MuniAssets
Fund, Inc.
STRATEGIC
Performance
[GRAPHIC OMITTED]
Semi-Annual Report
November 30, 1997
<PAGE>
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
Theodore R. Jaeckel Jr., Vice President
Gerald M. Richard, Treasurer
Patrick D. Sweeney, Secretary
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Transfer Agent
The Bank of New York
101 Barclay Street, 22W
New York, NY 10286
NYSE Symbol
MUA
<PAGE>
MuniAssets Fund, Inc., November 30, 1997
DEAR SHAREHOLDER
For the six months ended November 30, 1997, MuniAssets Fund, Inc. earned $0.427
per share income dividends, which included earned and unpaid dividends of
$0.069. This represents a net annualized yield of 5.81%, based on a month-end
per share net asset value of $14.64. Over the same period, the Fund's total
investment return was +6.68%, based on a change in per share net asset value
from $14.16 to $14.64, and assuming reinvestment of $0.430 per share income
dividends.
The Municipal Market Environment
During the six months ended November 30, 1997, long-term tax-exempt bond yields,
as measured by the Bond Buyer Revenue Bond Index, generally declined. On a
weekly basis, bond yields were buffeted by alternating strong and weak
indicators. The general financial environment has remained one of solid economic
growth with few or no inflationary pressures. However, economic growth remained
strong enough to suggest that the Federal Reserve Board (FRB) might soon be
obligated to raise short-term interest rates. Such action would be intended to
slow economic growth and ensure that any incipient inflationary pressures would
be curtailed. Over the last six months, long-term municipal bond yields have
fallen approximately 35 basis points (0.35%) to 5.55%.
Similarly, long-term US Treasury bond yields generally drifted lower during most
of the six-month period ended November 30, 1997. However, the turmoil in the
world's equity markets during the last week in October has resulted in a
significant rally in the Treasury bond market. The US Treasury bond market was
the beneficiary of a flight to quality mainly by foreign investors whose own
domestic markets have continued to be very volatile. Prior to the initial
decline in Asian equity markets, yields on long-term US Treasury securities had
declines similar to those experienced in the tax-exempt market. For the
six-month period ended November 30, 1997, US Treasury bond yields declined over
85 basis points to 6.05%, their lowest level of 1997.
The tax-exempt bond market's continued underperformance as compared to its
taxable counterpart has been largely in response to its ongoing weakening
technical position. As municipal bond yields have declined, municipalities have
rushed to refinance outstanding higher-couponed debt with new issues financed at
present low rates. During the last six months, over $120 billion in new
long-term tax-exempt issues were underwritten, an increase of nearly 30% versus
the comparable period a year ago. As interest rates have continued to decline,
these refinancings have sustained municipal bond issuance. During the past three
months, approximately $60 billion in new long-term municipal securities were
underwritten, an increase of over 25% as compared to the November 30, 1996
quarter.
The recent trend toward larger and larger bond issues has also continued.
However, issues of such magnitude usually must be attractively priced to ensure
adequate investor interest. Obviously, the yields of other municipal bond issues
are impacted by the yield premiums such large issuers have been required to pay.
Much of the municipal bond market's recent underperformance can be traced to
market pressures that these large issues have exerted.
In our opinion, the recent correction in world equity markets has enhanced the
near-term prospects for continued low, if not declining, interest rates in the
United States. It is likely that the recent correction will result in slower US
domestic growth in the coming months. This decline should be generated in part
by reduced US export growth. Additionally, some decline in consumer spending can
also be expected in response to reduced consumer confidence. Perhaps more
importantly, it is likely that barring a dramatic and unexpected resurgence in
domestic growth, the FRB may be unwilling to raise interest rates until the full
impact of the equity market's corrections can be established.
All of these factors suggest that for at least the near term, interest rates,
including tax-exempt bond yields, are unlikely to rise by any appreciable
amount. It is probable that municipal bond yields will remain under some
pressure as a result of continued strong new-issue supply. However, the recent
pace of municipal bond issuance is likely to be unsustainable. Continued
increases in bond issuance will require lower tax-exempt bond yields to generate
the economic savings necessary for additional municipal bond refinancing.
