MuniAssets
Fund, Inc.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Semi-Annual Report
November 30, 1999
<PAGE>
MuniAssets Fund, Inc.
Managed Dividend Policy
The Fund's dividend policy is to distribute all or a portion of its net
investment income to its shareholders on a monthly basis. In order to provide
shareholders with a more consistent yield to the current trading price of shares
of Common Stock of the Fund, the Fund may at times pay out less than the entire
amount of net investment income earned in any particular month and may at times
in any particular month pay out such accumulated but undistributed income in
addition to net investment income earned in that month. As a result, the
dividends paid by the Fund for any particular month may be more or less than the
amount of net investment income earned by the Fund during such month. The Fund's
current accumulated but undistributed net investment income, if any, is
disclosed in the Statement of Assets, Liabilities and Capital, which comprises
part of the financial information included in this report.
Officers and Directors
Terry K. Glenn, President and Director
Joe Grills, Director
Walter Mintz, Director
Robert S. Salomon Jr., Director
Melvin R. Seiden, Director
Stephen B. Swensrud, Director
Arthur Zeikel, Director
Vincent R. Giordano, Senior Vice President
Kenneth A. Jacob, Vice President
Theodore R. Jaeckel Jr., Vice President
John M. Loffredo, Vice President
Donald C. Burke, Vice President and Treasurer
Bradley J. Lucido, 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, 1999
DEAR SHAREHOLDER
For the six months ended November 30, 1999, MuniAssets Fund, Inc. earned $0.411
per share income dividends, which included earned and unpaid dividends of
$0.065. This represents a net annualized yield of 6.15%, based on a month-end
net asset value of $13.35 per share. Over the same period, the Fund's total
investment return was -4.53%, based on a change in per share net asset value
from $14.46 to $13.35, and assuming reinvestment of $0.411 per share income
dividends.
The Municipal Market Environment
The combination of steady strong domestic economic growth, improvement in
foreign economies (most notably in Japan) and increasing investor concerns
regarding potential increases in US inflation put upward pressure on bond yields
throughout the six-month period ended November 30, 1999. Continued strong US
employment growth and consumer spending were among the reasons the Federal
Reserve Board cited for raising short-term interest rates in late June, August
and November. US Treasury bond yields reacted by climbing above 6.375% by late
October and into November. During the period, yields on 30-year US Treasury
bonds increased over 45 basis points (0.45%).
Long-term tax-exempt bond yields also rose during the six months ended November
30, 1999. For much of the first half of 1999, the municipal bond market was able
to withstand much of the upward pressure on bond yields. However, investor
concerns of additional moves by the Federal Reserve Board to moderate US
economic growth and, more importantly, the loss of the strong technical support
that the tax-exempt market enjoyed in early 1999 helped push municipal bond
yields significantly higher for the remainder of the period. The yields on
long-term tax-exempt revenue bonds rose over 70 basis points to 6.14% by
November 30, 1999, as measured by the Bond Buyer Revenue Bond Index.
In recent months, the significant decline in new tax-exempt bond issuance has
remained a positive factor within the municipal bond market, as it had been for
much of the past year. Over the last year, more than $230 billion in long-term
municipal bonds was issued, a decline of nearly 20% compared to the same period
a year ago. During the past six months, over $115 billion in long-term
tax-exempt bonds was underwritten, representing a decline of nearly 15% compared
to the corresponding period in 1998. Over the past three months, approxi mately
$55 billion in securities was issued by municipalities nationally. This
quarterly issuance represented a decline of over 5% when compared to the same
period in 1998. It is likely that many tax-exempt issuers have accelerated their
financings in recent months to avoid any potential Year 2000 (Y2K)-related
disruptions at year-end. It is likely that this increased new-issue volume in
October and November is at the expense of future bond issuance, particularly in
early 2000. Consequently, the municipal market's positive technical position is
likely to continue into early next year.
Although tax-exempt bond yields are at their highest level in over two years and
have attracted significant retail investor interest, institutional demand has
declined sharply. Long-term municipal mutual funds have seen consistent outflows
in recent months as the yields of individual securities have risen faster than
those of larger, more diverse mutual funds. In addition, the demand from
property/casualty insurance companies has weakened as a result of the losses,
and anticipated losses, incurred as a result of the series of damaging storms
across much of the eastern United States. Additionally, many institutional
investors who were attracted to the municipal bond market in recent years by
historically attractive tax-exempt bond yield ratios of over 90% have found
other asset classes even more attractive. Even with a reduced supply position,
tax-exempt issuers have been forced to repeatedly raise municipal bond yields in
the attempt to attract adequate demand.
