MuniAssets
Fund, Inc.
FUND LOGO
Annual Report
May 31, 1995
Officers and Directors
Arthur Zeikel, President and Director
Joe Grills, 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
90 Washington Street
New York, NY 10286
<PAGE>
Transfer Agent
The Bank of New York
101 Barclay Street, 22W
New York, NY 10286
NYSE Symbol
MUA
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
<PAGE>
MuniAssets Fund, Inc.
<TABLE>
Per Share
Selected Quarterly
Financial Data*
<CAPTION>
Net Realized Unrealized Dividends/Distributions
Investment Gains Gains Net Investment Capital
For the Period Income (Losses) (Losses) Income Gains
<S> <C> <C> <C> <C> <C>
June 25, 1993++ to August 31, 1993 $.15 $ .07 $ .39 -- --
September 1, 1993 to November 30, 1993 .22 .09 (.33) $.30 --
December 1, 1993 to February 28, 1994 .22 .03 (.01) .22 --
March 1, 1994 to May 31, 1994 .22 (.12) (.78) .22 $.15
June 1, 1994 to August 31, 1994 .22 (.07) .16 .22 --
September 1, 1994 to November 30, 1994 .21 (.17) (.87) .21 --
December 1, 1994 to February 28, 1995 .22 (.19) 1.10 .22 --
March 1, 1995 to May 31, 1995 .22 (.13) .50 .20 --
<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 $14.13 $15.00 $14.25 396
September 1, 1993 to November 30, 1993 14.99 14.42 14.875 13.75 241
December 1, 1993 to February 28, 1994 14.76 14.25 14.375 13.25 620
March 1, 1994 to May 31, 1994 14.22 12.97 13.875 12.125 513
June 1, 1994 to August 31, 1994 13.78 13.19 12.875 11.75 448
September 1, 1994 to November 30, 1994 13.68 12.26 12.375 10.125 848
December 1, 1994 to February 28, 1995 13.37 12.50 12.25 10.875 637
March 1, 1995 to May 31, 1995 13.73 13.24 12.375 11.625 575
<FN>
++Commencement of Operations.
*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.
</TABLE>
<PAGE>
DEAR SHAREHOLDER
On April 24, 1995, the shareholders of MuniBond Income Fund, Inc.
and MuniAssets Fund, Inc. voted to merge the assets and liabilities
of both Funds into a single fund which continued as MuniAssets Fund,
Inc. Both Funds share the same investment objectives and restrictions.
For the year ended May 31, 1995, MuniAssets Fund, Inc. earned $0.862
per share income dividends, which included earned and unpaid
dividends of $0.091. This represents a net annualized yield of
6.27%, based on a month-end net asset value of $13.73 per share.
Over the same period, the Fund's total investment return was +9.93%,
based on a change in per share net asset value from $13.40 to
$13.73, and assuming reinvestment of $0.845 per share income
dividends.
For the six-month period ended May 31, 1995, the Fund's total
investment return was +14.11%, based on a change in per share net
asset value from $12.45 to $13.73, and assuming reinvestment of
$0.411 per share income dividends.
The Environment
Increasing signs of slowing economic growth improved the investment
outlook during the six months ended May 31, 1995. Recent declines in
indicators such as new home sales and durable goods orders were
reflected in the slight downward revision in first-quarter gross
domestic product growth to 2.7% from 2.8%, a level appreciably lower
than the final quarter of 1994. At the same time, inventories of
unsold goods grew at a slower rate than previously estimated, while
consumer, residential construction and capital goods spending were
revised upward. As a result, it appears that the economy is losing
enough momentum to keep inflation under control and preclude further
significant monetary policy tightening by the Federal Reserve Board.
Despite some periods of strengthening, the US dollar has been
persistently weak relative to the yen and the Deutschemark. Large
trade deficits and exports of capital from the United States have
kept the US currency in a decade-long decline relative to the
Japanese and German currencies. Over the longer term, since the
United States has the highest productivity among industrialized
nations and among the lowest labor costs, demand for US dollar-
denominated assets may improve. However, a reduction of the still-
widening US trade deficit may be necessary before the US dollar
appreciates substantially relative to the yen and the Deutschemark.
Another important factor that will continue to influence currency
markets is the increasing possibility of US/Japanese trade
sanctions.
