MUNIASSETS
FUND, INC.
FUND LOGO
Semi-Annual Report
November 30, 1996
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. Statements and other information herein are as dated
and are subject to change.
<PAGE>
MuniAssets
Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
MuniAssets Fund, Inc.
Officers and
Directors
Arthur Zeikel, President and Director
Joe Grills, Director
Walter Mintz, Director
Robert S. Salomon Jr., Director
Melvin R. Seiden, Director
Stephen B. Swensrud, 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
<PAGE>
Custodian
The Bank of New York
90 Washington 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
DEAR SHAREHOLDER
For the six months ended November 30, 1996, MuniAssets Fund, Inc.
earned $0.420 per share income dividends, which included earned and
unpaid dividends of $0.068. This represents a net annualized yield
of 5.92%, based on a month-end net asset value of $14.13 per share.
Over the same period, the Fund's total investment return was +6.35%,
based on a change in per share net asset value from $13.74 to
$14.13, and assuming reinvestment of $0.424 per share income
dividends.
The Municipal Market
Environment
Municipal bond yields generally moved lower during the six months
ended November 30, 1996. Long-term tax-exempt revenue bond yields,
as measured by the Bond Buyer Revenue Bond Index, declined
approximately 35 basis points (0.35%) to close the six-month period
ended November 30, 1996 at approximately 5.80%. The municipal bond
market exhibited considerable weekly yield volatility over the last
six months with bond yields vacillating as much as 20 basis points.
This ongoing volatility was in response to fluctuating evidence
regarding the degree to which recent economic growth would result in
any significant increase in inflationary pressures. Much of the
evidence supporting stronger growth centered around the strong
employment growth seen in April and June with bond yields rising in
response. Other, more recent, economic indicators suggested that
economic growth will not be excessive and inflationary pressures
will remain well-contained. This continued benign inflationary
environment supported lower tax-exempt bond yields in recent months.
US Treasury bond yields have exhibited similar, albeit greater,
volatility during the six-month period ended November 30, 1996
falling more than 60 basis points to end the period at 6.35%.
<PAGE>
Much of the tax-exempt bond market's strong technical position, one
of the primary reasons for the improvement in municipal bond yields
seen throughout 1996, remained intact. Over the last year,
approximately $180 billion in long-term municipal securities was
issued, an increase of approximately 20% versus the same period a
year ago. Much of this increase was the result of issuers seeking to
refinance their existing higher-couponed debt as interest rates
declined in 1995 and early 1996. As interest rates rose, these
financings became increasingly economically impractical and issuance
declined. Over the last six months, approximately $80 billion in
long-term tax-exempt securities was underwritten, essentially
unchanged versus the comparable period a year earlier. Only $43
billion in tax-exempt securities was issued in the last three
months, also unchanged versus the November 30, 1995 quarter.
The municipal bond market's recent underperformance relative to
Treasury issues was the result of a number of other factors. Among
other things, as tax-exempt bond yields declined below 6%, in the
past some investors temporarily have lost interest in the municipal
bond market. As interest rates continue to decline, as they did in
1994, investors quickly adjust to the new levels. The inherent
attractiveness of the tax-advantaged products quickly outweighs low
nominal yields and investor demand increases.
Finally, the Presidential and Congressional elections earlier this
month resurrected some investor concerns regarding continued Federal
deficit reduction and potential legislative restrictions upon the
municipal bond market. This situation was similar to that at the
beginning of 1996 when tax-exempt bond yields were negatively
impacted by fears that legislation reducing the tax advantage of
municipal bonds would be introduced to aid further deficit
reductions. Also, earlier fears that the Democratic party could
regain control of both houses of Congress, as well as maintain the
White House, may have caused some investors to delay any asset
allocations into the municipal bond market until after the
elections.
Currently, the future direction of interest rates remains unclear.
The Federal Reserve Board's decision to hold interest rates steady
in late September temporarily relieved mounting fears of rising
interest rates for the remainder of 1996. Should economic growth
slow further in upcoming months, as expected by the Federal Reserve
Board, and inflation remain well-contained, interest rates are
poised to decline further. Under such a scenario, municipal bond
yields are also likely to decline.
<PAGE>
Portfolio Strategy
During the six months ended November 30, 1996, we modified our
portfolio strategy to reflect our more constructive market outlook.
