<PAGE>

                 Municipal Partners
                 Fund II Inc.



                 Semi-Annual Report

                 DECEMBER 31, 1998


<PAGE>

MUNICIPAL PARTNERS FUND II INC.

February 8, 1999

To Our Shareholders:

We are pleased to provide this semi-annual report for the Municipal Partners
Fund II Inc. ("Fund") as of December 31, 1998. Included are market commentary, a
schedule of the Fund's investments as of December 31, 1998 and financial
statements for the six months ended December 31, 1998. The Fund distributed
income dividends to common shareholders totaling $0.38 per share during this
period. The table below shows the annualized distribution rate and the six-month
total return based on the Fund's December 31, 1998 net asset value ("NAV") per
share and its New York Stock Exchange ("NYSE") closing price:

                    Price                  Annualized             Six-Month
                  Per Share            Distribution Rate*       Total Return
                ------------           -----------------        ------------
                $14.48 (NAV)                 5.18%                  3.04%
                $13.50 (NYSE)                5.56%                  8.91%

In comparison, the Lipper General Muni Leveraged Fund Index posted a total
return based on NAV of 3.12% for the same period.

For the six months ending December 31, 1998, the U.S. economy continued to grow
at a steady rate while resisting downward pressures from overseas. The most
significant macroeconomic events of the second half of 1998 occurred between
July and October. During this period, financial market sentiment experienced
extreme shifts between greed and fear. In brief, escalating concerns over
struggling Asian economies, developing problems in Latin America and, finally,
the near collapse of the Russian financial markets, sent the capital markets
tumbling. A flight to quality arose sending panicked investors to the safe-haven
of U.S. Treasuries causing government bond yields to fall to historic lows. In
the latter part of 1998, the Federal Reserve ("Fed") lowered its short-term
lending rate by 25 basis points on three separate occasions. The Fed's
intervention successfully restored liquidity and confidence in the market.

The municipal market was not significantly impacted by the heightened volatility
resulting from economic turmoil overseas. In fact, municipal bonds benefited
from low interest rates, benign inflation and stable U.S. economic growth.
Municipal securities performed well throughout the year versus other fixed
income asset classes.

State and local governments issued approximately $284 billion of debt during
1998, which is just shy of 1993's record pace of $292 billion. A notable
difference between 1993 and 1998 was the type of debt issued during the
respective years. Most of the debt issued during 1993 was for refunding purposes
while the majority of debt issued in 1998 was for new project funding. Strong
demand from property and casualty insurance companies, mutual funds and
corporations helped absorb the abundant supply. Additionally, generous municipal
yields versus U.S. Treasuries sparked demand from non-traditional buyers of 
municipal bonds.

Throughout 1998, municipal bond issuers benefited from a strong national
economy, which facilitated capital funding. Standard & Poor's, a debt credit
rating agency, reported that the number of improving credits outpaced weakening
issues.

---------------
* The annualized distribution rate assumes a current monthly income dividend
  rate of $0.0625 per share for twelve months.

<PAGE>

MUNICIPAL PARTNERS FUND II INC.

As of December 31, 1998, the Fund's long-term holdings consisted of 53 issues in
25 different states. The portfolio's credit quality remains high with an average
rating of "AA". The industry sector weightings are well-diversified, with the
greatest emphasis in Healthcare, Transportation and Housing. For the six months
ended December 31, 1998, the Fund underperformed its benchmark primarily due to
the relative weakness of two holdings, one in the Healthcare sector, the second
in Education. We have since liquidated these positions and reduced our exposure
to these sectors.

We expect technical factors (supply and demand) to improve in 1999 through a
reduction in new issue volume. The reduction in new issuance may diminish the
municipal yield ratios to U.S. Treasuries. However, a decrease in supply coupled
with continuing demand should allow for price appreciation of these securities,
which is a contributing factor of total return performance. In response to the
relatively tight risk premium levels of lower quality bonds, we will continue to
invest in the higher quality spectrum of the municipal market.

Our philosophy of focusing on long-term fundamentals, rigorous credit analysis
and sector selection remains the credo for managing the Fund. We believe the
asset class is attractive for its portfolio diversification benefits, current
yield ratios and low correlation to U.S. Treasuries and other investment
categories.

We appreciate your continued support of the Fund and encourage you to call
888-777-0102 with any questions.


Cordially,

/s/ William D. Cvengros                            /s/ Heath B. McLendon

William D. Cvengros                                Heath B. McLendon
Co-Chairman of the Board                           Co-Chairman of the Board


/s/ Robert E. Amodeo

Robert E. Amodeo
Executive Vice President


Special Shareholder Notice. In September, 1998, Robert E. Amodeo became
portfolio manager of the Fund, primarily responsible for the Fund's day-to-day
investments. Mr. Amodeo is a Director of Salomon Brothers Asset Management Inc,
which he joined in 1992, and has been involved in the portfolio management of
the Fund since its inception.


<PAGE>

MUNICIPAL PARTNERS FUND II INC.

Schedule of Investments (unaudited)
December 31, 1998

<TABLE>
<CAPTION>
     Face
    Amount          Rating(a)                    Security                                        Value
-------------------------------------------------------------------------------------------------------------
Long-Term Investments -- 98.3%

<S>                <C>        <C>                                                            <C>
California -- 8.0%
  $3,000,000        AA-        California State Housing Finance Agency Home
                                 Mortgage Revenue, Series H, 6.15% due 8/1/16...............  $ 3,215,130
   2,175,000        Aaa*       California State Public Works Board, Lease Revenue
                                 Refunding Bonds (Department of Corrections),
                                 Series A, 6.875% due 11/1/14, Pre-Refunded 11/1/04.........    2,562,150
   2,900,000        Aaa*       California State Public Works Board, Lease Revenue
                                 Refunding Bonds (Various University of California Projects),
                                 1993 Series A, 7.00% due 3/1/14, Pre-Refunded 3/1/04.......    3,387,664
   1,000,000        A2*        West Covina, CA COP (Queen of the Valley Hospital),
                                 6.50% due 8/15/14, Pre-Refunded 8/15/04....................    1,151,000
                                                                                              -----------
                                                                                               10,315,944
                                                                                              -----------
Colorado -- 0.8%
   1,000,000        BBB        Colorado Health Facilities Authority Hospital Revenue
                                 (Rocky Mountain Adventist Healthcare Project),
                                 Series 1993, 6.625% due 2/1/13.............................    1,071,800
                                                                                              -----------

Georgia -- 1.3%
     180,000        AAA        Fulton County, GA Housing Authority Single-Family
                                 Mortgage, 6.60% due 3/1/28.................................      190,082
   1,375,000        AA         Fulton County, GA School District Refunding GO,
                                 5.25% due 1/1/14...........................................    1,469,531
                                                                                              -----------
                                                                                                1,659,613
                                                                                              -----------
Hawaii -- 0.8%
   1,000,000        A          Hawaii State Department of Budget & Finance Special
                                 Purpose Revenue, 6.00% due 7/1/11..........................    1,097,490
                                                                                              -----------

Illinois -- 16.8%
   6,050,000        AAA        Chicago Heights, IL GO, Series A, FGIC-Insured, 5.65%
                                 due 12/1/16................................................    6,476,888
   4,255,000        AAA        Chicago, IL Board of Education (Chicago School
                                 Reform), MBIA-Insured, 6.00% due 12/1/16...................    4,676,160
   3,500,000        AAA        Chicago, IL O'Hare International Airport Special
                                 Facility Revenue (International Terminal), MBIA-Insured,
                                 6.75% due 1/1/18...........................................    3,811,955
   1,000,000        AAA        Illinois Health Facilities Authority Revenue (Highland
                                 Park Project B), FGIC-Insured, 5.55% due 10/1/06...........    1,071,570

---------------------------------------------------------------------------------------------------------
                                     See notes to financial statements.
                                                                                                   Page 3
</TABLE>

<PAGE>

MUNICIPAL PARTNERS FUND II INC.

