-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, VDgzDM+WEkqffdNaAD2fETQtG0RPQj27atCvOZPvmnCI8IiV32O3jawYMNqW61LI hNevOQlMjPA9q/dRePfDxg== 0000900092-94-000034.txt : 19940126 0000900092-94-000034.hdr.sgml : 19940126 ACCESSION NUMBER: 0000900092-94-000034 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19931130 FILED AS OF DATE: 19940125 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MUNIASSETS FUND INC CENTRAL INDEX KEY: 0000901243 STANDARD INDUSTRIAL CLASSIFICATION: 0000 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 40 SEC FILE NUMBER: 811-07642 FILM NUMBER: 94502654 BUSINESS ADDRESS: STREET 1: 800 SCUDDERS MILL RD CITY: PLAINSBORO STATE: NJ ZIP: 08536 BUSINESS PHONE: 6092822800 N-30D 1 SEMI-ANNUAL REPORT MuniAssets Fund, Inc. Semi-Annual Report November 30, 1993 This report, including the financial information herein, is transmitted to the shareholders of MuniAssets Fund, Inc. for their information. It is not a prospectus, circular or representation intended for use in the purchase of shares of the Fund or any securities mentioned in the report. Past performance results shown in this report should not be considered a representation of future performance. MuniAssets Fund, Inc. Box 9011 Princeton, NJ 08543-9011 MuniAssets Fund, Inc. Directors and Officers Arthur Zeikel, President and Director Walter Mintz, Director Melvin R. Seiden, Director Stephen B. Swensrud, Director Harry Woolf, Director Terry K. Glenn, Executive Vice President Vincent R. Giordano, Senior Vice President Donald C. Burke, Vice President Kenneth A. Jacob, Vice President Gerald M. Richard, Treasurer Mark B. Goldfus, Secretary Custodian The Bank of New York 48 Wall Street New York, New York 10286 Transfer Agent The Bank of New York 101 Barclay Street, 22W New York, New York 10286 NYSE Symbol MUA DEAR SHAREHOLDER We are pleased to provide you with this first semi-annual report for MuniAssets Fund, Inc. In this and future share- holder reports, we will highlight the Fund's performance, describe recent investment activities, and examine some of the important market develop- ments that helped shape our investment strategy during the period under review. MuniAssets Fund, Inc. seeks to provide shareholders with as high a level of current income exempt from Federal income taxes as is consistent with its investment policies and prudent invest- ment management. The Fund also seeks to achieve its investment objective by investing primarily in a portfolio of medium- to lower-grade or unrated municipal obligations, the interest on which is exempt from Federal income taxes. Since inception (June 25, 1993) through November 30, 1993, MuniAssets Fund, Inc. earned $0.529 per share income dividends, representing a net annualized yield of 8.41%, based on a month-end net asset value of $14.44 per share. Over the same period, the total invest- ment return on the Fund was +3.96%, based on a change in per share net asset value from $14.18 to $14.44, and assuming reinvestment of $0.300 per share income dividends. The Environment The US economy began to show some signs of improvement during the six months ended November 30, 1993 with little evidence of an appreciable increase in the rate of inflation. The industrial sector is demonstrating grow- ing strength, yet capacity utilization is still well below the levels associated with rising inflation. Consumer spend- ing has improved, but the labor market remains soft. Despite the areas of eco- nomic weakness that persist, concerns arose during the quarter that the rate of business activity might increase inflationary pressures. Other developments during the Novem- ber period had significant long-term implications for the US financial markets. Although Boris Yeltsin's swift and apparently decisive victory over his hard-line opponents in Russia created little immediate disruption in the world financial markets, the future of political and economic reform in the former Soviet Union is far from certain. Evi- dence of greater progress toward a free-market economy and democratic government in Russia would have more positive implications for US financial markets over the longer term. The out- line for proposed healthcare reform is also very important for the US economy. As the various healthcare reform pro- posals are debated, investors will focus on their potential effects on the Federal budget, the US