This shift contrasted with the more guarded approach adopted during
the six months ended May 31, 1996 and came about largely because of
our belief that long-term interest rates had already discounted an
unlikely rise in the rate of inflation. Furthermore, economic growth
seemed unsustainable at the pace evident during the first half of
1996, thereby setting the stage for bond prices to move higher. With
this scenario in mind, we pursued a strategy designed to increase
the Fund's sensitivity to interest rate fluctuations. We kept cash
reserves to a minimum level while redeploying some of the
portfolio's assets into higher duration instruments in an effort to
seek to enhance potential return.
The high-yield sector of the municipal market exhibited continued
signs of maturation as an increase in volume and broader
institutional participation enhanced liquidity within the context of
steadily narrowing credit spreads. Coming to market over the last
six months were a number of issuers representing a diverse cross
section of the high-yield tax-exempt universe. Investor interest in
high-yield municipal bonds remains strong in what appears to be an
unending search for yield. As a consequence, spreads between high-
yield and investment-grade municipal bonds have narrowed
considerably over time, and this phenomenon is most pronounced in
the healthcare sector. In light of these developments, we have grown
more selective in our pursuit of new investments and limited the
percentage of healthcare holdings to the minimum requirement as
detailed in the Fund's Offering Memorandum.
In Conclusion
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
<PAGE>
(Theodore R. Jaeckel, Jr.)
Theodore R. Jaeckel Jr.
Portfolio Manager
December 27, 1996
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
EDA Economic Development Authority
GO General Obligation Bonds
HFA Housing Finance Agency
IDA Industrial Development Authority
IDB Industrial Development Board
IDR Industrial Development Revenue Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
S/F Single-Family
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--4.3% NR* Ba2 $ 1,000 Birmingham, Alabama, IDB, PCR (USG Interiors), 7.125% due
4/01/2002 $ 1,012
B+ NR* 1,420 Brewton, Alabama, IDB, PCR, Refunding (Container Corporation
American Project), 8% due 4/01/2009 1,550
BBB- Baa3 3,500 Mobile, Alabama, IDB, Solid Waste Disposal, Revenue Refunding
Bonds (Mobile Energy Services Co. Project), 6.95% due 1/01/2020 3,736
<PAGE>
Alaska--1.3% NR* NR* 2,000 Valdez, Alaska, Marine Terminal Revenue Refunding Bonds (Amerada
Hess Pipeline Corporation), 6.10% due 2/01/2024 1,986
California-- NR* NR* 3,305 Long Beach, California, Redevelopment Agency, M/F Housing
4.3% Revenue Bonds (Pacific Court Apartments), AMT, Issue B, 6.80%
due 9/01/2013 2,148
AA Aa 2,000 Metropolitan Water District, Southern California, Waterworks
Revenue Bonds, RIB, 7.661% due 8/05/2022 (b) 2,100
NR* NR* 1,900 Pleasanton, California, Joint Powers Financing Authority,
Reassessment Subordinated Revenue Bonds, Series B, 6.60% due
9/02/2008 2,019
Colorado--4.4% NR* Baa 2,500 Arapahoe County, Colorado, Capital Improvement Trust Fund,
Highway Revenue Bonds (SR-E-470 Project), Series B, 7% due
8/31/2026 2,771
NR* NR* 3,370 Mountain Village Metropolitan District, Colorado, San Miguel
County, 7.40% due 12/15/2013 (c) 3,679
Connecticut-- NR* NR* 1,920 Eastern Connecticut, State Regional Educational Service Center,
1.3% 6.50% due 5/15/2009 1,974
District of District of Columbia, COP:
Columbia-- B- NR* 2,000 6.875% due 1/01/2003 2,059
3.6% B- NR* 3,130 7.30% due 1/01/2013 3,301
Georgia--1.5% NR* NR* 1,975 Hancock County, Georgia, COP, 8.50% due 4/01/2015 (c) 2,160
Illinois-- A1+ Aa3 2,215 Illinois Development Financing Authority Revenue Bonds
10.0% (Presbyterian Home Lake), Series B, 6.40% due 9/01/2031 2,300
Illinois Health Facilities Authority Revenue Bonds:
BBB+ NR* 1,000 (Community Hospital of Ottawa Project), 6.75% due 8/15/2014 1,039
BBB+ NR* 2,000 (Community Hospital of Ottawa Project), 6.85% due 8/15/2024 2,085
A A 2,000 (Edward Hospital Association Project), 7% due 2/15/2022 2,140
NR* Baa1 2,150 (Holy Cross Hospital Project), 6.70% due 3/01/2014 2,223
A NR* 1,250 Refunding (Riverside Health System), Series A, 6% due
11/15/2018 1,262
BBB NR* 1,485 Refunding (Saint Elizabeth's Hospital of Chicago), 7.625% due
7/01/2010 1,629
BBB- NR* 2,000 Metropolitan Pier and Exposition Authority, Illinois,
Hospitality Facilities Revenue Bonds (McCormick Place
Convention), 6.25% due 7/01/2017 2,038
<PAGE>
Indiana--4.6% BB Ba2 1,000 East Chicago, Indiana, Economic Development Revenue Bonds (U.S.