The recent relative underperformance of the municipal bond market has resulted
in an opportunity for long-term investors to purchase tax-exempt issues whose
yields are nearly identical with taxable US Treasury securities. At November 30,
1999, long-term uninsured municipal revenue bond yields were almost 98% of
comparable US Treasury securities. In recent months, many taxable asset classes,
such as corporate bonds, mortgage-backed securities and US agency debt, have all
accelerated debt issuance. This acceleration was initiated largely to avoid
issuing securities at year-end and to minimize any associated Y2K problems that
may develop. However, this increased issuance has also resulted in higher yield
levels in the various asset classes as lower bond prices became necessary to
attract sufficient investor demand. Going forward, it is believed that the pace
of non-US Government debt issuance is likely to slow significantly. As the
supply of this debt declines, we would expect many institutional investors to
return to the municipal bond market and the attractive yield ratios available.
Looking ahead, it appears to us that long-term tax-exempt bond yields will
remain under pressure, trading in a broad range centered near current levels.
Investors are likely to remain concerned about future action by the Federal
Reserve Board. We believe Y2K considerations have prohibited any further Federal
Reserve Board moves from the end of the year and the beginning of 2000. Any
improvement in bond prices will probably be contingent upon weakening in both US
employment growth and consumer spending. The 100 basis point rise in US Treasury
bond yields seen thus far this year may negatively impact US economic growth.
The US housing market will be among the first sectors likely to be affected, as
some declines have already been evidenced in response to higher mortgage rates.
We believe that it is also unrealistic to expect double-digit returns in US
equity markets to continue indefinitely. Much of the US consumer's wealth is
tied to recent stock market appreciation. Any slowing in these incredible growth
rates is likely to reduce consumer spending. We believe that these factors
suggest that the worst of the recent increase in bond yields has passed and
stable, if not slightly improving, bond prices may be expected.
Portfolio Strategy
Largely as a result of the stabilization of financial markets, credit spreads
within the municipal market reverted to their historically narrow levels early
in the six-month period ended November 30, 1999. Corporate-related tax-exempt
debt benefited the most as a rebound in commodity prices and robust economic
growth contributed to growing optimism over earnings prospects. However, more
recently an upturn in the supply of high-yield issuance coupled with heightened
liquidity-related concerns on the part of the investor community caused credit
spreads to widen somewhat. These recent developments are largely attributable to
year-end seasonal patterns as well as Y2K-related concerns.
In contrast to the corporate sector, healthcare-related debt has undergone
appreciable deterioration in credit fundamentals and market liquidity. The
financial positions of many nonprofit hospitals have weakened in recent quarters
as these hospitals struggle to cope with rising costs, reduced reimbursement
rates resulting from the Balanced Budget Act of 1997 and increased competition.
For some time now, we have maintained a limited exposure in this sector and,
while we remain circumspect given the strained environment, credit spreads have
widened out to the point where much of the bad news appears to have been
discounted. In light of these developments, we began to establish small
positions in credits that we believe have been unnecessarily punished by the
market and therefore represent good value, in our opinion.
Extending the portfolio's average call protection remained a strategic focus
throughout the past six months. Municipal securities are typically issued with
optional call features giving the issuer the right to redeem outstanding debt
prior to maturity. This usually occurs at an inopportune time from the
investor's perspective as interest rates are likely to be lower. In light of
this ongoing reinvestment risk, we have maintained a proactive approach to
managing call exposure in an effort to reduce the impact on the portfolio's
overall income stream and, ultimately, offer a more stable stream of dividend
income for shareholders over the long term.
Our investment philosophy has grown more flexible to allow for more short-term
trading opportunities, which requires a greater emphasis on liquidity. As a
consequence, we shifted our focus toward larger and more widely distributed
issues. Typically, smaller issues are closely held by a handful of
2 & 3
<PAGE>
MuniAssets Fund, Inc., November 30, 1999 investors. They tend to trade
infrequently and are subject to higher transaction costs, making them unsuitable
for our current strategies. This greater willingness to capitalize on short-term
inefficiencies within the tax-exempt high-yield arena may possibly generate more
turnover than the portfolio has experienced in the past. At the same time, we
expect the enhanced degree of liquidity to prove beneficial both in terms of
reducing individual credit risk and rendering the portfolio more responsive to
changes in our investment outlook.
