UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
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: (800) 882-0052
Date of fiscal year end: 05/31/07
Date of reporting period: 06/01/06 - 05/31/07
Item 1 - Report to Stockholders
ALTERNATIVES BLACKROCK SOLUTIONS EQUITIES
FIXED INCOME LIQUIDITY REAL ESTATE
BlackRock MuniAssets BLACKROCK
Fund, Inc.
ANNUAL REPORT | MAY 31, 2007
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
BlackRock MuniAssets Fund, Inc.
Portfolio Information as of May 31, 2007
Percent of
Quality Ratings by Total
S&P/Moody's Investments
- --------------------------------------------------------------------------------
AAA/Aaa .......................................................... 9.3%
AA/Aa ............................................................ 0.5
A/A .............................................................. 3.2
BBB/Baa .......................................................... 21.5
BB/Ba ............................................................ 7.5
B/B .............................................................. 5.4
CCC/Caa .......................................................... 4.9
NR (Not Rated) ................................................... 43.6
Other* ........................................................... 4.1
- --------------------------------------------------------------------------------
* 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 floaters, 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.
Swap Agreements
The Fund may invest in swap agreements, which are over-the-counter contracts in
which one party agrees to make periodic payments based on the change in market
value of a specified bond, basket of bonds, or index in return for periodic
payments based on a fixed or variable interest rate or the change in market
value of a different bond, basket of bonds or index. Swap agreements may be used
to obtain exposure to a bond or market without owning or taking physical custody
of securities. Swap agreements involve the risk that the party with whom the
Fund has entered into a swap will default on its obligation to pay the Fund and
the risk that the Fund will not be able to meet its obligations to pay the other
party to the agreement. The swap agreements in which the Fund may invest
includes credit default swap agreements.
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. MAY 31, 2007
A Letter to Shareholders
Dear Shareholder
The 12 months from May 2006 to May 2007 took global equities on an extraordinary
ride. A sharp correction at the start, the first in almost four years, gave way
to strength in the latter half of 2006 and early 2007. This rally was
interrupted by another set-back at the end of February, before markets resumed
their upward march through May 31. Ultimately, the tailwinds of a generally
favorable global economic backdrop, tame inflation, relatively low interest
rates, still positive earnings growth and attractive valuations prevailed over
the headwinds of a weakening U.S. economy, slowing housing market, escalating
geopolitical concerns and high energy prices. In fact, both the Dow Jones
Industrial Average and the Standard & Poor's 500 Index touched new record highs
following the most recent correction.
Mixed economic signals led to volatile behavior in fixed income markets as well.
However, from the beginning of 2007 through May 31, short-term bond yields
generally fell while longer-term yields increased. This resulted in some
re-steepening of the yield curve, which had been flat to inverted throughout
2006. On a year-over-year basis, yields on 30-year Treasury bonds fell 20 basis
points (.20%) and 10-year yields fell 22 basis points, while bond prices
correspondingly rose. Meanwhile, the Federal Reserve Board (the Fed) has left
the federal funds rate at 5.25% since first pausing in August 2006. While
first-quarter gross domestic product growth of 0.6% represented the slowest rate
of expansion since 2002, the Fed reiterated its view that inflation, not a
slowing economy, remains its primary concern. Many observers interpreted the
Fed's reaction to mean that the economy has hit its low and is bound for renewed
strength, therefore reducing the likelihood of an interest rate cut in the near
future.
Against this backdrop, most major market indexes posted positive returns for the
annual and semi-annual reporting periods ended May 31, 2007, with equities
exhibiting particular strength:
Total Returns as of May 31, 2007 6-month 12-month
===============================================================================================================
U.S. equities (Standard & Poor's 500 Index) +10.29% +22.79%
- ---------------------------------------------------------------------------------------------------------------
Small cap U.S. equities (Russell 2000 Index) + 8.39 +18.92
- ---------------------------------------------------------------------------------------------------------------
International equities (MSCI Europe, Australasia, Far East Index) +14.08 +26.84
- ---------------------------------------------------------------------------------------------------------------
Fixed income (Lehman Brothers Aggregate Bond Index) + 0.69 + 6.66
- ---------------------------------------------------------------------------------------------------------------
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) + 0.30 + 4.84
- ---------------------------------------------------------------------------------------------------------------
High yield bonds (Lehman Brothers U.S. Corporate High Yield 2% Issuer Cap Index) + 6.02 +12.64
- ---------------------------------------------------------------------------------------------------------------
We expect market volatility to linger throughout the remainder of 2007. As you
navigate the uncertainties, we encourage you to review your investment goals
with your financial professional and to make portfolio changes, as needed. For
more insight, we invite you to view "What's Ahead in 2007: An Investment
Perspective" and "Are You Prepared for Volatility?" at www.blackrock.com/funds.
We thank you for entrusting BlackRock with your investment assets, and we look
forward to continuing to serve you in the months and years ahead.
Sincerely,
/s/ Robert C. Doll, Jr.
Robert C. Doll, Jr.
Fund President and Director
BLACKROCK MUNIASSETS FUND, INC. MAY 31, 2007 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 fiscal year, while the high yield sector continued
to outperform the broader municipal market.
Describe the recent market environment relative to municipal bonds.
Over the past 12 months, long-term bond yields generally moved lower as bond
prices, which move opposite of yields, increased. Bond prices began to improve
(and yields fall) in late June 2006 as economic growth weakened. The improvement
accelerated in response to the Federal Reserve Board's (the Fed) decision in
August to keep its target interest rate on hold at 5.25% after 17 consecutive
interest rate hikes since mid-2004. The bond price rally continued in the fall
amid moderating oil prices and slower economic growth. By the end of November
2006, 30-year U.S. Treasury bond yields had fallen to 4.56%.
More recently, strong U.S. equity markets, continued moderate employment growth
and mounting investor conviction that the Fed would keep interest rates steady
for the remainder of the year combined to push bond prices lower, while yields
correspondingly rose. Still, over the full 12 months, 30-year U.S. Treasury bond
yields fell 20 basis points (.20%) to 5.01%, and 10-year Treasury yields
declined 22 basis points to 4.90%.
The long-term tax-exempt bond market outperformed U.S. Treasury issues over the
12 months as investor demand outstripped a resurgent new-issue calendar. As
measured by Municipal Market Data, yields on 30-year, AAA-rated issues declined
28 basis points to 4.25%. Intermediate-maturity bonds saw their yields fall less
dramatically. Yields on AAA-rated 10-year municipal issues declined 11 basis
points to 3.91%.
Investor demand for municipal product continued to strengthen throughout the
period. Statistics from the Investment Company Institute indicate that long-term
municipal bond funds received more than $10.1 billion in net new cash flows
during the first four months of 2007. This represented a 71% increase relative
to the first four months of 2006. Weekly fund flows, as reported by AMG Data
Services, also have risen. Weekly inflows during the three months ended May 2007
averaged over $520 million, up from a weekly average of $400 million in fourth
quarter 2006 and well above the $233 million weekly average of last June.
As investor demand has strengthened, so has municipal bond supply. Some $423
billion in new long-term municipal bonds was issued during the reporting period,
a nearly 12% increase compared to the same 12 months a year ago. Over $173
billion in long-term municipal bonds has been underwritten so far this year.
This puts 2007 annual issuance more than 5% ahead of 2005's record pace. Issuers
have continued to take advantage of historically low interest rates to refinance
outstanding debt. So far this year, there have been more than 10 underwritings
exceeding $1 billion in size. These "mega-deals" have continued to be relatively
easily absorbed by tax-exempt market participants, especially non-traditional
and foreign buyers, both of which find the liquidity that such deals afford
particularly attractive.
Looking ahead, the increase in new bond supply seen this year appears unlikely
to abate significantly. As such, investor demand will be critical in maintaining
the tax-exempt market's strong technical position. Having said that, we expect
that both traditional and non-traditional investors will continue to be drawn to
the municipal market given the relative stability of tax-exempt yield ratios in
recent months and the steepness of the municipal yield curve compared to the
taxable curve. We believe this should help to support the market's performance
in the months ahead.
How did the Fund perform during the fiscal year?
For the 12-month period ended May 31, 2007, the Common Stock of BlackRock
MuniAssets Fund, Inc. had net annualized yields of 6.06% and 5.49%, based on a
year-end per share net asset value of $13.87 and a per share market price of
$15.29, respectively, and $.840 per share income dividends. Over the same
period, the total investment return on the Fund's Common Stock was +7.72%, based
on a change in per share net asset value from $13.65 to $13.87, and assuming
reinvestment of all distributions.
The Fund's total return, based on net asset value, outpaced the +7.57% average
return of the Lipper High Yield Municipal Debt Funds category for the 12-month
period. (Funds in this Lipper category invest at least 50% of their assets in
lower-rated municipal debt issues.) The high yield municipal market continued to
benefit from robust demand, evidenced by continued strong flows into high yield
municipal bond funds. Healthy investor appetite for higher-yielding securities
helped spreads (versus higher-quality issues of comparable maturity) to remain
stable or tighten. One exception was the
4 BLACKROCK MUNIASSETS FUND, INC. MAY 31, 2007
health care sector, where we saw substantial issuance in recent months as
hospitals sought to take advantage of low-cost borrowing to fund new capital
projects or to advance refund existing debt. The same was true in the long-term
care sector. Consequently, spreads in the hospital sector mostly widened, and
that was somewhat of a drag on performance in the high yield sector. However,
the Fund was slightly underweight in hospitals versus the Lipper group, and that
proved to be a relative advantage.
Several high yield positions in the portfolio were advance refunded. This
benefited Fund performance, as bonds generally increase in value when they are
refunded ahead of their maturity date. It also led to an improvement in credit
quality and caused the bonds to fall out of the high yield sector and into the
"prerefunded escrow to maturity" sector. We retained the positions, as their
higher credit quality complements our efforts to improve the Fund's credit
profile.
