MuniAssets
Fund, Inc.
Semi-Annual Report November 30, 1993
This report, including the financial information herein,
is transmitted to the shareholders of MuniAssets Fund,
Inc. for their information. It is not a prospectus, circular
or representation intended for use in the purchase of
shares of the Fund or any securities mentioned in the
report. Past performance results shown in this report
should not be considered a representation of future
performance.
MuniAssets Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
MuniAssets Fund, Inc.
Directors and
Officers
Arthur Zeikel, President and Director
Walter Mintz, Director
Melvin R. Seiden, Director
Stephen B. Swensrud, Director
Harry Woolf, Director
Terry K. Glenn, Executive Vice President
Vincent R. Giordano, Senior Vice President
Donald C. Burke, Vice President
Kenneth A. Jacob, Vice President
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
Custodian
The Bank of New York
48 Wall Street
New York, New York 10286
Transfer Agent
The Bank of New York
101 Barclay Street, 22W
New York, New York 10286
NYSE Symbol
MUA
<PAGE>
DEAR SHAREHOLDER
We are pleased to provide you with this
first semi-annual report for MuniAssets
Fund, Inc. In this and future share-
holder reports, we will highlight the
Fund's performance, describe recent
investment activities, and examine
some of the important market develop-
ments that helped shape our investment
strategy during the period under review.
MuniAssets Fund, Inc. 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 invest-
ment management. The Fund also seeks
to achieve its investment objective by
investing primarily in a portfolio of
medium- to lower-grade or unrated
municipal obligations, the interest on
which is exempt from Federal income
taxes.
Since inception (June 25, 1993) through
November 30, 1993, MuniAssets Fund,
Inc. earned $0.529 per share income
dividends, representing a net annualized
yield of 8.41%, based on a month-end
net asset value of $14.44 per share.
Over the same period, the total invest-
ment return on the Fund was +3.96%,
based on a change in per share net
asset value from $14.18 to $14.44, and
assuming reinvestment of $0.300 per
share income dividends.
The Environment
The US economy began to show some
signs of improvement during the
six months ended November 30, 1993
with little evidence of an appreciable
increase in the rate of inflation. The
industrial sector is demonstrating grow-
ing strength, yet capacity utilization is
still well below the levels associated
with rising inflation. Consumer spend-
ing has improved, but the labor market
remains soft. Despite the areas of eco-
nomic weakness that persist, concerns
arose during the quarter that the rate
of business activity might increase
inflationary pressures.
<PAGE>
Other developments during the Novem-
ber period had significant long-term
implications for the US financial markets.
Although Boris Yeltsin's swift and
apparently decisive victory over his
hard-line opponents in Russia created
little immediate disruption in the world
financial markets, the future of political
and economic reform in the former
Soviet Union is far from certain. Evi-
dence of greater progress toward a
free-market economy and democratic
government in Russia would have more
positive implications for US financial
markets over the longer term. The out-
line for proposed healthcare reform is
also very important for the US economy.
As the various healthcare reform pro-
posals are debated, investors will focus
on their potential effects on the Federal
budget, the US economy and the quality
of healthcare delivery in the United
States. Finally, the ratification of the
North American Free Trade Agreement
by the US Congress was important not
only for the prospect of expanding trade
with Canada and Mexico, but also as
a positive influence on the recently
concluded round of negotiations on the
General Agreement on Tariffs and Trade.
Further economic integration and
growth through trade liberalization
would be positive for capital markets in
the United States and around the world.
<PAGE>
The Municipal Market
The municipal bond market exhibited
considerable volatility during the
quarter ended November 30, 1993.
From September through mid-October,
municipal bond yields continued their
earlier decline. By mid-October, yields
on tax-exempt revenue bonds maturing
in 30 years, as reflected by the Bond
Buyer Revenue Bond Index, had declined
an additional 15 basis points (0.15%) to
another record low of 5.41%. However,
the municipal bond market then reacted
sympathetically to a nervous US Treasury
bond market during the remainder of
the quarter, and tax-exempt bond yields
rose to end the quarter at 5.47%. Despite
the increase in bond yields late in the
quarter, it is important to note that
tax-exempt bond yields have declined
approximately 70 basis points since the
beginning of 1993.
