MuniAssets
Fund, Inc.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Semi-Annual Report
November 30, 2000
<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
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
--------------------------------------------------------------------------------
Arthur Zeikel, Director of MuniAssets Fund, Inc. has recently retired. The
Fund's Board of Directors wishes Mr. Zeikel well in his retirement.
--------------------------------------------------------------------------------
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, 2000
DEAR SHAREHOLDER
For the six months ended November 30, 2000, MuniAssets Fund, Inc. earned $0.406
per share income dividends, which included earned and unpaid dividends of
$0.067. This represents a net annualized yield of 6.36%, based on a month-end
net asset value of $12.73 per share. Over the same period, the Fund's total
investment return was +3.24%, based on a change in per share net asset value
from $12.76 to $12.73, and assuming reinvestment of $0.407 per share income
dividends.
The Municipal Market Environment
During the six months ended November 30, 2000, long-term US Treasury bond yields
generally drifted lower. A number of economic indicators, particularly
employment, new home sales and consumer spending, have suggested that US
economic growth, while still strong, has moderated from 1999's robust levels.
Revised third-quarter 2000 US gross domestic product growth was 2.4%, well below
the first-quarter 2000 rate of 4.8% and the second-quarter 2000 rate of 5.6%.
This decline in economic growth suggested to some analysts that the Federal
Reserve Board was finished raising interest rates for its current interest rate
cycle. The Federal Reserve Board increased short-term interest rates at its May
meeting and has kept monetary policy steady at its subsequent meetings. (After
the close of the period, the Federal Reserve Board cut interest rates by 0.50%.)
Given the potential for stable short-term interest rates in the coming months,
investor emphasis focused on the continuing US Treasury debt reduction program
and forecasts of sizeable Federal budgetary surpluses going forward. Many
investors have concluded that there will be a significant future shortage of
longer-dated maturity US Treasury securities. By late August, US Treasury bond
yields declined 30 basis points (0.30%) to 5.66%.
However, during September and early October, bond prices were unable to maintain
their earlier gains. Rising oil prices were the major impetus, as many investors
feared that higher oil prices would result in increased inflationary pressures.
Additionally, US corporations issued large amounts of taxable debt in order to
take advantage of the current low interest rate environment. During the last
three months, US corporations issued more than $100 billion in investment-grade
securities, offering yields in the 7.25%-8.50% range. Many investors found these
taxable issues an attractive and more plentiful alternative to US Treasury
bonds. As the demand for US Treasury issues weakened, US bond yields rose. By
early October 2000, US Treasury bond yields had risen to 5.90%.
Declining oil prices and, more importantly, a dramatic decline in US equity
prices, particularly among NASDAQ issues, allowed the bond rally to resume in
late October. Bond yields declined for the remainder of the period as further
evidence of a moderating domestic economy were released. In particular, labor
conditions appeared to have loosened as weekly unemployment claims rose
consistently during the month. A further series of significant declines on
various US equity exchanges also caused bond prices to rise. By November 30,
2000, US Treasury bond yields declined to 5.61%, their lowest level for the
year.
The six-month period ended November 30, 2000 was one of the few periods in
recent years in which the tax-exempt bond market outperformed its taxable
counterpart, the US Treasury bond market. While municipal bond yields followed
the similar seesaw pattern of Treasury bond yields, tax-exempt bond price
volatility was significantly reduced. Municipal bond yields traded in a
relatively narrow range during much of November 2000. Overall investor demand
for municipal bonds remained strong, allowing tax-exempt bond yields, as
measured by the Bond Buyer Revenue Bond Index, to decline more than 45 basis
points to end the period at 5.74%.
New long-term municipal bond issuance has continued to decline, although in
recent months the rate of this decline has slowed. Over the past three months,
more than $50 billion in new long-term municipal bonds was issued, a decline of
8.5% compared to the same three-month period in 1999. During the last six
months, approximately $106 billion in tax-exempt bonds was issued, representing
a similar decline of 8.5%. Approximately $195 billion in new municipal
securities was issued during the last 12 months, a decline of 16% compared to
the same 12-month period in 1999. This reduction in tax-exempt bond issuance
helped provide a solid technical support for the municipal bond market.