In terms of duration, the Fund was mostly defensive throughout the period. This
was particularly beneficial in first quarter and most of second quarter 2007.
More recently, we would view the increase in rates as an opportunity to
reposition to a more neutral or even longer duration.
For the six-month period ended May 31, 2007, the total investment return on the
Fund's Common Stock was +1.46%, based on a change in per share net asset value
from $14.07 to $13.87, and assuming reinvestment of all distributions.
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 distributions, 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?
Amid historically tight credit spreads and a seemingly insatiable appetite for
high yield bonds, day-to-day portfolio activity was primarily tactical. Given
the scarcity of fundamental value in the high yield marketplace, we preferred to
selectively participate in the most attractive deals and to quickly turn
profits. At the same time, the continued strong demand in the market allowed us
to trim exposure to investments that had become less desirable. For example, we
sold a position in an elderly housing rental facility that had fallen well short
of occupancy projections and appeared at risk of payment default.
From a sector perspective, we reduced exposure to corporate-related debt
somewhat, which represented the largest sector exposure in the portfolio at
26.7% of assets. In particular, we modestly pared back exposure to the airline
segment given its strong performance. We maintained a fairly constant weighting
in tax-backed development districts, another significant position at 12% of
assets. For the most part, our exposure was concentrated in solid geographic
locales, such as Florida and California. We had some concern over the housing
market given the weakening trends seen there and, as such, refrained from adding
new issues in this sector.
How would you characterize the Fund's position at the close of the period?
The high yield municipal market continues to experience strong demand, and a
drop-off does not appear imminent. At the same time, supply should remain
healthy as issuers continue to take advantage of low interest rates to refinance
their existing debt. Credit spreads also remain tight and, as noted earlier, we
are more willing to lock in profits as it becomes increasingly difficult to
uncover value. While this has resulted in the realization of some capital gains,
we are carefully evaluating our transactions in an effort to balance the need to
maintain a competitive and stable yield with our tax-efficient investment style.
For the most part, we intend to maintain the Fund's current sector exposures,
although we may increase our allocation to housing. Given the relatively
high-quality nature of the sector, this would be consistent with our efforts to
upgrade the credit quality of the portfolio.
Theodore R. Jaeckel Jr., CFA
Portfolio Manager
June 7, 2007
BLACKROCK MUNIASSETS FUND, INC. MAY 31, 2007 5
Schedule of Investments as of May 31, 2007 (in Thousands)
Face
Amount Municipal Bonds Value
================================================================================
Alabama -- 0.6%
$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 $ 1,847
================================================================================
Alaska -- 0.4%
1,015 Alaska Industrial Development and Export Authority
Revenue Bonds (Williams Lynxs Alaska Cargoport),
AMT, 7.80% due 5/01/2014 1,078
================================================================================
Arizona -- 6.1%
Coconino County, Arizona, Pollution Control
Corporation Revenue Refunding Bonds (Tucson
Electric Power -- Navajo):
3,000 AMT, Series A, 7.125% due 10/01/2032 3,082
2,500 Series B, 7% due 10/01/2032 2,568
1,325 Maricopa County, Arizona, IDA, Education Revenue
Bonds (Arizona Charter Schools Project 1), Series A,
6.625% due 7/01/2020 1,347
1,615 Maricopa County, Arizona, IDA, M/F Housing Revenue
Bonds (Sun King Apartments Project), Series A,
6.75% due 5/01/2031 1,662
4,800 Phoenix, Arizona, IDA, Airport Facility, Revenue
Refunding Bonds (America West Airlines Inc. Project),
AMT, 6.30% due 4/01/2023 4,877
1,420 Pima County, Arizona, IDA, Education Revenue Bonds
(Arizona Charter Schools Project), Series E, 7.25%
due 7/01/2031 1,571
Pima County, Arizona, IDA, Education Revenue
Refunding Bonds (Arizona Charter Schools Project II),
Series A:
415 6.75% due 7/01/2011 (b) 457
690 6.75% due 7/01/2031 737
1,095 Show Low, Arizona, Improvement District Number 5,
Special Assessment Bonds, 6.375% due 1/01/2015 1,115
================================================================================
California -- 2.0%
California State, Various Purpose, GO:
1,900 5.25% due 11/01/2025 2,015
1,300 5.50% due 11/01/2033 1,399
1,320 Fontana, California, Special Tax, Refunding (Community
Facilities District Number 22 -- Sierra), 6%
due 9/01/2034 1,398
1,030 Golden State Tobacco Securitization Corporation of
California, Tobacco Settlement Revenue Refunding
Bonds, Senior Series A-1, 5.125% due 6/01/2047 1,021
================================================================================
Colorado -- 4.9%
650 Colorado Health Facilities Authority, Revenue Refunding
Bonds (Christian Living Communities Project),
Series A, 5.75% due 1/01/2026 681
2,000 Denver, Colorado, City and County Airport Revenue
Bonds, AMT, Series D, 7.75% due 11/15/2013 (a) 2,225
Elk Valley, Colorado, Public Improvement Revenue
Bonds (Public Improvement Fee):
1,580 Series A 7.10% due 9/01/2014 1,679
2,095 Series A 7.30% due 9/01/2022 2,216
420 Series B, 7.45% due 9/01/2031 445
1,760 North Range Metropolitan District Number 1, Colorado,
GO, 7.25% due 12/15/2011 (b) 1,972
Plaza Metropolitan District Number 1, Colorado, Tax
Allocation Revenue Bonds (Public Improvement Fees):
2,850 8% due 12/01/2025 3,148
525 8.125% due 12/01/2025 529
1,170 Southlands, Colorado, Medical District, GO
(Metropolitan District Number 1), 7.125%
due 12/01/2034 1,291
================================================================================
Connecticut -- 1.6%
680 Connecticut State Development Authority, Airport
Facility Revenue Bonds (Learjet Inc. Project), AMT,
7.95% due 4/01/2026 813
3,490 Connecticut State Development Authority, IDR (AFCO
Cargo BDL-LLC Project), AMT, 8% due 4/01/2030 3,761
================================================================================
Florida -- 7.5%
1,130 Capital Projects Finance Authority, Florida, Continuing
Care Retirement Revenue Bonds (Glenridge on
Palmer Ranch), Series A, 8% due 6/01/2012 (b) 1,340
1,160 Halifax Hospital Medical Center, Florida, Hospital
Revenue Refunding Bonds, Series A, 5%
due 6/01/2038 1,161
490 Harbor Bay, Florida, Community Development District,
Capital Improvement Special Assessment Revenue
Bonds, Series A, 7% due 5/01/2033 529
1,195 Highlands County, Florida, Health Facilities Authority,
Hospital Revenue Bonds (Adventist Health System),
Series C, 5.25% due 11/15/2036 1,237
2,000 Hillsborough County, Florida, IDA, Exempt Facilities
Revenue Bonds (National Gypsum Company), AMT,
Series A, 7.125% due 4/01/2030 2,160
1,300 Jacksonville FL Economic Dev Community Dev Indl Dev
Rev Gerdau Ameristeel US, Inc., 5.30%
due 5/01/2037 1,298
2,620 Lee County, Florida, IDA, IDR (Lee Charter Foundation),
Series A, 5.375% due 6/15/2037 2,614
3,255 Midtown Miami, Florida, Community Development
District, Special Assessment Revenue Bonds, Series A,
6.25% due 5/01/2037 3,518
1,180 Orlando, Florida, Greater Orlando Aviation Authority,
Airport Facilities Revenue Bonds (JetBlue Airways
Corp.), AMT, 6.375% due 11/15/2026 1,245
2,295 Orlando, Florida, Urban Community Development
District, Capital Improvement Special Assessment
Bonds, Series A, 6.95% due 5/01/2033 2,469
Portfolio Abbreviations
To simplify the listings of BlackRock MuniAssets Fund, Inc.'s portfolio holdings
in the Schedule of EDR 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
Economic Development Revenue Bonds
GO General Obligation Bonds
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
VRDN Variable Rate Demand Notes
6 BLACKROCK MUNIASSETS FUND, INC. MAY 31, 2007
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
================================================================================
Florida (concluded)
$3,040 Santa Rosa Bay Bridge Authority, Florida, Revenue
Bonds, 6.25% due 7/01/2028 $ 3,059
900 Waterchase, Florida, Community Development District,
Capital Improvement Revenue Bonds, Series A,
6.70% due 5/01/2011 (b) 980
================================================================================
Georgia -- 3.4%
Atlanta, Georgia, Tax Allocation Bonds:
3,000 (Atlantic Station Project), 7.90% due 12/01/2024 3,304
740 (Princeton Lakes Project), 5.50% due 1/01/2031 753
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 934
1,690 7.25% due 1/01/2035 1,354
1,060 Fulton County, Georgia, Development Authority, PCR
(General Motors Corporation), Refunding, VRDN,
7.50% due 4/01/2010 (e) 1,060
1,000 Gainesville, Georgia, Redevelopment Authority,
Educational Facilities Revenue Refunding Bonds
(Riverside Military Academy), 5.125% due 3/01/2027 1,018
1,170 Savannah, Georgia, EDA, First Mortgage Revenue
Bonds (Marshes of Skidaway), Series A, 7.40%
due 1/01/2034 1,274
================================================================================
Idaho -- 0.4%
1,000 Idaho Health Facilities Authority, Revenue Refunding
Bonds (Valley Vista Care Corporation), Series A,
7.75% due 11/15/2016 1,051
================================================================================
Illinois -- 6.9%
2,630 Caseyville, Illinois, Senior Tax Increment Revenue Bonds
(Forest Lakes Project), 7% due 12/30/2022 2,757
4,000 Chicago, Illinois, O'Hare International Airport, Special
Facility Revenue Refunding Bonds (American Airlines
Inc. Project), 8.20% due 12/01/2024 4,040
2,720 Illinois Development Finance Authority Revenue Bonds
(Primary Health Care Centers Facilities Acquisition
Program), 7.75% due 12/01/2016 2,774
2,950 Illinois State Finance Authority Revenue Bonds (Clare
At Water Tower Project), Series A, 6.125%
due 5/15/2038 3,082
600 Illinois State Finance Authority Revenue Bonds
(Landing At Plymouth Place Project), Series A, 6%
due 5/15/2037 636
685 Illinois State Finance Authority Revenue Bonds (Primary
Health Care Centers Program), 6.60% due 7/01/2024 714
1,070 Lincolnshire, Illinois, Special Service Area Number 1,
Special Tax Bonds (Sedgebrook Project), 6.25%
due 3/01/2034 1,135
2,600 Lombard, Illinois, Public Facilities Corporation,
First Tier Revenue Bonds (Conference Center and Hotel),
Series A-1, 7.125% due 1/01/2036 2,784
1,165 Naperville, Illinois, IDR (General Motors Corporation),
Refunding, VRDN, 7.50% due 12/01/2012 (e) 1,165
825 Village of Wheeling, Illinois, Revenue Bonds (North
Milwaukee/Lake-Cook Tax Increment Financing (TIF)
Redevelopment Project), 6% due 1/01/2025 836
================================================================================
Indiana -- 0.4%
1,200 Vanderburgh County, Indiana, Redevelopment
Commission, Redevelopment District Tax Allocation
Bonds, 5.25% due 2/01/2031 1,265
================================================================================
Iowa -- 0.9%
2,210 Iowa Finance Authority, Health Care Facilities, Revenue
Refunding Bonds (Care Initiatives Project), 9.25%
due 7/01/2011 (b) 2,663
================================================================================
Kansas -- 0.6%
1,770 Wyandotte County, Kansas, Kansas City Unified