The pace of new municipal bond issu-
ance slowed during the November
quarter. More than $62 billion in tax-
exempt securities were issued over the
last three months, an increase of more
than 5% versus the November 1992
quarter's issuance. In recent quarters,
however, new bond issuance had been
increasing at a rate of approximately
25%. Even this relative decline in supply
was unable to provide any technical
support for the municipal bond market
as investors became extremely con-
cerned that economic growth would
dramatically accelerate during the last
calendar quarter of 1993 and continue
into early 1994. This projected growth
and expected associated inflationary
pressures combined to cause yields to
rise significantly in late October and
November.
<PAGE>
A number of additional factors have
been involved in the recent increase
in tax-exempt bond yields. Individual
investors have demonstrated only
limited interest in the municipal bond
market over the last month. This prob-
ably has been related to a combination
of seasonal factors and the desire to
avoid the tax liability resulting from the
large capital gains expected to be
declared by most bond funds this year.
Also, many larger institutional investors
have been reluctant participants in the
markets in order not to jeopardize their
already strong year-to-date perform-
ances. Consequently, recent interest
rate volatility has been intensified by
this decline in demand.
By early 1994, however, it is likely that
demand will increase significantly.
The proceeds from bond maturities,
bond calls and coupon payments
beginning in January will all need to be
reinvested. The new higher marginal
Federal tax rates will also go into effect
in January. Given the ongoing attractive
after-tax benefits municipal bonds
provide, it is likely that both individual
and institutional investors will return
to the tax-exempt bond market. This
increased demand should serve to
stabilize the market in early 1994.
<PAGE>
Portfolio Strategy
At the Fund's inception on June 25, 1993,
we primarily sought to rapidly invest
the proceeds of the Fund's initial offer-
ing in long-term, medium-quality, invest-
ment-grade tax-exempt municipal
bonds. In the months that followed, our
focus shifted to restructuring the port-
folio to take advantage of attractive
high-yield investment opportunities as
they arose in the marketplace. The
rationale for this approach was twofold.
First, the Fund's fundamental invest-
ment objective is to provide share-
holders with high current income
exempt from Federal income taxes by
primarily investing in a portfolio of
medium- to lower-grade or unrated
municipal obligations. Scarcity and ex-
tensive credit analysis typify the market
for high-yield securities; hence, we
expected the entire process of structur-
ing the Fund to fully reflect its stated
objective to take some time. Second, our
constructive outlook for interest rates
warranted a swift entry into the market-
place, enabling us to participate in the
expected rally. We expected the port-
folio's composition to change with the
purchase of each new viable high-yield
security.
At present, roughly 33% of the Fund's
net assets are invested in unrated or
noninvestment-grade tax-exempt securi-
ties. Looking forward, we anticipate
gradually increasing the percentage of
such holdings with significant attention
being focused on the healthcare indus-
try. Currently, 31% of the Fund's net
assets are centered in this sector. All
existing holdings are regularly moni-
tored for creditworthiness and ongoing
viability. Unless our interest rate outlook
warrants a more defensive posture, we
will maintain cash reserves at below
5% of net assets.
We appreciate your investment in
MuniAssets Fund, Inc., and we look
forward to assisting you with your
financial needs in the months and
years ahead.