Schedule of Investments (unaudited) (continued)
December 31, 1998

<TABLE>
<CAPTION>
     Face
    Amount          Rating(a)                    Security                                        Value
-------------------------------------------------------------------------------------------------------------
Illinois -- 16.8% (continued)
<S>                <C>        <C>                                                            <C>
  $2,000,000        AAA        Illinois Health Facilities Authority Revenue (Servantcor
                                 Project), Series A, FSA-Insured, 6.00% due 8/15/12,
                                 Pre-Refunded 8/15/06.......................................  $ 2,288,660
   1,850,000        AAA        Illinois Health Facilities Authority Revenue Refunding
                                 (SSM Health Care), MBIA-Insured, 6.55% due 6/1/13..........    2,210,991
                               Illinois Health Facilities Authority Revenue (South
                                 Suburban Hospital Project):
     395,000        A              7.00% due 2/15/18, Pre-Refunded 2/15/02..................      439,070
     605,000        A              7.00%, Escrowed to Maturity 2/15/18......................      739,243
                                                                                              -----------
                                                                                               21,714,537
                                                                                              -----------
Indiana -- 3.7%
   2,000,000        AA+        Indiana Transportation Finance Authority Airport Facilities
                                 Lease Revenue, Series A, 5.50% due 11/1/17.................    2,083,600
   2,500,000        AAA        Indianapolis, IN Airport Authority Revenue Refunding,
                                 Series A, FGIC-Insured, 5.60% due 7/1/15...................    2,656,050
                                                                                              -----------
                                                                                                4,739,650
                                                                                              -----------
Iowa -- 2.9%
   3,350,000        NR         Iowa Finance Authority Hospital Facility Revenue Refunding
                                 (Trinity Regional Hospital Project), 7.00% due 7/1/12,
                                 Pre-Refunded 7/1/02........................................    3,749,923
                                                                                              -----------

Louisiana -- 4.9%
   6,000,000        BBB        Louisiana Public Facilities Authority Hospital Revenue
                                 Refunding (Touro Infirmary Project), Series B, 
                                 6.125% due 8/15/23.........................................    6,266,220
                                                                                              -----------

Massachusetts -- 2.7%
   2,250,000        AA-        Massachusetts State GO, Series C, 5.25% due 8/1/17...........    2,368,935
   1,000,000         A         Massachusetts State Health & Educational Facilities
                                 Authority Revenue (Dana Farber Cancer Project),
                                 Series G-1, 6.25% due 12/1/22..............................    1,096,980
                                                                                              -----------
                                                                                                3,465,915
                                                                                              -----------
Michigan -- 1.0%
     750,000        AAA        Detroit, MI City School District Refunding, Series C,
                                 FGIC-Insured, 5.25% due 5/1/17.............................      784,898
     500,000        AA         Michigan State Building Authority Revenue Refunding,
                                 Series 1, 5.25% due 10/15/14...............................      520,105
                                                                                              -----------
                                                                                                1,305,003
                                                                                              -----------

---------------------------------------------------------------------------------------------------------
                                     See notes to financial statements.
<Page 4
</TABLE>

<PAGE>
MUNICIPAL PARTNERS FUND II INC.

Schedule of Investments (unaudited) (continued)
December 31, 1998

<TABLE>
<CAPTION>
     Face
    Amount          Rating(a)                    Security                                        Value
-------------------------------------------------------------------------------------------------------------
<S>                <C>        <C>                                                            <C>
Missouri -- 2.1%
  $2,500,000        AA         Missouri State Environmental Improvement & Energy
                                 Research Authority PCR Refunding (Associated Electric
                                 Coop Thomas Hill), 5.50% due 12/1/10.......................  $ 2,715,850
                                                                                              -----------

Nevada -- 4.3%
   3,000,000        AAA        Clark County, NV IDR Refunding (Nevada Power Project),
                                 AMBAC-Insured, 7.20% due 10/1/22...........................    3,375,000
   1,000,000        AAA        Clark County, NV Passenger Facility Revenue (McCarran
                                 International Airport), MBIA-Insured, 5.75% due 7/1/23.....    1,051,420
   1,065,000        AAA        Nevada Housing Division, Single-Family Program,
                                 Series C, AMBAC-Insured, 6.35% due 10/1/12.................    1,138,847
                                                                                              -----------
                                                                                                5,565,267
                                                                                              -----------
New Jersey -- 1.3%
     500,000        AAA        New Jersey EDA Revenue Refunding (Trenton Office Complex),
                                 FSA-Insured, 5.25% due 6/15/12.............................      537,795
   1,000,000        AAA        New Jersey EDA Water Facilities Revenue (New Jersey
                                 American Water Co., Inc. Project), FGIC-Insured,
                                 6.875% due 11/1/34.........................................    1,138,940
                                                                                              -----------
                                                                                                1,676,735
                                                                                              -----------
New York -- 15.0%
   3,000,000        Aaa*       The City of New York, GO Bonds, Fiscal 1994 Series B,
                                 Subseries B-1, 7.00% due 8/15/16, Pre-Refunded 8/15/04.....    3,494,040
   1,435,000        AAA        Long Island Power Authority, NY Electric Systems Revenue,
                                 Series A, FSA-Insured, 5.50% due 12/1/12...................    1,574,511
   2,500,000        AAA        Metropolitan Transportation Authority, NY (Transit Facilities),
                                 Series O, MBIA-Insured, 6.375% due 7/1/20,
                                 Pre-Refunded 7/1/04........................................    2,840,625
   2,000,000        BBB-       New York State Dormitory Authority Revenue (Manhattan
                                 Eye, Ear & Throat Hospital), 5.125% due 7/1/07.............    2,081,760
   1,500,000        A+         New York State Local Government Assistance
                                 Corporation Revenue, Series A, 6.00% due 4/1/16............    1,645,710
   4,400,000        AAA        Port Authority of New York and New Jersey Construction,
                                 Ninety-Sixth Series, FGIC-Insured, 6.60% due 10/1/23.......    4,922,500
   2,570,000        Aa3*       Triborough Bridge & Tunnel Authority, NY General
                                 Purpose Revenue, Series Y, 5.50% due 1/1/17................    2,785,212
                                                                                              -----------
                                                                                               19,344,358
                                                                                              -----------

---------------------------------------------------------------------------------------------------------
                                     See notes to financial statements.
                                                                                                   Page 5
</TABLE>

<PAGE>

MUNICIPAL PARTNERS FUND II INC.