The demand for municipal bonds came from a number of non-traditional and
conventional sources. Derivative/arbitrage programs and insurance companies
remained the dominant institutional buyers, while individual retail purchases
also remained strong. Traditional, open-end tax-exempt mutual funds have
continued to see significant disintermediation. It was recently reported that
thus far during the 2000 calendar year, long-term municipal bond mutual funds
experienced net cash outflows of more than $15 billion. Fortunately, the
combination of reduced new bond issuance and ongoing demand from non-traditional
sources has been able to more than offset the decline in demand from tax-exempt
mutual funds. This favorable balance has fostered a significant decline in
municipal bond yields in recent months.
Currently, there is no reason to expect that the positive technical position of
the municipal bond market will significantly deteriorate. The steeply positive
yield curve and the relatively high credit quality that the tax-exempt bond
market offers should continue to attract different classes of institutional
buyers. Strong state and local governmental financial conditions also suggest
that issuance should remain manageable into next year. Recently, research
analysts suggested that issuance in 2001 is likely to be in the $200 billion
range, which implies that next year's issuance is unlikely to exert any
significant pressure on the tax-exempt bond market.
However, the presidential election may affect the tax-exempt bond market.
Various tax and spending programs proposed by President-elect Bush have obvious
implications for state and local governments as well as for corporate and
individual taxpayers. Recent congressional elections resulted in very narrow
majorities in both the House and the Senate, making significant legislative
changes difficult in the coming session. Political history has shown that the
enactment of campaign promises, both Republican and Democratic, has very often
been a long, laborious process. This suggests that over the next few months US
economic factors will most likely have a greater effect on bond yields than
political considerations.
Portfolio Strategy
During the six months ended November 30, 2000, the tax-exempt high-yield market
experienced unrelenting pressure as yield spreads continued to widen in an
environment characterized by a lack of investor demand and periods of pronounced
illiquidity. Tax-exempt mutual funds, a traditional source of demand for this
sector, were largely absent, contending with a persistent asset drain as
individual investors continued to withdraw money. Furthermore, various factors
converged, raising questions about creditworthiness across several sectors. A
typical example was the general deterioration in credit quality of
not-for-profit hospitals emerging from sharply lower government reimbursement
rates among heightened competition caused by the expanding role of managed care.
Recently, the convergence of soaring energy prices, the weak euro and high
interest rates raised concerns about the sustainability of corporate earnings.
As a consequence, corporate spreads within both the taxable and the tax-exempt
market widened considerably in the last six months. Making matters worse,
broker-dealer numbers diminished either through consolidation or outright
closures. The resulting loss of liquidity, coupled with a reduced risk
tolerance, weakened the market further.
We sought to maintain the same focus and discipline in pursuing our investment
strategy, although the Fund was affected by these developments. Portfolio
activity during the period continued to reflect our efforts to seek to enhance
both relative performance and the Fund's dividend distribution. Valuations in
the tax-exempt high-yield market negatively affected a broad variety of sectors,
giving investors the opportunity to capitalize on aberrations in pricing,
particularly brand new issuance and more sea-
2 & 3
<PAGE>
MuniAssets Fund, Inc., November 30, 2000
soned securities. The utility sector was one of the best performers within the
high-yield market in noticeable contrast to the poor performance of much of the
healthcare sector. Investor-owned utilities have long represented a core
position of the Fund and considering their relative outperformance in recent
months, provided a sensible source of funds for new investments. The bulk of
these new investments were healthcare credits, which we believed represented
reasonable value in the current market environment. We were careful in our
selections, preferring the debt of long-term care facilities and human service
providers. We believe that these issues stand to benefit from favorable
demographic trends and significant support through government funding.