<PAGE>
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Vice President and Portfolio Manager
December 30, 1993
Portfolio
Abbreviations
To simplify the listings of MuniAssets Fund, Inc.'s
portfolio holdings in the Schedule of Investments, we
have abbreviated the names of many of the securities
according to the list at right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
GO General Obligation Bonds
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Alabama--1.5% NR B2 $ 1,000 Birmingham, Alabama, Industrial Development Board (USG Interiors),
PCR, 7.50% due 4/01/2002 $ 999
Arizona--1.3% BB+ Ba2 900 Maricopa County, Arizona, Pollution Control Corporation, PCR,
Refunding (Public Service Company--Palo Verde),
Series A, 6.375% due 8/15/2023 905
Arkansas--1.5% NR NR 1,000 Pine Bluff, Arkansas, IDR, Refunding (Coltec Industries
Incorporated), 6.50% due 2/15/2009 1,001
<PAGE>
California--18.1% NR Baa 1,000 California Educational Facilities Authority, Revenue Refunding Bonds
(Pooled College and University Financing),
Series B, 6.25% due 6/01/2018 1,011
NR NR 1,500 Long Beach, California, Redevelopment Agency, M/F Housing
Revenue Refunding Bonds, AMT (Pacific Court Apartments),
Issue B, 6.80% due 9/01/2013 1,457
AA Aa 2,000 Metropolitan Water District, Southern California Waterworks,
Revenue Bonds, RIB, 8.774% due 8/05/2022 (c) 2,070
AAA Aaa 5,000 Northern California Transmission Revenue Bonds, RIB, 7.774%
due 4/29/2024 (b) (c) 4,888
NR NR 2,000 Pleasanton, California, Joint Powers Financing Authority, Revenue
Reassessment Subordinated Bonds, Series B, 6.60% due 9/02/2008 2,049
BBB NR 1,000 Snowline, California, Joint Unified School District, COP,
6.40% due 7/01/2018 1,018
Colorado--7.6% Denver, Colorado, City and County Airport Revenue Bonds, AMT:
BBB Baa1 2,500 Series B, 7.25% due 11/15/2023 2,694
BBB Baa1 2,500 Series C, 6.75% due 11/15/2022 2,584
Connecticut--2.8% NR NR 1,920 Eastern Connecticut, State Regional Educational Service Center
Revenue Bonds, 6.50% due 5/15/2009 1,929
Idaho--3.1% NR NR 2,080 Idaho Student Loan Fund Marketing Association Incorporated, Student
Loan Subordinated Revenue Bonds, Junior Series I, AMT,
6.70% due 10/01/2007 2,141
Illinois--9.8% AA Aa2 1,250 Illinois Development Finance Authority, PCR, Refunding
(Central Illinois Public Service), Series B-2, 5.90% due 6/01/2028 1,272
A+ A 4,450 Illinois Health Facilities Authority, Revenue Refunding Bonds
(Lutheran General Health), Series C, 6% due 4/01/2018 4,521
A- A 1,000 Quincy, Illinois, Revenue Refunding Bonds (Blessing Hospital),
6% due 11/15/2018 1,001
Indiana--1.4% B+ B2 1,000 East Chicago, Indiana, Economic Development Revenue Bonds
(U.S. Gypsum Company Project), 7.25% due 5/01/2014 1,001
Iowa--3.0% NR NR 800 Iowa Finance Authority, Health Care Facilities Revenue Bonds
(Mercy Health Initiatives Project), 9.95% due 7/01/2019 848
A1+ NR 1,200 Iowa Finance Authority, Solid Waste Disposal Revenue Bonds
(Cedar River Paper Company Project), Series A, VRDN,
2.05% due 7/01/2023 (a) 1,200
Maryland--1.5% NR Baa 1,000 Prince Georges County, Maryland, Hospital Revenue Bonds
(Greater Southeast Healthcare System), 6.375% due 1/01/2023 1,010
Massachusetts--4.0% A A 3,135 Massachusetts State Water Resource Authority, General Revenue
Refunding Bonds, Series B, 5% due 3/01/2022 2,796
Missouri--1.0% NR B2 700 Clay County, Missouri, IDA, Industrial Development Revenue
Refunding Bonds (U.S. Gypsum Corporate Project), 7.25% due 5/01/2014 701
Montana--1.5% NR NR 1,000 Montana State Board Investment, Resource Recovery Revenue Bonds
(Yellowstone Energy LP Project), AMT, 7% due 12/31/2019 1,020
<PAGE>
New Hampshire--1.4% NR Baa 1,000 New Hampshire Higher Educational and Health Facilities Authority,
Revenue Refunding Bonds (Frisbie Memorial Hospital Issue),
6.125% due 10/01/2013 984
New Mexico--1.8% BB+ Ba2 1,250 Farmington, New Mexico, PCR, Refunding (Public Service Company--
San Juan Project), Series A, 6.40% due 8/15/2023 1,259
New York--2.9% BBB Baa 2,000 New York City Health and Hospital Authority, Local Government
Revenue Refunding Bonds, Series A, 6.30% due 2/15/2020 2,035
Ohio--1.4% BBB NR 1,000 Belifontaine, Ohio, Hospital Facilities Revenue Refunding Bonds
(Mary Rutan Health Associates), 6% due 12/01/2013 977
Pennsylvania--14.8% A- NR 2,000 Delaware County, Pennsylvania, Hospital Authority Revenue Bonds
(Riddle Memorial Hospital), 6.50% due 1/01/2022 2,118
NR NR 1,500 Montgomery County, Pennsylvania, IDA, Revenue Bonds (Pennsburg
Nursing and Rehabilitation Center), 7.625% due 7/01/2018 1,500