Gypsum Company Project), 7.25% due 5/01/2014 1,031
Indiana Health Facility Financing Authority, Hospital Revenue
Bonds:
AA Aa 2,500 (Daughters of Charity--Saint Vincent Hospital and Healthcare
Center), 5.75% due 11/15/2022 2,517
NR* A 3,000 Refunding (Saint Anthony Medical Center), Series A, 7% due
10/01/2017 3,243
Iowa--1.4% BB NR* 1,000 Des Moines County, Iowa, IDR, Refunding (U.S. Gypsum Company
Project), 7.20% due 11/01/2007 (c) 1,069
NR* NR* 800 Iowa Finance Authority, Health Care Facilities, Revenue Refunding
Bonds (Care Initiatives Project), 9.25% due 7/01/2025 940
Kentucky--0.7% A- NR* 1,000 Christian County, Kentucky, Hospital Revenue Bonds (Jennie Stuart
Medical Center), Series A, 6% due 7/01/2017 1,019
Louisiana-- NR* Baa2 1,700 Lake Charles, Louisiana, Harbor and Terminal District, Port
5.0% Facilities Revenue Refunding Bonds (Trunkline Long Company
Project), 7.75% due 8/15/2022 1,941
BB NR* 1,600 New Orleans, Louisiana, IDB, IDR, Refunding (U.S. Gypsum Company
Project), 7.20% due 10/01/2007 1,704
BB NR* 3,500 Port New Orleans, Louisiana, IDR, Refunding (Continental Grain
Company Project), 7.50% due 7/01/2013 3,774
Maryland--2.4% NR* NR* 3,000 Maryland State Energy Financing Administration, Limited Obligation
Revenue Bonds (Cogeneration--AES Warrior Run), AMT, 7.40% due
9/01/2019 3,173
NR* VMIG1++ 300 Maryland State Health and Higher Educational Facilities Authority
Revenue Bonds (Pooled Loan Program), VRDN, Series A, 3.60% due
4/01/2035 (a) 300
</TABLE>
<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>
Massachusetts-- Massachusetts State Health and Educational Facilities Authority
8.6% Revenue Bonds:
NR* B $ 1,000 (New England Memorial Hospital Project), Series C, 7% due
4/01/2014 $ 915
A- NR* 1,000 Refunding (Melrose--Wakefield Hospital), Series B, 6.25% due
7/01/2012 1,032
Massachusetts State Industrial Finance Agency Revenue Bonds:
NR* B1 3,000 (Bay Cove Human Services Inc.), 8.375% due 4/01/2019 3,277
BB+ Ba1 1,865 (Vinfen Corporation), 7.10% due 11/15/2018 1,894
NR* NR* 1,000 Massachusetts State Industrial Finance Agency, Solid Waste
Disposal Revenue Bonds (Molten Metal Technology Project), 8.25%
due 8/01/2014 1,059
NR* NR* 4,000 Massachusetts State Port Authority, Special Project Revenue Bonds
(Harborside Hyatt Project), AMT, 10% due 3/01/2026 4,493
<PAGE>
Michigan--4.1% Michigan State Hospital Finance Authority, Revenue Refunding
Bonds, Series A:
A A 2,900 (Detroit Medical Center Obligation Group), 6.50% due 8/15/2018 3,063
AA Aa 1,500 (Henry Ford Health Systems), 5.25% due 11/15/2025 1,448
NR* NR* 1,500 Wayne Charter County, Michigan, Special Airport Facilities,
Revenue Refunding Bonds (Northwest Airlines, Inc.), 6.75% due
12/01/2015 1,541
Minnesota-- AA+ Aa 1,000 Minnesota State, HFA, S/F Mortgage, Series Q, 6.70% due 1/01/2017 1,056
0.7%
Missouri--2.7% NR* Ba2 700 Clay County, Missouri, IDA, IDR, Refunding (U.S. Gypsum Corporate
Project), 7.25% due 5/01/2014 723
BBB- NR* 1,555 Joplin, Missouri, IDA, Hospital Facilities, Revenue Refunding and
Improvement Bonds (Tri-State Osteopathic), 8.25% due 12/15/2014 1,687
NR* Baa 1,500 Missouri State Health and Educational Facilities Authority, Health
Facilities Revenue Bonds (Jefferson Memorial Hospital Obligation
Group), 6.80% due 5/15/2025 1,541
New Jersey-- NR* NR* 1,300 Camden County, New Jersey, Improvement Authority, Lease Revenue
1.6% Bonds (Holt Hauling and Warehousing), Series A, 9.875% due
1/01/2021 1,324
NR* NR* 1,000 New Jersey, EDA, IDR, Refunding (Newark Airport Marriott Hotel),