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 27, 2000
PROXY RESULTS
During the six-month period ended November 30, 2000, MuniAssets Fund, Inc.'s
shareholders voted on the following proposals. The proposals were approved at
the shareholders' meeting on August 23, 2000. 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> <C>
1. To elect the Fund's Directors: Melvin R. Seiden 10,076,561 226,132
Stephen B. Swensrud 10,077,749 224,944
---------------------------------------------------------------------------------------------------------------------------
<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. 10,169,445 38,769 94,479
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
====================================================================================================================================
<C> <C> <C> <C> <S> <C>
Alabama--2.0% B NR* $1,420 Brewton, Alabama, IDB, PCR, Refunding (Container Corporation of
America--Jefferson Smurfit Corp. Project), 8% due 4/01/2009 $ 1,450
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) 1,178
====================================================================================================================================
Alaska--1.5% NR* NR* 2,000 Valdez, Alaska, Marine Terminal Revenue Refunding Bonds (Amerada Hess
Pipeline Corporation), 6.10% due 2/01/2024 2,004
====================================================================================================================================
Arizona--8.1% B+ Ba3 2,500 Coconino County, Arizona, Pollution Control Corporation Revenue Refunding
Bonds (Tucson Electric Power Navajo), Series B, 7% due 10/01/2032 2,524
BBB+ Baa1 2,045 Maricopa County, Arizona, IDA, Health Facilities Revenue Bonds (Catholic
Healthcare West Project), Series A, 5% due 7/01/2021 1,669
NR* NR* 1,115 Maricopa County, Arizona, IDA, M/F Housing Revenue Bonds (Sun King
Apartments Project), Sub-Series C, 9.50% due 11/01/2031 1,137
NR* B1 3,000 Phoenix, Arizona, IDA, Airport Facility Revenue Refunding Bonds (America
West Airlines Inc. Project), AMT, 6.30% due 4/01/2023 2,569
Pima County, Arizona, IDA, Industrial Revenue Refunding Bonds (Tucson
Electric Power Company Project):
B+ Ba3 200 Series B, 6% due 9/01/2029 180
B+ Ba3 1,000 Series C, 6% due 9/01/2029 899
NR* NR* 1,780 Show Low, Arizona, Improvement District No. 5, Special Assessment Bonds,
6.375% due 1/01/2015 1,818
====================================================================================================================================
</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, 2000
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
====================================================================================================================================
<C> <C> <C> <C> <S> <C>
California--4.5% AAA NR* $4,000 Los Angeles, California, Department of Water and Power, Electric Plant
Revenue Bonds, RIB, Series 144, 6.95% due 6/15/2029 (a)(e) $ 4,037
NR* NR* 1,780 Pleasanton, California, Joint Powers Financing Authority, Revenue Refunding
Bonds, Reassessment, Sub-Series B, 6.60% due 9/02/2008 1,873
====================================================================================================================================
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 1,083
NR* NR* 2,500 Denver, Colorado, Urban Renewal Authority, Tax Increment Revenue Bonds
(Pavilions), AMT, 7.75% due 9/01/2016 2,655
====================================================================================================================================
Connecticut--5.4% NR* NR* 1,590 Connecticut State Development Authority, IDR (AFCO Cargo BDL-LLC Project),
AMT, 8% due 4/01/2030 1,614
BB+ Ba1 5,000 Connecticut State Development Authority, PCR, Refunding (Connecticut Light
and Power Company), Series A, 5.85% due 9/01/2028 4,554
NR* B1 1,025 New Haven, Connecticut, Facility Revenue Bonds (Hill Health Corporation
Project), 9.25% due 5/01/2017 1,058
====================================================================================================================================
Florida--3.4% NR* NR* 2,000 Hillsborough County, Florida, IDA, Exempt Facilities Revenue Bonds (National
Gypsum), AMT, Series A, 7.125% due 4/01/2030 1,791
NR* NR* 2,800 Parkway Center, Florida, Community Development District Special Assessment
Refunding Bonds, Series B, 8% due 5/01/2010 2,787