Schedule of Investments (unaudited) (continued)
December 31, 1998


<TABLE>
<CAPTION>
     Face
    Amount          Rating(a)                    Security                                        Value
-------------------------------------------------------------------------------------------------------------
<S>                <C>        <C>                                                            <C>
Ohio -- 4.8%
  $2,500,000        AA         Franklin County, OH Hospital Revenue (Holy Cross
                                 Health Systems Corp.), 5.875% due 6/1/21...................  $ 2,707,625
   3,300,000        A          Ohio State Water Development Authority Solid Waste
                                 Disposal Revenue (Broken Hill Proprietary Co., Ltd.),
                                 6.45% due 9/1/20...........................................    3,559,017
                                                                                              -----------
                                                                                                6,266,642
                                                                                              -----------
Pennsylvania -- 4.6%
   5,500,000        AAA        Delaware Valley, PA Regional Finance Authority Local
                                 Government Revenue, Series A, AMBAC-Insured,
                                 5.50% due 8/1/28...........................................    5,988,730
                                                                                              -----------
South Carolina -- 2.1%
   2,500,000        AA         Greenville, SC Hospital Systems Hospital Facilities Revenue,
                                 Series B, 5.70% due 5/1/12.................................    2,691,850
                                                                                              -----------
Tennessee -- 1.7%
   1,950,000        AA-        The IDB of Humphreys County, TN Solid Waste Disposal Revenue
                                 (E.I. duPont de Nemours and Co. Project), 6.70% due 5/1/24     2,173,451
                                                                                              -----------
Texas -- 7.2%
   4,500,000        AAA        Austin, TX Airport System Revenue, Series A, MBIA-Insured,
                                 6.20% due 11/15/15.........................................    4,926,960
   1,475,000        AAA        Bell County, TX Health Facilities Development Corp.
                                 Revenue Refunding & Improvement (Cook Childrens
                                 Hospital), FSA-Insured, 5.00% due 12/1/16..................    1,466,475
   2,665,000        A+         Port Corpus Christi Authority, TX Nueces County PCR
                                 (Hoechst Celanese Corporate Project), 6.875% due 4/1/17....    2,886,755
                                                                                              -----------
                                                                                                9,280,190
                                                                                              -----------
Utah -- 3.1%
   3,780,000        AAA        Utah State Housing Finance Agency Single-Family
                                 Mortgage, Issue H-2, 6.25% due 7/1/22......................    4,012,205
                                                                                              -----------
Virginia -- 3.5%
   2,000,000        AA         Fairfax County, VA EDA Lease Revenue (Government
                                 Center Properties), 5.50% due 5/15/18......................    2,076,640
                               Virginia State Housing Development Authority
                                 Commonwealth Mortgage:
   1,015,000        AAA            Subseries A-4, MBIA-Insured, 6.20% due 7/1/12............    1,094,312
   1,300,000        AA+            Subseries I-1, 6.55% due 7/1/17..........................    1,374,633
                                                                                              -----------
                                                                                                4,545,585
                                                                                              -----------

---------------------------------------------------------------------------------------------------------
                                     See notes to financial statements.
Page 6
</TABLE>

<PAGE>

MUNICIPAL PARTNERS FUND II INC.

Schedule of Investments (unaudited) (continued)
December 31, 1998

<TABLE>
<CAPTION>
     Face
    Amount          Rating(a)                    Security                                        Value
-------------------------------------------------------------------------------------------------------------
<S>                <C>        <C>                                                            <C>
Washington -- 0.8%
  $1,000,000        AA+        Washington State GO, Series C, 5.50% due 7/1/16..............  $ 1,085,350
                                                                                              -----------

West Virginia -- 1.3%
   1,555,000        A-         West Virginia State Water Development Authority,
                                 Loan Program II, Series A, 7.00% due 11/1/31,
                                 Pre-Refunded 11/1/01.......................................    1,721,975
                                                                                              -----------
Wisconsin -- 2.0%
   2,485,000        AA         Wisconsin Housing & EDA Revenue Refunding (Home
                                 Ownership), Series G, 6.30% due 9/1/17.....................    2,641,480
                                                                                              -----------
Wyoming -- 1.6%
   2,000,000        AA         Wyoming Community Development Authority Housing
                                 Revenue, Series 1, 6.10% due 12/1/14.......................    2,117,140
                                                                                              -----------
                               Total Long-Term Investments (Cost -- $116,744,661)...........  127,212,903
                                                                                              -----------

Short-Term Investments - 1.7%
-------------------------------------------------------------------------------------------------------------------
Indiana -- 0.5%
     700,000        A-1+       Rockport, IN PCR Refunding (AEP Generating Project),
                                 VRDD, AMBAC-Insured, 5.15% due 7/1/25......................      700,000
                                                                                              -----------
Missouri -- 0.2%
     300,000        A-1+       Missouri State Health & Educational Facilities Authority
                                 Educational Facilities Revenue (The Washington
                                 University Project B), VRDD, 5.10% due 9/1/30..............      300,000
                                                                                              -----------
North Carolina -- 0.1%
     130,000        A-1+       Halifax County, NC Industrial Facilities & Pollution Control
                                 Financing Authority Revenue, VRDD, 4.25% due 6/1/21........      130,000
                                                                                              -----------
Virginia -- 0.9%
   1,100,000        A-1+       Roanoke, VA IDA Hospital Revenue (Carilion Health
                                 System), VRDD, 5.05% due 7/1/27............................    1,100,000
                                                                                              -----------
                               Total Short-Term Investments (Cost -- $2,230,000)............    2,230,000
                                                                                              -----------
                               Total Investments -- 100% (Cost -- $118,974,661**)........... $129,442,903
                                                                                             ============
<FN>
---------------------------------------------------------------------------------------------------------
(a) All ratings are by Standard & Poor's Ratings Service, except those which
    are identified by an asterisk (*) are rated by Moody's Investors Service, Inc.
**  Aggregate cost for Federal income tax purposes is substantially the same.

    See pages 8 and 9 for definition of bond ratings and certain security descriptions.

---------------------------------------------------------------------------------------------------------
                                     See notes to financial statements.
                                                                                                   Page 7
</FN>
</TABLE>

<PAGE>

MUNICIPAL PARTNERS FUND II INC.

Long-Term Securities Ratings (unaudited)

Standard & Poor's Ratings Services ("Standard & Poor's") -- Ratings from "AA" to
"BB" may be modified by the addition of a plus (+) or minus (-) sign to show
relative standings within the major rating categories.

AAA -- Bonds rated "AAA" have the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.

AA -- Bonds rated "AA" have a very strong capacity to pay interest and repay
principal and differs from the highest rated issue only in a small degree.

A -- Bonds rated "A" have a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB -- Bonds rated "BBB" are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than in higher rated categories.