Additionally, municipal bond investors are expected to receive approximately $23
billion in January coupon payments, bond maturities and proceeds from early
redemptions. Such assets should serve to intensify investor demand in the near
future. With tax-exempt bond yields at already attractive yield ratios relative
to US Treasury bonds (approximately 90% at the end of November), any further
pressure on the municipal market may represent an attractive investment
opportunity.
Portfolio Strategy
Perhaps the most noteworthy event affecting the Fund during the six months ended
November 30, 1997 was a shift away from an emphasis on the healthcare industry,
a move that the Fund's shareholders approved in October. Since the Fund's
inception, consistent with the policy as outlined in the Fund's prospectus, we
have maintained a concentration in the healthcare sector amounting to 25% of net
assets. However, a confluence of recent developments has forced a reassessment
of this policy. For one, in recent years the financing needs of low
investment-grade hospitals largely have been filled, limiting potential
issuance. Moreover, as competition for business between the major bond insurers
has heated up, an increasing number of issuers have taken advantage of
relatively inexpensive insurance premiums and have come to market bearing some
form of credit enhancement. As a result, the healthcare sector has become
increasingly generic, affording few opportunities for the enhancement of total
return within the context of the Fund's original investment policy. The general
contraction in credit spreads has compounded matters further, as yields
currently available on lower-rated healthcare bonds appear insufficient given
the high level of risk and illiquidity so typical of this sector. This imbalance
between risk and reward coupled with the lack of supply led us to reassess our
investment policy.
Apart from the aforementioned policy change, the three months ended November 30,
1997 proved relatively uneventful as far as the composition and activity of the
Fund are concerned. Approximately $16.0 million in high-yield tax-exempt
securities were purchased bearing an average weighted yield of 6.18%. Looking
ahead, we expect to gradually reallocate a portion of the Fund's assets invested
in healthcare bonds toward other sectors. We expect this added flexibility to
result in a more balanced portfolio, relatively free of the risks inherent in
being overweighted in an industry whose debt we perceive to be overvalued. In
our view, other sectors in the tax-exempt high-yield market currently offer
greater value and, consequently, the potential to enhance the Fund's total
return on an ongoing basis.
In Conclusion
We appreciate your ongoing interest in MuniAssets Fund, Inc., and we look
forward to assisting you with your financial needs in the months and years
ahead.
Sincerely,
/s/ Arthur Zeikel
Arthur Zeikel
President
/s/ Vincent R. Giordano
Vincent R. Giordano
Senior Vice President
/s/ Theodore R. Jaeckel Jr.
Theodore R. Jaeckel Jr.
Vice President and Portfolio Manager
January 2, 1998
2 & 3
<PAGE>
MuniAssets Fund, Inc., November 30, 1997
PROXY RESULTS
During the six-month period ended November 30, 1997, MuniAssets Fund, Inc.
