UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-07642
Name of Fund: BlackRock MuniAssets Fund, Inc.
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Robert C. Doll, Jr., Chief Executive
Officer, BlackRock MuniAssets Fund, Inc., 800 Scudders Mill Road,
Plainsboro, NJ 08536. Mailing address: P.O. Box 9011, Princeton, NJ
08543-9011
Registrant's telephone number, including area code: (609) 282-2800
Date of fiscal year end: 05/31/07
Date of reporting period: 06/01/06 - 11/30/06
Item 1 - Report to Stockholders
ALTERNATIVES BLACKROCK SOLUTIONS EQUITIES
FIXED INCOME LIQUIDITY REAL ESTATE
BlackRock MuniAssets BLACKROCK
Fund, Inc.
SEMI-ANNUAL REPORT | NOVEMBER 30, 2006
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
BlackRock MuniAssets Fund, Inc.
Portfolio Information as of November 30, 2006
Percent of
Quality Ratings by Total
S&P/Moody's Investments
--------------------------------------------------------------------------------
AAA/Aaa ................................................. 11.0%
AA/Aa ................................................... 0.1
A/A ..................................................... 2.8
BBB/Baa ................................................. 25.2
BB/Ba ................................................... 5.0
B/B ..................................................... 5.9
CCC/Caa ................................................. 5.9
NR (Not Rated) .......................................... 42.5
Other* .................................................. 1.6
--------------------------------------------------------------------------------
* Includes portfolio holdings in variable rate demand notes and short-term
investments.
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.
Availability of Quarterly Schedule of Investments
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission ("SEC") for the first and third quarters of each fiscal
year on Form N-Q. The Fund's Forms N-Q are available on the SEC's Web site at
http://www.sec.gov. The Fund's Forms N-Q may also be reviewed and copied at the
SEC's Public Reference Room in Washington, DC. Information on the operation of
the Public Reference Room may be obtained by calling 1-800-SEC-0330.
2 BLACKROCK MUNIASSETS FUND, INC. NOVEMBER 30, 2006
A Letter to Shareholders
Dear Shareholder
As 2006 nears a conclusion, we are able to say it has been an interesting year
for investors. After a volatile start and far-reaching mid-year correction, the
financial markets regained some positive momentum through late summer and into
fall. For the six-month and 12-month periods ended November 30, 2006, the major
market indexes posted positive returns:
Total Returns as of November 30, 2006 6-month 12-month
==============================================================================================
U.S. equities (Standard & Poor's 500 Index) +11.33% +14.23%
----------------------------------------------------------------------------------------------
Small cap U.S. equities (Russell 2000 Index) + 9.72 +17.43
----------------------------------------------------------------------------------------------
International equities (MSCI Europe, Australasia, Far East Index) +11.19 +28.20
----------------------------------------------------------------------------------------------
Fixed income (Lehman Brothers Aggregate Bond Index) + 5.93 + 5.94
----------------------------------------------------------------------------------------------
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) + 4.53 + 6.12
----------------------------------------------------------------------------------------------
High yield bonds (Credit Suisse High Yield Index) + 6.28 +11.53
----------------------------------------------------------------------------------------------
After raising the target short-term interest rate 17 times between June 2004 and
June 2006, the Federal Reserve Board (the Fed) finally opted to pause on August
8. This left the federal funds rate at 5.25%, where it remained through the
September, October and December Federal Open Market Committee meetings. In
interrupting its two-year interest rate-hiking campaign, the Fed acknowledged
that economic growth is slowing, led by softness in the housing market. However,
the central bankers continue to take a cautionary position on inflation, despite
a decline in energy prices in the fall. At the time of this writing, the price
of crude oil was roughly $62 per barrel after reaching nearly $78 per barrel in
the summer.
Notwithstanding the mid-year correction, equity markets generally found support
in solid corporate earnings reports in the first three quarters of the year.
Overall corporate health, including strong company balance sheets, helped to
sustain robust dividend-distribution, share-buyback and merger-and-acquisition
activity. Many international equity markets fared equally well or better, thanks
in part to higher economic growth rates and low inflation.
In the U.S. bond market, prices declined (and yields correspondingly rose) for
much of the year as investors focused on decent economic activity and inflation
concerns. Bond prices began to improve (yields fell) in the summer as the
economy showed signs of weakening and the Fed paused. Notably, the Treasury
curve inverted periodically, a phenomenon typically associated with periods of
economic weakness. At the end of November, the one-month Treasury bill offered
the highest yield on the curve at 5.22%, while the 30-year Treasury bond had a
yield of 4.56%.
Amid the uncertainty inherent in the financial markets, we encourage you to
review your goals periodically with your financial professional and to make
portfolio changes, as needed. For additional insight and timely "food for
thought" for investors, we also invite you to visit Shareholder magazine at
www.blackrock.com/shareholdermagazine. We are pleased to make our
investor-friendly magazine available to you online. We thank you for trusting
BlackRock with your investment assets, and we look forward to continuing to
serve your investment needs.
Sincerely,
/s/ Robert C. Doll, Jr.
Robert C. Doll, Jr.
President and Director
BLACKROCK MUNIASSETS FUND, INC. NOVEMBER 30, 2006 3
A Discussion With Your Fund's Portfolio Manager
The Fund outpaced the average return of the Lipper High Yield Municipal
Debt Funds category for the period, benefiting from strong performance in three
key sectors of the high yield municipal market.
Describe the recent market environment relative to municipal bonds.
Long-term fixed income bond yields generally moved lower over the six-month
period as prices, which move opposite of yields, increased. Early in the period,
bond yields had remained near their recent highs as investors focused on solid
U.S. economic growth and inflationary fears ignited by rising commodity prices.
Bond prices began to improve (and yields fell) in late June as economic activity
softened. The price improvement accelerated in response to the Federal Reserve
Board's (the Fed) decision on August 8 to refrain from raising its target
interest rate. This occurred after 17 consecutive interest rate increases since
June 2004. Most recently, bond prices found additional support from moderating
oil prices, especially gasoline prices, and continued soft business activity.
At the end of November, the 30-year U.S. Treasury bond yield stood at 4.56%, a
decline of 65 basis points (.65%) over the past six months. The recent Fed pause
has allowed prices in the intermediate sector of the bond market to improve as
well, with the yield on the 10-year U.S. Treasury note falling 66 basis points
to 4.46% during the period.
The tax-exempt market generally mimicked its taxable counterpart throughout most
of the past six months. As measured by Municipal Market Data, yields on
AAA-rated issues maturing in 30 years declined 62 basis points to 3.91% -- the
lowest yield since this series' reporting history began in the late 1980s.
Strong demand for longer-maturity issues by non-traditional investors and only
modest retail investor demand for intermediate-maturity bonds led to a continued
flattening of the municipal yield curve. In recent months, intermediate
tax-exempt bond yields declined less than the yields of longer-maturity bonds.
During the six-month reporting period, yields on AAA-rated municipal bonds
maturing in 10 years fell 46 basis points to 3.56%, their lowest level since
October 2004.
Investor demand for municipal product has remained strong despite the recent
decline in bond yields. As reported by the Investment Company Institute,
long-term municipal bond funds saw net new cash inflows of over $2.2 billion
during October 2006, a material increase from flows seen in the summer. During
the first 10 months of the year, long-term tax-exempt bond funds had net new
cash flows of over $11.8 billion, a 70% increase versus the same period a year
earlier. Recent weekly fund flows, as reported by AMG Data, averaged $401
million in November 2006, above the year-to-date weekly average of $315 million.
Further supporting tax-exempt bond prices has been a recent decline in new
issuance. Year-to-date through November, over $325 billion in new long-term
municipal bonds was underwritten, a decline of more than 13% versus the same
period last year. Over the past six months, more than $191 billion in long-term
municipal bonds was issued, a decline of 7.4% compared to the same period a year
earlier.
Looking ahead, the market's favorable technical position should continue to
support municipal bond prices. Tax-exempt bond yield ratios remain attractive
relative to taxable bonds and investors continue to be drawn to the municipal
market's relatively steep yield curve. Taken together, these factors suggest
that the municipal market should continue to perform well in the months ahead.
How did the Fund perform during the period?
For the six-month period ended November 30, 2006, the Common Stock of BlackRock
MuniAssets Fund, Inc. (formerly MuniAssets Fund, Inc.) had net annualized yields
of 5.95% and 5.45%, based on a period-end per share net asset value of $14.07
and a per share market price of $15.37, respectively, and $.420 per share income
dividends. Over the same period, the total investment return on the Fund's
Common Stock was +6.17%, based on a change in per share net asset value from
$13.65 to $14.07, and assuming reinvestment of all distributions.
The Fund's total return, based on net asset value, compared favorably to the
+6.11% average return of the Lipper High Yield Municipal Debt Funds category for
the six-month period. (Funds in this Lipper category invest at least 50% of
their assets in lower-rated municipal debt issues.) Fund performance reflects
ongoing investor demand for high yield municipal bonds, which drove credit
spreads (versus higher-quality issues of comparable maturity) to historically
tight levels. Sectors that we emphasized -- health care, tax-backed development
districts and airlines -- were beneficiaries of this trend. Health care
comprised 25% of the portfolio, with emphasis on long-term care (10.8%) and
not-for-profit hospitals (11.4%). Ample supply in the health care sector has
4 BLACKROCK MUNIASSETS FUND, INC. NOVEMBER 30, 2006
led to increased appetite for these issues, which have tended to be
oversubscribed with bids higher than the bonds' initial pricing. From a credit
standpoint, hospitals have seen some of their best operating margins in more
than a decade, and demographic trends have favored the long-term care sector's
growth as the population ages. All of this has benefited our positions in health
care.
Development districts, both residential and commercial as well as blends of the
two, represented 12.8% of the portfolio. Although the housing market appears to
be experiencing a slowdown, most of our purchases in this sector occurred in the
past when spreads were wider or have been in existing developments that are
nearly complete. As such, our positions have done well. Finally, airline-related
debt accounted for 9.5% of the portfolio. Airlines continue to exhibit better
profitability amid reduced capacity and have benefited from somewhat lower fuel
costs in the past three to six months. An unsolicited bid by US Airways for
Delta Airlines, Inc. before it emerges from bankruptcy touched off speculation
about future consolidation, which would further reduce capacity and benefit the
profitability of the surviving carriers.
For a description of the Fund's total investment return based on a change in the
per share market value of the Fund's Common Stock (as measured by the trading
price of the Fund's shares on the New York Stock Exchange), and assuming
reinvestment of dividends, please refer to the Financial Highlights section of
this report. As a closed-end fund, the Fund's shares may trade in the secondary
market at a premium or discount to the Fund's net asset value. As a result,
total investment returns based on changes in the market value of the Fund's
Common Stock can vary significantly from total investment returns based on
changes in the Fund's net asset value.
What changes were made to the portfolio during the period?
Portfolio activity was focused largely on the new-issue market, where pricing
and liquidity generally have been better than in the secondary market. For the
most part, in making new purchases, we continued to emphasize our existing
sector concentrations, particularly health care. The purchases were funded with
the sale of positions that had performed well, particularly those positions that
we viewed to have little additional upside potential. One example is bonds
issued for the Pocahontas Parkway, which had been one of the Fund's largest
positions. This toll road was sold to a private entity and the bonds have been
defeased. As such, the bonds have been additionally secured by Treasury issues
set aside in an escrow account and command a higher market value due to their
collateral backing. Given this development, we started to reduce that exposure
and redeploy the proceeds into new opportunities. We made a similar move in the
airline sector, reducing one of our larger positions, Phoenix, Arizona bonds
issued on behalf of America West Airlines (now known as US Airways). These bonds
have recovered from low levels.