====================================================================================================================================
Idaho--0.7% NR* NR* 1,000 Idaho Health Facilities Authority, Revenue Refunding Bonds (Valley Vista
Care Corporation), Series A, 7.75% due 11/15/2016 970
====================================================================================================================================
Illinois--6.3% NR* NR* 1,755 Illinois Development Finance Authority Revenue Bonds (Primary Health Care
Centers Facilities Acquisition Program), 7.50% due 12/01/2006 1,840
Illinois Health Facilities Authority Revenue Bonds:
BBB+ NR* 1,000 (Community Hospital of Ottawa Project), 6.75% due 8/15/2014 1,014
BBB+ NR* 2,000 (Community Hospital of Ottawa Project), 6.85% due 8/15/2024 2,000
NR* Ba3 2,150 (Holy Cross Hospital Project), 6.70% due 3/01/2014 1,815
Illinois Health Facilities Authority, Revenue Refunding Bonds, VRDN (f):
A1 VMIG1@ 1,200 (Resurrection Health), Series A, 4.15% due 5/01/2029 (a) 1,200
A1 VMIG1@ 500 (University of Chicago Hospitals), 4.10% due 8/01/2026 (g) 500
====================================================================================================================================
Iowa--0.7% NR* NR* 800 Iowa Finance Authority, Health Care Facilities Revenue Refunding Bonds (Care
Initiatives Project), 9.25% due 7/01/2025 953
====================================================================================================================================
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 940
====================================================================================================================================
Louisiana--3.4% BB- NR* 4,500 Port New Orleans, Louisiana, IDR, Refunding (Continental Grain Company
Project), 7.50% due 7/01/2013 4,548
====================================================================================================================================
Maryland--4.5% NR* NR* 1,930 Maryland State Economic Development Corporation, Revenue Refunding Bonds
(Baltimore Association for Retarded Citizens--Health and Mental Hygiene
Program), Series A, 7.75% due 3/01/2025 1,925
NR* NR* 3,000 Maryland State Energy Financing Administration, Limited Obligation Revenue
Bonds (Cogeneration--AES Warrior Run), AMT, 7.40% due 9/01/2019 3,029
A1+ VMIG1@ 600 Maryland State Energy Financing Administration, Solid Waste Disposal Revenue
Bonds (Cimenteries Project), AMT, VRDN, 4.25% due 5/01/2035 (f) 600
NR* VMIG1@ 400 Maryland State Health and Higher Educational Facilities Authority, Revenue
Refunding Bonds (Pooled Loan Program), VRDN, Series A, 4.10% due
4/01/2035 (f) 400
====================================================================================================================================
Massachusetts--6.9% 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) 165
NR* Ba2 2,220 Massachusetts State Health and Educational Facilities Authority, Revenue
Refunding Bonds (Bay Cove Human Services Issue), Series A, 5.90%
due 4/01/2028 1,814
NR* Aaa 2,765 Massachusetts State Industrial Finance Agency, Revenue Refunding Bonds (Bay
Cove Human Services Inc.), 8.375% due 4/01/2004 (d) 3,062
NR* NR* 4,000 Massachusetts State Port Authority, Special Project Revenue Bonds
(Harborside Hyatt Project), AMT, 10% due 3/01/2026 4,111
====================================================================================================================================
New Jersey--12.8% Camden County, New Jersey, Improvement Authority, Lease Revenue Bonds (Holt
Hauling & Warehousing), AMT, Series A:
CCC+ NR* 1,000 9.625% due 1/01/2011 979
CCC+ NR* 3,800 9.875% due 1/01/2021 3,715
Camden County, New Jersey, Pollution Control Financing Authority, Solid
Waste Resource Recovery Revenue Refunding Bonds, AMT:
CCC B2 3,000 Series A, 7.50% due 12/01/2010 2,881
CCC B2 500 Series B, 7.50% due 12/01/2009 480
NR* NR* 2,000 New Jersey EDA, Economic Development Revenue Bonds (Glimcher Properties LP
Project), AMT, 6% due 11/01/2028 1,702
NR* NR* 200 New Jersey EDA, First Mortgage Revenue Bonds (Cranes Mill), Series A, 7.375%
due 2/01/2017 203
NR* NR* 1,000 New Jersey EDA, IDR, Refunding (Newark Airport Marriott Hotel), 7% due
10/01/2014 1,006
NR* NR* 2,800 New Jersey EDA, Retirement Community Revenue Bonds (Seabrook Village Inc.),
Series A, 8.125% due 11/15/2023 2,692
BB Ba2 2,000 New Jersey EDA, Special Facility Revenue Bonds (Continental Airlines Inc.