stockholders voted on the following proposals. The proposals were approved at
the annual stockholders' meeting on October 9, 1997. The description of each
proposal and number of shares voted are as follows:
<TABLE>
<CAPTION>
Shares Voted Shares Withheld
For From Voting
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. To elect the Fund's Board of Directors: Melvin R. Seiden 10,227,277 122,099
Stephen B. Swensrud 10,227,277 122,099
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as the Fund's
independent auditors. 10,158,430 39,577 151,369
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
3. To amend the Fund's fundamental investment restriction
regarding the Fund's healthcare concentration policy. 5,330,970 41,684 264,250
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS (in Thousands)
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
============================================================================================================================
<S> <C> <C> <C> <C> <C>
Alabama--3.6% B+ NR*$ 1,420 Brewton, Alabama, IDB, PCR, Refunding (Container Corporation
American Project), 8% due 4/01/2009 $ 1,583
BBB- Baa 33,500 Mobile, Alabama, IDB, Solid Waste Disposal, Revenue Refunding
Bonds (Mobile Energy Services Co. Project), 6.95% due
1/01/2020 3,838
============================================================================================================================
Alaska--1.3% NR* NR* 2,000 Valdez, Alaska, Marine Terminal Revenue Refunding Bonds
(Amerada Hess Pipeline Corporation), 6.10% due 2/01/2024 2,053
============================================================================================================================
Arizona--6.2% A1+ P1 2,600 Coconino County, Arizona, PCR (Arizona Public Service--Navajo
Project), VRDN, AMT, Series A, 4.10% due 10/01/2029 (a) 2,600
B B2 2,500 Coconino County, Arizona, PCR, Refunding (Tucson Electric
Power Navajo Corporation), Series B, 7% due 10/01/2032 2,738
A1+ P1 200 Maricopa County, Arizona, Pollution Control Corporation, PCR,
Refunding (Arizona Public Service Co.), VRDN, Series E, 3.90%
due 5/01/2029 (a) 200
B B2 2,000 Pima County, Arizona, IDA, Industrial Revenue Bonds (Tucson
Electric Power Company Project), Series B, 6% due 9/01/2029 2,024
NR* NR* 1,880 Show-Low, Arizona, Improvement District No. 5, 6.375% due
1/01/2015 1,913
============================================================================================================================
California--5.1% NR* NR* 3,305 Long Beach, California, Redevelopment Agency, M/F Housing
Revenue Bonds (Pacific Court Apartments), AMT, Issue B, 6.80%
due 9/01/2013 (g) 1,818
AA Aa2 2,000 Metropolitan Water District, Southern California, Waterworks
Revenue Bonds, RIB, 7.682% due 8/05/2022 (c) 2,190
NR* NR* 1,870 Pleasanton, California, Joint Powers Financing Authority,
Reassessment Subordinated Revenue Bonds, Sub-Series B, 6.60%
due 9/02/2008 2,020
NR* NR* 1,750 Stockton, California, Community Facilities District Special
Tax Refunding Bonds, No. 90-2 (Brookside Estates), 6.20% due
8/01/2015 1,800
============================================================================================================================
Colorado--7.6% NR* Aaa 2,500 Arapahoe County, Colorado, Capital Improvement Trust Fund,
Highway Revenue Bonds (SR-E-470 Project), Series B, 7% due
8/31/2005 (b) 2,962
NR* NR* 1,000 Colorado Postsecondary Educational Facilities Authority
Revenue Bonds (Colorado Ocean Journey Inc. Project), 8.30%
due 12/01/2017 1,115
NR* NR* 2,500 Denver, Colorado, Urban Renewal Authority, Tax Increment
Revenue Bonds (Downtown Denver), AMT, Series A, 7.75% due
9/01/2016 2,759
A1+ VMIG1+ 1,150 Moffat County, Colorado, PCR, Refunding (Pacificorp
Projects), VRDN, 3.90% due 5/01/2013 (a)(f) 1,150
NR* NR* 3,275 Mountain Village Metropolitan District, Colorado, San Miguel
County, 7.40% due 12/15/2013 3,565
============================================================================================================================
Connecticut--2.0% NR* NR* 1,000 Connecticut State Health and Educational Facilities Authority