Aside from these changes, our overall approach has become increasingly more
tactical given the magnitude of the market's outperformance in the past year. As
it becomes more difficult to uncover value in the high yield municipal market,
we are more willing to lock in profits as the market presents opportunities. The
Fund is in a favorable position to take these gains, as its substantial net
capital loss carryforwards can be used to offset the capital gains without
passing through a tax consequence to our shareholders.
How would you characterize the Fund's position at the close of the period?
We maintained our three key sector concentrations at period-end, although we
recently have refrained from adding exposure to both health care and tax-backed
development districts given a general lack of relative value as well as concern
about the state of the housing industry in select geographic regions.
The credit profile of the portfolio emerged from this period somewhat improved,
primarily due to the advance refunding of some existing holdings (e.g.,
Pocahontas Parkway). More recently, we have seen similar activity among some of
our long-term care holdings.
With credit spreads at historically tight levels, we expect that portfolio
activity in the next year will reflect efforts to upgrade the portfolio somewhat
relative to our peers and broader market benchmarks. We intend to remain
flexible and cautious in our approach as we pursue our mission of providing
shareholders with a high degree of tax-exempt income.
Theodore R. Jaeckel Jr., CFA
Vice President and Portfolio Manager
December 11, 2006
BLACKROCK MUNIASSETS FUND, INC. NOVEMBER 30, 2006 5
Schedule of Investments (in Thousands)
Face
Amount Municipal Bonds Value
====================================================================================================
Alabama--1.5%
$ 2,420 Brewton, Alabama, IDB, PCR, Refunding (Container
Corporation of America--Jefferson Smurfit Corp.
Project), 8% due 4/01/2009 $ 2,441
1,820 Tuscaloosa, Alabama, Special Care Facilities Financing
Authority, Residential Care Facility Revenue Bonds
(Capstone Village, Inc. Project), Series A, 5.875%
due 8/01/2036 1,868
====================================================================================================
Alaska--0.4%
1,125 Alaska Industrial Development and Export Authority
Revenue Bonds (Williams Lynxs Alaska Cargoport),
AMT, 7.80% due 5/01/2014 1,202
====================================================================================================
Arizona--6.0%
Coconino County, Arizona, Pollution Control
Corporation, Revenue Refunding Bonds (Tucson
Electric Power--Navajo):
3,000 AMT, Series A, 7.125% due 10/01/2032 3,117
2,500 Series B, 7% due 10/01/2032 2,596
1,325 Maricopa County, Arizona, IDA, Education Revenue
Bonds (Arizona Charter Schools Project 1), Series A,
6.625% due 7/01/2020 1,356
1,615 Maricopa County, Arizona, IDA, M/F Housing Revenue
Bonds (Sun King Apartments Project), Series A,
6.75% due 5/01/2031 1,418
4,800 Phoenix, Arizona, IDA, Airport Facility, Revenue
Refunding Bonds (America West Airlines Inc. Project),
AMT, 6.30% due 4/01/2023 4,905
Pima County, Arizona, IDA, Education Revenue Bonds:
1,420 (Arizona Charter Schools Project), Series E,
7.25% due 7/01/2031 1,564
1,105 (Arizona Charter Schools Project II), Series A,
6.75% due 7/01/2031 1,177
1,200 Show Low, Arizona, Improvement District Number 5,
Special Assessment Bonds, 6.375% due 1/01/2015 1,234
====================================================================================================
California--1.7%
California State, Various Purpose, GO:
1,900 5.25% due 11/01/2025 2,057
1,300 5.50% due 11/01/2033 1,433
1,320 Fontana, California, Special Tax Refunding Bonds
(Community Facilities District Number 22--Sierra),
6% due 9/01/2034 1,415
====================================================================================================
Colorado--6.7%
650 Colorado Health Facilities Authority, Revenue Refunding
Bonds (Christian Living Communities Project),
Series A, 5.75% due 1/01/2026 685
2,000 Denver, Colorado, City and County Airport Revenue
Bonds, AMT, Series D, 7.75% due 11/15/2013 (a) 2,279
5,155 Denver, Colorado, Urban Renewal Authority, Tax
Increment Revenue Bonds (Pavilions), AMT,
7.75% due 3/01/2007 (b) 5,257
Elk Valley, Colorado, Public Improvement Revenue
Bonds (Public Improvement Fee):
1,580 Series A, 7.10% due 9/01/2014 1,704
2,095 Series A, 7.30% due 9/01/2022 2,259
420 Series B, 7.45% due 9/01/2031 452
1,760 North Range, Colorado, Metropolitan District Number 1,
GO, 7.25% due 12/15/2031 1,905
Plaza Metropolitan District Number 1, Colorado, Tax
Allocation Revenue Bonds (Public Improvement Fees):
2,850 8% due 12/01/2025 3,178
525 8.125% due 12/01/2025 530
1,170 Southlands, Colorado, Medical District, GO
(Metropolitan District Number 1), 7.125%
due 12/01/2034 1,304
====================================================================================================
Connecticut--1.6%
680 Connecticut State Development Authority, Airport
Facility Revenue Bonds (Learjet Inc. Project), AMT,
7.95% due 4/01/2026 823
3,490 Connecticut State Development Authority, IDR (AFCO
Cargo BDL-LLC Project), AMT, 8% due 4/01/2030 3,798
====================================================================================================
Florida--6.1%
1,130 Capital Projects Finance Authority, Florida, Continuing
Care Retirement Revenue Bonds (Glenridge on
Palmer Ranch), Series A, 8% due 6/01/2032 1,250
1,160 Halifax Hospital Medical Center, Florida, Hospital
Revenue Refunding Bonds, Series A, 5%
due 6/01/2038 1,201
490 Harbor Bay, Florida, Community Development District,
Capital Improvement Special Assessment Revenue
Bonds, Series A, 7% due 5/01/2033 532
1,195 Highlands County, Florida, Health Facilities Authority,
Hospital Revenue Bonds (Adventist Health System),
Series C, 5.25% due 11/15/2036 1,285
2,000 Hillsborough County, Florida, IDA, Exempt Facilities
Revenue Bonds (National Gypsum Company), AMT,
Series A, 7.125% due 4/01/2030 2,204
3,255 Midtown Miami, Florida, Community Development
District, Special Assessment Revenue Bonds, Series A,
6.25% due 5/01/2037 3,563
1,180 Orlando, Florida, Greater Orlando Aviation Authority,
Airport Facilities Revenue Bonds (JetBlue Airways
Corp.), AMT, 6.375% due 11/15/2026 1,236
2,305 Orlando, Florida, Urban Community Development
District, Capital Improvement Special Assessment
Bonds, Series A, 6.95% due 5/01/2033 2,499
3,040 Santa Rosa Bay Bridge Authority, Florida, Revenue
Bonds, 6.25% due 7/01/2028 3,079
905 Waterchase, Florida, Community Development District,
Capital Improvement Revenue Bonds, Series A,
6.70% due 5/01/2032 973
====================================================================================================
Portfolio Abbreviations
To simplify the listings of BlackRock MuniAssets Fund, Inc.'s portfolio holdings
in the Schedule of Investments, we have abbreviated the names of many of the
securities according to the list at right.
AMT Alternative Minimum Tax (subject to)
EDA Economic Development Authority
EDR Economic Development Revenue Bonds
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
VRDN Variable Rate Demand Notes
6 BLACKROCK MUNIASSETS FUND, INC. NOVEMBER 30, 2006
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
====================================================================================================
Georgia--3.4%
Atlanta, Georgia, Tax Allocation Bonds:
$ 3,000 (Atlantic Station Project), 7.90% due 12/01/2024 $ 3,348
590 (Eastside Project), Series B, 5.40% due 1/01/2020 613
740 (Princeton Lakes Project), 5.50% due 1/01/2031 761
Brunswick and Glynn County, Georgia, Development
Authority, First Mortgage Revenue Bonds (Coastal
Community Retirement Corporation Project), Series A:
1,165 7.125% due 1/01/2025 1,158
1,690 7.25% due 1/01/2035 1,688
1,060 Fulton County, Georgia, Development Authority, PCR
(General Motors Corporation), Refunding, VRDN,
8% due 4/01/2010 (d) 1,060
1,170 Savannah, Georgia, EDA, First Mortgage Revenue
Bonds (Marshes of Skidaway), Series A, 7.40%
due 1/01/2034 1,288
====================================================================================================
Idaho--0.4%
1,000 Idaho Health Facilities Authority, Revenue Refunding
Bonds (Valley Vista Care Corporation), Series A,
7.75% due 11/15/2016 1,052
====================================================================================================
Illinois--7.1%
2,630 Caseyville, Illinois, Senior Tax Increment Revenue Bonds
(Forest Lakes Project), 7% due 12/30/2022 2,791
4,000 Chicago, Illinois, O'Hare International Airport, Special
Facility Revenue Refunding Bonds (American Airlines
Inc. Project), 8.20% due 12/01/2024 4,124
Illinois Development Finance Authority Revenue
Bonds (Primary Health Care Centers Facilities
Acquisition Program):
290 7.50% due 12/01/2006 290
60 7.50% due 12/01/2006 (c) 60
2,720 7.75% due 12/01/2016 2,805
Illinois State Finance Authority Revenue Bonds:
2,950 (Clare At Water Tower Project), Series A,
6.125% due 5/15/2038 3,106
600 (Landing At Plymouth Place Project), Series A,
6% due 5/15/2037 639
685 (Primary Health Care Centers Program),
6.60% due 7/01/2024 718
1,070 Lincolnshire, Illinois, Special Service Area Number 1,
Special Tax Bonds (Sedgebrook Project),
6.25% due 3/01/2034 1,151
2,600 Lombard, Illinois, Public Facilities Corporation, First
Tier Revenue Bonds (Conference Center and Hotel),
Series A-1, 7.125% due 1/01/2036 2,807
1,165 Naperville, Illinois, IDR (General Motors Corporation),
Refunding, VRDN, 8% due 12/01/2012 (d) 1,165
825 Village of Wheeling, Illinois, Revenue Bonds (North
Milwaukee/Lake-Cook Tax Increment Financing (TIF)
Redevelopment Project), 6% due 1/01/2025 846
====================================================================================================
Indiana--0.9%
1,160 Delaware County, Indiana, Hospital Authority, Hospital
Revenue Bonds (Cardinal Health System Obligated
Group), 5.25% due 8/01/2036 1,226
1,200 Vanderburgh County, Indiana, Redevelopment
Commission, Redevelopment District Tax Allocation
Bonds, 5.25% due 2/01/2031 1,283
====================================================================================================
Iowa--0.9%
2,210 Iowa Finance Authority, Health Care Facilities, Revenue
Refunding Bonds (Care Initiatives Project), 9.25%
due 7/01/2011 (b) 2,739
====================================================================================================
Kansas--0.6%
1,770 Wyandotte County, Kansas, Kansas City Unified
Government Revenue Refunding Bonds (General
Motors Corporation Project), 6% due 6/01/2025 1,812
====================================================================================================
Kentucky--1.0%
2,850 Kenton County, Kentucky, Airport Board, Special
Facilities Revenue Bonds (Mesaba Aviation, Inc.