<PAGE>
Thus far in 1995, economic developments have been very positive for
the US stock and bond markets. Continued signs of a moderating
expansion and well-contained inflationary pressures would provide
further assurance that the peak in interest rates is behind us,
creating a stronger foundation for higher stock and bond prices. On
the other hand, indications of reaccelerating growth and increasing
inflationary pressures would be negative developments for the US
financial markets.
The Municipal Market
Throughout the six months ended May 31, 1995, the tax-exempt bond
market staged an impressive rally. Signs of a weakening economy and
ongoing moderate inflationary pressures have fostered an environment
of declining interest rates. As measured by the Bond Buyer Revenue
Bond Index, yields of A-rated, uninsured municipal revenue bonds
have fallen 130 basis points (1.30%) to 6.02%. Tax-exempt bond
prices have regained all of their losses incurred in late 1994 and
are now higher than they were a year ago. Over the same period, US
Treasury bond yields have exhibited similar improvement, falling 135
basis points to 6.65%.
Throughout the past months, the municipal bond market has
been supported by a very strong technical position. Over the six-
month period ended May 31, 1995, less than $60 billion in long-term
tax-exempt securities were underwritten. This represents a decline
of over 40% versus the comparable period a year earlier. For the
year ended May 31, 1995, approximately $137 billion in municipal
securities were issued, representing a 45% decline in issuance
versus the prior year's level. Both January and February 1995
monthly issuance were less than $8 billion, which represents the
lowest monthly issuance levels since January 1988. Some analysts
have already lowered their estimates for 1995 annual issuance from
the $150 billion range to the $120 billion range. This would
represent a further 20% reduction in an already historically low
issuance environment.
At the same time, investors have experienced dramatic cash inflows
from tax-exempt bond maturities, coupon payments and proceeds from
early bond redemptions. It was estimated that municipal investors
received over $20 billion in January 1995. Investors are expected to
receive an additional $80 million in similar proceeds during June
and July. Given these inflows, investors should find it increasingly
difficult to replace existing holdings as they mature and to
reinvest coupon income.
<PAGE>
Despite the recent rise in tax-exempt bond prices, municipal bonds
remain attractive relative to other investment alternatives, both on
an after-tax basis and as a percentage of US Treasury bond yields.
For example, a tax-exempt bond presently yielding 5.80% represents
an after-tax equivalent of over 9.50% to an investor in the 39.6%
Federal income tax bracket. Additionally, municipal bonds currently
yield 85%--90% of comparable US Treasury securities. Analysts
usually consider municipal bonds yielding in excess of 82% of US
Treasury securities to be historically attractive. In the present
strong technical environment, many investors are likely to view the
current situation as an opportunity to purchase very attractively
priced tax-exempt products, causing municipal bond yields to quickly
return to their more historic relationship.
Portfolio Strategy
Over the six-month period ended May 31, 1995, we maintained the
constructive outlook we adopted in November 1994. We maintained cash
reserves at approximately 5% of net assets to allow the Fund to
fully participate in the price appreciation associated with the
current market rally. Consequently, the Fund's net asset value rose
accordingly. We added a number of attractively priced lower and non-
investment grade issues yielding in the 7%--9% range to the Fund
during the six-month period. We expect these purchases to help
maintain the Fund's attractive dividend payout in the coming years.
Looking forward, we expect to maintain a minimal cash reserve
position in order to seek to enhance shareholders' income.
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.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President and
Portfolio Manager
July 3, 1995
<PAGE>
PROXY RESULTS
During the six-month period ended May 31, 1995, MuniBond Income
Fund, Inc. shareholders voted on the following proposals. Proposal 1
was approved at a special shareholders' meeting on April 7, 1995.
Proposals 2 and 3 were approved at a special shareholders' meeting
held on March 10, 1995. The description of each proposal and
number of shares voted are as follows:
<TABLE>
<CAPTION>
Shares Voted Shares Voted Shares Voted Broker
For Against Abstain Non-Vote
<S> <C> <C> <C> <C>
1. To approve or disapprove an Agreement and Plan of Reorganization 2,915,119 44,956 105,764 2,638,685
between the Fund and MuniAssets Fund, Inc. (the "Acquiring Fund")
whereby the Acquiring Fund would acquire substantially all of the
assets, and assume substantially all of the liabilities, of the Fund.