BB -- Bonds rated "BB" have less near-term vulnerability to default than other
speculative issues. However, they face major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments.


Moody's Investors Service, Inc. ("Moody's") -- Numerical modifiers 1, 2 and 3
may be applied to each generic rating from "Aa" to "Baa," where 1 is the highest
and 3 the lowest ranking within its generic category.

Aaa -- Bonds rated "Aaa" are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt edge."
Interest payments are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

Aa -- Bonds rated "Aa" are judged to be of high quality by all standards.
Together with the "Aaa" group they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in "Aaa" securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in "Aaa"
securities.

A -- Bonds rated "A" possess many favorable investment attributes and are to be
considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment some time in the future.

Baa -- Bonds rated "Baa" are considered as medium grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.

NR -- Indicates that the bond is not rated by Moody's or Standard & Poor's.

Page 8

<PAGE>

MUNICIPAL PARTNERS FUND II INC.

Short-Term Securities Ratings (unaudited)

SP-1 -- Standard & Poor's highest rating indicating very strong or strong
capacity to pay principal and interest; those issues determined to possess
overwhelming safety characteristics are denoted with a plus (+) sign. 

A-1 -- Standard & Poor's highest commercial paper and variable-rate demand 
obligation ("VRDO") rating indicating that the degree of safety regarding 
timely payment is either overwhelming or very strong; those issues determined 
to possess overwhelming safety characteristics are denoted with a plus (+) 
sign. 

VMIG 1 -- Moody's highest rating for issues having a demand feature -- VRDO. 

P-1 -- Moody's highest rating for commercial paper and for VRDO prior to the 
advent of the VMIG 1 rating.


Security Descriptions (unaudited)

<TABLE>
<S>     <C>                                        <C>       <C>
ABAG     - Association of Bay Area Governors        GO        - General Obligation Bonds
AIG      - American International Guaranty          HDC       - Housing Development Corporation
AMBAC    - American Municipal Bond Assurance        HFA       - Housing Finance Authority
             Corporation                            IDA       - Industrial Development Authority
BAN      - Bond Anticipation Notes                  IDB       - Industrial Development Board
BIG      - Bond Investors Guaranty                  IDR       - Industrial Development Revenue
CGIC     - Capital Guaranty Insurance Company       INFLOS    - Inverse Floaters
CHFCLI   - California Health Facility               ISD       - Independent School District
             Construction Loan Insurance            LEVRRS    - Leveraged Reverse Rate Securities
CONNIE                                              LOC       - Letter of Credit
  LEE    - College Construction Loan Association    MBIA      - Municipal Bond Investors Assurance
COP      - Certificate of Participation                           Corporation
EDA      - Economic Development Authority           MVRICS    - Municipal Variable Rate Inverse
EDR      - Economic Development Revenue                           Coupon Security
FGIC     - Financial Guaranty Insurance Company     PCR       - Pollution Control Revenue
FHA      - Federal Housing Administration           PSFG      - Permanent School Fund Guaranty
FHLMC    - Federal Home Loan Mortgage               RAN       - Revenue Anticipation Notes
             Corporation                            RIBS      - Residual Interest Bonds
FLAIRS   - Floating Adjustable Interest Rate        RITES     - Residual Interest Tax-Exempt Securities
             Securities                             SYCC      - Structured Yield Curve Certificate
FNMA     - Federal National Mortgage Association    TAN       - Tax Anticipation Notes
FRTC     - Floating Rate Trust Certificates         TECP      - Tax Exempt Commercial Paper
FSA      - Financial Security Assurance             TOB       - Tender Option Bonds
GIC      - Guaranteed Investment Contract           TRAN      - Tax and Revenue Anticipation Notes
GNMA     - Government National Mortgage             VA        - Veterans Administration
             Association                            VRDD      - Variable Rate Daily Demand
                                                    VRWE      - Variable Rate Wednesday Demand

                                                                                               Page 9
</TABLE>

<PAGE>

MUNICIPAL PARTNERS FUND II INC.

Statement of Assets and Liabilities (unaudited)
December 31, 1998


Assets:
     Investments, at value (Cost -- $118,974,661).............   $129,442,903
     Cash.....................................................         20,333
     Interest receivable......................................      2,169,138
     Receivable for investments sold..........................        465,000
     Prepaid expenses.........................................         49,560
                                                                 ------------
     Total Assets.............................................    132,146,934
                                                                 ------------

Liabilities:
     Management fee payable (Note 2)..........................         67,379
     Accrued expenses.........................................         84,053
                                                                 ------------
     Total Liabilities........................................        151,432
                                                                 ------------
Total Net Assets..............................................   $131,995,502
                                                                 ============

Net Assets:
     Preferred Stock (Note 4).................................   $ 45,000,000
                                                                 ------------
     Common Stock ($.001 par value, 100,000,000 shares 
       authorized; 6,007,094 shares outstanding)..............          6,007
     Additional paid-in capital...............................     83,244,145
     Undistributed net investment income......................        683,294
     Accumulated net realized loss on investments.............     (7,406,186)
     Net unrealized appreciation on investments...............     10,468,242
                                                                -------------
     Net Assets Applicable to Common Stock....................     86,995,502
                                                                -------------
Total Net Assets..............................................   $131,995,502
                                                                =============

Net Asset Value Per Share of Common Stock 
  ($86,995,502 / 6,007,094 shares outstanding)................         $14.48
                                                                      =======

                       See notes to financial statements.
------------------------------------------------------------------------------
        
Page 10

<PAGE>

MUNICIPAL PARTNERS FUND II INC.

Statement of Operations (unaudited)
For the Six Months Ended December 31, 1998

INVESTMENT INCOME:
     Interest...................................................... $3,746,756
                                                                    ----------

EXPENSES:
     Management fee (Note 2).......................................    399,619
     Auction agent fee.............................................     60,746
     Audit and tax services .......................................     36,548
     Legal ........................................................     20,165
     Directors' fees and expenses (Note 2).........................     12,602
     Shareholder communications....................................     12,350
     Listing fee...................................................      8,151
     Transfer agent ...............................................      8,067
     Custodian.....................................................      3,025
     Shareholder annual meeting....................................      2,412
     Amortization of deferred organization costs (Note 1)..........      1,490
     Other.........................................................      9,347
                                                                    ----------
     Total Expenses................................................    574,522
                                                                    ----------
Net Investment Income..............................................  3,172,234
                                                                    ----------

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 3):
     Net Realized Loss From Security Transactions
     (excluding short-term securities):
        Proceeds From sales........................................ 13,654,381
        Cost of securities sold.................................... 13,792,518
                                                                    ----------
     Net Realized Loss.............................................   (138,137)
                                                                    ----------

     Change in Net Unrealized Appreciation on Investments:
        Beginning of period........................................  9,998,554
        End of period.............................................. 10,468,242
                                                                    ----------
     Increase in Net Unrealized Appreciation.......................    469,688
                                                                    ----------
Net Gain on Investments............................................    331,551
                                                                    ----------
Increase in Net Assets From Operations............................. $3,503,785
                                                                    ----------
                      
------------------------------------------------------------------------------
                       See notes to financial statements.
                                                                       Page 11

<PAGE>

MUNICIPAL PARTNERS FUND II INC.