Project), AMT, Series A, 6.70% due 7/01/2029 2,929
====================================================================================================
Louisiana--0.7%
1,870 Louisiana Public Facilities Authority, Hospital Revenue
Bonds (Franciscan Missionaries of Our Lady Health
System, Inc.), Series A, 5.25% due 8/15/2036 1,999
====================================================================================================
Maine--0.4%
1,160 Maine Finance Authority, Solid Waste Recycling Facilities
Revenue Bonds (Great Northern Paper Project --
Bowater), AMT, 7.75% due 10/01/2022 1,170
====================================================================================================
Maryland--1.2%
1,910 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 2,093
1,500 Maryland State Energy Financing Administration,
Limited Obligation Revenue Bonds (Cogeneration --
AES Warrior Run), AMT, 7.40% due 9/01/2019 1,511
====================================================================================================
Massachusetts--1.1%
1,150 Massachusetts State Health and Educational Facilities
Authority Revenue Bonds (Jordan Hospital), Series E,
6.75% due 10/01/2033 1,284
1,945 Massachusetts State Health and Educational Facilities
Authority, Revenue Refunding Bonds (Bay Cove Human
Services Issue), Series A, 5.90% due 4/01/2028 1,982
====================================================================================================
Michigan--1.2%
1,635 Macomb County, Michigan, Hospital Finance Authority,
Hospital Revenue Bonds (Mount Clemens General
Hospital), Series B, 5.875% due 11/15/2034 1,739
1,740 Monroe County, Michigan, Hospital Financing Authority,
Hospital Revenue Refunding Bonds (Mercy Memorial
Hospital Corporation), 5.50% due 6/01/2035 1,863
====================================================================================================
Minnesota--0.8%
1,770 Saint Paul, Minnesota, Port Authority, Hotel Facility
Revenue Refunding Bonds (Radisson Kellogg Project),
Series 2, 7.375% due 8/01/2008 (b) 1,927
440 Virginia, Minnesota, Housing and Redevelopment
Authority, Health Care Facility Lease Revenue Bonds,
5.25% due 10/01/2025 465
====================================================================================================
Missouri--0.7%
920 Fenton, Missouri, Tax Increment Revenue Refunding
and Improvement Bonds (Gravois Bluffs), 7%
due 10/01/2011 (b) 1,064
1,000 Kansas City, Missouri, IDA, First Mortgage Health
Facilities Revenue Bonds (Bishop Spencer Place),
Series A, 6.50% due 1/01/2035 1,063
====================================================================================================
BLACKROCK MUNIASSETS FUND, INC. NOVEMBER 30, 2006 7
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
====================================================================================================
Nevada--0.2%
$ 645 Clark County, Nevada, Improvement District
Number 142, Special Assessment Bonds, 6.375%
due 8/01/2023 $ 666
====================================================================================================
New Hampshire--0.4%
1,165 New Hampshire Health and Education Facilities
Authority, Hospital Revenue Bonds (Catholic Medical
Center), 5% due 7/01/2036 1,214
====================================================================================================
New Jersey--14.2%
Camden County, New Jersey, Pollution Control Financing
Authority, Solid Waste Resource Recovery, Revenue
Refunding Bonds, AMT:
9,000 Series A, 7.50% due 12/01/2010 9,135
565 Series B, 7.50% due 12/01/2009 573
3,065 New Jersey EDA, Cigarette Tax Revenue Bonds,
5.50% due 6/15/2024 3,256
2,500 New Jersey EDA, IDR, Refunding (Newark Airport
Marriott Hotel), 7% due 10/01/2014 2,590
New Jersey EDA, Retirement Community Revenue
Bonds, Series A (b):
1,665 (Cedar Crest Village, Inc. Facility),
7.25% due 11/15/2011 1,925
5,800 (Seabrook Village, Inc.), 8.125% due 11/15/2010 6,732
New Jersey EDA, Special Facility Revenue Bonds
(Continental Airlines Inc. Project), AMT:
2,000 6.25% due 9/15/2019 2,072
4,650 6.25% due 9/15/2029 4,814
1,250 9% due 6/01/2033 1,555
2,000 New Jersey Health Care Facilities Financing Authority
Revenue Bonds (Pascack Valley Hospital Association),
6.625% due 7/01/2036 2,134
1,500 New Jersey Health Care Facilities Financing Authority,
Revenue Refunding Bonds (Trinitas Hospital
Obligation Group), 7.40% due 7/01/2020 1,674
3,450 New Jersey State Transportation Trust Fund Authority,
Transportation System Revenue Bonds, Series C,
5.05% due 12/15/2035 (a)(f) 1,006
Tobacco Settlement Financing Corporation of New
Jersey, Asset-Backed Revenue Bonds:
1,990 5.75% due 6/01/2032 2,117
1,425 7% due 6/01/2041 1,659
====================================================================================================
New Mexico--0.9%
2,500 Farmington, New Mexico, PCR, Refunding (Tucson
Electric Power Company--San Juan Project),
Series A, 6.95% due 10/01/2020 2,592
====================================================================================================
New York--6.5%
1,400 Dutchess County, New York, IDA, Civic Facility Revenue
Refunding Bonds (Saint Francis Hospital), Series A,
7.50% due 3/01/2029 1,560
2,610 Erie County, New York, IDA, Revenue Bonds (Orchard
Park CCRC, Inc. Project), Series A, 6% due 11/15/2036 2,798
New York City, New York, City IDA, Civic Facility
Revenue Bonds:
510 Series C, 6.80% due 6/01/2028 565
1,515 (Special Needs Facilities Pooled Program),
Series C-1, 6.625% due 7/01/2029 1,586
2,400 New York City, New York, City IDA, Special Facility
Revenue Bonds (British Airways Plc Project), AMT,
7.625% due 12/01/2032 2,695
870 New York Liberty Development Corporation Revenue
Bonds (National Sports Museum Project), Series A,
6.125% due 2/15/2019 926
2,920 New York State Dormitory Authority, Non-State
Supported Debt, Revenue Bonds (Mount Sinai-
NYU Medical Center Health System), 5.50%
due 7/01/2026 2,985
2,635 New York State Dormitory Authority, Non-State
Supported Debt, Revenue Refunding Bonds
(Mount Sinai-NYU Medical Center Health
System), Series C, 5.50% due 7/01/2026 2,694
1,475 Suffolk County, New York, IDA, Continuing Care and
Retirement, Revenue Refunding Bonds (Jeffersons
Ferry Project), 5% due 11/01/2028 1,545
1,575 Westchester County, New York, IDA, Continuing Care
Retirement, Mortgage Revenue Bonds (Kendal on
Hudson Project), Series A, 6.50% due 1/01/2034 1,693
====================================================================================================
North Carolina--0.7%
350 North Carolina Medical Care Commission, Health Care
Facilities, First Mortgage Revenue Refunding Bonds
(Salemtowne Project), 5.10% due 10/01/2030 358
1,500 North Carolina Medical Care Commission, Retirement
Facilities, First Mortgage Revenue Bonds (Givens
Estates Project), Series A, 6.50% due 7/01/2032 1,626
====================================================================================================
Oklahoma--0.5%
1,295 Norman, Oklahoma, Regional Hospital Authority,
Hospital Revenue Bonds, 5.375% due 9/01/2036 1,379
====================================================================================================
Pennsylvania--5.8%
Bucks County, Pennsylvania, IDA, Retirement
Community Revenue Bonds (Ann's Choice, Inc.),
Series A:
200 6.125% due 1/01/2025 213
1,550 6.25% due 1/01/2035 1,648
2,330 Montgomery County, Pennsylvania, IDA, Revenue
Bonds (Whitemarsh Continuing Care Project),
6.125% due 2/01/2028 2,481
3,250 Pennsylvania Economic Development Financing
Authority, Exempt Facilities Revenue Bonds
(National Gypsum Company), AMT, Series A,
6.25% due 11/01/2027 3,433
Philadelphia, Pennsylvania, Authority for IDR:
2,270 (Air Cargo), AMT, Series A, 7.50% due 1/01/2025 2,499
6,440 Commercial Development, 7.75% due 12/01/2017 6,454
====================================================================================================
Rhode Island--1.0%
2,495 Central Falls, Rhode Island, Detention Facility
Corporation, Revenue Refunding Bonds, 7.25%
due 7/15/2035 2,821
====================================================================================================
South Carolina--2.5%
Connector 2000 Association, Inc., South Carolina, Toll
Road and Capital Appreciation Revenue Bonds,
Senior Series B (f):
1,500 6.50% due 1/01/2009 1,313
1,485 7.969% due 1/01/2014 861
885 Myrtle Beach, South Carolina, Tax Increment Revenue
Bonds (Myrtle Beach Air Force Base), Series A,
5.30% due 11/01/2035 910
3,500 South Carolina Jobs, EDA, EDR (Westminster
Presbyterian Center), 7.75% due 11/15/2010 (b) 4,089
====================================================================================================
8 BLACKROCK MUNIASSETS FUND, INC. NOVEMBER 30, 2006
Schedule of Investments (concluded) (in Thousands)
Face
Amount Municipal Bonds Value
====================================================================================================
Tennessee--2.6%
Shelby County, Tennessee, Health, Educational and
Housing Facilities Board Revenue Bonds
(Germantown Village):
$ 355 6.25% due 12/01/2034 $ 365
2,500 Series A, 7.25% due 12/01/2034 2,704
4,320 Sullivan County, Tennessee, Health, Educational and
Housing Facilities Board, Hospital Revenue Bonds
(Wellmont Health System Project), Series C,
5.25% due 9/01/2036 4,594
====================================================================================================
Texas--6.5%
1,000 Austin, Texas, Convention Center Revenue Bonds
(Convention Enterprises, Inc.), First Tier, Series A,
6.70% due 1/01/2011 (b) 1,068
2,550 Brazos River Authority, Texas, PCR, Refunding
(Texas Utility Company), AMT, Series A, 7.70%
due 4/01/2033 2,988
1,680 Brazos River Authority, Texas, Revenue Refunding
Bonds (Reliant Energy, Inc. Project), Series B,
7.75% due 12/01/2018 1,786
3,185 Dallas-Fort Worth, Texas, International Airport Facilities
Improvement Corporation Revenue Bonds
(American Airlines Inc.), AMT, 7.25%
due 11/01/2030 3,236
1,170 Grand Prairie, Texas, Housing Finance Corporation
Revenue Bonds (Independent Senior Living Center),
7.75% due 1/01/2034 1,172
945 HFDC of Central Texas, Inc., Retirement Facilities
Revenue Bonds, Series A, 5.625%
due 11/01/2026 975
1,400 Houston, Texas, Health Facilities Development
Corporation, Retirement Facility Revenue Bonds
(Buckingham Senior Living Community), Series A,
7.125% due 2/15/2034 1,567
750 Kerrville, Texas, Health Facilities Development
Corporation, Hospital Revenue Bonds (Sid Peterson
Memorial Hospital Project), 5.375% due 8/15/2035 795
3,190 Matagorda County, Texas, Navigation District Number 1,
Revenue Refunding Bonds (Reliant Energy, Inc.),
Series C, 8% due 5/01/2029 3,388
1,860 Port Corpus Christi, Texas, Industrial Development
Corporation, Environmental Facilities Revenue Bonds
(Citgo Petroleum Corporation Project), AMT,
8.25% due 11/01/2031 1,921
====================================================================================================
Utah--0.6%
1,660 Carbon County, Utah, Solid Waste Disposal, Revenue
Refunding Bonds (Laidlaw Environmental), AMT,
Series A, 7.45% due 7/01/2017 1,719
====================================================================================================
Virginia--8.3%
1,475 Dulles Town Center, Virginia, Community Development
Authority, Special Assessment Tax Bonds (Dulles
Town Center Project), 6.25% due 3/01/2026 1,539
440 Farms of New Kent, Virginia, Community Development
Authority, Special Assessment Bonds, Series C,
5.80% due 3/01/2036 446
86,800 Pocahontas Parkway Association, Virginia, Toll Road
Revenue Bonds, Capital Appreciation, Senior Series B,
5.95% due 8/15/2008 (b)(f) 21,074
1,000 Suffolk, Virginia, IDA, Retirement Facilities, Revenue
Refunding Bonds (Lake Prince Center), 5.30%
due 9/01/2031 1,026
====================================================================================================
Wisconsin--0.7%
1,855 Wisconsin State Health and Educational Facilities
Authority Revenue Bonds (New Castle Place Project),
Series A, 7% due 12/01/2031 1,939
====================================================================================================
Puerto Rico--0.2%
500 Puerto Rico Commonwealth, Public Improvement, GO,
Series A, 5.25% due 7/01/2030 546
====================================================================================================
U.S. Virgin Islands--1.2%
3,000 Virgin Islands Government Refinery Facilities, Revenue
Refunding Bonds (Hovensa Coker Project), AMT,
6.50% due 7/01/2021 3,401
----------------------------------------------------------------------------------------------------
Total Municipal Bonds
(Cost--$260,838)--97.2% 282,493
====================================================================================================
Shares
Held Short-Term Securities
====================================================================================================
2,305 Merrill Lynch Institutional Tax-Exempt Fund, 3.38% (e)(g) 2,305
----------------------------------------------------------------------------------------------------
Total Short-Term Securities
(Cost--$2,305)--0.8% 2,305
====================================================================================================
Total Investments (Cost--$263,143*)--98.0% 284,798
Other Assets Less Liabilities--2.0% 5,819
--------
Net Assets--100.0% $290,617
========
* The cost and unrealized appreciation of investments as of November 30,
2006 as computed for federal income tax purposes, were as follows:
Aggregate cost ............................................. $262,825
========
Gross unrealized appreciation .............................. $ 21,973
Gross unrealized depreciation .............................. --
--------
Net unrealized appreciation ................................ $ 21,973
========
(a) AMBAC Insured.