<CAPTION>
Shares Voted Shares Voted
For Without Authority
<S> <S> <C> <C>
2. To elect the Fund's Board of Directors: Joe Grills 5,595,993 100,101
Walter Mintz 5,595,493 100,601
Melvin R. Seiden 5,595,493 100,601
Stephen B. Swensrud 5,595,993 100,101
Harry Woolf 5,595,493 100,601
Arthur Zeikel 5,595,493 100,601
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
3. To select Deloitte & Touche LLP as the Fund's independent auditors. 5,502,136 32,542 161,416
<PAGE>
<CAPTION>
During the six-month period ended May 31, 1995, MuniAssets Fund,
Inc. shareholders voted on the following proposals. All proposals
were approved at a special shareholders' meeting on April 7, 1995.
The description of each proposal and number of shares voted are as
follows:
<CAPTION>
Shares Voted Shares Voted Shares Voted Broker
For Against Abstain Non-Vote
<S> <C> <C> <C> <C>
1. To approve or disapprove an Agreement and Plan of Reorganization 4,114,459 100,962 273,398 288,977
between the Fund and MuniBond Income Fund, Inc. (the "Acquired
Fund") whereby the Fund would acquire substantially all of the assets,
and assume substantially all of the liabilities, of the Acquired Fund.
<CAPTION>
Shares Voted Shares Voted
For Without Authority
<S> <S> <C> <C>
2. To elect the Fund's Board of Directors: Joe Grills 4,566,793 141,037
Walter Mintz 4,566,692 141,138
Melvin R. Seiden 4,566,692 141,138
Stephen B. Swensrud 4,566,793 141,037
Harry Woolf 4,566,692 141,138
Arthur Zeikel 4,566,793 141,037
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
3. To select Deloitte & Touche LLP as the Fund's independent auditors. 4,583,009 19,031 105,790
</TABLE>
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 below and at right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
GO General Obligation Bonds
HFA Housing Finance Agency
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
SAVRS Select Auction Variable Rate Securities
S/F Single-Family
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<PAGE>
<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--1.7% NR* B1 $1,000 Birmingham, Alabama, Industrial Development Board,
PCR (USG Interiors), 7.125% due 4/01/2002 $ 1,022
B+ NR* 1,420 Brewton, Alabama, Industrial Development Board,
PCR, Refunding (Container Corporation
American Project), 8% due 4/01/2009 1,494
Arizona--1.3% BB Ba2 1,000 Maricopa County, Arizona, Pollution Control Corporation,
PCR, Refunding (Public Service Company--Palo Verde),
Series A, 6.375% due 8/15/2023 953
A1+ P1 800 Pinal County, Arizona, IDA, PCR (Magma Copper/Newmont
Mining Corp.), VRDN, 4.30% due 12/01/2009 (a) 800
Arkansas--0.7% NR* NR* 1,000 Pine Bluff, Arkansas, IDR, Refunding (Coltec Industries
Incorporated), 6.50% due 2/15/2009 1,016
California--6.5% NR* NR* 3,305 Long Beach, California, Redevelopment Agency, M/F Housing
Revenue Refunding Bonds (Pacific Court Apartments),
AMT, Issue B, 6.80% due 9/01/2013 3,254
AA Aa 4,000 Metropolitan Water District, Southern California, Waterworks
Revenue Bonds, Special Linked SAVRS & RIB, 5.806% due 8/05/2022 4,008
NR* NR* 1,955 Pleasanton, California, Joint Powers Financing Authority,
Reassessment Subordinated Revenue Bonds, Series B, 6.60%
due 9/02/2008 1,993
Colorado--6.1% Denver, Colorado, City and County Airport Revenue Bonds, AMT:
BB Baa 1,000 Series A, 8% due 11/15/2025 1,074
BB Baa 2,500 Series B, 7.25% due 11/15/2023 2,564
BB Baa 1,500 Series C, 6.75% due 11/15/2022 1,504
NR* NR* 3,460 Mountain Village Metropolitan District, Colorado, San Miguel
County Revenue Bonds, 7.40% due 12/15/2013 3,680
Connecticut-- NR* NR* 1,920 Eastern Connecticut, State Regional Educational Service Center
1.4% Revenue Bonds, 6.50% due 5/15/2009 1,966
District of District of Columbia, COP:
Columbia--3.5% B- NR* 2,000 6.875% due 1/01/2003 2,027
B- NR* 3,000 7.30% due 1/01/2013 3,036