economy and the quality of healthcare delivery in the United States. Finally, the ratification of the North American Free Trade Agreement by the US Congress was important not only for the prospect of expanding trade with Canada and Mexico, but also as a positive influence on the recently concluded round of negotiations on the General Agreement on Tariffs and Trade. Further economic integration and growth through trade liberalization would be positive for capital markets in the United States and around the world. The Municipal Market The municipal bond market exhibited considerable volatility during the quarter ended November 30, 1993. From September through mid-October, municipal bond yields continued their earlier decline. By mid-October, yields on tax-exempt revenue bonds maturing in 30 years, as reflected by the Bond Buyer Revenue Bond Index, had declined an additional 15 basis points (0.15%) to another record low of 5.41%. However, the municipal bond market then reacted sympathetically to a nervous US Treasury bond market during the remainder of the quarter, and tax-exempt bond yields rose to end the quarter at 5.47%. Despite the increase in bond yields late in the quarter, it is important to note that tax-exempt bond yields have declined approximately 70 basis points since the beginning of 1993. The pace of new municipal bond issu- ance slowed during the November quarter. More than $62 billion in tax- exempt securities were issued over the last three months, an increase of more than 5% versus the November 1992 quarter's issuance. In recent quarters, however, new bond issuance had been increasing at a rate of approximately 25%. Even this relative decline in supply was unable to provide any technical support for the municipal bond market as investors became extremely con- cerned that economic growth would dramatically accelerate during the last calendar quarter of 1993 and continue into early 1994. This projected growth and expected associated inflationary pressures combined to cause yields to rise significantly in late October and November. A number of additional factors have been involved in the recent increase in tax-exempt bond yields. Individual investors have demonstrated only limited interest in the municipal bond market over the last month. This prob- ably has been related to a combination of seasonal factors and the desire to avoid the tax liability resulting from the large capital gains expected to be declared by most bond funds this year. Also, many larger institutional investors have been reluctant participants in the markets in order not to jeopardize their already strong year-to-date perform- ances. Consequently, recent interest rate volatility has been intensified by this decline in demand. By early 1994, however, it is likely that demand will increase significantly. The proceeds from bond maturities, bond calls and coupon payments beginning in January will all need to be reinvested. The new higher marginal Federal tax rates will also go into effect in January. Given the ongoing attractive after-tax benefits municipal bonds provide, it is likely that both individual and institutional investors will return to the tax-exempt bond market. This increased demand should serve to stabilize the market in early 1994. Portfolio Strategy At the Fund's inception on June 25, 1993, we primarily sought to rapidly invest the proceeds of the Fund's initial offer- ing in long-term, medium-quality, invest- ment-grade tax-exempt municipal bonds. In the months that followed, our focus shifted to restructuring the port- folio to take advantage of attractive high-yield investment opportunities as they arose in the marketplace. The rationale for this approach was twofold. First, the Fund's fundamental invest- ment objective is to provide share- holders with high current income exempt from Federal income taxes by primarily investing in a portfolio of medium- to lower-grade or unrated municipal obligations. Scarcity and ex- tensive credit analysis typify the market for high-yield securities; hence, we expected the entire process of structur- ing the Fund to fully reflect its stated objective to take some time. Second, our constructive outlook for interest rates warranted a swift entry into the market- place, enabling us to participate in the expected rally. We expected the port- folio's composition to change with the purchase