(b) Prerefunded.
(c) Escrowed to maturity.
(d) Security may have a maturity of more than one year at time of issuance,
but has variable rate and demand features that qualify it as a short-term
security. The rate disclosed is that currently in effect. This rate
changes periodically based upon prevailing market rates.
(e) Investments in companies considered to be an affiliate of the Fund, for
purposes of Section 2(a)(3) of the Investment Company Act of 1940, were as
follows:
--------------------------------------------------------------------------
Net Dividend
Affiliate Activity Income
--------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund (1,001) $53
--------------------------------------------------------------------------
(f) Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase.
(g) Represents current yield as of November 30, 2006.
See Notes to Financial Statements.
BLACKROCK MUNIASSETS FUND, INC. NOVEMBER 30, 2006 9
Statement of Assets, Liabilities and Capital
As of November 30, 2006
===============================================================================================================================
Assets
-------------------------------------------------------------------------------------------------------------------------------
Investments in unaffiliated securities, at value (identified cost--$260,838,251) $ 282,493,295
Investments in affiliated securities, at value (identified cost--$2,304,642) ... 2,304,642
Cash ........................................................................... 58,065
Receivables:
Interest .................................................................... $ 4,921,265
Securities sold ............................................................. 1,009,500 5,930,765
-------------
Prepaid expenses and other assets .............................................. 2,274
-------------
Total assets ................................................................... 290,789,041
-------------
===============================================================================================================================
Liabilities
-------------------------------------------------------------------------------------------------------------------------------
Payables:
Investment adviser .......................................................... 130,484
Other affiliates ............................................................ 7,369 137,853
-------------
Accrued expenses ............................................................... 34,595
-------------
Total liabilities .............................................................. 172,448
-------------
===============================================================================================================================
Net Assets
-------------------------------------------------------------------------------------------------------------------------------
Net Assets ..................................................................... $ 290,616,593
=============
===============================================================================================================================
Capital
-------------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.10 per share; 200,000,000 shares authorized; 20,649,690
shares issued and outstanding ................................................. $ 2,064,969
Paid-in capital in excess of par ............................................... 300,564,629
Undistributed investment income--net ........................................... $ 2,844,864
Accumulated realized capital losses--net ....................................... (36,512,913)
Unrealized appreciation--net ................................................... 21,655,044
-------------
Total accumulated losses--net .................................................. (12,013,005)
-------------
Total capital--Equivalent to $14.07 net asset value per share of Common Stock
(market price--$15.37) ........................................................ $ 290,616,593
=============
See Notes to Financial Statements.
10 BLACKROCK MUNIASSETS FUND, INC. NOVEMBER 30, 2006
Statement of Operations
For the Six Months Ended November 30, 2006
===============================================================================================================================
Investment Income
-------------------------------------------------------------------------------------------------------------------------------
Interest ....................................................................... $ 9,423,124
Dividends from affiliates ...................................................... 52,626
-------------
Total income ................................................................... 9,475,750
-------------
===============================================================================================================================
Expenses
-------------------------------------------------------------------------------------------------------------------------------
Investment advisory fees ....................................................... $ 786,790
Accounting services ............................................................ 50,238
Professional fees .............................................................. 31,101
Transfer agent fees ............................................................ 25,528
Printing and shareholder reports ............................................... 21,342
Pricing fees ................................................................... 9,437
Directors' fees and expenses ................................................... 9,314
Custodian fees ................................................................. 8,460
Listing fees ................................................................... 8,241
Other .......................................................................... 16,435
-------------
Total expenses before reimbursement ............................................ 966,886
Reimbursement of expenses ...................................................... (3,077)
-------------
Total expenses after reimbursement ............................................. 963,809
-------------
Investment income--net ......................................................... 8,511,941
-------------
===============================================================================================================================
Realized & Unrealized Gain (Loss)--Net
-------------------------------------------------------------------------------------------------------------------------------
Realized loss on investments--net .............................................. (6,570,001)
Change in unrealized appreciation on investments--net .......................... 15,321,112
-------------
Total realized and unrealized gain--net ........................................ 8,751,111
-------------
Net Increase in Net Assets Resulting from Operations ........................... $ 17,263,052
=============
See Notes to Financial Statements.
BLACKROCK MUNIASSETS FUND, INC. NOVEMBER 30, 2006 11
Statements of Changes in Net Assets
For the Six For the
Months Ended Year Ended
November 30, May 31,
Increase (Decrease) in Net Assets: 2006 2006
===============================================================================================================================
Operations
-------------------------------------------------------------------------------------------------------------------------------
Investment income--net ......................................................... $ 8,511,941 $ 16,514,494
Realized gain (loss)--net ...................................................... (6,570,001) 1,597,787
Change in unrealized appreciation--net ......................................... 15,321,112 4,122,867
-------------------------------
Net increase in net assets resulting from operations ........................... 17,263,052 22,235,148
-------------------------------
===============================================================================================================================
Dividends to Shareholders
-------------------------------------------------------------------------------------------------------------------------------
Investment income--net ......................................................... (8,651,790) (17,054,653)
-------------------------------
Net decrease in net assets resulting from dividends to Common Stock shareholders (8,651,790) (17,054,653)
-------------------------------
===============================================================================================================================
Common Stock Transactions
-------------------------------------------------------------------------------------------------------------------------------
Value of shares issued to Common Stock shareholders in reinvestment of dividends 1,212,373 2,230,610
-------------------------------
===============================================================================================================================
Net Assets
-------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets ................................................... 9,823,635 7,411,105
Beginning of period ............................................................ 280,792,958 273,381,853
-------------------------------
End of period* ................................................................. $ 290,616,593 $ 280,792,958
===============================
* Undistributed investment income--net ...................................... $ 2,844,864 $ 2,984,713
===============================
See Notes to Financial Statements.
12 BLACKROCK MUNIASSETS FUND, INC. NOVEMBER 30, 2006
Financial Highlights
For the Six For the Year Ended
Months Ended May 31,
The following per share data and ratios have been derived November 30, --------------------------------------------------------
from information provided in the financial statements 2006 2006 2005 2004 2003 2002
=================================================================================================================================
Per Share Operating Performance
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ........... $ 13.65 $ 13.40 $ 12.36 $ 11.94 $ 12.55 $ 12.96
--------------------------------------------------------------------
Investment income--net ......................... .41+ .81+ .81+ .83+ .81+ .79
Realized and unrealized gain (loss)--net ....... .43 .27 1.04 .38 (.64) (.41)
--------------------------------------------------------------------
Total from investment operations ............... .84 1.08 1.85 1.21 .17 .38
--------------------------------------------------------------------
Less dividends and distributions:
Investment income--net ...................... (.42) (.83) (.81) (.78) (.78) (.79)
Realized gain--net .......................... -- -- -- (.01) -- --
--------------------------------------------------------------------
Total dividends and distributions .............. (.42) (.83) (.81) (.79) (.78) (.79)
--------------------------------------------------------------------
Net asset value, end of period ................. $ 14.07 $ 13.65 $ 13.40 $ 12.36 $ 11.94 $ 12.55
====================================================================
Market price per share, end of period .......... $ 15.37 $ 14.13 $ 13.27 $ 11.38 $ 11.91 $ 11.66
====================================================================
=================================================================================================================================
Total Investment Return**
---------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ............. 6.17%++ 8.31% 15.65% 10.74% 1.61% 3.30%
====================================================================
Based on market price per share ................ 12.04++ 13.22% 24.39% 2.22% 9.09% (4.32%)
====================================================================
=================================================================================================================================
Ratios to Average Net Assets
---------------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement and excluding
reorganization expenses ...................... .67%* .68% .67% .67% .78% .74%
====================================================================
Expenses ....................................... .68%* .68% .67% .67% .78% .83%
====================================================================
Investment income--net ......................... 5.95%* 5.97% 6.30% 6.71% 6.76% 6.16%
====================================================================
=================================================================================================================================
Supplemental Data
---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) ....... $290,617 $280,793 $273,382 $252,203 $243,671 $255,150
====================================================================
Portfolio turnover ............................. 10.04% 17.22% 19.67% 19.14% 26.98% 20.07%
====================================================================
* 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.
+ Based on average shares outstanding.
++ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK MUNIASSETS FUND, INC. NOVEMBER 30, 2006 13
Notes to Financial Statements
1. Significant Accounting Policies:
On September 29, 2006, MuniAssets Fund, Inc. was renamed BlackRock MuniAssets
Fund, Inc. (the "Fund"). The Fund is registered under the Investment Company Act
of 1940, as amended, as a non-diversified, closed-end management investment
company. The Fund's financial statements are prepared in conformity with U.S.
generally accepted accounting principles, which may require the use of
management accruals and estimates. Actual results may differ from these
estimates. These unaudited financial statements reflect all adjustments, which
are, in the opinion of management, necessary to present a fair statement of the
results for the interim period. 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 daily basis. The Fund's Common Stock shares are
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 ("OTC") markets and are valued at the last available bid price
in the OTC market or on the basis of values as obtained by a pricing service.
Pricing services use valuation matrixes that incorporate both dealer-supplied
valuations and valuation models. The procedures of the pricing service and its
valuations are reviewed by the officers of the Fund under the general direction
of the Board of Directors. Such valuations and procedures are reviewed
periodically by the Board of Directors of the Fund. 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. Options
traded in the OTC market are valued at the last asked price (options written) or
the last bid price (options purchased). Swap agreements are valued by quoted
fair values received daily by the Fund's pricing service. Short-term investments
with a remaining maturity of 60 days or less are valued at amortized cost, which
approximates market value, under which method the investment is valued at cost
and any premium or discount is amortized on a straight line basis to maturity.