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Florida--1.7% A1 VMIG1++ $2,400 Pinellas County, Florida, Health Facilities Authority,
Revenue Refunding Bonds (Pooled Hospital Loan Program),
VRDN, 4.30% due 12/01/2015 (a) $ 2,400
Georgia--1.4% NR* NR* 2,000 Hancock County, Georgia, COP, 7% due 4/01/2015 2,023
Illinois--4.7% Illinois Health Facilities Authority Revenue Bonds:
BBB+ NR* 1,000 (Community Hospital of Ottawa Project), 6.75% due 8/15/2014 995
BBB+ NR* 2,000 (Community Hospital of Ottawa Project), 6.85% due 8/15/2024 1,977
A A 1,000 (Edward Hospital Association Project), 7% due 2/15/2022 1,048
NR* Baa1 1,150 (Holy Cross Hospital Project), 6.70% due 3/01/2014 1,138
BBB- NR* 1,485 Refunding (Saint Elizabeth's Hospital of Chicago),
7.625% due 7/01/2010 1,549
Indiana--6.1% NR* NR* 2,500 Burns Harbor, Indiana, Solid Waste Disposal Facilities
Revenue Bonds (Bethlehem Steel Corporation Project),
AMT, 8% due 4/01/2024 2,622
BB Ba3 1,000 East Chicago, Indiana, Economic Development Revenue Bonds
(U.S. Gypsum Company Project), 7.25% due 5/01/2014 1,016
NR* A 2,000 Indiana Health Facilities Finance Authority, Hospital
Revenue Refunding Bonds (Saint Anthony Medical Center),
Series A, 7% due 10/01/2017 2,112
BBB Baa2 2,850 Indianapolis, Indiana, Airport Authority, Special Facilities
Revenue Bonds (Federal Express Corporation Project),
AMT, 7.10% due 1/15/2017 2,977
Iowa--1.3% BB NR* 1,000 Des Moines County, Iowa, IDR, Refunding (U.S. Gypsum Company
Project), 7.20% due 11/01/2007 1,041
NR* NR* 800 Iowa Finance Authority, Health Care Facilities Revenue
Bonds (Mercy Health Initiatives Project), 9.95% due 7/01/2019 855
Kentucky--0.7% NR* NR* 1,000 Perry County, Kentucky, Solid Waste Disposal Revenue
Bonds (TJ International Project), AMT, 7% due 6/01/2024 1,009
Louisiana--5.3% NR* Baal 4,195 Lafourche Parish, Louisiana, Revenue Bonds (Hospital Service
District No. 003), 6% due 10/01/2012 3,941
NR* Baa3 1,700 Lake Charles, Louisiana, Harbor and Terminal District,
Port Facilities Revenue Refunding Bonds (Trunkline Long
Company Project), 7.75% due 8/15/2022 1,880
BB NR* 1,600 New Orleans, Louisiana, Industrial Development Board,
IDR, Refunding (U.S. Gypsum Company Project), 7.20%
due 10/01/2007 1,678
<PAGE>
Massachusetts-- NR* NR* 1,000 Massachusetts State Health and Educational Facilities
7.9% Authority Revenue Bonds (New England Memorial Hospital),
Series C, 7% due 4/01/2014 871
Massachusetts State Industrial Finance Agency Revenue Bonds:
NR* B1 3,000 (Bay Cove Human Services Inc.), 8.375% due 4/01/2019 3,109
BB+ Ba1 2,000 (Vinfen Corporation), 7.10% due 11/15/2018 1,923
NR* NR* 1,000 Massachusetts State Industrial Finance Agency, Solid
Waste Disposal Revenue Bonds (Molten Metal Technology
Project), 8.25% due 8/01/2014 1,031
NR* NR* 4,000 Massachusetts State Port Authority, Special Project Revenue
Bonds (Harborside Hyatt Project), AMT, 10% due 3/01/2026 4,433
Michigan--4.2% Michigan State Hospital Finance Authority, Revenue
Refunding Bonds:
A- A 2,000 (Detroit Medical Center), Series B, 5.50% due 8/15/2023 1,750
BBB Baa1 2,000 (Pontiac Osteopathic), Series A, 6% due 2/01/2014 1,787
BBB Baa1 1,500 (Pontiac Osteopathic), Series A, 6% due 2/01/2024 1,309
AA Aa 1,230 Royal Oak, Michigan, Hospital Finance Authority
Revenue Bonds (William Beaumont Hospital), Series D,
6.75% due 1/01/2020 1,289
Minnesota--0.7% AA+ Aa 1,000 Minnesota State, HFA, S/F Mortgage Revenue Bonds,
Series Q, 6.70% due 1/01/2017 1,050
Mississippi--2.1% BBB- Ba1 1,500 Clairborne County, Mississippi, PCR, Refunding (System
Energy Resources, Inc.), 7.30% due 5/01/2025 1,534
NR* P1 500 Jackson County, Mississippi, PCR, Refunding (Chevron
USA, Inc. Project), VRDN, 4% due 6/01/2023 (a) 500
NR* Baa3 1,000 Warren County, Mississippi, PCR, Refunding (Mississippi