of each new viable high-yield security. At present, roughly 33% of the Fund's net assets are invested in unrated or noninvestment-grade tax-exempt securi- ties. Looking forward, we anticipate gradually increasing the percentage of such holdings with significant attention being focused on the healthcare indus- try. Currently, 31% of the Fund's net assets are centered in this sector. All existing holdings are regularly moni- tored for creditworthiness and ongoing viability. Unless our interest rate outlook warrants a more defensive posture, we will maintain cash reserves at below 5% of net assets. We appreciate your investment in MuniAssets Fund, Inc., and we look forward to assisting you with your financial needs in the months and years ahead. Sincerely, (Arthur Zeikel) Arthur Zeikel President (Vincent R. Giordano) Vincent R. Giordano Vice President and Portfolio Manager December 30, 1993 Portfolio Abbreviations To simplify the listings of MuniAssets Fund, Inc.'s portfolio holdings in the Schedule of Investments, we have abbreviated the names of many of the securities according to the list at right. AMT Alternative Minimum Tax (subject to) COP Certificates of Participation GO General Obligation Bonds IDA Industrial Development Authority IDR Industrial Development Revenue Bonds M/F Multi-Family PCR Pollution Control Revenue Bonds RIB Residual Interest Bonds UT Unlimited Tax VRDN Variable Rate Demand Notes SCHEDULE OF INVESTMENTS (in Thousands)
S&P Moody's Face Value STATE Ratings Ratings Amount Issue (Note 1a) Alabama--1.5% NR B2 $ 1,000 Birmingham, Alabama, Industrial Development Board (USG Interiors), PCR, 7.50% due 4/01/2002 $ 999 Arizona--1.3% BB+ Ba2 900 Maricopa County, Arizona, Pollution Control Corporation, PCR, Refunding (Public Service Company--Palo Verde), Series A, 6.375% due 8/15/2023 905 Arkansas--1.5% NR NR 1,000 Pine Bluff, Arkansas, IDR, Refunding (Coltec Industries Incorporated), 6.50% due 2/15/2009 1,001 California--18.1% NR Baa 1,000 California Educational Facilities Authority, Revenue Refunding Bonds (Pooled College and University Financing), Series B, 6.25% due 6/01/2018 1,011 NR NR 1,500 Long Beach, California, Redevelopment Agency, M/F Housing Revenue Refunding Bonds, AMT (Pacific Court Apartments), Issue B, 6.80% due 9/01/2013 1,457 AA Aa 2,000 Metropolitan Water District, Southern California Waterworks, Revenue Bonds, RIB, 8.774% due 8/05/2022 (c) 2,070 AAA Aaa 5,000 Northern California Transmission Revenue Bonds, RIB, 7.774% due 4/29/2024 (b) (c) 4,888 NR NR 2,000 Pleasanton, California, Joint Powers Financing Authority, Revenue Reassessment Subordinated Bonds, Series B, 6.60% due 9/02/2008 2,049 BBB NR 1,000 Snowline, California, Joint Unified School District, COP, 6.40% due 7/01/2018 1,018 Colorado--7.6% Denver, Colorado, City and County Airport Revenue Bonds, AMT: BBB Baa1 2,500 Series B, 7.25% due 11/15/2023 2,694 BBB Baa1 2,500 Series C, 6.75% due 11/15/2022 2,584 Connecticut--2.8% NR NR 1,920 Eastern Connecticut, State Regional Educational Service Center Revenue Bonds, 6.50% due 5/15/2009 1,929 Idaho--3.1% NR NR 2,080 Idaho Student Loan Fund Marketing Association Incorporated, Student Loan Subordinated Revenue Bonds, Junior Series I, AMT, 6.70% due 10/01/2007 2,141 Illinois--9.8% AA Aa2 1,250 Illinois Development Finance Authority, PCR, Refunding (Central Illinois Public Service), Series B-2, 5.90% due 6/01/2028 1,272 A+ A 4,450 Illinois Health Facilities Authority, Revenue Refunding Bonds (Lutheran General Health), Series C, 6% due 4/01/2018 4,521 A- A 1,000 Quincy, Illinois, Revenue Refunding Bonds (Blessing Hospital), 6% due 11/15/2018 1,001 Indiana--1.4% B+ B2 1,000 East Chicago, Indiana, Economic Development Revenue Bonds (U.S. Gypsum Company Project), 7.25% due 5/01/2014 1,001 Iowa--3.0% NR NR 800 Iowa Finance Authority, Health Care Facilities Revenue Bonds (Mercy Health Initiatives Project), 9.95% due 7/01/2019 848 A1+ NR 1,200 Iowa Finance Authority, Solid Waste Disposal Revenue Bonds (Cedar River Paper Company Project), Series A, VRDN, 2.05% due 7/01/2023 (a) 1,200 Maryland--1.5% NR Baa 1,000 Prince Georges County, Maryland, Hospital Revenue Bonds (Greater Southeast Healthcare System), 6.375% due 1/01/2023 1,010 Massachusetts--4.0% A A 3,135 Massachusetts State Water Resource Authority, General Revenue Refunding Bonds, Series B, 5% due 3/01/2022 2,796 Missouri--1.0% NR B2 