Revenue Bonds (Edgehill Issue), Series A, 6.875% due
7/01/2027 1,048
NR* NR* 1,920 Eastern Connecticut, State Regional Educational Service
Center, 6.50% due 5/15/2009 2,022
============================================================================================================================
District of B- NR* 2,000 District of Columbia, COP, 6.875% due 1/01/2003 2,097
Columbia--1.4%
============================================================================================================================
Florida--1.1% NR* NR* 1,625 North Springs Improvement District, Florida, Special
Assessment Revenue Bonds (Parkland Isles Project), Series B,
6.25% due 5/01/2005 1,633
============================================================================================================================
Georgia--3.4% NR* NR* 1,900 Hancock County, Georgia, COP, 8.50% due 4/01/2015 2,128
NR* NR* 1,370 Rockdale County, Georgia, Development Authority, Solid Waste
Disposal Revenue Bonds (Visy Paper Inc. Project), AMT, 7.40%
due 1/01/2016 1,476
NR* NR* 1,500 Savannah, Georgia, EDA, IDR (Stone Container Corporation
Project), AMT, 7.40% due 4/01/2026 1,658
============================================================================================================================
Illinois--10.3% A1+ Aa3 2,215 Illinois Development Finance Authority Revenue Bonds
(Presbyterian Home Lake), Series B, 6.40% due 9/01/2031 2,399
NR* NR* 2,400 Illinois Development Finance Authority Revenue Bonds (Primary
Health Care Centers--Facilities Acquisition Program), 7.50%
due 12/01/2006 2,488
Illinois Health Facilities Authority Revenue Bonds:
BBB+ NR* 1,000 (Community Hospital of Ottawa Project), 6.75% due 8/15/2014 1,077
BBB+ NR* 2,000 (Community Hospital of Ottawa Project), 6.85% due 8/15/2024 2,160
A+ A2 2,000 (Edward Hospital Association Project), 7% due 2/15/2002 (b) 2,234
NR* Baa1 2,150 (Holy Cross Hospital Project), 6.70% due 3/01/2014 2,288
A A3 1,250 Refunding (Riverside Health System), Series A, 6% due 11/15/20 181,293
A- NR* 1,485 Refunding (Saint Elizabeth's Hospital of Chicago), 7.625% due
7/01/2004 (b) 1,765
============================================================================================================================
</TABLE>
================================================================================
Portfolio To simplify the listings of MuniAssets Fund, Inc.'s
Abbreviations 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
EDA Economic Development Authority
GO General Obligation Bonds
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
4 & 5
<PAGE>
MuniAssets Fund, Inc., November 30, 1997
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
============================================================================================================================
<S> <C> <C> <C> <C> <C>
Indiana--2.1% NR* A2$ 3,000 Indiana Health Facility Financing Authority, Hospital Revenue
Refunding Bonds (Saint Anthony Medical Center), Series A, 7%
due 10/01/2017 $ 3,264
============================================================================================================================
Iowa--1.4% BB+ NR* 1,000 Des Moines County, Iowa, IDR, Refunding (U.S. Gypsum
Company Project), 7.20% due 11/01/2007 1,092
NR* NR* 800 Iowa Finance Authority, Health Care Facilities, Revenue
Refunding Bonds (Care Initiatives Project), 9.25% due
7/01/2025 1,053
============================================================================================================================
Louisiana--5.0% NR* A3 1,700 Lake Charles, Louisiana, Harbor and Terminal District, Port
Facilities Revenue Refunding Bonds (Trunkline Long Company
Project), 7.75% due 8/15/2022 1,957
BB+ NR* 1,600 New Orleans, Louisiana, IDB, IDR, Refunding (U.S. Gypsum
Company Project), 7.20% due 10/01/2007 1,747
BB NR* 3,500 Port New Orleans, Louisiana, IDR, Refunding (Continental
Grain Company Project), 7.50% due 7/01/2013 3,856
============================================================================================================================