Power and Light Company Project), 7% due 4/01/2022 1,034
Missouri--0.5% NR* Ba3 700 Clay County, Missouri, IDA, IDR, Refunding (U.S. Gypsum
Corporate Project), 7.25% due 5/01/2014 713
New Mexico--1.1% A1+ VMIG1++ 400 Albuquerque, New Mexico, Hospital Revenue Bonds
(Sisters of Charity at Saint Joseph's Church),
VRDN, 3.95% due 5/15/2022 (a) 400
BB Ba2 1,250 Farmington, New Mexico, PCR, Refunding (Public Service
Company--San Juan Project), Series A, 6.40% due 8/15/2023 1,180
New York--3.7% New York City, New York, GO, UT:
A- Baa1 1,000 Series B, 7% due 2/01/2016 1,050
A- Baa1 1,155 Series B, Sub-Series B-1, 7.375% due 8/15/2013 1,260
A- Baa1 1,800 Series B, Sub-Series B-1, 7.25% due 8/15/2019 1,941
AAA VMIG1++ 1,000 New York City, New York, Municipal Water Finance
Authority, Water and Sewer System Revenue Bonds, VRDN,
Series G, 4% due 6/15/2024 (a)(b) 1,000
<PAGE>
Ohio--4.8% BB Ba2 3,500 Ohio State Air Quality Development Authority, PCR,
Refunding (Cleveland Electric Company), AMT, 6.85%
due 7/01/2023 3,231
BB Ba2 3,500 Ohio State Water Development Authority, Pollution Control
Facilities Revenue Bonds (Toledo Edison Project), AMT,
Series A, 7.40% due 11/01/2022 3,526
Oregon--2.5% A1+ A3 500 Port of St. Helens, Oregon, PCR (Portland General Electric
Company Project), VRDN, AMT, Series A, 4.20% due 8/01/2014 (a) 500
NR* NR* 1,000 Western Generation Agency, Oregon, Revenue Bonds (Wauna
Cogeneration Project), Series A, 7.125% due 1/01/2021 1,030
B+ NR* 2,000 Yamhill County, Oregon, PCR, Refunding (Smurfit Newsprint
Corporation Project), 8% due 12/01/2003 2,080
Pennsylvania-- BB+ Baa3 1,750 Allegheny County, Pennsylvania, IDA, Environmental
10.1% Improvement, Revenue Refunding Bonds (USX Corporation),
Series A, 6.70% due 12/01/2020 1,759
NR* NR* 1,275 Lehigh County, Pennsylvania, General Purpose Authority
Revenue Bonds (Wiley House Kids Peace), 8.75% due 11/01/2014 1,300
NR* Ba 1,500 Montgomery County, Pennsylvania, IDA, Revenue Bonds Center),
(Pennsburg Nursing and Rehabilitation
7.625% due 7/01/2018 1,513
BBB NR* 3,935 Northeastern, Pennsylvania Hospital and Educational
Authority, University Revenue Refunding Bonds (Wilkes
University), 5.625% due 10/01/2018 3,662
NR* NR* 3,000 Pennsylvania Economic Development Financing Authority,
Recycling Revenue Bonds (Ponderosa Fibres Project),
AMT, Series A, 9.25% due 1/01/2022 3,112
BBB- NR* 1,000 Pennsylvania Economic Development Financing Authority,
Resource Recovery Revenue Bonds (Colver Project),
AMT, Series D, 7.15% due 12/01/2018 1,028
NR* NR* 2,000 Washington County, Pennsylvania, Hospital Authority,
Revenue Refunding Bonds (Canonsburg General Hospital
Project), 7.35% due 6/01/2013 1,984
</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>
Rhode Island-- West Warwick, Rhode Island, GO, UT, Series A:
1.4% NR* Ba $ 995 6.80% due 7/15/1998 $ 1,055
NR* Ba 910 7.30% due 7/15/2008 964
Tennessee--1.8% NR* NR* 2,400 Knox County, Tennessee, Health, Educational and Housing
Facilities Board, Hospital Facilities Revenue
Bonds (Baptist Health Systems of East Tennessee),
8.60% due 4/15/2016 2,583
<PAGE>
Texas--2.4% BB Ba 3,500 Odessa, Texas, Junior College District Revenue Bonds,
Series A, 8.125% due 12/01/2018 3,500
Utah--0.7% BBB+ Baa2 1,000 Carbon County, Utah, Solid Waste Disposal Revenue
Refunding Bonds (Laidlaw Inc.--ECDC Project),
AMT, Series A, 7.50% due 2/01/2010 1,042
Vermont--6.1% BBB NR* 1,450 Swanton Village, Vermont, Electric System Revenue Bonds,
6.70% due 12/01/2023 1,477
Vermont Educational and Health Buildings Financing
Agency, Revenue Refunding Bonds:
NR* NR* 3,065 (College of Saint Joseph's Project), 8.50% due 11/01/2024 3,258
NR* Baa 4,080 (Norwich University Project), 6% due 9/01/2013 3,956
Virginia--2.5% NR* NR* 1,000 Pittsylvania County, Virginia, IDA, Multitrade Revenue