Investments in open-end investment companies are valued at their net asset value
each business day. Securities and other assets for which market quotations are
not readily available are valued at fair value as determined in good faith by or
under the direction of the Board of Directors of the Fund.
(b) Derivative financial instruments -- The Fund may engage in various portfolio
investment strategies both to increase the return of the Fund and to hedge, or
protect, its exposure to interest rate movements and movements in the securities
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 financial futures contracts.
Financial 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 may 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 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.
o Forward interest rate swaps -- The Fund may enter into forward interest
rate swaps. In a forward interest rate swap, the Fund and the counterparty
agree to make periodic net payments on a specified notional contract
amount, commencing on a specified future effective date, unless terminated
earlier. The value of the agreement is
14 BLACKROCK MUNIASSETS FUND, INC. NOVEMBER 30, 2006
Notes to Financial Statements (continued)
determined by quoted fair values received daily by the Fund from the
counterparty. When the agreement is closed, the Fund records a realized
gain or loss in an amount equal to the value of the agreement.
o Swaps -- Each Fund may enter into swap agreements, which are OTC contracts
in which the Fund and a counterparty agree to make periodic net payments
on a specified notional amount. The net payments can be made for a set
period of time or may be triggered by a predetermined credit event. The
net periodic payments may be based on a fixed or variable interest rate;
the change in market value of a specified security, basket of securities,
or index; or the return generated by a security. These periodic payments
received or made by the Fund are recorded in the accompanying Statement of
Operations as realized gains or losses, respectively. Gains or losses are
also realized upon termination of the swap agreements. Swaps are
marked-to-market daily and changes in value are recorded as unrealized
appreciation (depreciation). Risks include changes in the returns of the
underlying instruments, failure of the counterparties to perform under the
contracts' terms and the possible lack of liquidity with respect to the
swap agreements.
(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).
Realized gains and losses on security transactions are determined on the
identified cost basis. Interest income is recognized on the accrual basis. The
Fund amortizes all premiums and discounts on debt securities.
(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.
(f) Recent accounting pronouncements -- In July 2006, the Financial Accounting
Standards Board ("FASB") issued Interpretation No. 48 ("FIN 48"), "Accounting
for Uncertainty in Income Taxes -- an interpretation of FASB Statement No. 109."
FIN 48 prescribes the minimum recognition threshold a tax position must meet in
connection with accounting for uncertainties in income tax positions taken or
expected to be taken by an entity including mutual funds before being measured
and recognized in the financial statements. Adoption of FIN 48 is required for
fiscal years beginning after December 15, 2006. The impact on the Fund's
financial statements, if any, is currently being assessed.
In addition, in September 2006, Statement of Financial Accounting Standards No.
157, "Fair Value Measurements" ("FAS 157"), was issued and is effective for
fiscal years beginning after November 15, 2007. FAS 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. Management is currently evaluating the implication of
FAS 157. At this time its impact on the Fund's financial statements has not been
determined.
2. Investment Advisory Agreement and Transactions with Affiliates:
On September 29, 2006, BlackRock, Inc. and Merrill Lynch & Co., Inc. ("Merrill
Lynch") combined Merrill Lynch's investment management business, Merrill Lynch
Investment Managers, L.P. ("MLIM"), and its affiliates, including Fund Asset
Management, L.P. ("FAM"), with BlackRock, Inc. to create a new independent
company. Merrill Lynch has a 49.8% economic interest and a 45% voting interest
in the combined company and The PNC Financial Services Group, Inc. has
approximately a 34% economic and voting interest. The new company operates under
the BlackRock name and is governed by a board of directors with a majority of
independent members.
On August 15, 2006, shareholders of the Fund approved a new Investment Advisory
Agreement with BlackRock Advisors, Inc. (the "Manager"), an indirect, wholly
owned subsidiary of BlackRock, Inc. BlackRock Advisors, Inc. was recently
reorganized into a limited liability company and renamed BlackRock Advisors,
LLC. The new Investment Advisory Agreement between the Fund and the Manager
became effective on September 29, 2006. Prior to September 29, 2006, FAM was the
Fund's Manager. The general partner of FAM is Princeton Services, Inc. ("PSI"),
an indirect, wholly owned subsidiary of Merrill Lynch, which was the limited
partner.
The Manager 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 daily value of the Fund's net
assets. The Manager (and previously FAM) has agreed to reimburse its management
fee by the amount of management fees the Fund pays to the Manager and/or FAM
indirectly through its investments in Merrill Lynch Institutional Tax-Exempt
Fund. For the six months ended
BLACKROCK MUNIASSETS FUND, INC. NOVEMBER 30, 2006 15
Notes to Financial Statements (concluded)
November 30, 2006, the Manager and FAM reimbursed the Fund in the amounts of
$1,873 and $1,204, respectively.
In addition, the Manager has entered into a sub-advisory agreement with
BlackRock Investment Management, LLC, an affiliate of the Manager, under which
the Manager pays the Sub-Advisor for services it provides a fee that is a
percentage of the management fee paid by the Fund to the Manager.
For the six months ended November 30, 2006, the Fund reimbursed the Manager and
FAM $975 and $1,951, respectively, for certain accounting services.
Prior to September 29, 2006, certain officers and/or directors of the Fund were
officers and/or directors of FAM, MLIM, PSI, and/or Merrill Lynch.
Commencing September 29, 2006, certain officers and/or directors of the Fund are
officers and/or directors of BlackRock, Inc. or its affiliates.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the six
months ended November 30, 2006, were $27,905,659 and $31,196,737, respectively.
4. Common Stock Transactions:
At November 30, 2006, 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, 2006 and
for the year ended May 31, 2006, increased by 85,507 and 164,470, respectively,
as a result of dividend investment.
5. Capital Loss Carryforward:
On May 31, 2006, the Fund had a net capital loss carryforward of $29,921,653, of
which $611,976 expires in 2007, $6,860,553 expires in 2008, $3,487,083 expires
in 2009, $2,260,830 expires in 2010, $7,452,325 expires in 2011, $5,486,273
expires in 2012 and $3,762,613 expires in 2013. This amount will be available to
offset like amounts of any future taxable gains.
6. Subsequent Event:
The Fund paid a tax-exempt income dividend to holders of Common Stock in the
amount of $.070000 per share on December 28, 2006 to shareholders of record on
December 15, 2006.
Officers and Directors
Robert C. Doll, Jr., President and Director
James H. Bodurtha, Director
Kenneth A. Froot, Director
Joe Grills, Director
Herbert I. London, Director
Roberta Cooper Ramo, Director
Robert S. Salomon, Jr., Director
Donald C. Burke, Vice President and Treasurer
John M. Loffredo, Senior Vice President
Theodore R. Jaeckel Jr., Vice President
Jeffrey Hiller, Fund Chief Compliance Officer
Alice A. Pellegrino, Secretary
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agent
The Bank of New York
101 Barclay Street -- 11 East
New York, NY 10286
NYSE Symbol
MUA
16 BLACKROCK MUNIASSETS FUND, INC. NOVEMBER 30, 2006
Disclosure of Investment Advisory Agreement
BlackRock Investment Advisory Agreement -- Matters Considered by the Board
The following disclosure appeared in the May 31, 2006 Annual Report of the Fund
and is the discussion referred to in "New BlackRock Sub-Advisory Agreement --
Matters Considered by the Board" below.
In connection with the Transaction between Merrill Lynch and BlackRock, the
Fund's Board of Directors considered a new investment advisory agreement (the
"New Investment Advisory Agreement") between the Fund and BlackRock Advisors,
Inc. or its successor ("BlackRock Advisors"). If the New Investment Advisory
Agreement is approved by the Fund's shareholders, it will become effective upon
the closing of the Transaction, which is expected in the third quarter of 2006.
The Board discussed the New Investment Advisory Agreement at telephonic and
in-person meetings held during April and May 2006. The Board, including the
independent directors, approved the New Investment Advisory Agreement at a
meeting held on May 9, 2006.
To assist the Board in its consideration of the New Investment Advisory
Agreement, BlackRock provided materials and information about BlackRock,
including its financial condition and asset management capabilities and
organization, and Merrill Lynch provided materials and information about the
Transaction. The independent directors, through their independent legal counsel,
also requested and received additional information from Merrill Lynch and
BlackRock in connection with their consideration of the New Investment Advisory
Agreement. The additional information was provided in advance of the May 9, 2006
meeting. In addition, the independent directors consulted with their counsel and
Fund counsel on numerous occasions, discussing, among other things, the legal
standards and certain other considerations relevant to the directors'
deliberations.
At the Board meetings, members of the Board discussed with Merrill Lynch
management and certain BlackRock representatives the Transaction, its strategic
rationale and BlackRock's general plans and intentions regarding the Fund. At
these Board meetings, representatives of Merrill Lynch and BlackRock made
presentations to and responded to questions from the Board. The directors also
inquired about the plans for and anticipated roles and responsibilities of
certain employees and officers of the Investment Adviser and certain affiliates
being transferred to BlackRock in connection with the Transaction. The
independent directors of the Board also conferred separately and with their
counsel about the Transaction and other matters related to the Transaction on a
number of occasions, including in connection with the April and May 2006
meetings. After the presentations and after reviewing the written materials
provided, the independent directors met in executive sessions with their counsel
to consider the New Investment Advisory Agreement.
In connection with the Board's review of the New Investment Advisory Agreement,
Merrill Lynch and/or BlackRock advised the directors about a variety of matters.
The advice included the following, among other matters:
o that there is not expected to be any diminution in the nature, quality and
extent of services provided to the Fund and its shareholders by BlackRock
Advisors, including compliance services;
o that operation of New BlackRock as an independent investment management
firm will enhance its ability to attract and retain talented
professionals;
o that the Fund should benefit from having access to BlackRock's state of
the art technology and risk management analytic tools, including
investment tools, provided under the BlackRock Solutions(R) brand name;
o that BlackRock has no present intention to alter any applicable expense
waivers and reimbursements currently in effect and, while it reserves the
right to do so in the future, it would seek the approval of the Board
before making any changes;
o that under the Transaction Agreement, Merrill Lynch and BlackRock have
agreed to conduct, and use reasonable best efforts to cause their
respective affiliates to conduct, their respective businesses in
compliance with the conditions of Section 15(f) of the Investment Company
Act of 1940 (the "1940 Act") in relation to any public funds advised by
BlackRock or the Investment Adviser (or its affiliates), respectively; and
o that Merrill Lynch and BlackRock would derive benefits from the
Transaction and that, as a result, they have a different financial
interest in the matters that were being considered than do Fund
shareholders;
The directors considered the information provided by Merrill Lynch and BlackRock
above, and, among other factors, the following:
BLACKROCK MUNIASSETS FUND, INC. NOVEMBER 30, 2006 17
Disclosure of Investment Advisory Agreement (continued)
o the potential benefits to Fund shareholders from being part of a combined
fund family with BlackRock-sponsored funds, including possible economies
of scale and access to investment opportunities;
o the reputation, financial strength and resources of BlackRock and its
investment advisory subsidiaries and the anticipated financial strength
and resources of New BlackRock;
o the compliance policies and procedures of BlackRock Advisors;
o the terms and conditions of the New Investment Advisory Agreement,
including the fact that the schedule of the Fund's total advisory fees
will not increase by virtue of the New Investment Advisory Agreement, but
will remain the same;
o that within the past year the Board performed a full annual review of the
investment advisory agreement currently in effect for the Fund (the
"Current Investment Advisory Agreement") as required by the 1940 Act and
has determined that the Investment Adviser has the capabilities, resources
and personnel necessary to provide the advisory and administrative
services currently provided to the Fund; and that the advisory and/or
management fees paid by the Fund, taking into account any applicable
agreed-upon fee waivers and breakpoints, represent reasonable compensation
to the Investment Adviser in light of the services provided, the costs to
the Investment Adviser of providing those services, economies of scale,
the fees and other expenses paid by similar funds (including information
provided by Lipper), and such other matters as the directors have
considered relevant in the exercise of their reasonable judgment (the
Board had most recently performed a full annual review of the Current
Investment Advisory Agreement in November 2005); and
o that Merrill Lynch agreed to pay all expenses of the Fund in connection
with the Board's consideration of the New Investment Advisory Agreement
and related agreements and all costs of shareholder approval of the New
Investment Advisory Agreement and as a result the Fund would bear no costs
in obtaining shareholder approval of the New Investment Advisory
Agreement.