Government Revenue Refunding Bonds (General
Motors Corporation Project), 6% due 6/01/2025 1,790
================================================================================
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 2,911
================================================================================
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 1,937
================================================================================
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 1,169
================================================================================
Maryland -- 2.2%
880 Howard County, Maryland, Retirement Community
Revenue Refunding Bonds (Columbia Vantage House
Corporation), Series B, 5.25% due 4/01/2037 896
1,855 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 2,025
1,500 Maryland State Energy Financing Administration,
Limited Obligation Revenue Bonds (Cogeneration --
AES Warrior Run), AMT, 7.40% due 9/01/2019 1,513
Maryland State Health and Higher Educational Facilities
Authority Revenue Bonds:
1,250 (King Farm Presbyterian Community), Series A,
5.30% due 1/01/2037 1,280
590 (Washington Christian Academy), 5.50%
due 7/01/2038 601
================================================================================
Massachusetts -- 1.1%
1,150 Massachusetts State Health and Educational Facilities
Authority Revenue Bonds (Jordan Hospital), Series E,
6.75% due 10/01/2033 1,259
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 1,976
================================================================================
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 1,728
1,740 Monroe County, Michigan, Hospital Financing Authority,
Hospital Revenue Refunding Bonds (Mercy Memorial
Hospital Corporation), 5.50% due 6/01/2035 1,821
================================================================================
BLACKROCK MUNIASSETS FUND, INC. MAY 31, 2007 7
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
================================================================================
Minnesota -- 0.7%
$1,770 Saint Paul, Minnesota, Port Authority, Hotel Facility,
Revenue Refunding Bonds (Radisson Kellogg Project),
Series 2, 7.375% due 8/01/2008 (b) $ 1,893
================================================================================
Mississippi -- 0.6%
1,780 Mississippi Business Finance Corporation Revenue
Bonds (Northrop Grumman Ship System), 4.55%
due 12/01/2028 1,753
================================================================================
Missouri -- 0.7%
920 Fenton, Missouri, Tax Increment Revenue Refunding
and Improvement Bonds (Gravois Bluffs), 7%
due 10/01/2011 (b) 1,040
1,000 Kansas City, Missouri, IDA, First Mortgage Health
Facilities Revenue Bonds (Bishop Spencer Place),
Series A, 6.50% due 1/01/2035 1,057
================================================================================
Nevada -- 0.2%
645 Clark County, Nevada, Improvement District Number
142, Special Assessment Bonds, 6.375%
due 8/01/2023 666
================================================================================
New Hampshire -- 1.5%
1,165 New Hampshire Health and Education Facilities
Authority, Hospital Revenue Bonds (Catholic Medical
Center), 5% due 7/01/2036 1,156
3,165 New Hampshire State Business Financing Authority,
Solid Waste Disposal Revenue Bonds (Waste
Management Inc. Project), AMT, 5.20%
due 5/01/2027 3,253
================================================================================
New Jersey -- 13.6%
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 9,121
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 3,206
2,500 New Jersey EDA, IDR, Refunding (Newark Airport
Marriott Hotel), 7% due 10/01/2014 2,583
New Jersey EDA, Retirement Community Revenue
Bonds, Series A (b):
1,665 (Cedar Crest Village Inc. Facility), 7.25%
due 11/15/2011 1,894
5,800 (Seabrook Village Inc.), 8.125% due 11/15/2010 6,608
New Jersey EDA, Special Facility Revenue Bonds
(Continental Airlines Inc. Project), AMT:
2,000 6.25% due 9/15/2019 2,067
3,330 6.25% due 9/15/2029 3,442
1,250 9% due 6/01/2033 1,518
2,000 New Jersey Health Care Facilities Financing Authority
Revenue Bonds (Pascack Valley Hospital Association),
6.625% due 7/01/2036 1,789
3,450 New Jersey State Transportation Trust Fund Authority,
Transportation System Revenue Bonds, Series C,
5.05% due 12/15/2035 (a)(g) 932
Tobacco Settlement Financing Corporation of New
Jersey, Asset-Backed Revenue Bonds:
1,425 7% due 6/01/2013 (b) 1,657
1,800 5.75% due 6/01/2032 1,922
1,845 Tobacco Settlement Financing Corporation of New
Jersey, Revenue Refunding Bonds, Series 1A, 5%
due 6/01/2041 1,799
================================================================================
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 2,563
================================================================================
New York -- 4.6%
1,400 Dutchess County, New York, IDA, Civic Facility Revenue
Refunding Bonds (Saint Francis Hospital), Series A,
7.50% due 3/01/2029 1,549
2,610 Erie County, New York, IDA, Revenue Bonds (Orchard
Park CCRC, Inc. Project), Series A, 6%
due 11/15/2036 2,762
New York City, New York, City IDA, Civic Facility
Revenue Bonds:
510 Series C, 6.80% due 6/01/2028 557
1,515 (Special Needs Facilities Pooled Program),
Series C-1, 6.625% due 7/01/2029 1,577
2,400 New York City, New York, City IDA, Special Facility
Revenue Bonds (British Airways Plc Project), AMT,
7.625% due 12/01/2032 2,656
870 New York Liberty Development Corporation Revenue
Bonds (National Sports Museum Project), Series A,
6.125% due 2/15/2019 910
1,470 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 1,488
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 1,683
================================================================================
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 350
1,500 North Carolina Medical Care Commission, Retirement
Facilities, First Mortgage Revenue Bonds (Givens
Estates Project), Series A, 6.50% due 7/01/2013 (b) 1,709
================================================================================
Oklahoma -- 1.0%
1,295 Norman, Oklahoma, Regional Hospital Authority,
Hospital Revenue Bonds, 5.375% due 9/01/2036 1,344
1,475 Oklahoma Dev Fin Auth Rev Ref-St John Health System,
5% due 2/15/2042 1,498
================================================================================
Pennsylvania -- 7.9%
3,015 Allegheny County, Pennsylvania Hosp Dev Auth Rev
Health Sys-West Penn-Ser A, 5.375% due 11/15/2040 3,066
Bucks County, Pennsylvania, IDA, Retirement
Community Revenue Bonds (Ann's Choice Inc.),
Series A:
200 6.125% due 1/01/2025 212
1,550 6.25% due 1/01/2035 1,640
8 BLACKROCK MUNIASSETS FUND, INC. MAY 31, 2007
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
================================================================================
Pennsylvania (concluded)
$2,250 Hampton Township, Pennsylvania, School District, GO,
Refunding, Series B, 4.25% due 8/15/2031 (c) $ 2,136
900 Harrisburg, Pennsylvania, Authority, University Revenue
Bonds (Harrisburg University of Science), Series B,
6% due 9/01/2036 934
2,330 Montgomery County, Pennsylvania, IDA, Revenue Bonds
(Whitemarsh Continuing Care Project), 6.125%
due 2/01/2028 2,451
3,250 Pennsylvania Economic Development Financing
Authority, Exempt Facilities Revenue Bonds (National
Gypsum Company), AMT, Series A, 6.25%
due 11/01/2027 3,395
Philadelphia, Pennsylvania, Authority for IDR:
2,270 (Air Cargo), AMT, Series A, 7.50% due 1/01/2025 2,473
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, Detention Facility, Revenue Refunding
Bonds, 7.25% due 7/15/2035 2,790
================================================================================
South Carolina -- 1.4%
Connector 2000 Association, Inc., South Carolina, Toll
Road and Capital Appreciation Revenue Bonds,
Senior Series B (g):
1,500 6.50% due 1/01/2009 1,354
1,485 7.969% due 1/01/2014 890
1,500 South Carolina Jobs, EDA, EDR (Westminster
Presbyterian Center), 7.75% due 11/15/2010 (b) 1,710
================================================================================
Tennessee -- 3.0%
6,785 Knox County, Tennessee, Health, Educational and
Housing Facilities Board, Hospital Facilities Revenue
Refunding Bonds (Covenant Health), Series A, 5.06%
due 1/01/2040 (g) 1,242
Shelby County, Tennessee, Health, Educational and
Housing Facilities Board Revenue Bonds
(Germantown Village):
355 6.25% due 12/01/2034 322
2,500 Series A, 7.25% due 12/01/2034 2,531
4,320 Sullivan County, Tennessee, Health, Educational &
Housing Facilities Board, Hospital Revenue Bonds
(Wellmont Health System Project), Series C, 5.25%
due 9/01/2036 4,434
================================================================================
Texas -- 6.1%
1,000 Austin, Texas, Convention Center Revenue Bonds
(Convention Enterprises Inc.), First Tier, Series A,
6.70% due 1/01/2011 (b) 1,092
2,550 Brazos River Authority, Texas, PCR, Refunding (TXU
Energy Company LLC Project), AMT, Series A, 7.70%
due 4/01/2033 2,869
1,680 Brazos River Authority, Texas, Revenue Refunding
Bonds (Reliant Energy Inc. Project), Series B, 7.75%
due 12/01/2018 1,757
3,185 Dallas-Fort Worth, Texas, International Airport
Facilities Improvement Corporation Revenue Bonds
(American Airlines, Inc.), AMT, 7.25% due 11/01/2030 3,191
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 1,547
750 Kerrville, Texas, Health Facilities Development
Corporation, Hospital Revenue Bonds (Sid Peterson
Memorial Hospital Project), 5.375% due 8/15/2035 776
3,190 Matagorda County, Texas, Navigation District
Number 1, Revenue Refunding Bonds (Reliant
Energy Inc.), Series C, 8% due 5/01/2029 3,337
1,860 Port Corpus Christi, Texas, Individual Development
Corporation, Environmental Facilities Revenue Bonds
(Citgo Petroleum Corporation Project), AMT, 8.25%
due 11/01/2031 1,902
================================================================================
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 1,697
================================================================================
Virginia -- 6.5%
1,465 Dulles Town Center, Virginia, Community Development
Authority, Special Assessment Tax (Dulles Town
Center Project), 6.25% due 3/01/2026 1,511
Fairfax County, Viriginia Economic Dev Auth Residential
Care Facs MT Goodwin House, Inc.:
750 5.125% due 10/01/2037 762
450 5.125% due 10/01/2042 455
440 Farms of New Kent, Virginia, Community Development
Authority, Special Assessment Bonds, Series C,
5.80% due 3/01/2036 441
48,400 Pocahontas Parkway Association, Virginia, Toll Road
Revenue Bonds, Capital Appreciation, Senior
Series B, 5.95% due 8/15/2008 (b)(g) 12,242
1,000 Suffolk, Virginia, IDA, Retirement Facilities, Revenue
Refunding Bonds (Lake Prince Center), 5.30%
due 9/01/2031 1,021
2,180 Tobacco Settlement Fing Corp Virginia Senior Series B1,
5% due 6/01/2047 2,131
================================================================================
Washington -- 0.6%
1,750 Washington State Housing Financing Commission,
Nonprofit Revenue Bonds (Skyline at First Hill
Project), Series A, 5.625% due 1/01/2038 1,779
================================================================================
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 1,930
================================================================================
BLACKROCK MUNIASSETS FUND, INC. MAY 31, 2007 9
Schedule of Investments (concluded) (in Thousands)
Face
Amount Municipal Bonds Value