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,
/s/ Terry K. Glenn
Terry K. Glenn
President and Director
/s/ Vincent R. Giordano
Vincent R. Giordano
Senior Vice President
/s/ Theodore R. Jaeckel Jr.
Theodore R. Jaeckel Jr.
Vice President and Portfolio Manager
/s/ John M. Loffredo
John M. Loffredo
Vice President and Portfolio Manager
December 30, 1999
PROXY RESULTS
During the six-month period ended November 30, 1999, MuniAssets Fund, Inc.'s
shareholders voted on the following proposals. The proposals were approved at
the shareholders' meeting on August 25, 1999. 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 Directors: Terry K. Glenn 9,960,619 345,282
Joe Grills 9,958,734 347,167
Walter Mintz 9,952,654 353,247
<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 for the current fiscal year. 10,027,496 58,602 219,803
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue
===================================================================================================================================
<S> <C> <C> <C> <C> <C>
Alabama--2.1% B- NR* $ 1,420 Brewton, Alabama, IDB, PCR, Refunding (Container Corporation
of America--Jefferson Smurfit Corp. Project), 8% due 4/01/2009 $ 1,487
CCC Ca 4,324 Mobile, Alabama, IDB, Solid Waste Disposal Revenue Refunding
Bonds (Mobile Energy Services Co. Project), 6.95% due 1/01/2020 (b) 1,426
===================================================================================================================================
Alaska--1.4% NR* NR* 2,000 Valdez, Alaska, Marine Terminal Revenue Refunding Bonds (Amerada Hess
Pipeline Corporation), 6.10% due 2/01/2024 2,006
===================================================================================================================================
Arizona--8.7% B B2 2,500 Coconino County, Arizona, Pollution Control Corporation, Revenue
Refunding Bonds (Tucson Electric Power Navajo), Series B, 7%
due 10/01/2032 2,544
BBB+ Baa1 2,045 Maricopa County, Arizona, IDA, Health Facilities Revenue Bonds
(Catholic Healthcare West Project), Series A, 5% due 7/01/2021 1,622
BBB- Baa3 1,500 Maricopa County, Arizona, Pollution Control Corporation, PCR,
Refunding (Public Service Company of New Mexico), Series A, 5.75%
due 11/01/2022 1,342
NR* B1 3,000 Phoenix, Arizona, IDA, Airport Facility Revenue Refunding Bonds
(America West Airlines Inc. Project), AMT, 6.30% due 4/01/2023 2,760
Pima County, Arizona, IDA, Industrial Revenue Refunding Bonds (Tucson
Electric Power Company Project):
B B2 1,200 Series B, 6% due 9/01/2029 1,064
B B2 1,000 Series C, 6% due 9/01/2029 889
NR* NR* 1,880 Show Low, Arizona, Improvement District No. 5, Special Assessment
Bonds, 6.375% due 1/01/2015 1,874
===================================================================================================================================
</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)
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
VRDN Variable Rate Demand Notes
4 & 5
<PAGE>
MuniAssets Fund, Inc., November 30, 1999
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
===================================================================================================================================
<S> <C> <C> <C> <C> <C>
California--6.1% AAA Aaa $ 9,545 Anaheim, California, Public Financing Authority, Lease Revenue
Bonds (Public Improvements Project), Sub-Series C, 5.95%**
due 9/01/2036 (a) $ 1,009
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 2,049
AAA NR* 4,000 Los Angeles, California, Department of Water and Power, Electric
Plant Revenue Bonds, RIB, Series 144, 7.05% due 6/15/2029 (a)(e) 3,580
NR* NR* 1,780 Pleasanton, California, Joint Powers Financing Authority, Revenue
Refunding Bonds, Reassessment, Sub-Series B, 6.60% due 9/02/2008 1,841
===================================================================================================================================
