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 811-21348
Name of Fund: Muni Intermediate Duration 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, Muni Intermediate Duration Fund, Inc., 800 Scudders Mill Road,
Plainsboro, NJ, 08536. Mailing address: P.O. Box 9011, Princeton,
NJ, 08543-9011
Registrant's telephone number, including area code: (609) 282-2800
Date of fiscal year end: 05/31/05
Date of reporting period: 06/01/04 - 05/31/05
Item 1 - Report to Stockholders
Muni Intermediate Duration Fund, Inc.
Muni New York Intermediate Duration Fund, Inc.
Annual Reports
May 31, 2005
(BULL LOGO) Merrill Lynch Investment Managers
www.mlim.ml.com
Mercury Advisors
A Division of Merrill Lynch Investment Managers
www.mercury.ml.com
These reports, including the financial information herein, are transmitted
to shareholders of Muni Intermediate Duration Fund, Inc. and Muni New York
Intermediate Duration Fund, Inc. for their information. This is not a
prospectus. The Funds have leveraged their Common Stock and intend to remain
leveraged by issuing Preferred Stock to provide the Common Stock shareholders
with potentially higher rates of return. Leverage creates risks for Common
Stock shareholders, including the likelihood of greater volatility of net asset
value and market price of shares of the Common Stock, and the risk that
fluctuations in the short-term dividend rates of the Preferred Stock may affect
the yield to Common Stock shareholders. Past performance results shown in these
reports 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 Funds use to determine
how to vote proxies relating to portfolio securities is available (1) without
charge, upon request, by calling toll-free 1-800-MER-FUND (1-800-637-3863);
(2) at www.mutualfunds.ml.com; and (3) on the Securities and Exchange
Commission's Web site at http://www.sec.gov. Information about how the
Funds vote proxies relating to securities held in the Funds' portfolios
during the most recent 12-month period ended June 30 is available (1) at
www.mutualfunds.ml.com; and (2) on the Securities and Exchange Commission's
Web site at http://www.sec.gov.
Muni Intermediate Duration Fund, Inc.
Muni New York Intermediate Duration Fund, Inc.
Box 9011
Princeton, NJ 08543-9011
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Muni Intermediate Duration Fund, Inc.
Muni New York Intermediate Duration Fund, Inc.
The Benefits and Risks of Leveraging
The Funds utilize leveraging to seek to enhance the yield and net asset value
of their Common Stock. However, these objectives cannot be achieved in all
interest rate environments. To leverage, each Fund issues Preferred Stock,
which pays dividends at prevailing short-term interest rates, and invests the
proceeds in long-term municipal bonds. The interest earned on these
investments, net of dividends to Preferred Stock, is paid to Common Stock
shareholders in the form of dividends, and the value of these portfolio
holdings is reflected in the per share net asset value of each Fund's Common
Stock. However, in order to benefit Common Stock shareholders, the yield curve
must be positively sloped; that is, short-term interest rates must be lower
than long-term interest rates. At the same time, a period of generally
declining interest rates will benefit Common Stock shareholders. If either of
these conditions change, then the risks of leveraging will begin to outweigh
the benefits.
To illustrate these concepts, assume a fund's Common Stock capitalization of
$100 million and the issuance of Preferred Stock for an additional $50 million,
creating a total value of $150 million available for investment in long-term
municipal bonds. If prevailing short-term interest rates are approximately 3%
and long-term interest rates are approximately 6%, the yield curve has a
strongly positive slope. The fund pays dividends on the $50 million of
Preferred Stock based on the lower short-term interest rates. At the same time,
the fund's total portfolio of $150 million earns the income based on long-term
interest rates.
In this case, the dividends paid to Preferred Stock shareholders are
significantly lower than the income earned on the fund's long-term investments,
and therefore the Common Stock shareholders are the beneficiaries of the
incremental yield. However, if short-term interest rates rise, narrowing the
differential between short-term and long-term interest rates, the incremental
yield pickup on the Common Stock will be reduced or eliminated completely. At
the same time, the market value of the fund's Common Stock (that is, its price
as listed on the New York Stock Exchange) may, as a result, decline.
Furthermore, if long-term interest rates rise, the Common Stock's net asset
value will reflect the full decline in the price of the portfolio's
investments, since the value of the fund's Preferred Stock does not fluctuate.