================================================================================
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 $ 3,360
- --------------------------------------------------------------------------------
Total Municipal Bonds
(Cost -- $259,243) -- 95.8% 275,433
================================================================================
Shares
Held Short-Term Securities Value
- --------------------------------------------------------------------------------
$9,410 Merrill Lynch Institutional Tax-Exempt Fund,
3.60% (d)(f) $ 9,410
- --------------------------------------------------------------------------------
Total Short-Term Securities
(Cost -- $9,410) -- 3.3% 9,410
================================================================================
Total Investments (Cost -- $268,653*) -- 99.1% 284,843
Other Assets Less Liabilities -- 0.9% 2,524
--------
Net Assets -- 100.0% $287,367
========
* The cost and unrealized appreciation (depreciation) of investments as of
May 31, 2007 as computed for federal income tax purposes, were as follows:
Aggregate cost ............................................. $ 268,314
=========
Gross unrealized appreciation .............................. $ 17,443
Gross unrealized depreciation .............................. (914)
---------
Net unrealized appreciation ................................ $ 16,529
=========
(a) AMBAC Insured.
(b) Prerefunded.
(c) FSA Insured.
(d) 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 6,104 $85
- --------------------------------------------------------------------------------
(e) 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.
(f) Represents the current yield as of May 31, 2007.
(g) Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase.
o Forward interest rate swaps outstanding as of May 31, 2007 were as
follows:
- --------------------------------------------------------------------------------
Notional Unrealized
Description Amount Depreciation
- --------------------------------------------------------------------------------
Receive a fixed rate of 5.39% and pay a
floating rate based on 3-month LIBOR
Broker, Deutsche Bank AG London
Expires August 2017 $23,060 $(57)
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
10 BLACKROCK MUNIASSETS FUND, INC. MAY 31, 2007
Statement of Assets, Liabilities and Capital
As of May 31, 2007
================================================================================================================================
Assets
- --------------------------------------------------------------------------------------------------------------------------------
Investments in unaffiliated securities, at value (identified cost -- $259,243,749) $ 275,433,798
Investments in affiliated securities, at value (identified cost -- $9,409,571) ... 9,409,571
Cash ............................................................................. 78,259
Receivables:
Interest ..................................................................... $ 4,791,016
Securities sold .............................................................. 2,479,209 7,270,225
-------------
Prepaid expenses ................................................................. 2,440
-------------
Total assets ..................................................................... 292,194,293
-------------
================================================================================================================================
Liabilities
- --------------------------------------------------------------------------------------------------------------------------------
Unrealized depreciation on forward interest rate swaps ........................... 56,774
Payables:
Securities purchased ......................................................... 3,068,938
Dividends to shareholders .................................................... 1,450,299
Investment adviser ........................................................... 134,225
Other affiliates ............................................................. 3,678 4,657,140
-------------
Accrued expenses ................................................................. 113,256
-------------
Total liabilities ................................................................ 4,827,170
-------------
================================================================================================================================
Net Assets
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets ....................................................................... $ 287,367,123
=============
================================================================================================================================
Capital
- --------------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.10 per share; 200,000,000 shares authorized;
20,718,552 shares issued and outstanding ....................................... $ 2,071,855
Paid-in capital in excess of par ................................................. 300,953,777
Undistributed investment income -- net ........................................... $ 2,522,745
Accumulated realized capital losses -- net ....................................... (34,314,529)
Unrealized appreciation -- net ................................................... 16,133,275
-------------
Total accumulated losses -- net .................................................. (15,658,509)
-------------
Total capital -- Equivalent to $13.87 net asset value per share of Common Stock
(market price -- $15.29) ....................................................... $ 287,367,123
=============
See Notes to Financial Statements.
BLACKROCK MUNIASSETS FUND, INC. MAY 31, 2007 11
Statement of Operations
For the Year Ended May 31, 2007
================================================================================================================================
Investment Income
- --------------------------------------------------------------------------------------------------------------------------------
Interest ......................................................................... $ 18,835,285
Dividends from affiliates ........................................................ 85,085
-------------
Total income ..................................................................... 18,920,370
-------------
================================================================================================================================
Expenses
- --------------------------------------------------------------------------------------------------------------------------------
Investment advisory fees ......................................................... $ 1,580,425
Accounting services .............................................................. 101,555
Professional fees ................................................................ 83,655
Transfer agent fees .............................................................. 50,676
Printing and shareholder reports ................................................. 41,437
Pricing fees ..................................................................... 19,375
Directors' fees and expenses ..................................................... 18,428
Custodian fees ................................................................... 17,051
Listing fees ..................................................................... 9,379
Other ............................................................................ 29,943
-------------
Total expenses before reimbursement .............................................. 1,951,924
Reimbursement of expenses ........................................................ (4,858)
-------------
Total expenses after reimbursement ............................................... 1,947,066
-------------
Investment income -- net ......................................................... 16,973,304
-------------
================================================================================================================================
Realized & Unrealized Gain (Loss) -- Net
- --------------------------------------------------------------------------------------------------------------------------------
Realized loss on investments -- net .............................................. (5,079,543)
Change in unrealized appreciation/depreciation on:
Investments -- net ........................................................... 9,856,117
Forward interest rate swaps -- net ........................................... (56,774) 9,799,343
------------------------------
Total realized and unrealized gain -- net ........................................ 4,719,800
-------------
Net Increase in Net Assets Resulting from Operations ............................. $ 21,693,104
=============
See Notes to Financial Statements.
12 BLACKROCK MUNIASSETS FUND, INC. MAY 31, 2007
Statements of Changes in Net Assets
For the Year Ended
May 31,
------------------------------
Increase (Decrease) in Net Assets: 2007 2006
================================================================================================================================
Operations
- --------------------------------------------------------------------------------------------------------------------------------
Investment income -- net ......................................................... $ 16,973,304 $ 16,514,494
Realized gain (loss) -- net ...................................................... 1,597,787
Change in unrealized appreciation/depreciation -- net ............................ 9,799,343 4,122,867
------------------------------
Net increase in net assets resulting from operations ............................. 21,693,104 22,235,148
------------------------------
================================================================================================================================
Dividends to Shareholders
- --------------------------------------------------------------------------------------------------------------------------------
Investment income -- net ......................................................... (17,339,322) (17,054,653)
------------------------------
Net decrease in net assets resulting from dividends to Common Stock shareholders . (17,339,322) (17,054,653)
------------------------------
================================================================================================================================
Common Stock Transactions
- --------------------------------------------------------------------------------------------------------------------------------
Value of shares issued to Common Stock shareholders in reinvestment of dividends . 2,220,383 2,230,610
------------------------------
================================================================================================================================
Net Assets
- --------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets ..................................................... 6,574,165 7,411,105
Beginning of year ................................................................ 280,792,958 273,381,853
------------------------------
End of year* ..................................................................... $ 287,367,123 $ 280,792,958
==============================
* Undistributed investment income -- net ..................................... $ 2,522,745 $ 2,984,713
==============================
See Notes to Financial Statements.