Colorado--2.8% NR* NR* 1,000 Colorado Post-Secondary Educational Facilities Authority Revenue
Bonds (Colorado Ocean Journey Inc. Project), 8.30% due 12/01/2017 1,123
NR* NR* 2,500 Denver, Colorado, Urban Renewal Authority, Tax Increment Revenue
Bonds (Pavilions), AMT, 7.75% due 9/01/2016 2,722
===================================================================================================================================
Connecticut--5.9% BB- Ba1 6,000 Connecticut State Development Authority, PCR, Refunding (Connecticut
Light & Power Company), Series A, 5.85% due 9/01/2028 5,473
NR* NR* 1,000 Connecticut State Health and Educational Facilities Authority Revenue
Bonds (Edgehill Issue), Series A, 6.875% due 7/01/2027 973
NR* NR* 1,795 Eastern Connecticut, State Regional Educational Service Center Revenue
Bonds, 6.50% due 5/15/2009 1,856
===================================================================================================================================
Illinois--5.2% NR* NR* 1,975 Illinois Development Finance Authority Revenue Bonds (Primary Health
Care Centers Facilities Acquisition Program), 7.50% due 12/01/2006 2,012
Illinois Health Facilities Authority Revenue Bonds (Community Hospital
of Ottawa Project):
BBB+ NR* 1,000 6.75% due 8/15/2014 1,034
BBB+ NR* 2,000 6.85% due 8/15/2024 2,073
NR* Baa1 2,150 Illinois Health Facilities Authority Revenue Bonds (Holy Cross
Hospital Project), 6.70% due 3/01/2014 2,189
===================================================================================================================================
Iowa--0.7% NR* NR* 800 Iowa Finance Authority, Health Care Facilities Revenue Bonds (Care
Initiatives Project), 9.25% due 7/01/2025 980
===================================================================================================================================
Kentucky--0.7% NR* NR* 1,000 Kenton County, Kentucky, Airport Board, Special Facilities Revenue
Bonds (Mesaba Aviation Inc. Project), AMT, Series A, 6.70% due 7/01/2029 964
===================================================================================================================================
Louisiana--3.3% CC NR* 4,500 Port New Orleans, Louisiana, IDR, Refunding (Continental Grain Company
Project), 7.50% due 7/01/2013 4,605
===================================================================================================================================
Maryland--2.8% NR* NR* 3,000 Maryland State Energy Financing Administration, Limited Obligation
Revenue Bonds (Cogeneration--AES Warrior Run), AMT, 7.40% due 9/01/2019 3,108
NR* VMIG1+ 300 Maryland State Health and Higher Educational Facilities Authority,
Revenue Refunding Bonds (Pooled Loan Program), VRDN, Series A, 3.85%
due 4/01/2035 (f) 300
A1+ VMIG1+ 600 University of Maryland, University Revenue Bonds (Equipment Loan
Program), VRDN, Series A, 3.75% due 7/01/2015 (f) 600
===================================================================================================================================
Massachusetts--6.8% NR* NR* 825 Massachusetts State Health and Educational Facilities Authority
Revenue Bonds (New England Memorial Hospital Project),
Series C, 7% due 4/01/2014 (b) 207
AAA Ba1 1,645 Massachusetts State Industrial Finance Agency Revenue Bonds (Vinfen
Corporation), 7.10% due 11/15/2003 (d) 1,821
NR* Aaa 2,765 Massachusetts State Industrial Finance Agency, Revenue Refunding
Bonds (Bay Cove Human Services Inc.), 8.375% due 4/01/2004 (d) 3,146
NR* NR* 4,000 Massachusetts State Port Authority, Special Project Revenue Bonds
(Harborside Hyatt Project), AMT, 10% due 3/01/2026 4,243
===================================================================================================================================
Michigan--1.5% A NR* 500 Grand Rapids Charter Township, Michigan, Revenue Bonds (Porter Hills
Obligation Group), 5.45% due 7/01/2029 427
A1+ VMIG1+ 200 University of Michigan, University Revenue Refunding Bonds (Medical