Statement of Changes in Net Assets
For the Six Months Ended December 31, 1998 (unaudited)
and Year Ended June 30, 1998

<TABLE>
<CAPTION>
                                                                             December 31      June 30
-------------------------------------------------------------------------------------------------------------------

OPERATIONS:
<S>                                                                           <C>              <C>         
     Net investment income ...............................................    $  3,172,234     $  6,214,711
     Net realized gain (loss).............................................        (138,137)         355,280
     Change in net unrealized appreciation................................         469,688        3,952,033
                                                                              ------------     ------------
     Increase in Net Assets From Operations ..............................       3,503,785       10,522,024
                                                                              ------------     ------------
DIVIDENDS PAID FROM
NET INVESTMENT INCOME TO:
     Common shareholders..................................................      (2,252,660)      (4,505,321)
     Preferred shareholders...............................................        (855,496)      (1,733,919)
                                                                              ------------     ------------
     Decrease in Net Assets From Dividends................................      (3,108,156)      (6,239,240)
                                                                              ------------     ------------
Increase in Net Assets....................................................         395,629        4,282,784

NET ASSETS:
     Beginning of period..................................................     131,599,873      127,317,089
                                                                              ------------     ------------
     End of period*.......................................................    $131,995,502     $131,599,873
                                                                              ============     ============

*Includes undistributed net investment income of..........................        $683,294         $619,216
                                                                                  ========         ========
</TABLE>

Statement of Cash Flows (unaudited)
For the Six Months Ended December 31, 1998

<TABLE>
<S>                                                                                             <C>        
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
     Proceeds from sales of portfolio securities.............................................   $14,869,036
     Purchases of portfolio securities.......................................................   (14,648,496)
     Net purchase of short-term securities...................................................      (230,000)
                                                                                                -----------
                                                                                                     (9,460)
     Net investment income ..................................................................     3,172,234
     Accretion of net discount on investments................................................       (50,208)
     Amortization of organization expenses...................................................         1,490
     Net change in receivables/payables related to operations................................       (45,750)
                                                                                                -----------
     Net Cash Provided by Operating Activities...............................................     3,068,306
                                                                                                -----------

CASH FLOWS USED BY FINANCING ACTIVITIES
     Common stock dividends paid.............................................................    (2,252,660)
     Preferred stock dividends paid..........................................................      (855,496)
                                                                                                -----------
     Net Cash Used by Financing Activities...................................................    (3,108,156)
                                                                                                -----------
Net Decrease in Cash.........................................................................       (39,850)
Cash, Beginning of Period....................................................................        60,183
                                                                                                -----------
Cash, End of Period..........................................................................    $   20,333
                                                                                                ===========

-----------------------------------------------------------------------------------------------------------
                                     See notes to financial statements.
Page 12
</TABLE>

<PAGE>

MUNICIPAL PARTNERS FUND II INC.

Notes to Financial Statements (unaudited)


Note 1.  Significant Accounting Policies

Municipal Partners Fund II Inc. ("Fund") was incorporated in Maryland on June
21, 1993 and is registered as a diversified, closed-end management investment
company under the Investment Company Act of 1940, as amended. The Board of
Directors authorized 100 million shares of $0.001 par value common stock. The
Fund may classify or reclassify any unissued shares of common stock into one or
more series of preferred stock (see Note 4).

The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles
("GAAP"). The preparation of financial statements in accordance with GAAP
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual amounts could differ
from those estimates.

Securities Valuation. Tax-exempt securities are valued by independent pricing
services which use prices provided by market-makers or estimates of market
values obtained from yield data relating to instruments or securities with
similar characteristics. Short-term investments having a maturity of 60 days or
less are valued at amortized cost which approximates market value. Securities
for which reliable quotations are not readily available are valued at fair value
as determined in good faith by, or under procedures established by, the Board of
Directors.

Securities Transactions and Investment Income. Securities transactions are
recorded on the trade date. Realized gains and losses on sales of securities are
calculated on the identified cost basis. Interest income is accrued on a daily
basis. The Fund amortizes premiums and accretes discounts on securities
purchased using the effective interest method.

Federal Income Taxes. The Fund has complied and intends to continue to comply
with the requirements of the Internal Revenue Code of 1986, as amended,
applicable to regulated investment companies, and to distribute all of its
income and capital gains, if any, to its shareholders. Therefore, no federal
income tax or excise tax provision is required.

Dividends and Distributions. The Fund declares and pays dividends and
distributions to common shareholders monthly from net investment income, net
realized short-term capital gains and other sources, if necessary. Long-term 
capital gains, if any, in excess of loss carryovers (See Note 7) are expected 
to be distributed annually. Dividends and distributions to common shareholders
are recorded on the ex-dividend date. Dividends and distributions to preferred
shareholders are accrued on a weekly basis and are determined as described in
Note 4. The amounts of dividends and distributions from net investment income 
and net realized gains are determined in accordance with federal income tax
regulations, which may differ from GAAP.

                                                                        Page 13
<PAGE>

MUNICIPAL PARTNERS FUND II INC.

Notes to Financial Statements (unaudited) (continued)

Deferred Organization Costs. Organization costs amounting to $93,817 were
incurred in connection with the organization of the Fund. These costs have
been deferred and amortized ratably over a five-year period from commencement 
of operations. As of December 31, 1998, the amortization of the deferred
organization costs had been completed.

Cash Flow Information. The Fund invests in securities and distributes dividends
from net investment income and net realized gains from investment transactions.
These activities are reported in the Statement of Changes in Net Assets.
Additional information on cash receipts and cash payments is presented in the
Statement of Cash Flows. Accounting practices that do not affect reporting
activities on a cash basis include carrying investments at value and amortizing
premium or accreting discount on debt obligations.


Note 2.  Management and Advisory Fees and Other Transactions

The Fund has entered into a management agreement with Value Advisors LLC
("Investment Manager"), a subsidiary of PIMCO Advisors L.P. ("PIMCO"), pursuant
to which the Investment Manager, among other things, supervises the Fund's
investment program and monitors the performance of the Fund's service providers.
The agreement with the Investment Manager was approved by shareholders at a
special meeting held on October 14, 1997, and has been in effect since the
closing of the sale of the Investment Manager by Oppenheimer Group Inc. to
PIMCO, which occurred on November 4, 1997. The Investment Manager was the
transferee of the investment management responsibilities for the Fund which were
previously provided by Advantage Advisers, Inc.

The Investment Manager and the Fund entered into an investment advisory and
administration agreement with Salomon Brothers Asset Management Inc ("Investment
Adviser"), a subsidiary of Salomon Smith Barney Holdings Inc. ("SSBH"), pursuant
to which the Investment Adviser provides investment advisory and administrative
services to the Fund. The Investment Adviser is responsible on a day-to-day
basis for the management of the Fund's portfolio in accordance with the Fund's
investment objectives and policies and for making decisions to buy, sell, or
hold particular securities and is responsible for day-to-day administration of
the Fund.