Bonds, AMT, Series A, 7.55% due 1/01/2019 1,038
AA+ Aa1 2,375 Virginia State Housing Development Authority, Commonwealth
Mortgage, AMT, Series A, Sub-Series A-4, 7.80% due 7/01/2028 2,517
Wyoming--0.7% BBB Baa3 1,000 Sweetwater County, Wyoming, Solid Waste Disposal
Revenue Bonds (FMC Corporation Project), AMT, Series A,
7% due 6/01/2024 1,029
Puerto Rico-- A Baa 1,000 Puerto Rico Commonwealth, Aqueduct and Sewer Authority
0.8% Revenue Bonds, Series A, 7.875% due 7/01/2017 1,113
Total Investments (Cost--$136,754)--96.4% 138,073
Other Assets Less Liabilities--3.6% 5,096
--------
Net Assets--100.0% $143,169
========
<FN>
(a)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at May 31, 1995.
(b)FGIC Insured.
* Not Rated.
++ Highest short-term rating by Moody's Investors Service, Inc.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<CAPTION>
As of May 31, 1995
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$136,753,678)
(Note 1a) $138,072,670
Cash 267,402
Receivables:
Securities sold $ 3,748,600
Interest 2,587,079 6,335,679
------------
Deferred organization expenses (Note 1e) 46,679
Prepaid expenses and other assets 43,741
------------
Total assets 144,766,171
------------
Liabilities: Payables:
Securities purchased 1,306,610
Investment adviser (Note 2) 23,912 1,330,522
------------
Accrued expenses and other liabilities 266,195
------------
Total liabilities 1,596,717
------------
Net Assets: Net assets $143,169,454
============
Capital: Common Stock, par value $.10 per share; 200,000,000 shares
authorized; 10,424,616 shares issued and outstanding $ 1,042,461
Paid-in capital in excess of par 148,526,406
Undistributed investment income--net 956,207
Accumulated realized capital losses on investments--net (Note 5) (8,674,612)
Unrealized appreciation on investments--net 1,318,992
------------
Total capital--Equivalent to $13.73 net asset value per share of Common Stock
(market price--$11.875)(Note 4) $143,169,454
============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Year Ended May 31, 1995
<S> <S> <C> <C>
Investment Interest and amortization of premium and discount earned $ 4,990,250
Income (Note 1d):
Expenses: Investment advisory fees (Note 2) $ 390,418
Professional fees 44,653
Printing and shareholder reports 36,627
Directors' fees and expenses 25,398
Transfer agent fees (Note 2) 23,699
Accounting services (Note 2) 23,172
Listing fees 16,834
Amortization of organization expenses (Note 1e) 15,213
Pricing fees 7,080
Custodian fees 6,448
Other 11,252
------------
Total expenses before reimbursement 600,794
Reimbursement of expenses (Note 2) (248,457)
------------
Total expenses after reimbursement 352,337
------------
Investment income--net 4,637,913
------------
Realized & Realized loss on investments--net (3,074,947)
Unrealized Gain Change in unrealized appreciation/depreciation on investments--net 5,812,630
(Loss) on ------------
Investments--Net Net Increase in Net Assets Resulting from Operations $ 7,375,596
(Notes 1b, 1d & 3): ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the For the Period
Year June 25,
Ended 1993++ to
Increase (Decrease) in Net Assets: May 31, 1995 May 31, 1994
<S> <S> <C> <C>
Operations: Investment income--net $ 4,637,913 $ 3,917,327
Realized gain (loss) on investments--net (3,074,947) 365,341
Change in unrealized appreciation/depreciation on
investments--net 5,812,630 (3,499,834)
------------ ------------
Net increase in net assets resulting from operations 7,375,596 782,834
------------ ------------
Dividends & Investment income--net (4,046,565) (3,558,848)
Distributions to Realized gain on investments--net -- (735,637)
Shareholders ------------ ------------
(Note 1f): Net decrease in net assets resulting from dividends
and distributions to shareholders (4,046,565) (4,294,485)