BBB+ Baa1 2,400 Philadelphia, Pennsylvania, Hospitals and Higher Educational
Facilities Authority, Revenue Bonds (Graduate Health System),
Series A, 6.25% due 7/01/2018 2,404
BBB Baa 2,175 Ridley Park, Pennsylvania, Hospitals Authority, Revenue Refunding
Bonds (Taylor Hospital), Series A, 6% due 12/01/2013 2,113
NR NR 2,000 Washington County, Pennsylvania, Hospital Authority, Revenue
Refunding Bonds (Canonsburg General Hospital Project),
7.35% due 6/01/2013 2,063
Rhode Island--10.7% A- Baa1 5,000 Rhode Island Depositors, Economic Protection Corporation,
Special Obligation Refunding Bonds, Series A, 6.375% due 8/01/2022 5,269
West Warwick, Rhode Island, GO, UT, Series A:
NR Ba 1,200 6.80% due 7/15/1998 1,218
NR Ba 910 7.30% due 7/15/2008 932
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Texas--6.1% A- NR $ 2,000 Brazos County, Texas, Health Facility Development Corporation,
Franciscan Services Corporation, Revenue Refunding Bonds (Saint
Joseph Hospital and Health Center), Series B, 6% due 1/01/2019 $ 1,997
BB Ba1 1,000 Dallas-Fort Worth, Texas, International Airport Facility
Improvement, Corporate Revenue Refunding Bonds (Delta Airlines
Incorporated), 6.25% due 11/01/2013 974
NR NR 1,250 Gulf Coast Waste Disposal Authority, Texas, Pollution Control and
Solid Waste Disposal Revenue Bonds (Diamond Shamrock Corporate
Project), 6.75% due 6/01/2009 1,266
<PAGE>
Vermont--1.1% BBB NR 750 Swanton Village, Vermont, Electric Systems Revenue Bonds,
6.70% due 12/01/2023 746
Total Investments (Cost--$67,660)--98.3% 67,971
Other Assets Less Liabilities--1.7% 1,146
--------
Net Assets-100.0% $ 69,117
========
<FN>
(a) The interest rate is subject to change periodically based upon the
prevailing market rate. The interest rates shown are those in effect at
November 30, 1993.
(b) MBIA Insured.
(c) The interest rate is subject to change periodically and inversely
based upon prevailing market rates. The interest rates shown are the
rate in effect at November 30, 1993.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<CAPTION>
As of November 30, 1993
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$67,660,409) (Note 1a) $67,970,857
Cash 89,079
Receivables:
Interest $1,211,843
Investment adviser (Note 2) 84,644 1,296,487
----------
Deferred organization expenses (Note 1e) 54,287
Prepaid expenses and other assets 7,138
-----------
Total assets 69,417,848
-----------
Liabilities: Dividends payable to shareholders (Note 1f) 193,498
Accrued expenses and other liabilities 106,862
-----------
Total liabilities 300,360
-----------
Net Assets: Net assets $69,117,488
===========
<PAGE>
Capital: Common Stock, par value $.10 per share; 200,000,000 shares authorized; 4,787,055 shares issued
and outstanding $478,706
Paid-in capital in excess of par 67,174,224
Undistributed investment income--net 358,838
Undistributed realized capital gains--net 795,272
Unrealized appreciation on investments--net 310,448
-----------
Total capital--Equivalent to $14.44 net asset value per share of Common Stock
(market price--$13.875) (Note 4) $69,117,488
===========
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Period June 25, 1993++ to November 30, 1993
<S> <S> <C> <C>
Investment Interest and amortization of premium and discount $ 1,800,953
Income
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 167,342
Accounting services (Note 2) 20,358
Professional fees 15,442
Printing and shareholder reports 9,364
Directors' fees and expenses 9,107
Transfer agent fees (Note 2) 8,915
Listing fees 6,452
Amortization of organization expenses (Note 1e) 5,837
Custodian fees 4,615
Other 9,549
-----------
Total expenses before reimbursement 256,981
Reimbursement of expenses (Note 2) (251,986)
-----------
Total expenses after reimbursement 4,995
------------
Investment income--net 1,795,958
------------
Realized & Realized gain on investments--net 795,272
Unrealized Unrealized appreciation on investments--net 310,448
Gain On ------------
Investments- Net Increase in Net Assets Resulting from Operations $ 2,901,678
Net ============
(Notes 1d & 3):
<FN>
++ Commencement of Operations.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
For the Period
June 25, 1993++
Increase (Decrease) in Net Assets: to November 30, 1993
<S> <S> <C>
Operations: Investment income--net $ 1,795,958
Realized gain on investments--net 795,272
Unrealized appreciation on investments--net 310,448
------------
Net increase in net assets resulting from operations 2,901,678
------------
Dividends to Investment income--net (1,437,120)
Shareholders ------------