Maryland--2.6% NR* NR* 3,000 Maryland State Energy Financing Administration, Limited
Obligation Revenue Bonds (Cogeneration--AES Warrior Run),
AMT, 7.40% due 9/01/2019 3,292
NR* VMIG1+ 400 Maryland State Health and Higher Educational Facilities
Authority Revenue Bonds (Pooled Loan Program), VRDN, Series
A, 3.85% due 4/01/2035 (a) 400
A1+ VMIG1+ 200 University of Maryland Revenue Bonds (Equipment Loan
Program), VRDN, Series A, 3.80% due 7/01/2015 (a) 200
============================================================================================================================
Massachusetts--7.7% Massachusetts State Health and Educational Facilities
Authority Revenue Bonds:
NR* B 960 (New England Memorial Hospital Project), Series C, 7% due
4/01/2014 960
A- NR* 1,000 Refunding (Melrose--Wakefield Hospital), Series B, 6.25% due
7/01/2012 1,054
Massachusetts State Industrial Finance Agency Revenue Bonds:
NR* B1 2,930 (Bay Cove Human Services Inc.), 8.375% due 4/01/2019 3,330
BBB Ba1 1,815 (Vinfen Corporation), 7.10% due 11/15/2018 1,995
NR* NR* 4,000 Massachusetts State Port Authority, Special Project Revenue
Bonds (Harborside Hyatt Project), AMT, 10% due 3/01/2026 4,464
============================================================================================================================
Michigan--3.1% A A2 2,900 Michigan State Hospital Finance Authority, Revenue Refunding
Bonds (Detroit Medical Center Obligation Group), Series A,
6.50% due 8/15/2018 3,128
NR* NR* 1,500 Wayne Charter County, Michigan, Special Airport Facilities,
Revenue Refunding Bonds (Northwest Airlines, Inc.), 6.75% due
12/01/2015 1,640
============================================================================================================================
Minnesota--0.7% AA+ Aa2 975 Minnesota State, HFA, S/F Mortgage, Series Q, 6.70% due 1/01/2017 1,038
============================================================================================================================
Missouri--2.3% BBB- NR* 1,660 Joplin, Missouri, IDA, Hospital Facilities Revenue Refunding
and Improvement Bonds (Tri-State Osteopathic), 8.25% due
12/15/2014 1,836
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 1,619
============================================================================================================================
New Jersey--5.9% Camden County, New Jersey, Improvement Authority, Lease
Revenue Bonds (Holt Hauling and Warehousing), Series A:
NR* NR* 1,000 9.625% due 1/01/2011 1,192
NR* NR* 3,800 9.875% due 1/01/2021 4,587
NR* NR* 1,000 New Jersey EDA, IDR, Refunding (Newark Airport Marriott
Hotel), 7% due 10/01/2014 1,077
New Jersey EDA, Revenue Bonds:
NR* NR* 1,000 (First Mortgage--Cranes Mill Project), Series A, 7.375% due
2/01/2017 1,094
NR* Aaa 4,350 (Saint Barnabas Project), 5.625% due 7/01/2025 (d)(e) 1,022
============================================================================================================================
New Mexico--1.6% BB+ Ba1 2,500 Farmington, New Mexico, PCR, Refunding (Public Service
Company), Series A, 5.80% due 4/01/2022 2,514
============================================================================================================================
New York--5.0% New York City, New York, GO, UT, Series B, Sub-Series B-1:
BBB+ Aaa 95 7% due 8/15/2004 (b) 110
BBB+ Aaa 475 7.25% due 8/15/2004 (b) 557
BBB+ Aaa 145 7.375% due 8/15/2004 (b) 170
BBB+ Baa1 1,010 7.375% due 8/15/2013 1,164
BBB+ Baa1 905 7% due 8/15/2016 1,023
BBB+ Baa1 340 7.25% due 8/15/2019 387
NR* NR* 1,500 Port Authority of New York and New Jersey, Special Obligation
Revenue Bonds (Special Project--KIAC), AMT, Series 4, Fifth
Installment, 6.75% due 10/01/2019 1,636 Utica, New York,
Public Improvement Bonds, UT:
CCC B 700 9.25% due 8/15/2001 779
CCC B 700 9.25% due 8/15/2002 790
CCC B 700 9.25% due 8/15/2003 798
CCC B 250 8.50% due 8/15/2015 285
============================================================================================================================
Oregon--2.5% NR* VMIG1+ 200 Oregon State Health, Housing, Educational, and Cultural