Project), AMT, 6.25% due 9/15/2029 1,734
BBB- Baa3 1,500 New Jersey Health Care Facilities Financing Authority, Revenue Refunding
Bonds (Trinitas Hospital Obligation Group), 7.40% due 7/01/2020 1,535
====================================================================================================================================
New York--1.9% Utica, New York, GO, Public Improvement Bonds:
BB Ba3 700 9.25% due 8/15/2001 716
BB Ba3 700 9.25% due 8/15/2002 735
BB Ba3 700 9.25% due 8/15/2003 752
BB Ba3 250 8.50% due 8/15/2015 277
====================================================================================================================================
</TABLE>
6 & 7
<PAGE>
MuniAssets Fund, Inc., November 30, 2000
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
====================================================================================================================================
<C> <C> <C> <C> <S> <C>
North Carolina--0.3% BBB Baa3 $ 350 North Carolina Eastern Municipal Power Agency, Power System Revenue
Refunding Bonds, Series A, 5.75% due 1/01/2026 $ 328
====================================================================================================================================
Ohio--2.1% NR* Ba2 3,365 Cleveland, Ohio, Airport Special Revenue Refunding Bonds (Continental
Airlines Inc. Project), AMT, 5.70% due 12/01/2019 2,801
====================================================================================================================================
Oregon--3.2% NR* NR* 1,630 Klamath Falls, Oregon, Electric Revenue Refunding Bonds (Klamath
Cogeneration Project), Senior Lien, 6% due 1/01/2025 1,468
NR* NR* 700 Western Generation Agency, Oregon, Cogeneration Project Revenue Bonds
(Wauna Cogeneration Project), Series A, 7.125% due 1/01/2021 708
B NR* 2,000 Yamhill County, Oregon, PCR, Refunding (Smurfit Newsprint Corporation
Project), 8% due 12/01/2003 2,040
====================================================================================================================================
Pennsylvania--7.9% NR* NR* 1,000 Lancaster County, Pennsylvania, Hospital Authority Revenue Bonds (Health
Center--Saint Annes Home), 6.60% due 4/01/2024 887
NR* Ba2 1,500 Lehigh County, Pennsylvania, General Purpose Authority, Revenue Refunding
Bonds (Kidspeace Obligation Group), 6% due 11/01/2023 1,222
3 Northhampton Pulp LLC (b)(c)(h) 399
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) 1,726
NR* NR* 4,000 Philadelphia, Pennsylvania, Authority for IDR, Commercial Development, AMT,
7.75% due 12/01/2017 4,202
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 2,073
====================================================================================================================================
South Carolina--1.7% BBB NR* 1,500 South Carolina Jobs, EDA, Economic Development Revenue Bonds (Westminster
Presbyterian Center), 7.75% due 11/15/2030 1,541
NR* NR* 750 South Carolina Jobs, EDA, Health Facilities Revenue Bonds, First Mortgage
(Lutheran Homes Project), 6.625% due 5/01/2028 680
====================================================================================================================================
Texas--5.2% BB Ba1 3,000 Houston, Texas, Airport System Revenue Bonds (Special Facilities--
Continental Airlines), AMT, Series B, 6.125% due 7/15/2017 2,650
BBB- Baa3 4,500 Lower Colorado River Authority, Texas, PCR (Samsung Austin Semiconductor),
AMT, 6.375% due 4/01/2027 4,293
====================================================================================================================================
Utah--1.2% NR* NR* 1,660 Carbon County, Utah, Solid Waste Disposal Revenue Refunding Bonds (Laidlaw
Environmental), AMT, Series A, 7.45% due 7/01/2017 1,600
====================================================================================================================================
Vermont--2.5% 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 3,316
====================================================================================================================================
Virginia--7.6% NR* NR* 1,500 Dulles Town Center, Virginia, Community Development Authority, Special
Assessment Tax (Dulles Town Center Project), 6.25% due 3/01/2026 1,420
NR* NR* 3,075 Peninsula Ports Authority, Virginia, Revenue Refunding Bonds (Port
Facility--Zeigler Coal), 6.90% due 5/02/2022 (b) 461
Pittsylvania County, Virginia, IDA, Revenue Refunding Bonds,
Exempt-Facility, AMT, Series A:
NR* NR* 1,700 7.50% due 1/01/2014 1,720
NR* NR* 1,000 7.55% due 1/01/2019 1,012
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 550
BBB- Baa3 48,400 Senior Series B, 5.95%** due 8/15/2032 4,922
====================================================================================================================================
Wisconsin--0.7% A+ NR* 1,000 Wisconsin State Health and Educational Facilities Authority Revenue Bonds
(Oakwood Village Project), Series A, 7.625% due 8/15/2030 966
====================================================================================================================================
Total Investments (Cost--$140,485)--98.0% 130,158
Other Assets Less Liabilities--2.0% 2,633
--------
Net Assets--100.0% $132,791
========
====================================================================================================================================
</TABLE>
(a) FSA Insured.
(b) Non-income producing security.
(c) These shares represent 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, 2000.