7% due 10/01/2014 1,037
New Mexico-- BB+ Ba1 2,500 Farmington, New Mexico, PCR, Refunding (Public Service Company--
1.7% San Juan Project), Series A, 6.40% due 8/15/2023 2,523
New York--7.5% New York City, New York, GO, UT, Series B:
BBB+ Baa1 1,000 Fiscal-92, 7% due 2/01/2016 1,089
BBB+ Baa1 1,155 Sub-Series B-1, 7.375% due 8/15/2013 1,296
BBB+ Baa1 1,000 Sub-Series B-1, 7% due 8/15/2016 1,095
BBB+ Baa1 1,800 Sub-Series B-1, 7.25% due 8/15/2019 1,999
Port Authority of New York and New Jersey, Special Obligation
Revenue Bonds (Special Project--KIAC), AMT, Series 4:
NR* NR* 1,500 Fifth Installment, 6.75% due 10/01/2019 1,540
NR* NR* 1,500 Third Installment, 7% due 10/01/2007 1,612
Utica, New York, Public Improvement Bonds, UT:
CCC B 700 9.25% due 8/15/2001 736
CCC B 700 9.25% due 8/15/2002 742
CCC B 700 9.25% due 8/15/2003 747
CCC B 250 8.50% due 8/15/2015 261
Ohio--1.8% NR* Ba1 2,300 Ohio State, IDR, Refunding (Kroger Company), 8.65% due 6/01/2011 2,598
Oregon--2.2% NR* NR* 1,000 Western Generation Agency, Oregon, Revenue Bonds (Wauna
Cogeneration Project), Series A, 7.125% due 1/01/2021 1,043
B+ NR* 2,000 Yamhill County, Oregon, PCR, Refunding (Smurfit Newsprint
Corporation Project), 8% due 12/01/2003 2,199
<PAGE>
Pennsylvania-- BB+ Baa3 1,250 Allegheny County, Pennsylvania, IDA, Environmental Improvement,
9.9% Revenue Refunding Bonds (USX Corporation), Series A, 6.70%
due 12/01/2020 1,306
BB Ba2 1,500 Beaver County, Pennsylvania, IDA, PCR, Refunding (Cleveland
Electric), Series A, 7.75% due 7/15/2025 1,641
NR* NR* 1,275 Lehigh County, Pennsylvania, General Purpose Authority Revenue
Bonds (Wiley House Kids Peace), 8.75% due 11/01/2014 1,329
NR* Ba 1,500 Montgomery County, Pennsylvania, IDA, Revenue Bonds (Pennsburg
Nursing and Rehabilitation Center), 7.625% due 7/01/2018 1,554
NR* NR* 3,000 Pennsylvania Economic Development Financing Authority, Recycling
Revenue Bonds (Ponderosa Fibres Project), AMT, Series A, 9.25%
due 1/01/2022 2,817
NR* NR* 1,455 Pennsylvania State Higher Educational Facilities Authority,
Eastern College and University Revenue Refunding Bonds
(Eastern College), Series A, 8% due 10/15/2015 1,557
NR* NR* 4,000 Philadelphia, Pennsylvania, Authority for IDR, Refunding
(Commercial Development--Philadelphia Airport), AMT, 7.75% due
12/01/2017 4,310
Rhode Island-- West Warwick, Rhode Island, GO, UT, Series A:
1.0% NR* Baa 485 6.80% due 7/15/1998 500
NR* Baa 910 7.30% due 7/15/2008 989
South Carolina-- AA- Aa 4,100 Greenville, South Carolina, Hospital System, Hospital Facilities
2.6% Revenue Refunding Bonds, Series B, 5.25% due 5/01/2023 3,892
Tennessee--1.7% 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 2,538
Texas--2.6% BB Ba 3,500 Odessa, Texas, Junior College District, Revenue Refunding Bonds,
Series A, 8.125% due 12/01/2018 3,802
</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>
Vermont--3.2% Vermont Educational and Health Buildings Financing Agency
Revenue Bonds:
NR* NR* $ 3,065 (College of Saint Joseph's Project), 8.50% due 11/01/2024 $ 3,383
NR* Baa2 1,250 Refunding (Norwich University Project), 6% due 9/01/2013 1,253
<PAGE>
Virginia--1.9% Pittsylvania County, Virginia, IDA, Multi-trade Revenue Bonds,
AMT, Series A:
NR* NR* 1,700 7.50% due 1/01/2014 1,805
NR* NR* 1,000 7.55% due 1/01/2019 1,058
Total Investments (Cost--$139,003)--98.6% 145,226
Other Assets Less Liabilities--1.4% 2,053
--------
Net Assets--100.0% $147,279
========
<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 November 30, 1996.