Certain of these considerations are discussed in more detail below.
In its review of the New Investment Advisory Agreement, the Board assessed the
nature, scope and quality of the services to be provided to the Fund by the
personnel of BlackRock Advisors and its affiliates, including administrative
services, shareholder services, oversight of fund accounting, marketing services
and assistance in meeting legal and regulatory requirements. In its review of
the New Investment Advisory Agreement, the Board also considered a range of
information in connection with its oversight of the services to be provided by
BlackRock Advisors and its affiliates. Among the matters considered were: (a)
fees (in addition to management fees) to be paid to BlackRock Advisors and its
affiliates by the Fund; (b) Fund operating expenses paid to third parties; (c)
the resources devoted to and compliance reports relating to the Fund's
investment objective, policies and restrictions, and its compliance with its
Code of Ethics and BlackRock Advisors' compliance policies and procedures; and
(d) the nature, cost and character of non-investment management services to be
provided by BlackRock Advisors and its affiliates.
In the period prior to the Board meetings to consider renewal of the Current
Investment Advisory Agreement, the Board had requested and received materials
specifically relating to the agreement. These materials included (a) information
compiled by Lipper Inc. ("Lipper") on the fees and expenses and the investment
performance of the Fund as compared to a comparable group of funds as classified
by Lipper; (b) information comparing the Fund's market price with its net asset
value per share; (c) a discussion by the Fund's portfolio management team on
investment strategies used by the Fund during its most recent fiscal year; (d)
information on the profitability to the Investment Adviser of the Current
Investment Advisory Agreement and other payments received by the Investment
Adviser and its affiliates from the Fund; and (e) information provided by the
Investment Adviser concerning services related to the valuation and pricing of
Fund portfolio holdings, the Fund's portfolio turnover statistics, and direct
and indirect benefits to the Investment Adviser and its affiliates from their
relationship with the Fund.
In their deliberations, the directors considered information received in
connection with their most recent continuation of the Current Investment
Advisory Agreement, in addition to information provided by BlackRock and
BlackRock Advisors in connection with their evaluation of the terms and
conditions of the New Investment Advisory Agreement. The directors did not
identify any particular information that was all-important or controlling. The
directors, including a majority of the independent directors, concluded that the
18 BLACKROCK MUNIASSETS FUND, INC. NOVEMBER 30, 2006
terms of the New Investment Advisory Agreement are appropriate, that the fees to
be paid are reasonable in light of the services to be provided to the Fund, and
that the New Investment Advisory Agreement should be approved and recommended to
Fund shareholders.
Nature, Quality and Extent of Services Provided -- The Board reviewed the
nature, extent and quality of services provided by the Investment Adviser,
including the investment advisory services and the resulting performance of the
Fund, as well as the nature, quality and extent of services expected to be
provided by BlackRock Advisors. The Board focused primarily on the Investment
Adviser's advisory services and the Fund's investment performance, but also
considered certain areas in which both the Investment Adviser and the Fund
receive services as part of the Merrill Lynch complex. The Board compared the
Fund's performance -- both including and excluding the effects of the Fund's
fees and expenses -- to the performance of a comparable group of funds, and the
performance of a relevant index or combination of indexes. While the Board
reviews performance data at least quarterly, consistent with the Investment
Adviser's investment goals, the Board attaches more importance to performance
over relatively long periods of time, typically three to five years.
In evaluating the nature, quality and extent of the services to be provided by
BlackRock Advisors under the New Investment Advisory Agreement, the directors
considered, among other things, the expected impact of the Transaction on the
operations, facilities, organization and personnel of New BlackRock and how it
would affect the Fund; the ability of BlackRock Advisors to perform its duties
after the Transaction; and any anticipated changes to the current investment and
other practices of the Fund.
The directors were given information with respect to the potential benefits to
the Fund and its shareholders from having access to BlackRock's state of the art
technology and risk management analytic tools, including the investment tools
provided under the BlackRock Solutions brand name.
The directors were advised that, as a result of Merrill Lynch's equity interest
in BlackRock after the Transaction, the Fund will continue to be subject to
restrictions concerning certain transactions involving Merrill Lynch affiliates
(for example, transactions with a Merrill Lynch broker-dealer acting as
principal) absent revised or new regulatory relief. The directors were advised
that a revision of existing regulatory relief with respect to these restrictions
was being sought from the Securities and Exchange Commission and were advised of
the possibility of receipt of such revised regulatory relief. There can be no
assurance that such relief will be obtained.
Based on their review of the materials provided and the assurances they had
received from the management of Merrill Lynch and of BlackRock, the directors
determined that the nature and quality of services to be provided to the Fund
under the New Investment Advisory Agreement were expected to be as good or
better than that provided under the Current Investment Advisory Agreement. It
was noted, however, that it is expected that there will be changes in personnel
following the Transaction and the combination of the operations of the
Investment Adviser and its affiliates with those of BlackRock. The directors
noted that if current portfolio managers or other personnel cease to be
available, the Board would consider all available options, which could include
seeking the investment advisory or other services of BlackRock affiliates.
Accordingly, the directors concluded that, overall, they were satisfied at the
present time with assurances from BlackRock and BlackRock Advisors as to the
expected nature, extent and quality of the services to be provided to the Fund
under the New Investment Advisory Agreement.
Costs of Services Provided and Profitability -- It was noted that, in
conjunction with the recent review of the Current Investment Advisory Agreement,
the directors had received, among other things, a report from Lipper comparing
the Fund's fees, expenses and performance to those of a peer group selected by
Lipper, and information as to the fees charged by the Investment Adviser or its
affiliates to other registered investment company clients for investment
management services. The Board reviewed the Fund's contractual management fee
rate and actual management fee rate as a percentage of total assets at common
asset levels -- the actual rate includes advisory fees and the effects of any
fee waivers -- compared to the other funds in its Lipper category. They also
compared the Fund's total expenses to those of other comparable funds. The
information showed that the Fund had fees and expenses within the range of fees
and expenses of comparable funds. The Board considered the services to be
provided by and the fees to be charged by BlackRock Advisors to other funds with
similar investment mandates and noted that the fees charged by BlackRock
Advisors in those cases, including fee waivers and expense reimbursements, were
generally comparable to those being charged to the Fund. The Board also noted
that, as a general matter, according to the information provided by BlackRock,
fees charged to institutional clients were lower than the fees charged to the
Fund, but BlackRock Advisors
BLACKROCK MUNIASSETS FUND, INC. NOVEMBER 30, 2006 19
Disclosure of Investment Advisory Agreement (concluded)
provided less extensive services to such clients. The Board concluded that the
Fund's management fee and fee rate and overall expense ratio are reasonable
compared to those of other comparable funds.
In evaluating the costs of the services to be provided by BlackRock Advisors
under the New Investment Advisory Agreement, the directors considered, among
other things, whether advisory fees or other expenses would change as a result
of the Transaction. Based on their review of the materials provided and the fact
that the New Investment Advisory Agreement is substantially similar to the
Current Investment Advisory Agreement in all material respects, including the
rate of compensation, the directors determined that the Transaction should not
increase the total fees payable, including any fee waivers and expense
reimbursements, for advisory and administrative services. The directors noted
that it was not possible to predict how the Transaction would affect BlackRock
Advisors' profitability from its relationship with the Fund.
The directors discussed with BlackRock Advisors its general methodology to be
used in determining its profitability with respect to its relationship with the
Fund. The directors noted that they expect to receive profitability information
from BlackRock Advisors on at least an annual basis and thus be in a position to
evaluate whether any adjustments in Fund fees and/or fee breakpoints would be
appropriate.
Fees and Economies of Scale -- The Board considered the extent to which
economies of scale might be realized as the assets of the Fund increase and
whether there should be changes in the management fee rate or structure in order
to enable the Fund to participate in these economies of scale. The Board
considered economies of scale to the extent applicable to the Fund's closed-end
structure and determined that the Fund currently appropriately benefits from any
economies of scale and no changes were currently necessary.
In reviewing the Transaction, the directors considered, among other things,
whether advisory fees or other expenses would change as a result of the
Transaction. Based on the fact that the New Investment Advisory Agreement is
substantially similar to the Current Investment Advisory Agreement in all
material respects, including the rate of compensation, the directors determined
that as a result of the Transaction, the Fund's total advisory fees would be no
higher than the fees under its Current Investment Advisory Agreement. The
directors noted that in conjunction with their most recent deliberations
concerning the Current Investment Advisory Agreement, the directors had
determined that the total fees for advisory and administrative services for the
Fund were reasonable in light of the services provided. It was noted that in
conjunction with the recent review of the Current Investment Advisory Agreement,
the directors had received, among other things, a report from Lipper comparing
the Fund's fees, expenses and performance to those of a peer group selected by
Lipper, and information as to the fees charged by the Investment Adviser or its
affiliates to other registered investment company clients for investment
management services. The directors concluded that, because the rates for
advisory fees for the Fund would be no higher than its current fee rates, the
proposed management fee structure, including any fee waivers, was reasonable and
that no additional changes were currently necessary.
Fall-Out Benefits -- In evaluating the fall-out benefits to be received by
BlackRock Advisors under the New Investment Advisory Agreement, the directors
considered whether the Transaction would have an impact on the fall-out benefits
received by the Investment Adviser by virtue of the Current Investment Advisory
Agreement. Based on their review of the materials provided, including materials
received in connection with their most recent approval or continuance of the
Current Investment Advisory Agreement, and their discussions with management of
the Investment Adviser and BlackRock, the directors determined that those
benefits could include increased ability for BlackRock to distribute shares of
its funds and other investment products. The directors noted that any such
benefits were difficult to quantify with certainty at this time, and indicated
that they would continue to evaluate them going forward.
Investment Performance -- The directors considered investment performance for
the Fund. The directors compared the Fund's performance -- both including and
excluding the effects of the Fund's fees and expenses -- to the performance of a
comparable group of funds, and the performance of a relevant index or
combination of indexes. The comparative information received from Lipper showed
Fund performance at various levels within the range of performance of comparable
funds over different time periods. While the Board reviews performance data at
least quarterly, consistent with the Investment Adviser's investment goals, the
Board attaches more importance over relatively long periods of time, typically
three to five years. The directors believed the Fund's performance was
satisfactory. Also, the directors took into account the investment performance
of funds currently advised by BlackRock Advisors. The Board considered
comparative information from Lipper which showed that the per-
20 BLACKROCK MUNIASSETS FUND, INC. NOVEMBER 30, 2006
formance of the funds advised by BlackRock Advisors was within the range of
performance of comparable funds over different time periods. The Board noted
BlackRock's considerable investment management experience and capabilities, but
were unable to predict what effect, if any, consummation of the Transaction
would have on the future performance of the Fund.