The Investment Adviser has delegated certain administrative services to Mutual
Management Corp. ("MMC"), an affiliate of the Investment Adviser, pursuant to a
Sub-Administration Agreement between the Investment Adviser and MMC. The
investment advisory and administration agreement with the Investment Adviser was
most recently approved by shareholders at a special meeting held on January 15,
1998. Approval of the agreement was necessary due to the merger of Salomon Inc,
which had been the ultimate parent company of the Investment Adviser, with and
into SSBH, a subsidiary of Citigroup, which occurred on November 28, 1997.

The Fund pays the Investment Manager a monthly fee at an annual rate of 0.60% of
the Fund's average weekly net assets for its services, and the Investment
Manager pays the Investment

Page 14

<PAGE>

MUNICIPAL PARTNERS FUND II INC.

Notes to Financial Statements (unaudited) (continued)


Adviser a monthly fee at an annual rate of 0.36% of the Fund's average weekly
net assets for its services. For purposes of calculating the fees, the
liquidation value of any outstanding preferred stock of the Fund is not 
deducted in determining the Fund's average weekly net assets.

Certain officers and/or directors of the Fund are also officers and/or directors
of the Investment Manager, or the Investment Adviser.

At December 31, 1998, the Investment Adviser owned 4,161 shares of the Fund.

The Fund pays each Director not affiliated with the Investment Manager or the
Investment Adviser a fee of $5,000 per year, $700 for attendance at each board
and audit committee meeting and reimbursement for travel and out-of-pocket
expenses for each board and committee meeting attended.


Note 3.  Portfolio Activity

Purchases and sales of investment securities, other than short-term investments
for the six months ended December 31, 1998, aggregated $12,142,931 and
$13,654,381, respectively.

The federal income tax cost basis of the Fund's investments at December 31, 1998
was substantially the same as the cost basis for financial reporting. Gross
unrealized appreciation and depreciation amounted to $10,468,958 and $716,
respectively, resulting in net unrealized appreciation for federal income tax
purposes of $10,468,242.


Note 4.  Preferred Stock

On October 1, 1993, the Fund closed its public offering of 900 shares of $.001
par value Auction Rate Preferred Stock ("Preferred Shares") at an offering price
of $50,000 per share. The Preferred Shares have a liquidation preference of
$50,000 per share plus an amount equal to accumulated but unpaid dividends
(whether or not earned or declared) and, subject to certain restrictions, are
redeemable in whole or in part.

Dividend rates generally reset every 28 days and are determined by auction
procedures. The dividend rates on the Preferred Shares during the six months
ended December 31, 1998 ranged from 3.625% to 3.858%. The weighted average
dividend rate for the six months ended December 31, 1998 was 3.72%. The Board of
Directors designated the dividend period commencing December 8, 1998 as a
Special Rate Period. Pursuant to this Special Rate Period, the dividend rate set
by the auction held on December 7, 1998 remains in effect through March 8, 1999
when the regular auction procedure resumes, subject to the Fund's ability to
designate any subsequent dividend period as a Special Rate Period. The dividend
rate for this Special Rate Period is 3.68%.

                                                                        Page 15

<PAGE>

MUNICIPAL PARTNERS FUND II INC.

Notes to Financial Statements (unaudited) (continued)


The Fund is subject to certain restrictions relating to the Preferred Shares.
The Fund may not declare dividends or make other distributions on shares of
common stock or purchase any such shares if, at the time of the declaration,
distribution or purchase, asset coverage with respect to the outstanding
Preferred Shares would be less than 200%. The Preferred Shares are also subject
to mandatory redemption at $50,000 per share plus any accumulated or unpaid
dividends, whether or not declared, if certain requirements relating to the
composition of the assets and liabilities of the Fund as set forth in its
Articles Supplementary are not satisfied.

The Preferred Shares, which are entitled to one vote per share, generally vote
with the common shares but vote separately as a class to elect two directors and
on certain matters affecting the rights of the Preferred Shares.


Note 5.  Concentration of Credit Risk

Since the Fund invests a portion of its assets in issuers located in a single
state, it may be affected by economic and political developments in a specific
state or region. Certain debt obligations held by the Fund are entitled to the
benefit of insurance, standby letters of credit or other guarantees of banks or
other financial institutions.


Note 6.  Common Stock Dividends Subsequent to December 31, 1998

On January 4 and February 1, 1999, the Board of Directors of the Fund declared a
common share dividend from net investment income, each in the amount of $0.0625
per share, payable on January 29 and February 26, 1999 to shareholders of record
on January 12 and February 17, 1999, respectively.


Note 7.  Capital Loss Carryforwards

At June 30, 1998, the Fund had a net capital loss carryover of approximately
$7,268,000, of which $3,377,000 will be available through June 30, 2003,
$3,081,000 will be available through June 30, 2004 and $810,000 will be
available through June 30, 2005 to offset future capital gains to the extent
provided by federal income tax regulations.


Page 16

<PAGE>

MUNICIPAL PARTNERS FUND II INC.

Notes to Financial Statements (unaudited) (continued)


Note 8.  Bylaw Amendment

The Board of Directors of the Fund reviewed and approved on July 14, 1998
various amendments to the Fund's bylaws. For example, the bylaws provisions
relating to timely notice for proposals to be brought before an annual meeting
of stockholders (other than a proposal under Rule 14a-8 of the Securities
Exchange Act of 1934 to be included in the Fund's proxy statement) have been
amended. As amended, a stockholder's notice must be delivered to the Fund not
less than 60 days nor more than 90 days prior to the first anniversary of the
preceding year's annual meeting. An exception applies in the event the date of
the annual meeting is substantially advanced or delayed from the anniversary
date. The Board believes that the amended timely notice provisions will provide
greater certainty to stockholders because previously, timely notice keyed off
the date of the current year's meeting or the date public disclosure of the
current year's meeting is made. In addition, the provisions provide that any
business to be brought before a special meeting of stockholders must be
specified in the notice of meeting or otherwise properly brought before the
meeting by or at the direction of the Board of Directors. Finally, upon
recommendation of the Fund's Maryland counsel, other changes to certain bylaw
provisions were made to conform to the bylaw provisions of more recently
organized Maryland companies.


                                                                       Page 17
<PAGE>

MUNICIPAL PARTNERS FUND II INC.