Service Plan), VRDN, Series A-1, 3.80% due 12/01/2021 (f) 200
NR* NR* 1,500 Wayne Charter County, Michigan, Special Airport Facilities Revenue
Refunding Bonds (Northwest Airlines Inc.), 6.75% due 12/01/2015 1,508
===================================================================================================================================
Mississippi--0.9% NR* NR* 1,250 Mississippi Development Bank, Special Obligation Revenue Refunding
Bonds (Diamond Lakes Utilities), Series A, 6.25% due 12/01/2017 1,215
===================================================================================================================================
Missouri--1.1% NR* Baa2 1,500 Missouri State Health and Educational Facilities Authority, Health
Facilities Revenue Bonds (Jefferson Memorial Hospital Obligation
Group), 6.80% due 5/15/2025 1,534
===================================================================================================================================
New Jersey--11.2% Camden County, New Jersey, Improvement Authority, Lease Revenue Bonds
(Holt Hauling & Warehousing), AMT, Series A:
BB- NR* 1,000 9.625% due 1/01/2011 1,144
BB- NR* 3,800 9.875% due 1/01/2021 4,391
Camden County, New Jersey, Pollution Control Financing Authority,
Solid Waste Resource Recovery Revenue Refunding Bonds, AMT:
B- B2 3,000 Series A, 7.50% due 12/01/2010 2,901
B- B2 500 Series B, 7.50% due 12/01/2009 484
NR* NR* 2,000 New Jersey EDA, Economic Development Revenue Bonds (Glimcher Properties
LP Project), AMT, 6% due 11/01/2028 1,853
NR* NR* 1,000 New Jersey EDA, IDR, Refunding (Newark Airport Marriott Hotel), 7% due
10/01/2014 1,045
New Jersey EDA, Revenue Bonds, First Mortgage:
NR* NR* 1,000 (Cranes Mill), Series A, 7.375% due 2/01/2017 1,032
BBB- NR* 1,000 (Fellowship Village Project), Series C, 5.50% due 1/01/2028 838
BB Ba2 2,000 New Jersey EDA, Special Facility Revenue Bonds (Continental Airlines
Inc. Project), AMT, 6.25% due 9/15/2029 1,871
===================================================================================================================================
New Mexico--2.3% Farmington, New Mexico, PCR, Refunding (Public Service Company--
San Juan Project):
NR* Baa3 2,500 Series A, 5.80% due 4/01/2022 2,254
NR* Baa3 1,000 Series C, 5.80% due 4/01/2022 902
===================================================================================================================================
</TABLE>
6 & 7
<PAGE>
MuniAssets Fund, Inc., November 30, 1999
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
===================================================================================================================================
<S> <C> <C> <C> <C> <C>
New York--1.8% Utica, New York, GO, Public Improvement Bonds:
CCC B2 $ 700 9.25% due 8/15/2001 $ 737
CCC B2 700 9.25% due 8/15/2002 751
CCC B2 700 9.25% due 8/15/2003 763
CCC B2 250 8.50% due 8/15/2015 278
===================================================================================================================================
Ohio--4.2% NR* Ba2 4,750 Cleveland, Ohio, Airport Special Revenue Refunding Bonds
(Continental Airlines Inc. Project), AMT, 5.70% due 12/01/2019 4,205
BBB+ Baa2 2,000 Ohio State Solid Waste Disposal Revenue Bonds (USG Corporation
Project), AMT, 5.65% due 3/01/2033 1,724
===================================================================================================================================
Oregon--3.1% NR* NR* 1,630 Klamath Falls, Oregon, Electric Revenue Refunding Bonds (Klamath
Cogeneration Project), Senior Lien, 6% due 1/01/2025 1,491
NR* NR* 700 Western Generation Agency, Oregon, Cogeneration Project Revenue
Bonds (Wauna Cogeneration Project), Series A, 7.125% due 1/01/2021 724
B- NR* 2,000 Yamhill County, Oregon, PCR, Refunding (Smurfit Newsprint
Corporation Project), 8% due 12/01/2003 2,097
===================================================================================================================================