BLACKROCK MUNIASSETS FUND, INC. MAY 31, 2007 13
Financial Highlights
For the Year Ended May 31,
The following per share data and ratios have been derived ----------------------------------------------------------------
from information provided in the financial statements. 2007 2006 2005 2004 2003
=============================================================================================================================
Per Share Operating Performance
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ........ $ 13.65 $ 13.40 $ 12.36 $ 11.94 $ 12.55
----------------------------------------------------------------
Investment income -- net** ................ .82 .81 .81 .83 .81
Realized and unrealized gain (loss) -- net .24 .27 1.04 .38 (.64)
----------------------------------------------------------------
Total from investment operations .......... 1.06 1.08 1.85 1.21 .17
----------------------------------------------------------------
Less dividends and distributions:
Investment income -- net .............. (.84) (.83) (.81) (.78) (.78)
Realized gain -- net .................. -- -- -- (.01) --
----------------------------------------------------------------
Total dividends and distributions ......... (.84) (.83) (.81) (.79) (.78)
----------------------------------------------------------------
Net asset value, end of year .............. $ 13.87 $ 13.65 $ 13.40 $ 12.36 $ 11.94
================================================================
Market price per share, end of year ....... $ 15.29 $ 14.13 $ 13.27 $ 11.38 $ 11.91
================================================================
=============================================================================================================================
Total Investment Return*
- -----------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ........ 7.72% 8.31% 15.65% 10.74% 1.61%
================================================================
Based on market price per share ........... 14.71% 13.22% 24.39% 2.22% 9.09%
================================================================
=============================================================================================================================
Ratios to Average Net Assets
- -----------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement ............ .68% .68% .67% .67% .78%
================================================================
Expenses .................................. .68% .68% .67% .67% .78%
================================================================
Investment income -- net .................. 5.91% 5.97% 6.30% 6.71% 6.76%
================================================================
=============================================================================================================================
Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (in thousands) .... $287,367 $280,793 $273,382 $252,203 $243,671
================================================================
Portfolio turnover ........................ 25.11% 17.22% 19.67% 19.14% 26.98%
================================================================
* Total investment returns based on market value, which can be significantly
greater or lesser than net asset value, may result in substantially
different returns. Total investment returns exclude the effects of sales
charges.
** Based on average shares outstanding.
See Notes to Financial Statements.
14 BLACKROCK MUNIASSETS FUND, INC. MAY 31, 2007
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. 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. 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 Fund's Board of Directors.
(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. The counterparty for certain
instruments may pledge cash or securities as collateral.
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 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 -- The 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
BLACKROCK MUNIASSETS FUND, INC. MAY 31, 2007 15
Notes to Financial Statements (continued)
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 released FASB Interpretation No. 48 ("FIN 48"), "Accounting for
Uncertainty in Income Taxes." FIN 48 provides guidance for how uncertain tax
positions should be recognized, measured, presented and disclosed in financial
statements. FIN 48 requires the evaluation of tax positions taken in the course
of preparing the Fund's tax returns to determine whether the tax positions are
"more-likely-than-not" of being sustained by the applicable tax authority. Tax
benefits of positions not deemed to meet the more-likely-than-not threshold
would be booked as a tax expense in the current year and recognized as: a
liability for unrecognized tax benefits; a reduction of an income tax refund
receivable; a reduction of deferred tax asset; an increase in deferred tax
liability; or a combination thereof. Adoption of FIN 48 is required for the last
net asset value calculation in the first required financial statement reporting
period for fiscal years beginning after December 15, 2006. The impact on the
Fund's financial statements, if any, is currently being assessed.
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.
In addition, in February 2007, FASB issued Statement of Financial Accounting
Standards No. 159, "The Fair Value Option for Financial Assets and Financial
Liabilities" ("FAS 159"), which is effective for fiscal years beginning after
November 15, 2007. Early adoption is permitted as of the beginning of a fiscal
year that begins on or before November 15, 2007, provided the entity also elects
to apply the provisions of FAS 157. FAS 159 permits entities to choose to
measure many financial instruments and certain other items at fair value that
are not currently required to be measured at fair value. FAS 159 also
establishes presentation and disclosure requirements designed to facilitate
comparisons between entities that choose different measurement attributes for
similar types of assets and liabilities. At this time, management is evaluating
the implications of FAS 159 and its impact on the Fund's financial statements,
if any, has not been determined.
(g) Reclassifications -- U.S. generally accepted accounting principles require
that certain components of net assets be adjusted to reflect permanent
differences between financial and tax reporting. Accordingly, during the current
year, $611,976 has been reclassified between paid-in capital in excess of par
and accumulated net realized capital losses and $95,950 has been reclassified
between undistributed net investment income and accumulated net realized capital
losses as a result of permanent differences attributable to the expiration of a
capital loss carryforward, amortization methods on fixed income securities and
securities in default. These reclassifications have no effect on net assets or
net asset values per share.
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,
16 BLACKROCK MUNIASSETS FUND, INC. MAY 31, 2007
Notes to Financial Statements (concluded)
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 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 an indirect, wholly owned subsidiary of Merrill
Lynch, which is 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 indirectly
through its investments in Merrill Lynch Institutional Tax-Exempt Fund. For the
year ended May 31, 2007, the Manager and FAM reimbursed the Fund in the amounts
of $3,654 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-Adviser for services it provides a fee that is a
percentage of the management fee paid by the Fund to the Manager.
For the year ended May 31, 2007, the Fund reimbursed the Manager and FAM $3,954
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, 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
year ended May 31, 2007, were $70,203,570 and $77,217,085, respectively.
4. Common Stock Transactions:
At May 31, 2007, 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 for the year ended May 31, 2007 and for the year
ended May 31, 2006, increased by 154,369 and 164,470, respectively, as a result
of dividend reinvestment.
5. Distributions to Shareholders:
The Fund paid a tax-exempt income dividend to holders of Common Stock in the
amount of $.070000 per share on July 2, 2007 to shareholders of record on June
15, 2007.
The tax character of distributions paid during the fiscal years ended May 31,
2007 and May 31, 2006 was as follows:
- --------------------------------------------------------------------------------
5/31/2007 5/31/2006
- --------------------------------------------------------------------------------
Distributions paid from:
Tax-exempt income .............................. $17,339,322 $17,054,653
--------------------------
Total distributions .............................. $17,339,322 $17,054,653
==========================
As of May 31, 2007, the components of accumulated losses on a tax basis were as
follows:
- -----------------------------------------------------------------------------
Undistributed tax-exempt income -- net ...................... $ 2,183,838
Undistributed ordinary income -- net ........................ 65,844
Undistributed long-term capital gains -- net ................ --
------------
Total undistributed earnings -- net ......................... 2,249,682
Capital loss carryforward ................................... (34,375,204)*
Unrealized gains -- net ..................................... 16,467,013**
------------
Total accumulated losses -- net ............................. $(15,658,509)
============
* On May 31, 2007, the Fund had a net capital loss carryforward of
$34,375,204, of which $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, $3,762,613 expires in 2013 and $5,065,527 expires in
2015. This amount will be available to offset like amounts of any future
taxable gains.
** The difference between book-basis and tax-basis net unrealized gains is
attributable primarily to the tax deferral of losses on straddles and the
difference between book and tax amortization methods for premiums and
discounts on fixed income securities.
BLACKROCK MUNIASSETS FUND, INC. MAY 31, 2007 17
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of BlackRock MuniAssets Fund, Inc.:
We have audited the accompanying statement of assets, liabilities and capital,
including the schedule of investments, of BlackRock MuniAssets Fund, Inc.
(formerly MuniAssets Fund, Inc.) as of May 31, 2007, and the related statement
of operations for the year then ended, the statements of changes in net assets
for each of the two years in the period then ended, and the financial highlights
for each of the five years in the period then ended. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal controls over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purposes
of expressing an opinion on the effectiveness of the Fund's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of May 31, 2007, by correspondence with the custodian and
brokers; where replies were not received from brokers, we performed other
auditing procedures. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
BlackRock MuniAssets Fund, Inc. as of May 31, 2007, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and its financial highlights for each of
the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.
Deloitte & Touche LLP
Princeton, New Jersey
July 20, 2007
Fund Certification (Unaudited)
In September 2006, the Fund filed its Chief Executive Officer Certification with
the New York Stock Exchange pursuant to Section 303A.12(a) of the New York Stock
Exchange Corporate Governance Listing Standards.
The Fund's Chief Executive Officer and Chief Financial Officer Certifications
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 were filed with the
Fund's Form N-CSR and are available on the Securities and Exchange Commission's
Web site at http://www.sec.gov.
Important Tax Information (Unaudited)
All of the net investment income distributions paid by BlackRock MuniAssets
Fund, Inc. during the taxable year ended May 31, 2007 qualify as tax-exempt
interest dividends for federal income tax purposes.
18 BLACKROCK MUNIASSETS FUND, INC. MAY 31, 2007
Automatic Dividend Reinvestment Plan
How the Plan Works -- The Fund offers a Dividend Reinvestment Plan (the "Plan")
under which income and capital gains dividends paid by the Fund are
automatically reinvested in additional shares of Common Stock of the Fund. The
Plan is administered on behalf of the shareholders by The Bank of New York (the
"Plan Agent"). Under the Plan, whenever the Fund declares a dividend,
participants in the Plan will receive the equivalent in shares of Common Stock
of the Fund. The Plan Agent will acquire the shares for the participant's
account either (i) through receipt of additional unissued but authorized shares
of the Fund ("newly issued shares") or (ii) by purchase of outstanding shares of
Common Stock on the open market on the New York Stock Exchange or elsewhere. If,
on the dividend payment date, the Fund's net asset value per share is equal to
or less than the market price per share plus estimated brokerage commissions (a
condition often referred to as a "market premium"), the Plan Agent will invest
the dividend amount in newly issued shares. If the Fund's net asset value per
share is greater than the market price per share (a condition often referred to
as a "market discount"), the Plan Agent will invest the dividend amount by
purchasing on the open market additional shares. If the Plan Agent is unable to
invest the full dividend amount in open market purchases, or if the market
discount shifts to a market premium during the purchase period, the Plan Agent
will invest any uninvested portion in newly issued shares. The shares acquired
are credited to each shareholder's account. The amount credited is determined by
dividing the dollar amount of the dividend by either (i) when the shares are
newly issued, the net asset value per share on the date the shares are issued or
(ii) when shares are purchased in the open market, the average purchase price
per share.