700 Clay County, Missouri, IDA, Industrial Development Revenue Refunding Bonds (U.S. Gypsum Corporate Project), 7.25% due 5/01/2014 701 Montana--1.5% NR NR 1,000 Montana State Board Investment, Resource Recovery Revenue Bonds (Yellowstone Energy LP Project), AMT, 7% due 12/31/2019 1,020 New Hampshire--1.4% NR Baa 1,000 New Hampshire Higher Educational and Health Facilities Authority, Revenue Refunding Bonds (Frisbie Memorial Hospital Issue), 6.125% due 10/01/2013 984 New Mexico--1.8% BB+ Ba2 1,250 Farmington, New Mexico, PCR, Refunding (Public Service Company-- San Juan Project), Series A, 6.40% due 8/15/2023 1,259 New York--2.9% BBB Baa 2,000 New York City Health and Hospital Authority, Local Government Revenue Refunding Bonds, Series A, 6.30% due 2/15/2020 2,035 Ohio--1.4% BBB NR 1,000 Belifontaine, Ohio, Hospital Facilities Revenue Refunding Bonds (Mary Rutan Health Associates), 6% due 12/01/2013 977 Pennsylvania--14.8% A- NR 2,000 Delaware County, Pennsylvania, Hospital Authority Revenue Bonds (Riddle Memorial Hospital), 6.50% due 1/01/2022 2,118 NR NR 1,500 Montgomery County, Pennsylvania, IDA, Revenue Bonds (Pennsburg Nursing and Rehabilitation Center), 7.625% due 7/01/2018 1,500 BBB+ Baa1 2,400 Philadelphia, Pennsylvania, Hospitals and Higher Educational Facilities Authority, Revenue Bonds (Graduate Health System), Series A, 6.25% due 7/01/2018 2,404 BBB Baa 2,175 Ridley Park, Pennsylvania, Hospitals Authority, Revenue Refunding Bonds (Taylor Hospital), Series A, 6% due 12/01/2013 2,113 NR NR 2,000 Washington County, Pennsylvania, Hospital Authority, Revenue Refunding Bonds (Canonsburg General Hospital Project), 7.35% due 6/01/2013 2,063 Rhode Island--10.7% A- Baa1 5,000 Rhode Island Depositors, Economic Protection Corporation, Special Obligation Refunding Bonds, Series A, 6.375% due 8/01/2022 5,269 West Warwick, Rhode Island, GO, UT, Series A: NR Ba 1,200 6.80% due 7/15/1998 1,218 NR Ba 910 7.30% due 7/15/2008 932
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
S&P Moody's Face Value STATE Ratings Ratings Amount Issue (Note 1a) Texas--6.1% A- NR $ 2,000 Brazos County, Texas, Health Facility Development Corporation, Franciscan Services Corporation, Revenue Refunding Bonds (Saint Joseph Hospital and Health Center), Series B, 6% due 1/01/2019 $ 1,997 BB Ba1 1,000 Dallas-Fort Worth, Texas, International Airport Facility Improvement, Corporate Revenue Refunding Bonds (Delta Airlines Incorporated), 6.25% due 11/01/2013 974 NR NR 1,250 Gulf Coast Waste Disposal Authority, Texas, Pollution Control and Solid Waste Disposal Revenue Bonds (Diamond Shamrock Corporate Project), 6.75% due 6/01/2009 1,266 Vermont--1.1% BBB NR 750 Swanton Village, Vermont, Electric Systems Revenue Bonds, 6.70% due 12/01/2023 746 Total Investments (Cost--$67,660)--98.3% 67,971 Other Assets Less Liabilities--1.7% 1,146 -------- Net Assets-100.0% $ 69,117 ======== (a) The interest rate is subject to change periodically based upon the prevailing market rate. The interest rates shown are those in effect at November 30, 1993. (b) MBIA Insured. (c) The interest rate is subject to change periodically and inversely based upon prevailing market rates. The interest rates shown are the rate in effect at November 30, 1993. See Notes to Financial Statements.
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
As of November 30, 1993 Assets: Investments, at value (identified cost--$67,660,409) (Note 1a) $67,970,857 Cash 89,079 Receivables: Interest $1,211,843 Investment adviser (Note 2) 84,644 1,296,487 ---------- Deferred organization expenses (Note 1e) 54,287 Prepaid expenses and other assets 7,138 ----------- Total assets 69,417,848 ----------- Liabilities: Dividends payable to shareholders (Note 1f) 193,498 Accrued expenses and other liabilities 106,862 ----------- Total liabilities 300,360 ----------- Net Assets: Net assets $69,117,488 =========== Capital: Common Stock, par value $.10 per share; 200,000,000 shares authorized; 4,787,055 shares issued and outstanding $478,706 Paid-in capital in excess of par 67,174,224 Undistributed investment income--net 358,838 Undistributed realized capital gains--net 795,272 Unrealized appreciation on investments--net 310,448 ----------- Total capital--Equivalent to $14.44 net asset value per share of Common Stock (market price--$13.875) (Note 4) $69,117,488 =========== See Notes to Financial Statements.