------------ ------------
Common Stock Net proceeds from issuance of Common Stock -- 67,756,500
Transactions Net proceeds from issuance of Common Stock resulting from
(Notes 1e & 4): reorganization 75,686,368 --
Offering and underwriting costs resulting from the issuance
of Common Stock -- (190,799)
------------ ------------
Net increase in net assets derived from capital stock
transactions 75,686,368 67,565,701
------------ ------------
Net Assets: Total increase in net assets 79,015,399 64,054,050
Beginning of period 64,154,055 100,005
------------ ------------
End of period* $143,169,454 $ 64,154,055
============ ============
<FN>
*Undistributed investment income--net $ 956,207 $ 358,479
============ ============
++Commencement of Operations.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
The following per share data and ratios have been derived For the For the Period
from information provided in the financial statements. Year June 25,
Ended 1993++ to
Increase (Decrease) in Net Asset Value: May 31, 1995 May 31, 1994
<S> <S> <C> <C>
Per Share Net asset value, beginning of period $ 13.40 $ 14.18
Operating ------------ ------------
Performance: Investment income--net .87 .81
Realized and unrealized gain (loss) on investments--net .33 (.66)
------------ ------------
Total from investment operations 1.20 .15
------------ ------------
Less dividends and distributions:
Investment income--net (.85) (.74)
Realized gain on investments--net -- (.15)
------------ ------------
Total dividends and distributions (.85) (.89)
------------ ------------
Capital charge resulting from issuance of Common Stock (.02) (.04)
------------ ------------
Net asset value, end of period $ 13.73 $ 13.40
============ ============
Market price per share, end of period $ 11.875 $ 12.25
============ ============
Total Investment Based on net asset value per share 9.93% 0.83%+++
Return:** ============ ============
Based on market price per share 4.00% (12.87%)+++
============ ============
Ratios to Average Expenses, net of reimbursement .50% .20%*
Net Assets: ============ ============
Expenses .85% .85%*
============ ============
Investment income--net 6.54% 6.12%*
============ ============
Supplemental Net assets, end of period (in thousands) $ 143,169 $ 64,154
Data: ============ ============
Portfolio turnover 55.51% 101.59%
============ ============
<PAGE>
<FN>
*Annualized.
**Total investment returns based on market value, which can be
significantly greater or lesser than the net asset value, may result
in substantially different returns. Total investment returns exclude
the effects of sales loads.
++Commencement of Operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniAssets Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 as a non-diversified, closed-end
management investment company. 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 and options thereon, 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) Derivative financial instruments--The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the debt markets. Losses may
arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
<PAGE>
* 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. Futures contracts
are contracts for delayed delivery of securities at a specific
future date and at a specific price or yield. Upon entering into a
contract, the Fund deposits and maintains as collateral such initial
margin as required by the exchange on which the transaction is
effected. Pursuant to the contract, the Fund agrees to receive from
or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are
known as variation margin and are recorded by the Fund as unrealized
gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of
the contract at the time it was opened and the value at the time it
was closed.