(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, 2000.
(g) MBIA Insured.
(h) Escrowed to maturity.
* 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, 2000
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<TABLE>
<CAPTION>
As of November 30, 2000
===================================================================================================================
<S> <C> <C> <C>
Assets: Investments, at value (identified cost--$140,484,766) ................. $ 130,158,215
Cash .................................................................. 53,995
Receivables:
Interest ............................................................ $ 2,543,903
Securities sold ..................................................... 220,000 2,763,903
-----------
Prepaid expenses and other assets ..................................... 8,187
-------------
Total assets .......................................................... 132,984,300
-------------
===================================================================================================================
Liabilities: Payables:
Dividends to shareholders ........................................... 96,772
Investment adviser .................................................. 50,212 146,984
-----------
Accrued expenses and other liabilities ................................ 46,490
-------------
Total liabilities ..................................................... 193,474
-------------
===================================================================================================================
Net Assets: Net assets ............................................................ $ 132,790,826
=============
===================================================================================================================
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 .................................. 737,068
Accumulated realized capital losses on investments--net ............... (7,194,565)
Unrealized depreciation on investments--net ........................... (10,326,551)
-------------
Total capital--Equivalent to $12.73 net asset value per share of Common
Stock (market price--$11.9375) ........................................ $ 132,790,826
=============
===================================================================================================================
</TABLE>
See Notes to Financial Statements
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Six Months Ended November 30, 2000
======================================================================================================
<S> <C> <C> <C>
Investment Interest and amortization of premium and discount earned $ 4,736,144
Income:
======================================================================================================
Expenses: Investment advisory fees ............................... $372,719
Professional fees ...................................... 28,751
Accounting services .................................... 24,576
Directors' fees and expenses ........................... 20,054
Printing and shareholder reports ....................... 15,570
Listing fees ........................................... 12,053
Transfer agent fees .................................... 9,873
Custodian fees ......................................... 5,295
Pricing fees ........................................... 4,416
Other .................................................. 7,086
--------
Total expenses ......................................... 500,393
-----------
Investment income--net ................................. 4,235,751
-----------
======================================================================================================
Realized & Unreal- Realized loss on investments--net ...................... (2,381,740)
ized Gain (Loss) on Change in unrealized depreciation on investments--net .. 2,117,217
Investments--Net: -----------
Net Increase in Net Assets Resulting from Operations ... $ 3,971,228
===========
======================================================================================================
</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, 2000 May 31, 2000
=========================================================================================================================
<S> <C> <C> <C>
Operations: Investment income--net .............................................. $ 4,235,751 $ 8,385,908
Realized loss on investments--net ................................... (2,381,740) (3,125,350)
Change in unrealized appreciation/depreciation on investments--net .. 2,117,217 (14,597,801)
------------- -------------
Net increase (decrease) in net assets resulting from operations ..... 3,971,228 (9,337,243)
------------- -------------
=========================================================================================================================
Dividends to Dividends to shareholders from investment income--net ............... (4,245,777) (8,480,641)
Shareholders: ------------- -------------
=========================================================================================================================
Net Assets: Total decrease in net assets ........................................ (274,549) (17,817,884)
Beginning of period ................................................. 133,065,375 150,883,259
------------- -------------
End of period* ...................................................... $ 132,790,826 $ 133,065,375
============= =============
=========================================================================================================================
*Undistributed investment income--net ................................ $ 737,068 $ 747,094
============= =============
=========================================================================================================================
</TABLE>
See Notes to Financial Statements.