STATEMENT OF OPERATIONS
For the Period June 25, 1993++ to November 30, 1993 Investment Interest and amortization of premium and discount $ 1,800,953 Income (Note 1d): Expenses: Investment advisory fees (Note 2) $ 167,342 Accounting services (Note 2) 20,358 Professional fees 15,442 Printing and shareholder reports 9,364 Directors' fees and expenses 9,107 Transfer agent fees (Note 2) 8,915 Listing fees 6,452 Amortization of organization expenses (Note 1e) 5,837 Custodian fees 4,615 Other 9,549 ----------- Total expenses before reimbursement 256,981 Reimbursement of expenses (Note 2) (251,986) ----------- Total expenses after reimbursement 4,995 ------------ Investment income--net 1,795,958 ------------ Realized & Realized gain on investments--net 795,272 Unrealized Unrealized appreciation on investments--net 310,448 Gain On ------------ Investments- Net Increase in Net Assets Resulting from Operations $ 2,901,678 Net ============ (Notes 1d & 3): ++ Commencement of Operations. See Notes to Financial Statements.
STATEMENT OF CHANGES IN NET ASSETS
For the Period June 25, 1993++ Increase (Decrease) in Net Assets: to November 30, 1993 Operations: Investment income--net $ 1,795,958 Realized gain on investments--net 795,272 Unrealized appreciation on investments--net 310,448 ------------ Net increase in net assets resulting from operations 2,901,678 ------------ Dividends to Investment income--net (1,437,120) Shareholders ------------ (Note 1f): Net decrease in net assets resulting from dividends to shareholders (1,437,120) ------------ Capital Share Net increase in net assets derived from capital share transactions 67,552,925 Transactions ------------ (Note 4): Net Assets: Total increase in net assets 69,017,483 Beginning of period 100,005 ------------ End of period* $ 69,117,488 ============ * Undistributed investment income--net $ 358,838 ============ ++ Commencement of Operations. See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
The following per share data and ratios have been derived from information provided in the financial statements. For the Period June 25, 1993++ to Increase (Decrease) in Net Asset Value: November 30, 1993 Per Share Net asset value, beginning of period $ 14.18 Operating ---------- Performance: Investment income--net .37 Realized and unrealized gain on investments--net .23 ---------- Total from investment operations .60 ---------- Less dividends: Investment income--net (.30) ---------- Capital charge resulting from issuance of Common Stock (.04) ---------- Net asset value, end of period $ 14.44 ========== Market price per share, end of period $ 13.875 ========== Total Based on net asset value per share 3.96%+++ Investment ========== Return:** Based on market price per share (5.57%)+++ ========== Ratios to Expenses, net of reimbursement .02%* Average ========== Net Assets: Expenses .85%* ========== Investment income--net 5.91%* ========== Supplemental Net assets, end of period (in thousands) $ 69,117 Data: ========== Portfolio turnover 70.76% ========== ++ Commencement of Operations. * Annualized. ** Total investment returns exclude the effects of sales loads. Total investment returns based on market value, which can be significantly greater or lesser than the net asset value, result in substantially different returns. +++ Aggregate total investment return. See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS 1. Significant Accounting Policies: MuniAssets Fund, Inc. (the "Fund") is registered under the Invest- ment Company Act of 1940 as a newly organized, non-diversified, closed-end investment management company. Prior to commence- ment of operations on June 25, 1993, the Fund had no operations other than those relating to organizational matters and the sale of 7,055 shares of Common Stock on June 11, 1993 to Fund Asset Management, Inc. ("FAMI") for $100,005. The Fund determines and makes available for publication the net asset value of its Common Stock on a weekly basis. The Fund's Common Stock is listed on the New York Stock Exchange under the symbol MUA. The following is a summary of significant accounting policies followed by the Fund. (a) Valuation of investments--Municipal bonds are traded primarily in the over-the-counter markets and are valued at the last available bid price in the over-the-counter market or on the basis of yield equivalents as obtained by the Fund's pricing service from one or more dealers that make markets in the securities. Financial futures contracts, which are traded on exchanges, are valued at their closing prices as of the close of such exchanges. Options, which are traded on exchanges, are valued at their last sale price as of the close of such exchanges or, lacking any sales, at the last available bid price. Short-term investments with a remaining maturity of sixty days or less are valued at amortized cost, which approximates market value. Securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of the Board of Directors of the Fund. (b) Financial futures contracts--The Fund may purchase or sell interest rate futures contracts and options on such futures contracts for the purpose of hedging the market risk on existing securities or the intended purchase of securities. 