Facilities Authority Revenue Bonds (Guide Dogs for the
Blind), VRDN, Series A, 3.95% due 7/01/2025 (a) 200
A1+ A3 300 Port St. Helen's, Oregon, PCR (Portland General Electric
Company Project), VRDN, AMT, Series A, 4.05% due 8/01/2014(a) 300
NR* NR* 1,000 Western Generation Agency, Oregon, Revenue Bonds (Wauna
Cogeneration Project), Series A, 7.125% due 1/01/2021 1,077
B+ NR* 2,000 Yamhill County, Oregon, PCR, Refunding (Smurfit Newsprint
Corporation Project), 8% due 12/01/2003 2,209
============================================================================================================================
Pennsylvania--8.5%
BBB- Baa3 1,250 Allegheny County, Pennsylvania, IDA, Environmental
Improvement, Revenue Refunding Bonds (USX Corporation),
Series A, 6.70% due 12/01/2020 1,350
NR* NR* 1,275 Lehigh County, Pennsylvania, General Purpose Authority
Revenue Bonds (Wiley House Kids Peace), 8.75% due 11/01/2014 1,333
NR* Ba3 1,400 Montgomery County, Pennsylvania, IDA, Revenue Bonds
(Pennsburg Nursing and Rehabilitation Center), 7.625% due
7/01/2018 1,584
NR* NR* 3,000 Pennsylvania Economic Development Financing Authority,
Recycling Revenue Bonds (Ponderosa Fibres Project), AMT,
Series A, 9.25% due 1/01/2022 2,025
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 1,675
NR* NR* 4,000 Philadelphia, Pennsylvania, Authority for IDR, Refunding
(Commercial Development--Philadelphia Airport), AMT, 7.75%
due 12/01/2017 4,445
NR* NR* 500 Philadelphia, Pennsylvania, Hospitals and Higher Education
Facilities Authority, Revenue Refunding Bonds (The Phil
Protestant Home Project), Series A, 6.50% due 7/01/2027 510
============================================================================================================================
South Carolina--0.7%
NR* NR* 1,000 Charleston County, South Carolina, Health Facilities Revenue
Bonds (First Mortgage--Episcopal Church Project), Series A,
6.25% due 4/01/2019 1,012
============================================================================================================================
Texas--4.5% BB Ba2 2,800 Houston, Texas, Airport System Revenue Bonds (Special
Facilities--Continental Airline Terminal Improvement), AMT,
Series B, 6.125% due 7/15/2017 2,898
BB Ba2 3,500 Odessa, Texas, Junior College District, Revenue Refunding
Bonds, Series A, 8.125% due 12/01/2018 3,984
============================================================================================================================
</TABLE>
6 & 7
<PAGE>
MuniAssets Fund, Inc., November 30, 1997
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
============================================================================================================================
<S> <C> <C> <C> <C> <C>
Vermont--2.3% NR* NR* $ 3,065 Vermont Educational and Health Buildings Financing Agency
Revenue Bonds (College of Saint Joseph's Project), 8.50% due
11/01/2024 $ 3,520
============================================================================================================================
Virginia--1.9% Pittsylvania County, Virginia, IDA, Multi-Trade Revenue
Bonds, AMT, Series A:
NR* NR* 1,700 7.50% due 1/01/2014 1,866
NR* NR* 1,000 7.55% due 1/01/2019 1,096
============================================================================================================================
Total Investments (Cost--$143,044)--99.8% 152,288
Other Assets Less Liabilities--0.2% 373
--------
Net Assets--100.0% $152,661
=========
============================================================================================================================
</TABLE>
(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, 1997.
(b) Prerefunded.
(c) 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, 1997.
(d) MBIA Insured.
(e) Represents a zero coupon bond; the interest rate shown
is the effective yield at the time of purchase by the
Fund.
(f) AMBAC Insured.
(g) Non-income producing security.
* Not Rated.
+ Highest short-term rating by Moody's Investors Service,
Inc. See Notes to Financial Statements.
See Notes to Financial Statements.