In addition to the decline in net asset value, the market value of the fund's
Common Stock may also decline.
As a part of its investment strategy, the Funds 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 Funds 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
Funds invest in inverse floaters, the market value of each Fund's portfolio and
the net asset value of each Fund's shares may also be more volatile than if the
Funds did not invest in such securities. As of May 31, 2005, the percentage of
Muni Intermediate Duration Fund, Inc.'s total net assets invested in inverse
floaters was 1.21%, before the deduction of Preferred Stock. As of May 31,
2005, none of Muni New York Intermediate Duration Fund, Inc.'s total net
assets was invested in inverse floaters.
ANNUAL REPORTS MAY 31, 2005
A Letter From the President
Dear Shareholder
After expanding at an annualized rate of 4.4% in 2004, U.S. gross
domestic product grew at an estimated 3.5% in the first quarter of
2005. The slowdown was not entirely unexpected given last year's
healthy growth and the evolution of the economic cycle. The Federal
Reserve Board - with one eye firmly affixed on the economic indicators
and the other on inflationary measures - has increased the federal
funds rate by 25 basis points (.25%) at each of its eight meetings
since June 2004. At period-end, the target short-term interest rate
stood at 3%.
U.S. equity markets ended 2004 in a strong rally, but have struggled
to record meaningful gains in 2005. The potential for slowing economic
and corporate earnings growth, as well as volatile energy prices, have
intermittently hampered equity market progress. On the positive side,
corporate transactions, such as mergers and acquisitions, stock buy-
backs and dividend payouts, have all increased. In Asia, equities have
continued to benefit from higher economic growth prospects and
valuations that appear inexpensive relative to other parts of the
world.
In the bond market, the yield curve flattening "conundrum" continued
as short-term and long-term yields moved still closer together. Over
the past year, the two-year Treasury yield increased 106 basis points
while the 10-year Treasury yield declined 66 basis points. At May 31,
2005, the two-year Treasury note yielded 3.60% and the 10-year
Treasury note yielded 4%. The falling long-term rates may be partly
attributed to foreign interest in U.S. assets and increased issuance
of short-term Treasury bonds to finance the federal deficit. Notably,
the government is considering the reissuance of the 30-year Treasury,
which was suspended in August 2001. This would allow the U.S. Treasury
to adopt a more flexible approach to borrowing, while providing
investors with another long-term fixed income option.
Amid these conditions, the major benchmarks posted six-month and
12-month returns as follows:
Total Returns as of May 31, 2005 6-month 12-month
U.S. equities (Standard & Poor's 500 Index) +2.42% + 8.24%
Small-cap U.S. equities (Russell 2000 Index) -2.10% + 9.82%
International equities (MSCI Europe Australasia Far East Index) +1.81% +14.62%
Fixed income (Lehman Brothers Aggregate Bond Index) +2.90% + 6.82%
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) +3.51% + 7.96%
High yield bonds (Credit Suisse First Boston High Yield Index) +0.60% + 9.97%
While the environment is likely to remain somewhat challenging, we
believe opportunities exist for investors. With this in mind, we
encourage you to meet with your financial advisor to review your goals
and asset allocation and to rebalance your portfolio, as necessary, to
ensure it remains aligned with your objectives and risk tolerance. As
always, we thank you for trusting Merrill Lynch Investment Managers
with your investment assets, and we look forward to serving you in the
months and years ahead.
Sincerely,
(Robert C. Doll, Jr.)
Robert C. Doll, Jr.
President and Director
ANNUAL REPORTS MAY 31, 2005
A Discussion With Your Funds' Portfolio Managers
The Funds provided attractive total returns for the year as we remained focused
on maintaining a competitive yield and protecting net asset value in a volatile
interest rate environment.
Describe the recent market environment relative to municipal bonds.
Amid significant volatility, long-term bond yields moved sharply lower over the
past 12 months as short-term interest rates increased. For all of 2004, real
gross domestic product (GDP) grew at an annualized rate of 4.4%, well ahead of
2003's annual rate of 3%. The initial estimate of first quarter 2005 GDP growth
came in at 3.5%, in keeping with many economists' expectations.