Conclusion -- After the independent directors of the Fund deliberated in
executive session, the entire Board, including the independent directors,
approved the New Investment Advisory Agreement, concluding that the advisory fee
rate was reasonable in relation to the services provided and that the New
Investment Advisory Agreement was in the best interests of the shareholders. In
approving the New Investment Advisory Agreement, the Board noted that it
anticipated reviewing the continuance of the agreement in advance of the
expiration of the initial two-year period.
Contingent BlackRock Sub-Advisory Agreement -- Matters Considered by the Board
At the telephonic and in-person meetings held during April and May 2006 at which
the Board of Directors discussed and approved the New Investment Advisory
Agreement, the Board, including the independent directors, also discussed and
approved a contingent sub-advisory agreement (the "Contingent Sub-Advisory
Agreement") between the Investment Adviser and BlackRock Advisors (the
"BlackRock Sub-adviser"). The Contingent Sub-Advisory Agreement is intended to
ensure that the Fund operates with efficient portfolio management services until
the closing of the Transaction, in the event that the Board deems it necessary
and in the best interests of the Fund and its shareholders that the BlackRock
Sub-Adviser assist in managing the operations of the Fund during the interim
period until the closing of the Transaction. If shareholders approve the
Contingent Sub-Advisory Agreement, it will take effect only upon recommendation
from the Investment Adviser and upon subsequent approval of the Board in the
period up to the closing of the Transaction. The effectiveness of the Contingent
Sub-Advisory Agreement, therefore, would be contingent on further Board approval
after shareholders approve it. Pursuant to the Contingent Sub-Advisory
Agreement, the BlackRock Sub-Adviser would receive a monthly fee from the
Investment Adviser equal to 50% of the advisory fee received by the Investment
Adviser. The Investment Adviser would pay the BlackRock Sub-Adviser out of its
own resources. There would be no increase in Fund expenses as a result of the
Contingent Sub-Advisory Agreement.
In making its approval, the Board considered the Contingent Sub-Advisory
Agreement in conjunction with the New Investment Advisory Agreement and reviewed
the same information and factors discussed above, and came to the same
conclusions. The Board also considered in conjunction with the Contingent
Sub-Advisory Agreement the necessity of ensuring that the Fund operates with
effective management services until the closing of the Transaction. In reviewing
the sub-advisory fee rate provided in the Contingent Sub-Advisory Agreement, the
Board took note of the fact that both the Investment Adviser and the BlackRock
Sub-Adviser would have significant responsibilities under their respective
advisory agreements. The Investment Adviser would remain responsible for
oversight of the Fund's operations and administration and the BlackRock
Sub-Adviser would provide advisory services to the Fund under the Contingent
Sub-Advisory Agreement. The Board also took into account the expected short
duration of the term of any Contingent Sub-Advisory Agreement and the fact that
total advisory fees paid by the Fund would not increase as a result of the
Contingent Sub-Advisory Agreement. Under all of the circumstances, the Board
concluded that it was a reasonable allocation of fees for the BlackRock
Sub-Adviser to receive 50% of the advisory fee paid by the Fund to the
Investment Adviser.
After the independent directors deliberated in executive session, the entire
Board, including the independent directors, approved the Contingent Sub-Advisory
Agreement, concluding that the advisory fee was reasonable in relation to the
services provided and that the Contingent Sub-Advisory Agreement was in the best
interests of shareholders.
BLACKROCK MUNIASSETS FUND, INC. NOVEMBER 30, 2006 21
Disclosure of Sub-Advisory Agreement
New BlackRock Sub-Advisory Agreement -- Matters Considered by the Board
At an in-person meeting held on August 22-23, 2006, the Board of Directors,
including the independent directors, discussed and approved the sub-advisory
agreement between BlackRock Advisors and its affiliate, BlackRock Investment
Management, LLC (the "Sub-Adviser") (the "BlackRock Sub-Advisory Agreement").
The BlackRock Sub-Advisory Agreement became effective on September 29, 2006, at
the same time the New Investment Advisory Agreement with BlackRock Advisors
(which had been approved by the Fund's shareholders) became effective.
Pursuant to the BlackRock Sub-Advisory Agreement, the Sub-Adviser receives a
monthly fee from BlackRock Advisors equal to 59% of the advisory fee received by
BlackRock Advisors from the Fund. BlackRock Advisors pays the Sub-Adviser out of
its own resources, and there is no increase in the Fund's expenses as a result
of the BlackRock Sub-Advisory Agreement.
In approving the BlackRock Sub-Advisory Agreement at the August in-person
meeting, the Board reviewed its considerations in connection with its approval
of the New Investment Advisory Agreement in May 2006. The Board relied on the
same information and considered the same factors as those discussed above in
connection with the approval of the New Investment Advisory Agreement, and came
to the same conclusions. In reviewing the sub-advisory fee rate provided for in
the BlackRock Sub-Advisory Agreement, the Board noted the fact that both
BlackRock Advisors and the Sub-Adviser have significant responsibilities under
their respective advisory agreements. Under the New Investment Advisory
Agreement, BlackRock Advisors remains responsible for the overall management of
the Fund and for oversight of the Fund's operations and administration. Under
the BlackRock Sub-Advisory Agreement, the Sub-Adviser provides advisory services
to the Fund and is responsible for the day-to-day management of the Fund's
portfolio. The Board also took into account the fact that there is no increase
in total advisory fees paid by the Fund as a result of the BlackRock
Sub-Advisory Agreement. Based on its considerations, the Board concluded that it
was a reasonable allocation of fees for the Sub-Adviser to receive 59% of the
advisory fee paid by the Fund to BlackRock Advisors.
After the independent directors deliberated in executive session, the entire
Board of the Fund, including the independent directors, approved the BlackRock
Sub-Advisory Agreement, concluding that the sub-advisory fee was reasonable in
relation to the services provided and that the BlackRock Sub-Advisory Agreement
was in the best interests of the Fund's shareholders.
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 stable level of dividend distributions, 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.
22 BLACKROCK MUNIASSETS FUND, INC. NOVEMBER 30, 2006
Proxy Results
During the six-month period ended November 30, 2006, BlackRock MuniAssets Fund,
Inc.'s shareholders voted on the following proposals. Proposals 2 and 3 were
approved at an annual shareholders' meeting on August 15, 2006. With respect to
Proposal 1, the annual shareholders' meeting was adjourned until September 15,
2006, at which time it passed. A description of the proposals and number of
shares voted were as follows:
--------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
--------------------------------------------------------------------------------------------------------
1. To elect the Fund's Directors: Roberta Cooper Ramo 12,584,451 303,062
--------------------------------------------------------------------------------------------------------
Shares Voted Shares Voted Shares Voted
For Against Abstain
--------------------------------------------------------------------------------------------------------
2. To approve a new investment advisory agreement
with BlackRock Advisors, Inc. 11,462,260 367,337 524,826
--------------------------------------------------------------------------------------------------------
3. To approve a contingent subadvisory agreement
with BlackRock Advisors, Inc. 11,477,867 398,979 477,577
--------------------------------------------------------------------------------------------------------
BlackRock Privacy Principles
BlackRock is committed to maintaining the privacy of its current and former fund
investors and individual clients (collectively, "Clients") and to safeguarding
their nonpublic personal information. The following information is provided to
help you understand what personal information BlackRock collects, how we protect
that information and why in certain cases we share such information with select
parties.
If you are located in a jurisdiction where specific laws, rules or regulations
require BlackRock to provide you with additional or different privacy-related
rights beyond what is set forth below, then BlackRock will comply with those
specific laws, rules or regulations.
BlackRock obtains or verifies personal nonpublic information from and about you
from different sources, including the following: (i) information we receive from
you or, if applicable, your financial intermediary, on applications, forms or
other documents; (ii) information about your transactions with us, our
affiliates, or others; (iii) information we receive from a consumer reporting
agency; and (iv) from visits to our Web sites.
BlackRock does not sell or disclose to nonaffiliated third parties any nonpublic
personal information about its Clients, except as permitted by law or as is
necessary to service Client accounts. These nonaffiliated third parties are
required to protect the confidentiality and security of this information and to
use it only for its intended purpose.
We may share information with our affiliates to service your account or to
provide you with information about other BlackRock products or services that may
be of interest to you. In addition, BlackRock restricts access to nonpublic
personal information about its Clients to those BlackRock employees with a
legitimate business need for the information. BlackRock maintains physical,
electronic and procedural safeguards that are designed to protect the nonpublic
personal information of its Clients, including procedures relating to the proper
storage and disposal of such information.
Electronic Delivery
Electronic copies of most financial reports and prospectuses are available on
the Fund's Web site. Shareholders can sign up for e-mail notifications of
quarterly statements, annual and semi-annual reports and prospectuses by
enrolling in the Fund's electronic delivery program.
To enroll:
Shareholders Who Hold Accounts with Investment Advisers, Banks or Brokerages:
Please contact your financial adviser. Please note that not all investment
advisers, banks or brokerages may offer this service.
BLACKROCK MUNIASSETS FUND, INC. NOVEMBER 30, 2006 23
BlackRock 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
shareholders of BlackRock 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.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available (1) without
charge, upon request, by calling toll-free 1-800-441-7762; (2) at
www.blackrock.com; and (3) on the Securities and Exchange Commission's Web site
at http://www.sec.gov. Information about how the Fund voted proxies relating to
securities held in the Fund's portfolio during the most recent 12-month period
ended June 30 is available (1) at www.blackrock.com and (2) on the Securities
and Exchange Commission's Web site at http://www.sec.gov.
BlackRock MuniAssets Fund, Inc.
P.O. Box 9011
Princeton, NJ 08543-9011
BLACKROCK
#16716-11/06
Item 2 - Code of Ethics - Not Applicable to this semi-annual report
Item 3 - Audit Committee Financial Expert - Not Applicable to this semi-annual
report
Item 4 - Principal Accountant Fees and Services - Not Applicable to this
semi-annual report
Item 5 - Audit Committee of Listed Registrants - Not Applicable to this
semi-annual report
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Not Applicable to this semi-annual
report
Item 8 - Portfolio Managers of Closed-End Management Investment Companies -
November 30, 2006
(a)(1) BlackRock MuniAssets Fund, Inc. is managed by a team of
investment professionals comprised of Theodore R. Jaeckel, Jr., CFA,
Managing Director at BlackRock, and Walter O'Connor, Managing Director
at BlackRock. Each is a member of BlackRock's municipal tax-exempt
management group. Mr. Jaeckel and Mr. O'Connor are responsible for
setting the Fund's overall investment strategy and overseeing the
management of the Fund. Mr. Jaeckel is also the Fund's lead portfolio
manager and is responsible for the day-to-day management of the Fund's
portfolio and the selection of its investments. Mr. O'Connor has been a
member of the Fund's management team since 2006 and Mr. Jaeckel has
been the Fund's portfolio manager since 1998.
Mr. Jaeckel joined BlackRock in 2006. Prior to joining BlackRock, he
was a Managing Director (Municipal Tax-Exempt Fund Management) of
Merrill Lynch Investment Managers, L.P. ("MLIM") from 2005 to 2006 and
a Director of MLIM from 1997 to 2005. He has been a portfolio manager
with BlackRock or MLIM since 1991.