Pennsylvania--10.0% NR* NR* 1,000 Lancaster County, Pennsylvania, Hospital Authority Revenue
Bonds (Health Center--Saint Annes Home), 6.60% due 4/01/2024 927
NR* NR* 1,500 Lehigh County, Pennsylvania, General Purpose Authority, Revenue
Refunding Bonds (Kidspeace Obligation Group), 6% due 11/01/2023 1,349
3 Northhampton Pulp LLC (b)(c) 405
NR* NR* 2,210 Pennsylvania Economic Development Financing Authority, Exempt
Facilities Revenue Bonds (National Gypsum Company), AMT,
Series A, 6.25% due 11/01/2027 2,099
AAA NR* 1,455 Pennsylvania State Higher Educational Facilities Authority, College
and University Revenue Refunding Bonds (Eastern College),
Series A, 8% due 10/15/2006 (d) 1,732
NR* NR* 4,000 Philadelphia, Pennsylvania, Authority for IDR, Commercial
Development, AMT, 7.75% due 12/01/2017 4,284
NR* NR* 2,625 Philadelphia, Pennsylvania, Authority for Industrial Development,
Health Care Facility Revenue Refunding Bonds (Paul's Run), Series A,
5.875% due 5/15/2028 2,219
A1+ VMIG1+ 600 Philadelphia, Pennsylvania, Hospitals and Higher Education
Facilities Authority, Hospital Revenue Bonds (Children's Hospital of
Philadelphia Project), VRDN, 3.85% due 3/01/2027 (f) 600
A1+ NR* 300 Schuylkill County, Pennsylvania, IDA, Resource Recovery Revenue
Refunding Bonds (Northeastern Power Company), VRDN, Series A,
3.75% due 12/01/2022 (f) 300
===================================================================================================================================
South Carolina--0.7% NR* NR* 1,000 South Carolina Jobs Economic Development Authority, Health
Facilities Revenue Bonds, First Mortgage (Lutheran Homes Project),
6.625% due 5/01/2028 926
===================================================================================================================================
Texas--3.1% BB- Ba1 4,500 Lower Colorado River Authority, Texas, PCR (Samsung Austin
Semiconductor), AMT, 6.375% due 4/01/2027 4,369
===================================================================================================================================
Vermont--2.4% NR* NR* 3,015 Vermont Educational and Health Buildings Financing Agency, Revenue
Refunding Bonds (College of Saint Joseph Project),
8.50% due 11/01/2024 3,319
===================================================================================================================================
Virginia--9.2% NR* NR* 1,500 Dulles Town Center Community Development Authority, Virginia, Special
Assessment Tax (Dulles Town Center Project), 6.25% due 3/01/2026 1,419
NR* NR* 3,075 Peninsula Ports Authority, Virginia, Revenue Refunding Bonds (Port
Facility--Zeigler Coal), 6.90% due 5/02/2022 2,716
Pittsylvania County, Virginia, IDA, Revenue Refunding Bonds,
Exempt-Facility, AMT, Series A:
NR* NR* 1,700 7.50% due 1/01/2014 1,790
NR* NR* 1,000 7.55% due 1/01/2019 1,052
Pocahontas Parkway Association, Virginia, Toll Road Revenue Bonds,
Capital Appreciation:
NR* Ba1 6,200 First Tier, Sub-Series C, 6.25%** due 8/15/2032 592
BBB- Baa3 48,400 Senior Series B, 5.95%** due 8/15/2032 5,148
===================================================================================================================================
Total Investments (Cost--$143,843)--98.0% 136,537
Other Assets Less Liabilities--2.0% 2,759
--------
Net Assets--100.0% $139,296
========
===================================================================================================================================
</TABLE>
(a) FSA Insured.
(b) Non-income producing security.
(c) Represents an equity interest in the reorganization of Ponderosa
Fibres PA. The security may be offered and sold to "qualified
institutional buyers" under Rule 144A of the Securities Act of 1933.
(d) Prerefunded.
(e) 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, 1999.
(f) 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, 1999.
* Not Rated.
** Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase by the Fund.
+ Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
8 & 9
<PAGE>
MuniAssets Fund, Inc., November 30, 1999
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<TABLE>
<CAPTION>
As of November 30, 1999
==============================================================================================================================
<S> <C> <C> <C>
Assets: Investments, at value (identified cost--$143,843,359) .................... $136,537,014
Cash ..................................................................... 141,106
Receivables:
Interest ............................................................... $ 2,539,757
Securities sold ........................................................ 205,000 2,744,757
-----------
Prepaid expenses and other assets ........................................ 31,742
------------
Total assets ............................................................. 139,454,619
------------
==============================================================================================================================
Liabilities: Payables:
Dividends to shareholders .............................................. 101,035
Investment adviser ..................................................... 4,134 105,169
-----------
Accrued expenses and other liabilities ................................... 53,905
------------
Total liabilities ........................................................ 159,074
------------
==============================================================================================================================
Net Assets: Net assets ............................................................... $139,295,545
============
==============================================================================================================================
Capital: Common Stock, par value $.10 per share; 200,000,000 shares authorized;
10,432,191 shares issued and outstanding ................................. $ 1,043,219
Paid-in capital in excess of par ......................................... 148,531,655
Undistributed investment income--net ..................................... 721,691
Accumulated realized capital losses on investments--net .................. (3,694,675)
Unrealized depreciation on investments--net .............................. (7,306,345)
------------
Total capital--Equivalent to $13.35 net asset value per share of Common
Stock (market price--$11.3125) ........................................... $139,295,545
============
==============================================================================================================================
</TABLE>
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Six Months Ended November 30, 1999
==============================================================================================================================
<S> <C> <C> <C>
Investment Interest and amortization of premium and discount earned ................. $ 4,699,112
Income:
==============================================================================================================================
Expenses: Investment advisory fees ................................................. $ 397,611
Professional fees ........................................................ 25,806
Directors' fees and expenses ............................................. 19,975
Accounting services ...................................................... 19,919
Printing and shareholder reports ......................................... 17,447
Transfer agent fees ...................................................... 17,203
Listing fees ............................................................. 11,951
Pricing fees ............................................................. 5,758
Custodian fees ........................................................... 5,722
Other .................................................................... 6,532
-----------
Total expenses ........................................................... 527,924
------------
Investment income--net ................................................... 4,171,188
------------
==============================================================================================================================
Realized & Realized loss on investments--net ........................................ (2,007,200)
Unrealized Loss on Change in unrealized appreciation/depreciation on investments--net ....... (9,460,378)
Investments--Net: ------------
Net Decrease in Net Assets Resulting from Operations ..................... $ (7,296,390)
============
==============================================================================================================================
</TABLE>
See Notes to Financial Statements.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Six For the Year
Months Ended Ended
Increase (Decrease) in Net Assets: Nov. 30, 1999 May 31, 1999
==============================================================================================================================
<S> <C> <C> <C>
Operations: Investment income--net ................................................... $ 4,171,188 $ 8,639,850
Realized gain (loss) on investments--net ................................. (2,007,200) 4,247,096
Change in unrealized appreciation/depreciation on investments--net ....... (9,460,378) (7,514,715)
------------ ------------
Net increase (decrease) in net assets resulting from operations .......... (7,296,390) 5,372,231
------------ ------------
==============================================================================================================================
Dividends to Investment income--net ................................................... (4,291,324) (8,547,155)
Shareholders: ------------ ------------
Net decrease in net assets resulting from dividends to shareholders ...... (4,291,324) (8,547,155)
==============================================================================================================================
Common Stock Value of shares issued to Common Stock shareholders in reinvested
Transactions: dividends ................................................................ -- 111,277
------------ ------------
==============================================================================================================================
Net Assets: Total decrease in net assets ............................................. (11,587,714) (3,063,647)
Beginning of period ...................................................... 150,883,259 153,946,906
------------ ------------
End of period* ........................................................... $139,295,545 $150,883,259
============ ============
==============================================================================================================================
* Undistributed investment income--net ..................................... $ 721,691 $ 841,827
============ ============
==============================================================================================================================
</TABLE>
See Notes to Financial Statements.
10 & 11
<PAGE>
MuniAssets Fund, Inc., November 30, 1999
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
The following per share data and ratios have For the
been derived from information provided in Six Months
the financial statements. Ended For the Year Ended May 31,
Nov. 30, ------------------------------------------
Increase (Decrease) in Net Asset Value: 1999 1999 1998 1997 1996
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period .................... $ 14.46 $ 14.77 $ 14.16 $ 13.74 $ 13.73
Operating -------- -------- -------- -------- --------
Performance: Investment income--net ................................. .40 .83 .84 .84 .88
Realized and unrealized gain (loss) on investments--net (1.10) (.32) .62 .42 .03
-------- -------- -------- -------- --------
Total from investment operations ........................ (.70) .51 1.46 1.26 .91
-------- -------- -------- -------- --------
Less dividends from investment income--net .............. (.41) (.82) (.85) (.84) (.89)
-------- -------- -------- -------- --------
Capital charge resulting from issuance of Common Stock .. -- -- -- -- (.01)
-------- -------- -------- -------- --------
Net asset value, end of period .......................... $ 13.35 $ 14.46 $ 14.77 $ 14.16 $ 13.74
======== ======== ======== ======== ========
Market price per share, end of period ................... $11.3125 $ 13.00 $ 13.75 $ 12.625 $ 12.375
======== ======== ======== ======== ========
====================================================================================================================================
Total Investment Based on net asset value per share ...................... (4.53%)+ 3.74% 10.87% 10.11% 7.46%
Return:** ======== ======== ======== ======== ========
Based on market price per share ......................... (10.01%)+ .19% 15.76% 9.01% 11.91%
======== ======== ======== ======== ========
====================================================================================================================================
Ratios to Average Expenses, net of reimbursement .......................... .73%* .72% .75% .76% .55%
Net Assets: ======== ======== ======== ======== ========
Expenses ................................................ .73%* .72% .75% .76% .77%
======== ======== ======== ======== ========
Investment income--net .................................. 5.74%* 5.66% 5.75% 6.06% 6.24%
======== ======== ======== ======== ========
====================================================================================================================================
Supplemental Net assets, end of period (in thousands) ................ $139,296 $150,883 $153,947 $147,630 $143,195
Data: ======== ======== ======== ======== ========
Portfolio turnover ...................................... 21.16% 40.57% 36.39% 45.15% 42.72%
======== ======== ======== ======== ========
====================================================================================================================================
</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 charges.