Participation in the Plan -- Participation in the Plan is automatic, that is, a
shareholder is automatically enrolled in the Plan when he or she purchases
shares of Common Stock of the Fund unless the shareholder specifically elects
not to participate in the Plan. Shareholders who elect not to participate will
receive all dividend distributions in cash. Shareholders who do not wish to
participate in the Plan must advise the Plan Agent in writing (at the address
set forth below) that they elect not to participate in the Plan. Participation
in the Plan is completely voluntary and may be terminated or resumed at any time
without penalty by writing to the Plan Agent.
Benefits of the Plan -- The Plan provides an easy, convenient way for
shareholders to make additional, regular investments in the Fund. The Plan
promotes a long-term strategy of investing at a lower cost. All shares acquired
pursuant to the Plan receive voting rights. In addition, if the market price
plus commissions of the Fund's shares is above the net asset value, participants
in the Plan will receive shares of the Fund for less than they could otherwise
purchase them and with a cash value greater than the value of any cash
distribution they would have received. However, there may not be enough shares
available in the market to make distributions in shares at prices below the net
asset value. Also, since the Fund does not redeem shares, the price on resale
may be more or less than the net asset value.
Plan Fees -- There are no enrollment fees or brokerage fees for participating in
the Plan. The Plan Agent's service fees for handling the reinvestment of
distributions are paid for by the Fund. However, brokerage commissions may be
incurred when the Fund purchases shares on the open market and shareholders will
pay a pro rata share of any such commissions.
Tax Implications -- The automatic reinvestment of dividends and distributions
will not relieve participants of any federal, state or local income tax that may
be payable (or required to be withheld) on such dividends. Therefore, income and
capital gains may still be realized even though shareholders do not receive
cash. The value of shares acquired pursuant to the Plan will generally be
excluded from gross income to the extent that the cash amount reinvested would
be excluded from gross income. If, when the Fund's shares are trading at a
market premium, the Fund issues shares pursuant to the Plan that have a greater
fair market value than the amount of cash reinvested, it is possible that all or
a portion of the discount from the market value (which may not exceed 5% of the
fair market value of the Fund's shares) could be viewed as a taxable
distribution. If the discount is viewed as a taxable distribution, it is also
possible that the taxable character of this discount would be allocable to all
the shareholders, including shareholders who do not participate in the Plan.
Thus, shareholders who do not participate in the Plan might be required to
report as ordinary income a portion of their distributions equal to their
allocable share of the discount.
Contact Information -- All correspondence concerning the Plan, including any
questions about the Plan, should be directed to the Plan Agent at The Bank of
New York, Church Street Station, P.O. Box 11258, New York, NY 10286-1258,
Telephone: 800-432-8224.
BLACKROCK MUNIASSETS FUND, INC. MAY 31, 2007 19
Officers and Directors
Number of
Portfolios in Other Public
Position(s) Length of Fund Complex Directorships
Held with Time Overseen by Held by
Name Address & Age Fund Served Principal Occupation(s) During Past 5 Years Director Director
====================================================================================================================================
Interested Director
- ------------------------------------------------------------------------------------------------------------------------------------
Robert C. P.O. Box 9011 Fund 2005 to Vice Chairman and Director of BlackRock, Inc., 122 Funds None
Doll, Jr.* Princeton, NJ President present Global Chief Investment Officer for Equities, 168 Portfolios
08543-9011 and Chairman of the BlackRock Retail Operating
Age: 52 Director Committee, and member of the BlackRock Executive
Committee since 2006; President of the funds
advised by Merrill Lynch Investment Managers, L.P.
("MLIM") and its affiliates ("MLIM/FAM-advised
funds") from 2005 to 2006 and Chief Investment
Officer thereof from 2001 to 2006; President of
MLIM and Fund Asset Management, L.P. ("FAM") from
2001 to 2006; Co-Head (Americas Region) thereof
from 2000 to 2001 and Senior Vice President from
1999 to 2001; President and Director of Princeton
Services, Inc. ("Princeton Services") and
President of Princeton Administrators, L.P.
("Princeton Administrators") from 2001 to 2006;
Chief Investment Officer of OppenheimerFunds, Inc.
in 1999 and Executive Vice President thereof from
1991 to 1999.
------------------------------------------------------------------------------------------------------------------------
* Mr. Doll is a director, trustee or member of an advisory board of certain other investment companies for which
BlackRock Advisors, LLC and its affiliates act as investment adviser. Mr. Doll is an "interested person," as
defined in the Investment Company Act, of the Fund based on his positions with BlackRock, Inc. and its affiliates.
Directors serve until their resignation, removal or death, or until December 31 of the year in which they turn 72.
As Fund President, Mr. Doll serves at the pleasure of the Board of Directors.
====================================================================================================================================
Independent Directors*
- ------------------------------------------------------------------------------------------------------------------------------------
James H. P.O. Box 9095 Director 2002 to Director, The China Business Group, Inc. since 37 Funds None
Bodurtha** Princeton, NJ present 1996 and Executive Vice President thereof from 57 Portfolios
08543-9095 1996 to 2003; Chairman of the Board, Berkshire
Age: 63 Holding Corporation since 1980; Partner, Squire,
Sanders & Dempsey from 1980 to 1993.
- ------------------------------------------------------------------------------------------------------------------------------------
Kenneth A. P.O. Box 9095 Director 2005 to Professor, Harvard University since 1992; 37 Funds None
Froot Princeton, NJ present Professor, Massachusetts Institute of Technology 57 Portfolios
08543-9095 from 1986 to 1992.
Age: 49
- ------------------------------------------------------------------------------------------------------------------------------------
Joe P.O. Box 9095 Director 1994 to Member of the Committee of Investment of Employee 37 Funds Kimco Realty
Grills** Princeton, NJ present Benefit Assets of the Association of Financial 57 Portfolios
08543-9095 Professionals ("CIEBA") since 1986; Member of
Age: 72 CIEBA's Executive Committee since 1988 and its
Chairman from 1991 to 1992; Assistant Treasurer of
International Business Machines Corporation
("IBM") and Chief Investment Officer of IBM
Retirement Funds from 1986 to 1993; Member of the
Investment Advisory Committee of the State of New
York Common Retirement Fund from 1989 to 2006;
Member of the Investment Advisory Committee of the
Howard Hughes Medical Institute from 1997 to 2000;
Director, Duke University Management Company from
1992 to 2004, Vice Chairman thereof from 1998 to
2004, and Director Emeritus thereof since 2004;
Director, LaSalle Street Fund from 1995 to 2001;
Director, Kimco Realty Corporation since 1997;
Member of the Investment Advisory Committee of the
Virginia Retirement System since 1998, Vice
Chairman thereof from 2002 to 2005, and Chairman
thereof since 2005; Director, Montpelier
Foundation since 1998, its Vice Chairman from 2000
to 2006, and Chairman, thereof, since 2006; Member
of the Investment Committee of the Woodberry
Forest School since 2000; Member of the Investment
Committee of the National Trust for Historic
Preservation since 2000.
20 BLACKROCK MUNIASSETS FUND, INC. MAY 31, 2007
Officers and Directors (continued)
Number of
Portfolios in Other Public
Position(s) Length of Fund Complex Directorships
Held with Time Overseen by Held by
Name Address & Age Fund Served Principal Occupation(s) During Past 5 Years Director Director
====================================================================================================================================
Independent Directors* (concluded)
- ------------------------------------------------------------------------------------------------------------------------------------
Herbert I. P.O. Box 9095 Director 2002 to Professor Emeritus, New York University since 37 Funds None
London Princeton, NJ present 2005; John M. Olin Professor of Humanities, New 57 Portfolios
08543-9095 York University from 1993 to 2005 and Professor
Age: 68 thereof from 1980 to 2005; President, Hudson
Institute since 1997 and Trustee thereof since
1980; Dean, Gallatin Division of New York
University from 1976 to 1993; Distinguished
Fellow, Herman Kahn Chair, Hudson Institute from
1984 to 1985; Chairman of the Board of Directors
of Vigilant Research, Inc. since 2006; Member of
the Board of Directors for Grantham University
since 2006; Director of AIMS since 2006; Director
of Reflex Security since 2006; Director of
InnoCentive, Inc. since 2006; Director of Cerego,
LLC since 2005; Director, Damon Corp. from 1991 to
1995; Overseer, Center for Naval Analyses from
1983 to 1993.
- ------------------------------------------------------------------------------------------------------------------------------------
Roberta P.O. Box 9095 Director 2002 to Shareholder, Modrall, Sperling, Roehl, Harris & 37 Funds None
Cooper Princeton, NJ present Sisk, P.A. since 1993; President, American Bar 57 Portfolios
Ramo 08543-9095 Association from 1995 to 1996 and Member of the
Age: 64 Board of Governors thereof from 1994 to 1997;
Shareholder, Poole, Kelly & Ramo, Attorneys at Law
P.C. from 1977 to 1993; Director of ECMC Group
(service provider to students, schools and
lenders) since 2001; Director, United New Mexico
Bank (now Wells Fargo) from 1983 to 1988;
Director, First National Bank of New Mexico (now
Wells Fargo) from 1975 to 1976; Vice President,
American Law Institute since 2004.