(Note 1f): Net decrease in net assets resulting from dividends to shareholders (1,437,120)
------------
Capital Share Net increase in net assets derived from capital share transactions 67,552,925
Transactions ------------
(Note 4):
Net Assets: Total increase in net assets 69,017,483
Beginning of period 100,005
------------
End of period* $ 69,117,488
============
<FN>
* Undistributed investment income--net $ 358,838
============
++ Commencement of Operations.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. For the Period
June 25, 1993++ to
Increase (Decrease) in Net Asset Value: November 30, 1993
<S> <S> <C>
Per Share Net asset value, beginning of period $ 14.18
Operating ----------
Performance: Investment income--net .37
Realized and unrealized gain on investments--net .23
----------
Total from investment operations .60
----------
Less dividends:
Investment income--net (.30)
----------
Capital charge resulting from issuance of Common Stock (.04)
----------
Net asset value, end of period $ 14.44
==========
Market price per share, end of period $ 13.875
==========
Total Based on net asset value per share 3.96%+++
Investment ==========
Return:** Based on market price per share (5.57%)+++
==========
Ratios to Expenses, net of reimbursement .02%*
Average ==========
Net Assets: Expenses .85%*
==========
Investment income--net 5.91%*
==========
Supplemental Net assets, end of period (in thousands) $ 69,117
Data: ==========
Portfolio turnover 70.76%
==========
<FN>
++ Commencement of Operations.
* Annualized.
** Total investment returns exclude the effects of sales loads. Total investment returns based on market value,
which can be significantly greater or lesser than the net asset value, result in substantially different returns.
+++ Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniAssets Fund, Inc. (the "Fund") is registered under the Invest-
ment Company Act of 1940 as a newly organized, non-diversified,
closed-end investment management company. Prior to commence-
ment of operations on June 25, 1993, the Fund had no operations
other than those relating to organizational matters and the sale of
7,055 shares of Common Stock on June 11, 1993 to Fund Asset
Management, Inc. ("FAMI") for $100,005. The Fund determines and
makes available for publication the net asset value of its Common
Stock on a weekly basis. The Fund's Common Stock is listed on the
New York Stock Exchange under the symbol MUA. The following
is a summary of significant accounting policies followed by the Fund.
(a) Valuation of investments--Municipal bonds are traded primarily
in the over-the-counter markets and are valued at the last available
bid price in the over-the-counter market or on the basis of yield
equivalents as obtained by the Fund's pricing service from one or
more dealers that make markets in the securities. Financial futures
contracts, which are traded on exchanges, are valued at their closing
prices as of the close of such exchanges. Options, which are traded
on exchanges, are valued at their last sale price as of the close of
such exchanges or, lacking any sales, at the last available bid price.
Short-term investments with a remaining maturity of sixty days or
less are valued at amortized cost, which approximates market value.
Securities and assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or
under the direction of the Board of Directors of the Fund.
(b) Financial futures contracts--The Fund may purchase or sell
interest rate futures contracts and options on such futures contracts
for the purpose of hedging the market risk on existing securities or
the intended purchase of securities. Upon entering into a contract,
the Fund deposits and maintains as collateral such initial margin as
required by the exchange on which the transaction is effected.
Pursuant to the contract, the Fund agrees to receive from or pay to
the broker an amount of cash equal to the daily fluctuation in value
of the contract. Such receipts or payments are known as variation
margin and are recorded by the Fund as unrealized gains or losses.
When the contract is closed, the Fund records a realized gain or loss
equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed.
(c) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its taxable
income to its shareholders. Therefore, no Federal income tax provision
is required.
<PAGE>
(d) Security transactions and investment income--Security trans-
actions are recorded on the dates the transactions are entered into
(the trade dates). Interest income is recognized on the accrual basis.