Mr. O'Connor joined BlackRock in 2006. Prior to joining BlackRock, he
was a Managing Director (Municipal Tax-Exempt Fund Management) of MLIM
from 2003 to 2006 and was a Director of MLIM from 1997 to 2002. He has
been a portfolio manager with BlackRock or MLIM since 1991.Mr. Theodore
R. Jaeckel, Jr. is primarily responsible for the day-to-day management
of the registrant's portfolio ("Portfolio Manager"). Mr. Jaeckel has
been a Managing Director of MLIM since 2005. He was a Director of MLIM
from 1997 to 2005. Mr. Jaeckel has been a portfolio manager with the
Investment Adviser and MLIM since 1991 and has been a Vice President
and portfolio manager of the Fund since 1998.
(a)(2)As of November 30, 2006:
(iii) Number of Other Accounts and
(ii) Number of Other Accounts Managed Assets for Which Advisory Fee is
and Assets by Account Type Performance-Based
Other Other
(i) Name of Registered Other Pooled Registered Other Pooled
Portfolio Investment Investment Other Investment Investment Other
Manager Companies Vehicles Accounts Companies Vehicles Accounts
--------------- ---------------
Theodore R
Jaeckel, Jr 82 0 0 0 0 0
$29,383,274,865 $ 0 $ 0 $ 0 $ 0 $ 0
Walter O'Connor 82 0 0 0 0 0
$29,383,274,865 $ 0 $ 0 $ 0 $ 0 $ 0
(iv) Potential Material Conflicts of Interest
BlackRock has built a professional working environment, firm-wide
compliance culture and compliance procedures and systems designed to
protect against potential incentives that may favor one account over
another. BlackRock has adopted policies and procedures that address the
allocation of investment opportunities, execution of portfolio
transactions, personal trading by employees and other potential
conflicts of interest that are designed to ensure that all client
accounts are treated equitably over time. Nevertheless, BlackRock
furnishes investment management and advisory services to numerous
clients in addition to the Fund, and BlackRock may, consistent with
applicable law, make investment recommendations to other clients or
accounts (including accounts which are hedge funds or have performance
or higher fees paid to BlackRock, or in which portfolio managers have a
personal interest in the receipt of such fees), which may be the same
as or different from those made to the Fund. In addition, BlackRock,
its affiliates and any officer, director, stockholder or employee may
or may not have an interest in the securities whose purchase and sale
BlackRock recommends to the Fund. BlackRock, or any of its affiliates,
or any officer, director, stockholder, employee or any member of their
families may take different actions than those recommended to the Fund
by BlackRock with respect to the same securities. Moreover, BlackRock
may refrain from rendering any advice or services concerning securities
of companies of which any of BlackRock's (or its affiliates') officers,
directors or employees are directors or officers, or companies as to
which BlackRock or any of its affiliates or the officers, directors and
employees of any of them has any substantial economic interest or
possesses material non-public information. Each portfolio manager also
may manage accounts whose investment strategies may at times be opposed
to the strategy utilized for the Fund. In this connection, it should be
noted that certain portfolio managers currently manage certain accounts
that are subject to performance fees. In addition, certain portfolio
managers assist in managing certain hedge funds and may be entitled to
receive a portion of any incentive fees earned on such funds and a
portion of such incentive fees may be voluntarily or involuntarily
deferred. Additional portfolio managers may in the future manage other
such accounts or funds and may be entitled to receive incentive fees.
As a fiduciary, BlackRock owes a duty of loyalty to its clients and
must treat each client fairly. When BlackRock purchases or sells
securities for more than one account, the trades must be allocated in a
manner consistent with its fiduciary duties. BlackRock attempts to
allocate investments in a fair and equitable manner among client
accounts, with no account receiving preferential treatment. To this
end, BlackRock has adopted a policy that is intended to ensure that
investment opportunities are allocated fairly and equitably among
client accounts over time. This policy also seeks to achieve reasonable
efficiency in client transactions and provide BlackRock with sufficient
flexibility to allocate investments in a manner that is consistent with
the particular investment discipline and client base.
(a)(3) As of November 30, 2006:
Portfolio Manager Compensation
The portfolio manager compensation program of BlackRock and its
affiliates, including the Investment Adviser, is critical to BlackRock's ability
to attract and retain the most talented asset management professionals. This
program ensures that compensation is aligned with maximizing investment returns
and it provides a competitive pay opportunity for competitive performance.
Compensation Program
The elements of total compensation for certain BlackRock and its
affiliates portfolio managers are a fixed base salary, annual performance-based
cash and stock compensation (cash and stock bonus) and other benefits. BlackRock
has balanced these components of pay to provide portfolio managers with a
powerful incentive to achieve consistently superior investment performance. By
design, portfolio manager compensation levels fluctuate -- both up and down --
with the relative investment performance of the portfolios that they manage.
Base Salary
Under the BlackRock approach, like that of many asset management firms,
base salaries represent a relatively small portion of a portfolio manager's
total compensation. This approach serves to enhance the motivational value of
the performance-based (and therefore variable) compensation elements of the
compensation program.
Performance-Based Compensation
BlackRock believes that the best interests of investors are served by
recruiting and retaining exceptional asset management talent and managing their
compensation within a consistent and disciplined framework that emphasizes pay
for performance in the context of an intensely competitive market for talent. To
that end, certain BlackRock and its affiliates portfolio manager incentive
compensation is based on a formulaic compensation program.
BlackRock's formulaic portfolio manager compensation program includes:
investment performance relative to a subset of general closed-end, high yield,
municipal debt funds over 1-, 3- and 5-year performance periods and a measure of
operational efficiency. Portfolio managers are compensated based on the pre-tax
performance of the products they manage. If a portfolio manager's tenure is less
than 5-years, performance periods will reflect time in position. Portfolio
managers are compensated based on the products they manage. A discretionary
element of portfolio manager compensation may include consideration of:
financial results, expense control, profit margins, strategic planning and
implementation, quality of client service, market share, corporate reputation,
capital allocation, compliance and risk control, leadership, workforce
diversity, supervision, technology and innovation. All factors are considered
collectively by BlackRock management.
Cash Bonus
Performance-based compensation is distributed to portfolio managers in a
combination of cash and stock. Typically, the cash bonus, when combined with
base salary, represents more than 60% of total compensation for portfolio
managers.
Stock Bonus
A portion of the dollar value of the total annual performance-based bonus
is paid in restricted shares of BlackRock stock. Paying a portion of annual
bonuses in stock puts compensation earned by a portfolio manager for a given
year "at risk" based on the Company's ability to sustain and improve its
performance over future periods.
The ultimate value of stock bonuses is dependent on future BlackRock stock
price performance. As such, the stock bonus aligns each portfolio manager's
financial interests with those of BlackRock shareholders and encourages a
balance between short-term goals and long-term strategic objectives. Management
strongly believes that providing a significant portion of competitive
performance-based compensation in stock is in the best interests of investors
and shareholders. This approach ensures that portfolio managers participate as
shareholders in both the "downside risk" and "upside opportunity" of the
Company's performance. Portfolio managers therefore have a direct incentive to
protect BlackRock's reputation for integrity.
Other Compensation Programs
Portfolio managers who meet relative investment performance and financial
management objectives during a performance year are eligible to participate in a
deferred cash program. Awards under this program are in the form of deferred
cash that may be benchmarked to a menu of certain BlackRock mutual funds
(including their own funds) during a five-year vesting period. The deferred cash
program aligns the interests of participating portfolio managers with the
investment results of BlackRock products and promotes continuity of successful
portfolio management teams.
Other Benefits
Portfolio managers are also eligible to participate in broad-based plans
offered generally to BlackRock employees, including broad-based retirement,
401(k), health, and other employee benefit plans.
(a)(4) Beneficial Ownership of Securities. As of November 30, 2006, neither of
Messrs. Jaeckel and O'Connor beneficially owns any stock issued by the
Fund.
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable
Item 10 - Submission of Matters to a Vote of Security Holders - Not Applicable
Item 11 - Controls and Procedures
11(a) - The Registrant's principal executive and principal financial officers
have evaluated the Registrant's disclosure controls and procedures,
including internal control over financial reporting, within 90 days of
this filing. Such principal officers have concluded that as of January
26, 2007 the Registrant's disclosure controls and procedures were
effective in design and operation to reasonably ensure that information
required to be disclosed by the Registrant in this Form N-CSR was
recorded, processed, summarized, and reported within the required time
periods, and were sufficient to form the basis of the certifications
required by Rule 30a-2 of the Investment Company Act of 1940, as
amended. Prior to reaching that conclusion, such principal officers had
become aware of matters relating to the Registrant's participation in
certain inverse floater structures that necessitated adjustments to
financial information included in Item 1 of this filing. As a result,
management of the Registrant had reevaluated certain disclosure controls
and procedures determined not to be effective, as discussed more fully
below.
Management of the Registrant is responsible for establishing and
maintaining effective internal control over financial reporting. In
fulfilling this responsibility, estimates and judgments by management
are required to assess the expected benefits and related costs of
controls. The Registrant's internal control over financial reporting is
a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with U.S. generally
accepted accounting principles. Such internal control includes policies
and procedures that provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use or disposition of a
registrant's assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the
risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
A control deficiency exists when the design or operation of a control
does not allow management or employees, in the normal course of
performing their assigned functions, to prevent or detect misstatements
on a timely basis. A significant deficiency is a control deficiency, or
combination of control deficiencies, that adversely affects the
Registrant's ability to initiate, authorize, record, process or report
financial data reliably in accordance with generally accepted accounting
principles such that there is more than a remote likelihood that a
misstatement of the Registrant's annual or interim financial statements
that is more than inconsequential will not be prevented or detected. A
material weakness is a significant deficiency, or combination of
significant deficiencies, that results in more than a remote likelihood
that a material misstatement of the annual or interim financial
statements will not be prevented or detected.
Prior to the filing of the Registrant's Form N-CSR, the Registrant
identified the following control deficiency, that was determined to be a
material weakness, as defined above, in the Registrant's internal
control over financial reporting at November 30, 2006. The Registrant's
controls related to the review and analysis of relevant terms and
conditions of transfers of certain assets pertaining to inverse floater
structures were not operating effectively to appropriately determine
whether the transfers of assets qualified for sale accounting under the
provisions of Statement of Financial Accounting Standards No. 140,
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities" ("SFAS 140"). As a result, these
controls did not detect that certain transfers were not appropriately
recorded as borrowings. Accordingly, the Registrant's financial
statements as of and for the period ended November 30, 2006, including
prior periods where applicable, were adjusted prior to being issued to
appropriately reflect transfers of such securities as secured borrowings
and to report the related income and expense. These adjustments had no
impact on net assets, net asset value per share or total return.
Prior to the evaluation of the design and operation of the Registrant's
disclosure controls and procedures at January 26, 2007, the Registrant's
disclosure controls and procedures were modified to enhance the review
and analysis of the relevant terms and conditions of transfers of
securities in connection with inverse floater structures in light of
SFAS 140.
11(b) - There have been no changes in the Registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Investment
Company Act of 1940, as amended) that occurred during the second half of
the Registrant's fiscal year that have materially affected, or are
reasonably likely to materially affect, the Registrant's internal
control over financial reporting. However, as discussed above,
subsequent to November 30, 2006, the Registrant has enhanced controls
related to the application of SFAS 140.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - Not Applicable to this semi-annual report
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
12(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
BlackRock MuniAssets Fund, Inc.
By: /s/ Robert C. Doll, Jr.
-------------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
BlackRock MuniAssets Fund, Inc.
Date: January 29, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Robert C. Doll, Jr.
-------------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
BlackRock MuniAssets Fund, Inc.
Date: January 29, 2007
By: /s/ Donald C. Burke
-------------------------------
Donald C. Burke,
Chief Financial Officer of
BlackRock MuniAssets Fund, Inc.
Date: January 29, 2007