Financial Highlights

Data for a share of common stock outstanding throughout each year ended June 30,
except where noted:

<TABLE>
<CAPTION>
                                               1998(1)     1998       1997       1996       1995     1994(2)
-------------------------------------------------------------------------------------------------------------
<S>                                            <C>        <C>        <C>        <C>       <C>        <C>    
Net Asset Value, Beginning of Period           $14.42     $13.70     $ 12.92    $ 12.58   $ 12.02    $ 14.10
                                               ------     ------     -------    -------   -------    -------
Income (Loss) From Operations:
   Net investment income............             0.53       1.03        1.05       1.05      1.07       0.89
   Net realized and unrealized gain (loss)       0.05       0.72        0.75       0.29      0.57      (1.87)
                                               ------     ------     -------    -------   -------    -------
Total Income (Loss) From Operations.             0.58       1.75        1.80       1.34      1.64      (0.98)
                                               ------     ------     -------    -------   -------    -------
Dividends Paid From
Net Investment Income To:
   Common shareholders..............            (0.38)     (0.75)      (0.74)     (0.71)    (0.79)     (0.69)
   Preferred shareholders...........            (0.14)     (0.28)      (0.28)     (0.29)    (0.29)     (0.17)
                                               ------     ------     -------    -------   -------    -------
Total Distributions.................            (0.52)     (1.03)     (1.02)      (1.00)    (1.08)     (0.86)
                                               ------     ------     -------    -------   -------    -------
Offering costs on issuance of common
   and preferred shares.............               --         --          --         --        --      (0.24)
                                               ------     ------     -------    -------   -------    -------
Net Asset Value, End of Period......           $14.48     $14.42     $ 13.70    $ 12.92   $ 12.58    $ 12.02
                                               ======     ======     =======    =======   =======    =======
Per Share Market Value, End of Period          $13.50     $12.75     $12.375    $ 10.75   $ 10.75    $ 11.25
                                               ======     ======     =======    =======   =======    =======
Total Return, Based on
  Market Price (3)..................             8.91%++    9.20%      22.80%      6.62%     2.97%    (15.92)%#
Ratios to Average Net Assets of
Common Shareholders (4):
   Operating expenses...............             1.31%+     1.36%       1.42%      1.44%     1.50%      1.45%+
   Net investment income...........              7.21+      7.27%       7.90%      8.09%     8.99%      7.22+
Net Assets of Common Shareholders,
   End of Period (000)..............          $86,996    $86,600     $82,317    $77,628   $75,541    $72,222
Preferred Stock Outstanding,
   End of Period (000)..............          $45,000    $45,000     $45,000    $45,000   $45,000    $45,000
Portfolio Turnover Rate.............                9%        20%          7%        55%       24%        50%
<FN>
-------------------------------------------------------------------------------------------------------------------
(1) For the six months ended December 31, 1998 (unaudited).
(2) For the period July 30, 1993 (commencement of investment operations) through
    June 30, 1994. 
(3) For purposes of this calculation, dividends on common shares are assumed 
    to be reinvested at prices obtained under the Fund's dividend reinvestment
    plan and the broker commission paid to purchase or sell a share is excluded.
(4) Ratios calculated on the basis of income and expenses relative to the
    average net assets of common shares and excludes the effect of dividend
    payments to preferred shareholders.
 #  Return calculated based on beginning of period price of $14.10 (initial
    offering price of $15.00 less underwriting discount of $0.90) and end of
    period market value of $11.25 per share. This calculation is not annualized.
 ++ Total return is not annualized, as it may not be representative of the 
    total return for the year.
 +  Annualized.
</FN>

Page 18
</TABLE>

<PAGE>

MUNICIPAL PARTNERS FUND II INC.

Selected Quarterly Financial Information (unaudited)

Summary of quarterly results of operations:

<TABLE>
<CAPTION>
                                                                                          Net Realized
                                                                  Net Investment         and Unrealized
                                                                      Income              Gain (Loss)
                                                                 -----------------    --------------------
Quarter Ended*                                                   Total   Per Share     Total     Per Share
-----------------------------------------------------------------------------------------------------------
<S>       <C> <C>                                                <C>      <C>              <C>       <C>  
September 30, 1996...........................................    $1,577   $0.26             $1,810    $0.30
December 31, 1996............................................     1,575    0.26              1,649     0.28
March 31, 1997...............................................     1,591    0.27             (1,971)   (0.33)
June 30, 1997................................................     1,589    0.26              3,018     0.50
September 30, 1997...........................................     1,586    0.26              2,321     0.39
December 31, 1997............................................     1,534    0.26              1,829     0.30
March 31, 1998...............................................     1,562    0.26               (186)   (0.03)
June 30, 1998................................................     1,533    0.25                343     0.06
September 30, 1998...........................................     1,571    0.26              1,972     0.33
December 31, 1998............................................     1,601    0.27             (1,640)   (0.28)
<FN>
------------------------------------------------------------------------------------------------------------
  *Totals expressed in thousands of dollars except per share amounts.
</FN>
                                                                                                    Page 19
</TABLE>

<PAGE>

MUNICIPAL PARTNERS FUND II INC.

Other Information (unaudited)


Year 2000. The investment management services provided to the Fund by the
Investment Adviser depend in large part on the smooth functioning of its
computer systems. Many computer software systems in use today cannot recognize
the year 2000, but revert to 1900 or some other date, due to the manner in which
the dates were encoded or calculated. The capability of these systems to
recognize the year 2000 could have a negative impact on the Investment Adviser's
provision of investment advisory services, including handling of securities
trades, pricing and account services. The Investment Adviser has advised the
Fund that it has been reviewing all of their computer systems and actively
working on necessary changes to its systems to prepare for the year 2000 and
expects that given the extensive testing which it is undertaking, its systems
will be year 2000 compliant before such date. In addition, the Investment
Adviser has been advised by certain of the Fund's service providers that they
are also in the process of modifying their systems with the same goal. There
can, however, be no assurance that the Investment Adviser or any other service
provider will be successful in achieving year 2000 compliance, or that
interaction with other non-complying computer systems will not impair services
to the Fund at that time.


Page 20

<PAGE>

MUNICIPAL PARTNERS FUND II INC.

Dividend Reinvestment Plan (unaudited)


Pursuant to certain rules of the Securities and Exchange Commission, the
following additional disclosure is provided.

Pursuant to the Fund's Dividend Reinvestment Plan ("Plan"), holders of Common
Stock whose shares of Common Stock are registered in their own names will be
deemed to have elected to have all distributions automatically reinvested by
State Street Bank and Trust Company ("Plan Agent") in Fund shares pursuant to
the Plan, unless they elect to receive distributions in cash. Holders of Common
Stock who elect to receive distributions in cash will receive all distributions
in cash by check in dollars mailed directly to the holder by the Plan Agent as
dividend-paying agent. Holders of Common Stock who do not wish to have
distributions automatically reinvested should notify the Plan Agent at the
address below. Distributions with respect to Common Stock registered in the name
of a bank, broker-dealer or other nominee (i.e., in "street name") will be
reinvested under the Plan unless the service is not provided by the bank,
broker-dealer or other nominee or the holder elects to receive dividends and
distributions in cash. Investors who own shares registered in the name of a
bank, broker-dealer or other nominee should consult with such nominee as to
participation in the Plan through such nominee, and may be required to have
their shares registered in their own names in order to participate in the Plan.

The Plan Agent serves as agent for the holders of Common Stock in administering
the Plan. After the Fund declares a dividend on the Common Stock or determines
to make a capital gain distribution, the Plan Agent will, as agent for the
participants, receive the cash payment and use it to buy the Fund's Common Stock
in the open market, on the New York Stock Exchange or elsewhere, for the
participants' accounts. The Fund will not issue any new shares of Common Stock
in connection with the Plan.