(b)The interest rate is subject to change periodically and inversely
based upon prevailing market rates. The interest rate shown is the
rate in effect at November 30, 1996.
(c)Bank Qualified.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<CAPTION>
As of November 30, 1996
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$139,002,944) (Note 1a) $145,226,237
Cash 71,032
Receivables:
Interest $ 2,940,999
Securities sold 1,125,054 4,066,053
------------
Deferred organization expenses (Note 1e) 31,425
Prepaid expenses and other assets 33,299
------------
Total assets 149,428,046
------------
Liabilities: Payables:
Securities purchased 1,843,332
Dividends to shareholders (Note 1f) 128,564
Investment adviser (Note 2) 68,340 2,040,236
------------
Accrued expenses and other liabilities 109,130
------------
Total liabilities 2,149,366
------------
<PAGE>
Net Assets: Net assets $147,278,680
============
Capital: Common Stock, par value $.10 per share; 200,000,000 shares
authorized; 10,424,616 shares issued and outstanding (Note 4) $ 1,042,461
Paid-in capital in excess of par 148,421,136
Undistributed investment income--net 733,323
Accumulated realized capital losses on investments--net (Note 5) (9,141,533)
Unrealized appreciation on investments--net 6,223,293
------------
Total capital--Equivalent to $14.13 net asset value per share
of Common Stock (market price--$12.75) $147,278,680
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended November 30, 1996
<S> <S> <C> <C>
Investment Interest and amortization of premium and discount earned $ 4,907,497
Income (Note 1d):
Expenses: Investment advisory fees (Note 2) $ 396,310
Professional fees 31,664
Accounting services (Note 2) 24,054
Directors' fees and expenses 20,872
Listing fees 20,038
Printing and shareholder reports 16,278
Transfer agent fees (Note 2) 11,054
Amortization of organization expenses (Note 1e) 7,936
Custodian fees 6,581
Pricing fees 6,295
Other 15,327
------------
Total expenses 556,409
------------
Investment income--net 4,351,088
------------
Realized & Realized loss on investments--net (109,739)
Unrealized Gain Change in unrealized appreciation on investments--net 4,258,983
(Loss) on ------------
Investments--Net Net Increase in Net Assets Resulting from Operations $ 8,500,332
(Notes 1b, 1d & 3): ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Six For the
Months Ended Year Ended
November 30, May 31,
Increase (Decrease) in Net Assets: 1996 1996
<S> <S> <C> <C>
Operations: Investment income--net $ 4,351,088 $ 9,092,773
Realized loss on investments--net (109,739) (357,178)
Change in unrealized appreciation/depreciation on investments
--net 4,258,983 645,318
------------ ------------
Net increase in net assets resulting from operations 8,500,332 9,380,913
------------ ------------
Dividends to Investment income--net (4,416,597) (9,250,148)
Shareholders ------------ ------------
(Note 1f): Net decrease in net assets resulting from dividends to
shareholders (4,416,597) (9,250,148)
------------ ------------
Common Stock Offering costs resulting from reorganization -- (105,274)
Transactions ------------ ------------
(Note 4): Net decrease in net assets derived from Common Stock
transactions -- (105,274)
------------ ------------
Net Assets: Total increase in net assets 4,083,735 25,491
Beginning of period 143,194,945 143,169,454
------------ ------------
End of period* $147,278,680 $143,194,945
============ ============
<FN>
*Undistributed investment income--net $ 733,323 $ 798,832
============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
For the
The following per share data and ratios For the Period
have been derived from information Six Months June 25,
provided in the financial statements. Ended 1993++ to
November 30, For the Year Ended May 31, May 31,
Increase (Decrease) in Net Asset Value: 1996 1996 1995 1994
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 13.74 $ 13.73 $ 13.40 $ 14.18
Operating ----------- ----------- ----------- -----------
Performance: Investment income--net .41 .88 .87 .81
Realized and unrealized gain (loss) on
investments--net .40 .03 .33 (.66)
----------- ----------- ----------- -----------
Total from investment operations .81 .91 1.20 .15