<TABLE>
<CAPTION>
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
As of November 30, 1997
============================================================================================================================
<S> <C> <C>
Assets: Investments, at value (identified cost--$143,044,487) (Note 1a) ............ $152,288,440
Cash........................................................................ 47,890
Receivables:
Interest.................................................................. $ 2,992,454
Securities sold........................................................... 60,419 3,052,873
-----------
Deferred organization expenses (Note 1e).................................... 16,213
Prepaid expenses and other assets........................................... 8,752
------------
Total assets................................................................ 155,414,168
------------
============================================================================================================================
Liabilities: Payables:
Securities purchased...................................................... 2,500,403
Dividends to shareholders (Note 1f)....................................... 122,279
Investment adviser (Note 2)............................................... 64,276 2,686,958
-----------
Accrued expenses and other liabilities...................................... 66,603
------------
Total liabilities........................................................... 2,753,561
------------
============================================================================================================================
Net Assets: Net assets.................................................................. $152,660,607
============
============================================================================================================================
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........................................ 718,415
Accumulated realized capital losses on investments--net (Note 5)............ (6,765,358)
Unrealized appreciation on investments--net................................. 9,243,953
------------
Total capital--Equivalent to $14.64 net asset value per share of
Common Stock (market price--$13.813) ....................................... $152,660,607
============
============================================================================================================================
</TABLE>
See Notes to Financial Statements
8 & 9
<PAGE>
MuniAssets Fund, Inc., November 30, 1997
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the Six Months Ended November 30, 1997
============================================================================================================================
<S> <C> <C> <C>
Investment Interest and amortization of premium and discount earned.................... $ 4,911,643
Income (Note 1d):
============================================================================================================================
Expenses: Investment advisory fees (Note 2)........................................... $ 412,765
Professional fees........................................................... 47,075
Accounting services (Note 2)................................................ 21,666
Directors' fees and expenses................................................ 19,176
Printing and shareholder reports............................................ 16,962
Transfer agent fees (Note 2)................................................ 16,025
Amortization of organization expenses (Note 1e)............................. 7,235
Pricing fees................................................................ 6,822
Custodian fees.............................................................. 5,600
Other....................................................................... 5,914
---------
Total expenses ............................................................. 559,240
-----------
Investment income--net...................................................... 4,352,403
-----------
============================================================================================================================
Realized & Realized gain on investments--net........................................... 1,169,975
Unrealized Change in unrealized appreciation on investments--net....................... 3,987,777
Gain on -----------
Investments--Net Net Increase in Net Assets Resulting from Operations........................ $ 9,510,155
(Notes 1b, 1d & 3): ===========
==============================================================================================================================
</TABLE>
See Notes to Financial Statements.
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: Nov. 30, 1997 May 31, 1997
============================================================================================================================
<S> <C> <C> <C>
Operations: Investment income--net...................................................... $ 4,352,403 $ 8,788,419
Realized gain on investments--net........................................... 1,169,975 1,096,461
Change in unrealized appreciation on investments--net....................... 3,987,777 3,291,866
----------- -----------
Net increase in net assets resulting from operations........................ 9,510,155 13,176,746
----------- -----------
============================================================================================================================
Dividends to Investment income--net...................................................... (4,479,875) (8,741,364)
Shareholders ----------- -----------
(Note 1f): Net decrease in net assets resulting from dividends to shareholders ........ (4,479,875) (8,741,364)
----------- -----------
============================================================================================================================
Net Assets: Total increase in net assets................................................ 5,030,280 4,435,382
Beginning of period......................................................... 147,630,327 143,194,945
----------- -----------
End of period*.............................................................. $152,660,607 $147,630,327
=========== ===========
============================================================================================================================
*Undistributed investment income--net........................................ $ 718,415 $ 845,887
=========== ===========
============================================================================================================================
</TABLE>
See Notes to Financial Statements.