Participants have the option of making additional cash payments to the Plan
Agent, monthly, in a minimum amount of $250, for investment in the Fund's Common
Stock. The Plan Agent will use all such funds received from participants to
purchase shares of Common Stock in the open market on or about the first
business day of each month. To avoid unnecessary cash accumulations, and also to
allow ample time for receipt and processing by the Plan Agent, it is suggested
that participants send in voluntary cash payments to be received by the Plan
Agent approximately ten days before an applicable purchase date specified above.
A participant may withdraw a voluntary cash payment by written notice, if the
notice is received by the Plan Agent not less than 48 hours before such payment
is to be invested.

The Plan Agent maintains all shareholder accounts in the Plan and furnishes
written confirmations of all transactions in an account, including information
needed by shareholders for personal and tax records. Shares of Common Stock in
the account of each Plan participant will be held by the Plan Agent in the name
of the participant, and each shareholder's proxy will include those shares
purchased pursuant to the Plan.

In the case of holders of Common Stock, such as banks, broker-dealers or other
nominees, who hold shares for others who are beneficial owners, the Plan Agent
will administer the Plan on the basis of the number of shares of Common Stock
certified from time to time by the holders as representing the total amount
registered in such holders' names and held for the account of beneficial owners
that have not elected to receive distributions in cash.

                                                                        Page 21


<PAGE>

MUNICIPAL PARTNERS FUND II INC.

Dividend Reinvestment Plan (unaudited) (continued)


There is no charge to participants for reinvesting dividends or capital gains
distributions or voluntary cash payments. The Plan Agent's fees for the
reinvestment of dividends and capital gains distributions and voluntary cash
payments will be paid by the Fund. However, each participant will pay a pro rata
share of brokerage commissions incurred with respect to the Plan Agent's open
market purchases in connection with the reinvestment of dividends and
distributions and voluntary cash payments made by the participant. The receipt
of dividends and distributions under the Plan will not relieve participants of
any income tax which may be payable on such dividends or distributions.

Participants may terminate their accounts under the Plan by notifying the Plan
Agent in writing. Such termination will be effective immediately if notice in
writing is received by the Plan Agent not less than ten days prior to any
dividend or distribution record date. Upon termination, the Plan Agent will send
the participant a certificate for the full shares held in the account and a cash
adjustment for any fractional shares or, upon written instruction from the
participant, the Plan Agent will sell part or all of the participant's shares
and remit the proceeds to the participant, less a $2.50 fee plus brokerage
commission for the transaction.

Experience under the Plan may indicate that changes in the Plan are desirable.
Accordingly, the Fund and the Plan Agent reserve the right to terminate the Plan
as applied to any voluntary cash payments made and any dividend or distribution
paid subsequent to notice of the termination sent to all participants in the
Plan at least 30 days before the record date for the dividend or distribution.
The Plan also may be amended by the Fund or the Plan Agent upon at least 30
days' written notice to participants in the Plan.

All correspondence concerning the Plan should be directed to the Plan Agent,
P.O. Box 8209, Boston, Massachusetts 02266-8209.


Page 22

<PAGE>

MUNICIPAL PARTNERS FUND II INC.

Additional Shareholder Information (unaudited)


On October 28, 1998, the Annual Meeting of the Fund's Stockholders was held for
the purpose of voting on the following matters:

   1. The election of Heath B. McLendon and Dr. Riordan Roett as Directors of 
      the Fund; and

   2. The ratification of the selection of PricewaterhouseCoopers LLP as the
      Fund's independent accountants for the fiscal year ending June 30, 1999.


   The results of the vote on Proposal 1 were as follows:

<TABLE>
<CAPTION>
                                        Preferred        % of Shares        Preferred       % of Shares
Name of Directors                       Votes For           Voted         Votes Against        Voted
--------------------------------------------------------------------------------------------------------
<S>                                       <C>             <C>                  <C>            <C> 
Heath B. McLendon                          848             100.0%               0              0.0%
Dr. Riordan Roett                          848             100.0%               0              0.0%
--------------------------------------------------------------------------------------------------------
</TABLE>

   The results of the vote on Proposal 2 were as follows:

<TABLE>
<CAPTION>
                      % of Shares                        % of Shares          Votes         % of Shares
     Votes For           Voted        Votes Against         Voted           Abstained        Abstained
--------------------------------------------------------------------------------------------------------
<S>                     <C>           <C>                  <C>            <C>                  <C> 
   5,118,290.094         97.7%         33,386.000           0.6%           89,884.751           1.7%
--------------------------------------------------------------------------------------------------------

                                                                                                Page 23
</TABLE>

<PAGE>

MUNICIPAL PARTNERS FUND II INC.

Directors

Charles F. Barber
      Consultant; formerly Chairman,
      ASARCO Incorporated

William D. Cvengros
      Co-Chairman of the Board;
      Chief Executive Officer, and
      President of Value Advisors LLC and
      Chief Executive Officer and 
      President of PIMCO Advisors L.P.

Heath B. McLendon
      Co-Chairman of the Board;
      Managing Director, Salomon Smith Barney Inc.
      President and Director, Mutual
      Management Corp. and Travelers
      Investment Advisers, Inc.;
      Chairman, Smith Barney Strategy
      Advisors Inc.

Riordan Roett
      Professor and Director, Latin American
      Studies Program, Paul H. Nitze
      School of Advanced International Studies,
      Johns Hopkins University

Robert L. Rosen
      General Partner,
      R.L.R. Partners

Officers

William D. Cvengros
      Co-Chairman of the Board

Heath B. McLendon
      Co-Chairman of the Board

Stephen J. Treadway
      President

Robert E. Amodeo
      Executive Vice President

Lewis E. Daidone
      Executive Vice President and Treasurer

Newton B. Schott
      Executive Vice President

Anthony Pace
      Assistant Controller

Christina T. Sydor
      Secretary


Municipal Partners Fund II Inc.

      7 World Trade Center
      New York, New York  10048
      Telephone 1-888-777-0102

Investment Adviser
      Salomon Brothers Asset Management Inc
      7 World Trade Center
      New York, New York  10048

Investment Manager
      Value Advisors LLC
      800 Newport Center Drive
      Suite 100
      Newport Beach, California 92660

Auction Agent
      Bankers Trust Company
      4 Albany Street
      New York, New York  10006

Custodian
      PNC Bank N.A.
      200 Stevens Drive
      Lester, PA 19113

Dividend Disbursing and Transfer Agent
      State Street Bank and Trust Company
      225 Franklin Street
      Boston, Massachusetts 02110

Legal Counsel
      Simpson Thacher & Bartlett
      425 Lexington Avenue
      New York, New York  10017

New York Stock Exchange Symbol
      MPT

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State Street Bank and Trust Company
P.O. Box 8200
Boston, Massachusetts 02266-8200


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                                  U.S. POSTAGE
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                                S. HACKENSACK, NJ
                                 PERMIT No. 750