10 & 11
<PAGE>
MuniAssets Fund, Inc., November 30, 2000
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For the
The following per share data and ratios have been derived Six Months
from information provided in the financial statements. Ended For the Year Ended May 31,
Nov. 30, -----------------------------------------
Increase (Decrease) in Net Asset Value: 2000 2000 1999 1998 1997
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period .................... $ 12.76 $ 14.46 $ 14.77 $ 14.16 $ 13.74
Operating -------- -------- -------- -------- --------
Performance: Investment income--net ................................ .41 .80 .83 .84 .84
Realized and unrealized gain (loss) on
investments--net ...................................... (.03) (1.69) (.32) .62 .42
-------- -------- -------- -------- --------
Total from investment operations ........................ .38 (.89) .51 1.46 1.26
-------- -------- -------- -------- --------
Less dividends from investment income--net .............. (.41) (.81) (.82) (.85) (.84)
-------- -------- -------- -------- --------
Net asset value, end of period .......................... $ 12.73 $ 12.76 $ 14.46 $ 14.77 $ 14.16
======== ======== ======== ======== ========
Market price per share, end of period ................... $11.9375 $11.1875 $ 13.00 $ 13.75 $ 12.625
======== ======== ======== ======== ========
===================================================================================================================================
Total Investment Based on net asset value per share ...................... 3.24%+ (5.45%) 3.74% 10.87% 10.11%
Return:** ======== ======== ======== ======== ========
Based on market price per share ......................... 10.42%+ (7.79%) .19% 15.76% 9.01%
======== ======== ======== ======== ========
===================================================================================================================================
Ratios to Expenses ................................................ .74%* .74% .72% .75% .76%
Average ======== ======== ======== ======== ========
Net Assets: Investment income--net .................................. 6.25%* 5.96% 5.66% 5.75% 6.06%
======== ======== ======== ======== ========
===================================================================================================================================
Supplemental Net assets, end of period (in thousands) ................ $132,791 $133,065 $150,883 $153,947 $147,630
Data: ======== ======== ======== ======== ========
Portfolio turnover ...................................... 8.67% 32.38% 40.57% 36.39% 45.15%
======== ======== ======== ======== ========
===================================================================================================================================
</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 conformity with accounting
principles generally accepted in the United States of America, 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 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
investment strategies to increase or decrease the level of risk to which the
Fund is exposed more quickly and efficiently than transactions in other types of
instruments. 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 closing transaction), the Fund realizes a gain or loss on the
12 & 13
<PAGE>
MuniAssets Fund, Inc., November 30, 2000
NOTES TO FINANCIAL STATEMENTS (concluded)
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 were provided to the Fund by FAM.
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, 2000 were $11,244,808 and $12,768,449, respectively.
Net realized losses for the six months ended November 30, 2000 and net
unrealized losses as of November 30, 2000 were as follows:
-------------------------------------------------------------------------
Realized Unrealized
Losses Losses
-------------------------------------------------------------------------
Long-term investments ............... $(2,381,740) $(10,326,551)
----------- ------------
Total ............................... $(2,381,740) $(10,326,551)
=========== ============
-------------------------------------------------------------------------
As of November 30, 2000, net unrealized depreciation for Federal income tax
purposes aggregated $10,326,551, of which $2,554,700 related to appreciated
securities and $12,881,251 related to depreciated securities. The aggregate cost
of investments at November 30, 2000 for Federal income tax purposes was
$140,484,766.
4. Common Stock Transactions:
At November 30, 2000, 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, 2000 and during the
year ended May 31, 2000 remained constant.
5. Capital Loss Carryforward:
At May 31, 2000, the Fund had a net capital loss carryforward of approximately
$3,084,000, of which $1,047,000 expires in 2004 and $2,037,000 expires in 2008.
This amount will be available to offset like amounts of any future taxable
gains.
6. Subsequent Event:
On December 7, 2000, the Fund's Board of Directors declared an ordinary income
dividend to Common Stock shareholders in the amount of $.066534 per share,
payable on December 28, 2000 to shareholders of record as of December 20, 2000.
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, 2000 were as
follows:
--------------------------------------------------------------------------------
Percent of
S&P Rating/Moody's Rating Net Assets
--------------------------------------------------------------------------------
AAA/Aaa ............................................................... 6.7%
A/A ................................................................... 0.7
BBB/Baa ............................................................... 13.0
BB/Ba ................................................................. 20.9
B/B ................................................................... 7.9
CCC/Caa ............................................................... 4.4
NR (Not Rated) ........................................................ 42.1
Other* ................................................................ 2.3
--------------------------------------------------------------------------------
* Temporary investments in short-term municipal securities.
14 & 15
<PAGE>
MuniAssets Fund, Inc. seeks to provide shareholders with current income exempt
from Federal income taxes by investing primarily in a portfolio of
medium-to-lower grade or unrated municipal obligations the interest on which, in
the opinion of bond counsel to the issuer, is exempt from Federal income taxes.
This report, including the financial information herein, is transmitted to the
shareholders of MuniAssets Fund, Inc. for their information. It is not a
prospectus. 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--11/00
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