10 & 11
<PAGE>
MuniAssets Fund, Inc., November 30, 1997
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following per share data and ratios For the
have been derived from information provided For the Period
in the financial statements. Six Months For the Year June 25,
Ended Ended May 31, 1993+ to
Nov. 30, ------------------------------- May 31,
Increase (Decrease) in Net Asset Value: 1997 1997 1996 1995 1994
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ................... $ 14.16 $ 13.74 $ 13.73 $ 13.40 $ 14.18
Operating -------- ------- -------- -------- -------
Performance: Investment income--net ................................ .42 .84 .88 .87 .81
Realized and unrealized gain (loss) on investments--net .49 .42 .03 .33 (.66)
-------- ------- -------- -------- -------
Total from investment operations ....................... .91 1.26 .91 1.20 .15
-------- ------- -------- -------- -------
Less dividends and distributions:
Investment income--net ................................ (.43) (.84) (.89) (.85) (.74)
Realized gain on investments--net ..................... -- -- -- -- (.15)
-------- ------- -------- -------- -------
Total dividends and distributions ...................... (.43) (.84) (.89) (.85) (.89)
Capital charge resulting from issuance of Common Stock . -- -- (.01) (.02) (.04)
-------- ------- -------- -------- -------
Net asset value, end of period ......................... $ 14.64 $ 14.16 $ 13.74 $ 13.73 $ 13.40
======== ======= ======== ======== =======
Market price per share, end of period .................. $ 13.813 $12.625 $ 12.375 $ 11.875 $ 12.25
======== ======= ======== ======== =======
===============================================================================================================================
Total Based on net asset value per share ..................... 6.68%++ 10.11% 7.46% 9.93% .83%++
Investment ======== ======= ======== ======== =======
Return:** Based on market price per share ........................ 12.88%++ 9.01% 11.91% 4.00% (12.87%)++
======== ======= ======== ======== =======
===============================================================================================================================
Ratios to Expenses, net of reimbursement ......................... .75%* .76% .55% .50% .20%*
Average ======== ======= ======== ======== =======
Net Assets: Expenses ............................................... .75%* .76% .77% .85% .85%*
======== ======= ======== ======== =======
Investment income--net ................................. 5.81%* 6.06% 6.24% 6.54% 6.12%*
======== ======= ======== ======== =======
===============================================================================================================================
Supplemental Net assets, end of period (in thousands) ............... $152,661 $147,63 $143,195 $143,169 $64,154
Data: ======== ======= ======== ======== =======
Portfolio turnover ..................................... 24.83% 45.15% 42.72% 55.51% 101.59%
======== ======= ======== ======== =======
===============================================================================================================================
</TABLE>
* 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.
MuniAssets Fund, Inc., November 30, 1997
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.
o 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.
o 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.
12 & 13
<PAGE>
MuniAssets Fund, Inc., November 30, 1997
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.
(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, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the six
months ended November 30, 1997 were $36,034,298 and $36,082,525, respectively.
Net realized and unrealized gains as of November 30, 1997 were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Gains Gains
- --------------------------------------------------------------------------------
Long-term investments ................ $1,169,975 $9,243,953
---------- ----------
Total ................................ $1,169,975 $9,243,953
========== ==========
- --------------------------------------------------------------------------------
As of November 30, 1997, net unrealized appreciation for Federal income tax
purposes aggregated $9,243,953, of which $11,723,723 related to appreciated
securities and $2,479,770 related to depreciated securities. The aggregate cost
of investments at November 30, 1997 for Federal income tax purposes was
$143,044,487.
4. Common Stock Transactions:
At November 30, 1997, the Fund had one class of shares of Common Stock, par
value $.10 per share, of which 200,000,000 shares were authorized. Shares issued
and outstanding during the six months ended November 30, 1997 and the year ended
May 31, 1997 remained constant.
5. Capital Loss Carryforward:
At May 31, 1997, the Fund had a net capital loss carryforward of approximately
$7,156,000, of which $1,023,000 expires in 2002, $1,351,000 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 9, 1997, the Fund's Board of Directors declared an ordinary income
dividend to Common Stock shareholders in the amount of $.068915 payable on
December 30, 1997 to shareholders of record as of December 19, 1997.
14
<PAGE>
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.
MuniAssets
Fund, Inc.
Box 9011
Princeton, NJ
08543-9011 #16716--11/97
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