- ------------------------------------------------------------------------------------------------------------------------------------
Robert S. P.O. Box 9095 Director 1996 to Principal of STI Management (investment adviser) 37 Funds None
Salomon, Princeton, NJ present from 1994 to 2005; Chairman and CEO of Salomon 57 Portfolios
Jr. 08543-9095 Brothers Asset Management Inc. from 1992 to 1995;
Age: 70 Chairman of Salomon Brothers Equity Mutual Funds
from 1992 to 1995; regular columnist with Forbes
Magazine from 1992 to 2002; Director of Stock
Research and U.S. Equity Strategist at Salomon
Brothers Inc. from 1975 to 1991; Trustee,
Commonfund from 1980 to 2001.
------------------------------------------------------------------------------------------------------------------------
* Directors serve until their resignation, removal or death, or until December 31 of the year in which they turn 72.
** Co-Chairman of the Board of Directors and the Audit Committee.
BLACKROCK MUNIASSETS FUND, INC. MAY 31, 2007 21
Officers and Directors (concluded)
Position(s) Length of
Held with Time
Name Address & Age Fund Served Principal Occupation(s) During Past 5 Years
====================================================================================================================================
Fund Officers*
- ------------------------------------------------------------------------------------------------------------------------------------
Donald C. P.O. Box 9011 Vice 1993 to Managing Director of BlackRock, Inc. since 2006; Managing Director of Merrill
Burke Princeton, NJ President present Lynch Investment Managers, L.P. ("MLIM") and Fund Asset Management, L.P. ("FAM")
08543-9011 and and 1999 in 2006; First Vice President of MLIM and FAM from 1997 to 2005 and Treasurer
Age: 46 Treasurer to present thereof from 1999 to 2006; Vice President of MLIM and FAM from 1990 to 1997.
- ------------------------------------------------------------------------------------------------------------------------------------
Karen P.O. Box 9011 Fund Chief 2007 to Managing Director of BlackRock, Inc. and Chief Compliance Officer of certain
Clark Princeton, NJ Compliance present BlackRock-advised funds since 2007; Director of BlackRock, Inc. from 2005 to
08543-9011 Officer 2007; Principal and Senior Compliance Officer, State Street Global Advisors,
Age: 42 from 2001 to 2005; Principal Consultant, PricewaterhouseCoopers, LLP from 1998
to 2001; and Branch Chief, Division of Investment Management and Office of
Compliance Inspections and Examinations, U.S. Securities and Exchange
Commission, from 1993 to 1998.
- ------------------------------------------------------------------------------------------------------------------------------------
Alice A. P.O. Box 9011 Secretary 2004 to Director of BlackRock, Inc. since 2006; Director (Legal Advisory) of MLIM from
Pellegrino Princeton, NJ present 2002 to 2006; Vice President of MLIM from 1999 to 2002; Attorney associated with
08543-9011 MLIM from 1997 to 1999; Secretary of MLIM, FAM, FAM Distributors, Inc. and
Age: 47 Princeton Services from 2004 to 2006.
------------------------------------------------------------------------------------------------------------------------
* Officers of the Fund serve at the pleasure of the Board of Directors.
- ------------------------------------------------------------------------------------------------------------------------------------
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
22 BLACKROCK MUNIASSETS FUND, INC. MAY 31, 2007
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 non-public 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 non-public 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 non-affiliated third parties any
non-public personal information about its Clients, except as permitted by law or
as is necessary to respond to regulatory requests or to service Client accounts.
These non-affiliated 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 non-public
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 non-public
personal information of its Clients, including procedures relating to the proper
storage and disposal of such information.
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.
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.
Shareholders Who Hold Accounts with Investment Advisers, Banks or Brokerages:
Please contact your financial advisor to enroll. Please note that not all
investment advisers, banks or brokerages may offer this service.
BLACKROCK MUNIASSETS FUND, INC. MAY 31, 2007 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
#16716-5/07
Item 2 - Code of Ethics - The registrant has adopted a code of ethics, as of
the end of the period covered by this report, that applies to the
registrant's principal executive officer, principal financial officer
and principal accounting officer, or persons performing similar
functions. A copy of the code of ethics is available without charge at
www.blackrock.com.
Item 3 - Audit Committee Financial Expert - The registrant's board of directors
has determined that (i) the registrant has the following audit
committee financial experts serving on its audit committee and (ii)
each audit committee financial expert is independent: (1) Joe Grills
and (2) Robert S. Salomon, Jr.
Item 4 - Principal Accountant Fees and Services
(a) Audit Fees - Fiscal Year Ended May 31, 2007 - $28,000
Fiscal Year Ended May 31, 2006 - $28,000
(b) Audit-Related Fees - Fiscal Year Ended May 31, 2007 - $0
Fiscal Year Ended May 31, 2006 - $0
(c) Tax Fees - Fiscal Year Ended May 31, 2007 - $6,100
Fiscal Year Ended May 31, 2006 - $6,000
The nature of the services include tax compliance, tax advice and tax
planning.
(d) All Other Fees - Fiscal Year Ended May 31, 2007 - $0
Fiscal Year Ended May 31, 2006 - $0
(e)(1) The registrant's audit committee (the "Committee") has adopted
policies and procedures with regard to the pre-approval of services.
Audit, audit-related and tax compliance services provided to the
registrant on an annual basis require specific pre-approval by the
Committee. The Committee also must approve other non-audit services
provided to the registrant and those non-audit services provided to
the registrant's affiliated service providers that relate directly to
the operations and the financial reporting of the registrant. Certain
of these non-audit services that the Committee believes are a)
consistent with the SEC's auditor independence rules and b) routine
and recurring services that will not impair the independence of the
independent accountants may be approved by the Committee without
consideration on a specific case-by-case basis ("general
pre-approval"). However, such services will only be deemed
pre-approved provided that any individual project does not exceed
$5,000 attributable to the registrant or $50,000 for all of the
registrants the Committee oversees. Any proposed services exceeding
the pre-approved cost levels will require specific pre-approval by the
Committee, as will any other services not subject to general
pre-approval (e.g., unanticipated but permissible services). The
Committee is informed of each service approved subject to general
pre-approval at the next regularly scheduled in-person board meeting.
(e)(2) 0%
(f) Not Applicable
(g) Fiscal Year Ended May 31, 2007 - $2,985,417
Fiscal Year Ended May 31, 2006 - $3,130,717
(h) The registrant's audit committee has considered and determined
that the provision of non-audit services that were rendered to the
registrant's investment adviser and any entity controlling, controlled
by, or under common control with the investment adviser that provides
ongoing services to the registrant that were not pre-approved pursuant
to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible
with maintaining the principal accountant's independence.
Regulation S-X Rule 2-01(c)(7)(ii) - $1,739,500, 0%
Item 5 - Audit Committee of Listed Registrants - The following individuals are
members of the registrant's separately-designated standing audit
committee established in accordance with Section 3(a)(58)(A) of the
Exchange Act (15 U.S.C. 78c(a)(58)(A)):
James H. Bodurtha
Kenneth A. Froot
Joe Grills
Herbert I. London
Roberta Cooper Ramo
Robert S. Salomon, Jr.
Item 6 - Schedule of Investments - The registrant's Schedule of Investments is
included as part of the Report to Stockholders filed under Item 1 of
this form.
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Proxy Voting Policies and Procedures
Applicable to the Fund
Each Fund's Board of Directors has delegated to the Manager authority
to vote all proxies relating to the Fund's portfolio securities. The
Manager has adopted policies and procedures (the "Proxy Voting
Procedures") with respect to the voting of proxies related to the
portfolio securities held in the account of one or more of its
clients, including a Fund. Pursuant to these Proxy Voting Procedures,
the Manager's primary objective when voting proxies is to make proxy
voting decisions solely in the best interests of each Fund and its
shareholders, and to act in a manner that the Manager believes is most
likely to enhance the economic value of the securities held by the
Fund. The Proxy Voting Procedures are designed to ensure that the
Manager considers the interests of its clients, including each Fund,
and not the interests of the Manager, when voting proxies and that
real (or perceived) material conflicts that may arise between the
Manager's interest and those of the Manager's clients are properly
addressed and resolved.
In order to implement the Proxy Voting Procedures, the Manager has
formed a Proxy Voting Committee (the "Committee"). The Committee,
which is a subcommittee of the Manager's Equity Investment Policy
Oversight Committee ("EIPOC"), is comprised of a senior member of the
Manager's equity management group who is also a member of EIPOC, one
or more other senior investment professionals appointed by EIPOC,
portfolio managers and investment analysts appointed by EIPOC and any
other personnel EIPOC deems appropriate. The Committee will also
include two non-voting representatives from the Manager's Legal
Department appointed by the Manager's General Counsel. The Committee's
membership shall be limited to full-time employees of the Manager. No
person with any investment banking, trading, retail brokerage or
research responsibilities for the Manager's affiliates may serve as a
member of the Committee or participate in its decision making (except
to the extent such person is asked by the Committee to present
information to the Committee on the same basis as other interested
knowledgeable parties not affiliated with the Manager might be asked
to do so). The Committee determines how to vote the proxies of all
clients, including a Fund, that have delegated proxy voting authority
to the Manager and seeks to ensure that all votes are consistent with
the best interests of those clients and are free from unwarranted and
inappropriate influences. The Committee establishes general proxy
voting policies for the Manager and is responsible for determining how
those policies are applied to specific proxy votes, in light of each
issuer's unique structure, management, strategic options and, in
certain circumstances, probable economic and other anticipated
consequences of alternate actions. In so doing, the Committee may
determine to vote a particular proxy in a manner contrary to its
generally stated policies. In addition, the Committee will be
responsible for ensuring that all reporting and recordkeeping
requirements related to proxy voting are fulfilled.