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. (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 trans- actions are recorded on the dates the transactions are entered into (the trade dates). Interest income is recognized on the accrual basis. Realized gains and losses on security transactions are determined on the identified cost basis. (e) Deferred organization and offering expenses--Deferred organiza- tion expenses are charged to expense on a straight-line basis over a five-year period beginning with the commencement of operations of the Fund. Direct expenses relating to the public offering of the Fund's shares of common stock were charged to capital at the time of issuance of the shares. (f) Dividends and distributions--Dividends from net investment income are declared daily and paid monthly. Distributions of capital gains are recorded on the ex-dividend dates. (g) Non-income producing investments--Written and purchased options are non-income producing investments. 2. Investment Advisory Agreement and Transactions with Affiliates: The Fund has entered into an Investment Advisory Agreement with Merrill Lynch Asset Management ("MLAM"). MLAM is the name under which Merrill Lynch Investment Management, Inc. ("MLIM") does business. MLIM is an indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc. MLAM is responsible for the management of the Fund's portfolio and provides the necessary personnel, facilities, equipment and certain other services necessary to the operations of the Fund. For such services, the Fund pays a monthly fee of 0.55% based upon the average daily value of the Fund's net assets. For the period June 25, 1993 to November 30, 1993, MLAM earned fees of $167,342, all of which was voluntarily waived. In addition, MLAM voluntarily reimbursed the Fund $84,644 in additional expenses. Effective January 1, 1994, the investment advisory business of MLAM reorganized from a corporation to a limited partnership. The general partner of MLAM is Princeton Services, Inc., an indirect wholly- owned subsidiary of Merrill Lynch & Co. Financial Data Services, Inc. ("FDS"), an indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc., is the Fund's transfer agent. Accounting services are provided to the Fund by MLAM at cost. Certain officers and/or directors of the Fund are officers and/or direc- tors of MLIM, MLFD, FDS, MLPF&S, and/or Merrill Lynch & Co., Inc. 3. Investments: Purchases and sales of investments, excluding short-term securities, for the period ended November 30, 1993 were $107,598,920 and $40,782,666, respectively. Net realized and unrealized gains (losses) as of November 30, 1993 were as follows: Realized Unrealized Gains Gains (Losses) (Losses) Long-term investments $ 753,384 $ 451,783 Short-term investments (243) (141,335) Financial futures contracts 42,131 -- ---------- ---------- Total $ 795,272 $ 310,448 ========== ========== As of November 30, 1993, net unrealized appreciation for Federal income tax purposes aggregated $310,448, of which $679,691 related to appreciated securities and $369,243 related to depreciated securi- ties. The aggregate cost of investments at November 30, 1993 for Federal income tax purposes was $67,660,409. 4. Common Stock Transactions: At November 30, 1993, the Fund had one class of shares of Common Stock, par value $.10 per share, of which 200,000,000 shares were authorized. During the period June 25, 1993 to November 30, 1993, the Fund sold 4,780,000 shares of beneficial interest which increased net assets by $67,552,925. At November 30, 1993, total paid-in capital amounted to $67,652,930. 5. Subsequent Event: On December 10, 1993, the Fund's Board of Directors declared an ordinary income dividend to Common Stock shareholders in the amount of $.074960 and a capital gain distribution of $.1537 per share, payable on December 30, 1993 to shareholders of record as of December 20, 1993. PER SHARE INFORMATION
Per Share Selected Quarterly Financial Data* Net Unrealized Dividends/Distributions Investment Realized Gains Net Investment Capital For the Period Income Gains (Losses) Income Gains June 25, 1993++ to August 31, 1993 $.16 $.01 $.39 -- -- September 1, 1993 to November 30, 1993 .21 .10 (.27) $.30 -- Net Asset Value Market Price** For the Period High Low High Low Volume*** June 25, 1993++ to August 31, 1993 $14.74 $14.12 $15.00 $14.25 396 September 1, 1993 to November 30, 1993 14.99 14.42 14.875 13.75 241 *Calculations are based upon shares of Common Stock outstanding at the end of each period. **As reported in the consolidated transaction reporting system. ***In thousands. ++Commencement of Operations.
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