----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income--net (.42) (.89) (.85) (.74)
Realized gain on investments--net -- -- -- (.15)
----------- ----------- ----------- -----------
Total dividends and distributions (.42) (.89) (.85) (.89)
----------- ----------- ----------- -----------
Capital charge resulting from issuance
of Common Stock -- (.01) (.02) (.04)
----------- ----------- ----------- -----------
Net asset value, end of period $ 14.13 $ 13.74 $ 13.73 $ 13.40
=========== =========== =========== ===========
Market price per share, end of period $ 12.75 $ 12.375 $ 11.875 $ 12.25
=========== =========== =========== ===========
Total Investment Based on net asset value per share 6.35%+++ 7.46% 9.93% .83%+++
Return:** =========== =========== =========== ===========
Based on market price per share 6.55%+++ 11.91% 4.00% (12.87%)+++
=========== =========== =========== ===========
Ratios to Average Expenses, net of reimbursement .77%* .55% .50% .20%*
Net Assets: =========== =========== =========== ===========
Expenses .77%* .77% .85% .85%*
=========== =========== =========== ===========
Investment income--net 6.04%* 6.24% 6.54% 6.12%*
=========== =========== =========== ===========
Supplemental Net assets, end of period
Data: (in thousands) $ 147,279 $ 143,195 $ 143,169 $ 64,154
=========== =========== =========== ===========
Portfolio turnover 16.97% 42.72% 55.51% 101.59%
=========== =========== =========== ===========
<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>
<PAGE>
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. These unaudited financial statements
reflect all adjustments which are, in the opinion of management,
necessary to a fair statement of the results for the interim period
presented. All such adjustments are of a normal recurring nature.
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, including valuations furnished by a
pricing service retained by the Fund, which may utilize a matrix
system for valuations. The procedures of the pricing service and its
valuations are reviewed by the officers of the Fund under the
general supervision of the Board of Directors.
(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 and purchase call and put
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.
NOTES TO FINANCIAL STATEMENTS (concluded)
(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.
<PAGE>
(e) Deferred organization expenses--Deferred organization expenses
are charged to expense on a straight-line basis over a five-year
period.
(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.
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.
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, 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 six months ended November 30, 1996 were $26,991,175 and
$24,048,151, respectively.
Net realized and unrealized gains (losses) as of November 30, 1996
were as follows:
Realized
Gains Unrealized
(Losses) Gains
Long-term investments $ 229,236 $ 6,223,293
Financial futures contracts (338,975) --
---------- -----------
Total $ (109,739) $ 6,223,293
========== ===========
As of November 30, 1996, net unrealized appreciation for Federal
income tax purposes aggregated $6,223,293, of which $7,586,762
related to appreciated securities and $1,363,469 related to
depreciated securities. The aggregate cost of investments at
November 30, 1996 for Federal income tax purposes was $139,002,944.
<PAGE>
4. Common Stock Transactions:
At November 30, 1996, 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 six months ended November 30, 1996, shares
issued and outstanding remained constant at 10,424,616. At November
30, 1996, total paid-in capital amounted to $149,463,597.
5. Capital Loss Carryforward:
At May 31, 1996, the Fund had a net capital loss carryforward of
approximately $8,485,000, of which $2,353,000 expires in 2002,
$1,350,000 expires in 2003 and $4,782,000 expires in 2004. This
amount will be available to offset like amounts of any future
taxable gains.
6. Subsequent Event:
On December 10, 1996, the Fund's Board of Directors declared an
ordinary income dividend to Common Stock shareholders in the amount
of $.068067 payable on December 30, 1996 to shareholders of record
as of December 20, 1996.