Realized gains and losses on security transactions are determined
on the identified cost basis.
(e) Deferred organization and offering expenses--Deferred organiza-
tion expenses are charged to expense on a straight-line basis over a
five-year period beginning with the commencement of operations of
the Fund. Direct expenses relating to the public offering of the Fund's
shares of common stock were charged to capital at the time of
issuance of the shares.
(f) Dividends and distributions--Dividends from net investment
income are declared daily and paid monthly. Distributions of capital
gains are recorded on the ex-dividend dates.
(g) Non-income producing investments--Written and purchased
options are non-income producing investments.
2. Investment Advisory Agreement and Transactions with
Affiliates:
The Fund has entered into an Investment Advisory Agreement with
Merrill Lynch Asset Management ("MLAM"). MLAM is the name
under which Merrill Lynch Investment Management, Inc. ("MLIM")
does business. MLIM is an indirect wholly-owned subsidiary of
Merrill Lynch & Co., Inc.
MLAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund.
For such services, the Fund pays a monthly fee of 0.55% based upon
the average daily value of the Fund's net assets. For the period
June 25, 1993 to November 30, 1993, MLAM earned fees of $167,342,
all of which was voluntarily waived. In addition, MLAM voluntarily
reimbursed the Fund $84,644 in additional expenses.
Effective January 1, 1994, the investment advisory business of MLAM
reorganized from a corporation to a limited partnership. The general
partner of MLAM is Princeton Services, Inc., an indirect wholly-
owned subsidiary of Merrill Lynch & Co.
Financial Data Services, Inc. ("FDS"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc., is the Fund's transfer agent.
Accounting services are provided to the Fund by MLAM at cost.
Certain officers and/or directors of the Fund are officers and/or direc-
tors of MLIM, MLFD, FDS, MLPF&S, and/or Merrill Lynch & Co., Inc.
<PAGE>
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the period ended November 30, 1993 were $107,598,920 and
$40,782,666, respectively.
Net realized and unrealized gains (losses) as of November 30, 1993
were as follows:
Realized Unrealized
Gains Gains
(Losses) (Losses)
Long-term investments $ 753,384 $ 451,783
Short-term investments (243) (141,335)
Financial futures contracts 42,131 --
---------- ----------
Total $ 795,272 $ 310,448
========== ==========
As of November 30, 1993, net unrealized appreciation for Federal
income tax purposes aggregated $310,448, of which $679,691 related
to appreciated securities and $369,243 related to depreciated securi-
ties. The aggregate cost of investments at November 30, 1993 for
Federal income tax purposes was $67,660,409.
4. Common Stock Transactions:
At November 30, 1993, the Fund had one class of shares of Common
Stock, par value $.10 per share, of which 200,000,000 shares were
authorized. During the period June 25, 1993 to November 30, 1993,
the Fund sold 4,780,000 shares of beneficial interest which increased
net assets by $67,552,925. At November 30, 1993, total paid-in capital
amounted to $67,652,930.
5. Subsequent Event:
On December 10, 1993, the Fund's Board of Directors declared an
ordinary income dividend to Common Stock shareholders in the
amount of $.074960 and a capital gain distribution of $.1537 per
share, payable on December 30, 1993 to shareholders of record as of
December 20, 1993.
<PAGE>
<TABLE>
PER SHARE INFORMATION
<CAPTION>
Per Share
Selected Quarterly
Financial Data*
Net Unrealized Dividends/Distributions
Investment Realized Gains Net Investment Capital
For the Period Income Gains (Losses) Income Gains
<S> <C> <C> <C> <C> <C>
June 25, 1993++ to August 31, 1993 $.16 $.01 $.39 -- --
September 1, 1993 to November 30, 1993 .21 .10 (.27) $.30 --
<CAPTION>
Net Asset Value Market Price**
For the Period High Low High Low Volume***
<S> <C> <C> <C> <C> <C>
June 25, 1993++ to August 31, 1993 $14.74 $14.12 $15.00 $14.25 396
September 1, 1993 to November 30, 1993 14.99 14.42 14.875 13.75 241
<FN>
*Calculations are based upon shares of Common Stock outstanding at the end of each period.
**As reported in the consolidated transaction reporting system.
***In thousands.
++Commencement of Operations.
</TABLE>