+ Aggregate total investment return.
See Notes to Financial Statements.
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's financial statements are prepared in accordance with generally accepted
accounting principles, which may require the use of management accruals and
estimates. 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 written or purchased are valued at the last sale price in the case of
exchange-traded options. In the case of options traded in the over-the-counter
market, valuation is the last asked price (options written) or the last bid
price (options purchased). 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 quota tions 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 financial 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 covered call options and purchase 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
12 & 13
<PAGE>
MuniAssets Fund, Inc., November 30, 1999
NOTES TO FINANCIAL STATEMENTS (concluded)
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) 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
.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, 1999 were $30,291,111 and $35,088,696, respectively.
Net realized losses for the six months ended November 30, 1999 and net
unrealized losses as of November 30, 1999 were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Losses Losses
- --------------------------------------------------------------------------------
Long-term investments ................ $(2,007,200) $(7,306,345)
----------- -----------
Total ................................ $(2,007,200) $(7,306,345)
=========== ===========
- --------------------------------------------------------------------------------
As of November 30, 1999, net unrealized depreciation for Federal income tax
purposes aggregated $7,306,345, of which $3,750,706 related to appreciated
securities and $11,057,051 related to depreciated securities. The aggregate cost
of investments at November 30, 1999 for Federal income tax purposes was
$143,843,359.
4. Common Stock Transactions:
At November 30, 1999, 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, 1999 remained constant
and during the year ended May 31, 1999 increased by 7,575 due to dividend
reinvestment.
5. Capital Loss Carryforward:
At May 31, 1999, the Fund had a net capital loss carryforward of approximately
$1,047,000, all of which expires in 2004. This amount will be available to
offset like amounts of any future taxable gains.
6. Subsequent Event:
On December 8, 1999, the Fund's Board of Directors declared an ordinary income
dividend to Common Stock shareholders in the amount of $.065324 payable on
December 30, 1999 to shareholders of record as of December 23, 1999.
ABOUT INVERSE FLOATERS
As a part of its investment strategy, the Fund may invest in certain securities
whose potential income return is inversely related to changes in a floating
interest rate ("inverse floaters"). In general, income on inverse floaters will
decrease when short-term interest rates increase and increase when short-term
interest rates decrease. Investments in inverse floaters may be characterized as
derivative securities and may subject the Fund to the risks of reduced or
eliminated interest payments and losses of invested principal. In addition,
inverse floaters have the effect of providing investment leverage and, as a
result, the market value of such securities will generally be more volatile than
that of fixed rate, tax-exempt securities. To the extent the Fund invests in
inverse securities, the market value of the Fund's portfolio and the net asset
value of the Fund's shares may also be more volatile than if the Fund did not
invest in these securities.
QUALITY PROFILE
The quality ratings of securities in the Fund as of November 30, 1999 were as
follows:
- --------------------------------------------------------------------------------
Percent of
S&P Rating/Moody's Rating Net Assets
- --------------------------------------------------------------------------------
AAA/Aaa ................................................ 8.1%
A/A .................................................... 0.3
BBB/Baa ................................................ 14.8
BB/Ba .................................................. 15.8
B/B .................................................... 12.0
CCC/Caa ................................................ 1.0
CC/Ca .................................................. 3.3
NR (Not Rated) ......................................... 41.2
Other* ................................................. 1.5
- --------------------------------------------------------------------------------
* Temporary investments in short-term municipal securities.
14 & 15
<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--11/99
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