The Committee may determine that the subject matter of a recurring
proxy issue is not suitable for general voting policies and requires a
case-by-case determination. In such cases, the Committee may elect not
to adopt a specific voting policy applicable to that issue. The
Manager believes that certain proxy voting issues require investment
analysis - such as approval of mergers and other significant corporate
transactions - akin to investment decisions, and are, therefore, not
suitable for general guidelines. The Committee may elect to adopt a
common position for the Manager on certain proxy votes that are akin
to investment decisions, or determine to permit the portfolio manager
to make individual decisions on how best to maximize economic value
for a Fund (similar to normal buy/sell investment decisions made by
such portfolio managers). While it is expected that the Manager will
generally seek to vote proxies over which the Manager exercises voting
authority in a uniform manner for all the Manager's clients, the
Committee, in conjunction with a Fund's portfolio manager, may
determine that the Fund's specific circumstances require that its
proxies be voted differently.
To assist the Manager in voting proxies, the Committee has retained
Institutional Shareholder Services ("ISS"). ISS is an independent
adviser that specializes in providing a variety of fiduciary-level
proxy-related services to institutional investment managers, plan
sponsors, custodians, consultants, and other institutional investors.
The services provided to the Manager by ISS include in-depth research,
voting recommendations (although the Manager is not obligated to
follow such recommendations), vote execution, and recordkeeping. ISS
will also assist the Fund in fulfilling its reporting and
recordkeeping obligations under the Investment Company Act.
The Manager's Proxy Voting Procedures also address special
circumstances that can arise in connection with proxy voting. For
instance, under the Proxy Voting Procedures, the Manager generally
will not seek to vote proxies related to portfolio securities that are
on loan, although it may do so under certain circumstances. In
addition, the Manager will vote proxies related to securities of
foreign issuers only on a best efforts basis and may elect not to vote
at all in certain countries where the Committee determines that the
costs associated with voting generally outweigh the benefits. The
Committee may at any time override these general policies if it
determines that such action is in the best interests of a Fund.
From time to time, the Manager may be required to vote proxies in
respect of an issuer where an affiliate of the Manager (each, an
"Affiliate"), or a money management or other client of the Manager,
including investment companies for which the Manager provides
investment advisory, administrative and/or other services (each, a
"Client"), is involved. The Proxy Voting Procedures and the Manager's
adherence to those procedures are designed to address such conflicts
of interest. The Committee intends to strictly adhere to the Proxy
Voting Procedures in all proxy matters, including matters involving
Affiliates and Clients. If, however, an issue representing a
non-routine matter that is material to an Affiliate or a widely known
Client is involved such that the Committee does not reasonably believe
it is able to follow its guidelines (or if the particular proxy matter
is not addressed by the guidelines) and vote impartially, the
Committee may, in its discretion for the purposes of ensuring that an
independent determination is reached, retain an independent fiduciary
to advise the Committee on how to vote or to cast votes on behalf of
the Manager's clients.
In the event that the Committee determines not to retain an
independent fiduciary, or it does not follow the advice of such an
independent fiduciary, the Committee may pass the voting power to a
subcommittee, appointed by EIPOC (with advice from the Secretary of
the Committee), consisting solely of Committee members selected by
EIPOC. EIPOC shall appoint to the subcommittee, where appropriate,
only persons whose job responsibilities do not include contact with
the Client and whose job evaluations would not be affected by the
Manager's relationship with the Client (or failure to retain such
relationship). The subcommittee shall determine whether and how to
vote all proxies on behalf of the Manager's clients or, if the proxy
matter is, in their judgment, akin to an investment decision, to defer
to the applicable portfolio managers, provided that, if the
subcommittee determines to alter the Manager's normal voting
guidelines or, on matters where the Manager's policy is case-by-case,
does not follow the voting recommendation of any proxy voting service
or other independent fiduciary that may be retained to provide
research or advice to the Manager on that matter, no proxies relating
to the Client may be voted unless the Secretary, or in the Secretary's
absence, the Assistant Secretary of the Committee concurs that the
subcommittee's determination is consistent with the Manager's
fiduciary duties.
In addition to the general principles outlined above, the Manager has
adopted voting guidelines with respect to certain recurring proxy
issues that are not expected to involve unusual circumstances. These
policies are guidelines only, and the Manager may elect to vote
differently from the recommendation set forth in a voting guideline if
the Committee determines that it is in a Fund's best interest to do
so. In addition, the guidelines may be reviewed at any time upon the
request of a Committee member and may be amended or deleted upon the
vote of a majority of Committee members present at a Committee meeting
at which there is a quorum.
The Manager has adopted specific voting guidelines with respect to the
following proxy issues:
o Proposals related to the composition of the board of directors of
issuers other than investment companies. As a general matter, the
Committee believes that a company's board of directors (rather than
shareholders) is most likely to have access to important, nonpublic
information regarding a company's business and prospects, and is,
therefore, best-positioned to set corporate policy and oversee
management. The Committee, therefore, believes that the foundation of
good corporate governance is the election of qualified, independent
corporate directors who are likely to diligently represent the
interests of shareholders and oversee management of the corporation in
a manner that will seek to maximize shareholder value over time. In
individual cases, the Committee may look at a nominee's number of
other directorships, history of representing shareholder interests as
a director of other companies or other factors, to the extent the
Committee deems relevant.
o Proposals related to the selection of an issuer's independent
auditors. As a general matter, the Committee believes that corporate
auditors have a responsibility to represent the interests of
shareholders and provide an independent view on the propriety of
financial reporting decisions of corporate management. While the
Committee will generally defer to a corporation's choice of auditor,
in individual cases, the Committee may look at an auditors' history of
representing shareholder interests as auditor of other companies, to
the extent the Committee deems relevant.
o Proposals related to management compensation and employee benefits.
As a general matter, the Committee favors disclosure of an issuer's
compensation and benefit policies and opposes excessive compensation,
but believes that compensation matters are normally best determined by
an issuer's board of directors, rather than shareholders. Proposals to
"micro-manage" an issuer's compensation practices or to set arbitrary
restrictions on compensation or benefits will, therefore, generally
not be supported.
o Proposals related to requests, principally from management, for
approval of amendments that would alter an issuer's capital structure.
As a general matter, the Committee will support requests that enhance
the rights of common shareholders and oppose requests that appear to
be unreasonably dilutive.
o Proposals related to requests for approval of amendments to an
issuer's charter or by-laws. As a general matter, the Committee
opposes poison pill provisions.
o Routine proposals related to requests regarding the formalities of
corporate meetings.
o Proposals related to proxy issues associated solely with holdings of
investment company shares. As with other types of companies, the
Committee believes that a fund's board of directors (rather than its
shareholders) is best positioned to set fund policy and oversee
management. However, the Committee opposes granting boards of
directors authority over certain matters, such as changes to a fund's
investment objective, which the Investment Company Act envisions will
be approved directly by shareholders.
o Proposals related to limiting corporate conduct in some manner that
relates to the shareholder's environmental or social concerns. The
Committee generally believes that annual shareholder meetings are
inappropriate forums for discussion of larger social issues, and
opposes shareholder resolutions "micromanaging" corporate conduct or
requesting release of information that would not help a shareholder
evaluate an investment in the corporation as an economic matter. While
the Committee is generally supportive of proposals to require
corporate disclosure of matters that seem relevant and material to the
economic interests of shareholders, the Committee is generally not
supportive of proposals to require disclosure of corporate matters for
other purposes.
Information about how a Fund voted proxies relating to securities held
in the Fund's portfolio during the most recent 12 month period ended
June 30 is available without charge (1) at www.blackrock.com and (2)
on the Commission's web site at http://www.sec.gov.
Item 8 - Portfolio Managers of Closed-End Management Investment Companies - as
of May 31, 2007.
(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 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 1997.
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.
(a)(2) As of May 31, 2007:
- ---------------------------------------------------------------------------------------------------------------------------
(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. 80 0 1 0 0 1
Jaeckel, Jr.
- ---------------------------------------------------------------------------------------------------------------------------
$28,981,191,895 $0 $34,565,220 $0 $0 $34,565,220
- ---------------------------------------------------------------------------------------------------------------------------
Walter O'Connor 80 0 0 0 0 0
- ---------------------------------------------------------------------------------------------------------------------------
$28,981,191,895 $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 May 31, 2007:
Portfolio Manager Compensation
The elements of total compensation for portfolio managers on
BlackRock's municipal team include 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 these portfolio managers with a powerful incentive to achieve
consistently superior investment performance. By design, compensation
levels for these portfolio managers fluctuate--both up and down--with
the relative investment performance of the portfolios that they
manage.
Base compensation. 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, 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 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 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 the
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 BlackRock mutual funds (including their own fund) 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 employees of BlackRock and its
affiliates, including broad-based retirement, 401(k), health, and
other employee benefit plans.
(a)(4) Beneficial Ownership of Securities. As of May 31, 2007, neither
Mr. Jaeckel nor Mr. O'Connor beneficially owned 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 - The registrant's
Nominating Committee will consider nominees to the Board recommended
by shareholders when a vacancy becomes available. Shareholders who
wish to recommend a nominee should send nominations which include
biographical information and set forth the qualifications of the
proposed nominee to the registrant's Secretary. There have been no
material changes to these procedures.
Item 11 - Controls and Procedures
11(a) - The registrant's principal executive and principal financial officers
or persons performing similar functions have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act")) are effective as of a date within 90 days of the filing
of this report based on the evaluation of these controls and
procedures required by Rule 30a-3(b) under the 1940 Act and Rule
13a-15(b) under the Securities and Exchange Act of 1934, as amended.
11(b) - There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter
of the period covered by this report that have materially affected, or
are reasonably likely to materially affect, the registrant's internal
control over financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - See Item 2
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: July 24, 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: July 24, 2007
By: /s/ Donald C. Burke
-------------------------------
Donald C. Burke,
Chief Financial Officer of
BlackRock MuniAssets Fund, Inc.
Date: July 24, 2007