* Options--The Fund is authorized to write covered call options and
purchase put and call options. When the Fund writes an option, an
amount equal to the premium received by the Fund is reflected as an
asset and an equivalent liability. The amount of the liability is
subsequently marked to market to reflect the current market value of
the option written. When a security is purchased or sold through an
exercise of an option, the related premium paid (or received) is
added to (or deducted from) the basis of the security acquired or
deducted from (or added to) the proceeds of the security sold. When
an option expires (or the Fund enters into a closing transaction),
the Fund realizes a gain or loss on the option to the extent of the
premiums received or paid (or gain or loss to the extent the cost of
the closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
(c) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
(d) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income is recognized on the accrual
basis. Discounts and market premiums are amortized into interest
income. Realized gains and losses on security transactions are
determined on the identified cost basis.
(e) Deferred organization and offering expenses--Deferred
organization 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.
<PAGE>
(f) Dividends and distributions--Dividends from net investment
income are declared and paid monthly. Distributions of capital gains
are recorded on the ex-dividend dates.
NOTES TO FINANCIAL STATEMENTS (concluded)
2. Investment Advisory Agreement and Transactions
with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee of 0.55% based upon the
average weekly value of the Fund's net assets. For the year ended
May 31, 1995, FAM earned fees of $390,418, of which $248,457 was
voluntarily waived.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, MLFDS, Merrill Lynch, Pierce, Fenner & Smith
Inc. ("MLPF&S"), and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended May 31, 1995 were $106,635,544 and $38,931,353,
respectively.
Net realized and unrealized gains (losses) as of May 31, 1995 were
as follows:
Realized Unrealized
Losses Gains (Losses)
Long-term investments $(2,136,721) $ 1,452,054
Short-term investments (494,271) (133,062)
Financial futures contracts (443,955) --
----------- ------------
Total $(3,074,947) $ 1,318,992
=========== ============
<PAGE>
As of May 31, 1995, net unrealized appreciation for Federal income
tax purposes aggregated $1,318,992, of which $2,895,349 related to
appreciated securities and $1,576,357 related to depreciated
securities. The aggregate cost of investments at May 31, 1995 for
Federal income tax purposes was $136,753,678.
4. Common Stock Transactions:
At May 31, 1995, 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 year ended May 31, 1995, shares issued and
outstanding increased by 5,637,561 pursuant to a plan of
reorganization. At May 31, 1995, shares issued and outstanding
amounted to 10,424,616 and total paid-in capital amounted to
$149,568,867.
5. Capital Loss Carryforward:
At May 31, 1995, the Fund had a capital loss carryforward of
approximately $3,703,000, all of which expires in 2003. This amount
will be available to offset like amounts of any future taxable
gains.
6. Acquisition of MuniBond Income Fund, Inc.:
On April 24, 1995, MuniAssets Fund, Inc. acquired all the net assets
of MuniBond Income Fund, Inc. pursuant to a plan of reorganization.
The acquisition was accomplished by a tax-free exchange of 5,637,561
Common Stock shares of MuniAssets Fund, Inc. for 5,752,965 Common
Stock shares outstanding of MuniBond Income Fund, Inc. MuniBond
Income Fund, Inc.'s net assets on that date of $75,866,609,
including $993,804 of unrealized depreciation and $5,229,374 of
accumulated net realized capital losses, were combined with those of
MuniAssets Fund, Inc. The aggregate net assets of MuniAssets Fund,
Inc. immediately after the acquisition amounted to $140,292,594.
7. Subsequent Event:
On June 12, 1995, the Fund's Board of Directors declared an ordinary
income dividend to Common Stock shareholders in the amount of
$0.091113 payable on June 29, 1995 to shareholders of record as of
June 23, 1995.
<PAGE>
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
MuniAssets Fund, Inc.:
We have audited the accompanying statement of assets, liabilities,
and capital, including the schedule of investments, of MuniAssets
Fund, Inc. as of May 31, 1995, the related statements of operations
for the year then ended and changes in net assets and the financial
highlights for the year then ended and for the period June 25, 1993
(commencement of operations) to May 31, 1994. These financial
statements and the financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion
on these financial statements and the financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned at May 31,
1995 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
MuniAssets Fund, Inc. as of May 31, 1995, the results of its
operations, the changes in net assets and the financial highlights
for the respective stated periods in conformity with generally
accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
June 30, 1995
</AUDIT-REPORT>
<PAGE>
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid monthly by
MuniAssets Fund, Inc. during its taxable year ended May 31, 1995
qualify as tax-exempt interest dividends for Federal income tax
purposes.