It appeared that continued economic improvements were generally disregarded as
investors focused on inflationary trends, currency-related demand for long-term
U.S. securities, slowing foreign economies and interest rate action on the part
of the Federal Reserve Board (the Fed). Over the past 12 months, 30-year U.S.
Treasury bond yields declined 103 basis points (1.03%) to 4.32%, while 10-year
Treasury note yields fell 66 basis points to 4%. The Fed, in the meantime,
continued to raise short-term interest rates at each of its meetings since June
2004, bringing the federal funds rate to 3% by period-end. As short-term
interest rates increased while longer-term interest rates fell, the yield curve
continued to flatten.
In the tax-exempt market, yields on 30-year revenue bonds, as measured by the
Bond Buyer Revenue Bond Index, fell 58 basis points to 4.78% during the year.
According to Municipal Market Data, yields on AAA-rated issues maturing in
30 years declined 73 basis points to 4.26%, while AAA-rated bonds maturing
in 10 years saw their yields decline 44 basis points to 3.49%.
Over the past year, nearly $375 billion in long-term municipal securities
was underwritten, roughly in line with last year's issuance of $385 billion.
During the last six months, more than $186 billion in tax-exempt bonds was
underwritten, an increase of 7.5% versus the same period a year earlier.
Issuance so far in 2005 has been boosted by more than a 40% increase in
refunding issues as municipalities have sought to refinance existing higher-
coupon debt. These refunding issues have been heavily weighted in the
10-year - 20-year maturity range to lower the overall interest cost of the
refunding issue. This concentration has put pressure on intermediate tax-exempt
bond yields while supporting longer-term bond prices.
Investor demand for municipal product remained generally positive during the
period. Investment Company Institute statistics indicate that, year-to-date
through April 30, 2005, net new cash flows into long-term municipal bond funds
exceeded $697 million. This represented a significant improvement from the
$2.86 billion net outflow seen during the same period in 2004. Throughout much
of the past 12 months, high yield tax-exempt bond funds experienced very
positive net cash flows. During May, these lower-rated/non-rated bond funds
received an average of $175 million per week. The need to invest these ongoing
cash flows has led to strong demand for lower-rated issues and a resultant
narrowing of credit spreads.
Looking ahead, we would expect the long-term municipal market to perform much
like the U.S. Treasury market. The tax-exempt market's supply/demand position
remains generally favorable. The refunding deals that inflated new-issue supply
so far in 2005 are not likely to be repeated later in the year. Municipal bond
issues have underperformed their taxable counterparts in recent months as U.S.
Treasury bonds enjoyed increased demand from foreign governments, which are
unable to benefit from the tax advantage inherent in tax-exempt products. This
underperformance, however, has resulted in very attractive tax-exempt bond
yield ratios. At 95% - 102%, tax-exempt bond yield ratios are well above recent
historic averages. We believe this should continue to attract both traditional
and nontraditional investors to the marketplace, particularly if new municipal
bond issuance remains modest.
Muni Intermediate Duration Fund, Inc.
How did the Fund perform during the fiscal year?
For the 12-month period ended May 31, 2005, the Common Stock of Muni
Intermediate Duration Fund, Inc. had net annualized yields of 5.57% and 6.20%,
based on a year-end per share net asset value of $15.51 and a per share market
price of $13.94, respectively, and $.864 per share income dividends. Over the
same period, the total investment return on the Fund's Common Stock was
+15.36%, based on a change in per share net asset value from $14.52 to $15.51,
and assuming reinvestment of all distributions.
ANNUAL REPORTS MAY 31, 2005
The Fund's total return, based on net asset value, exceeded the +12.69% average
return of the Lipper General Municipal Debt Funds (Leveraged) category for
the 12-month period. (Funds in this Lipper category invest primarily in
municipal debt issues rated in the top four credit-rating categories. These
funds can be leveraged via use of debt, preferred equity and/or reverse
repurchase agreements.) The Fund's outperformance is primarily attributed to
two factors - an overweight exposure to spread product, which benefited from a
continued narrowing of credit spreads, and the Fund's yield curve strategies.
In general, credit spreads on lower investment grade and non-investment grade
securities narrowed due to improvements in corporate balance sheets and
municipal government finances. This improvement in creditworthiness and the low
level of absolute interest rates caused an increase in demand for securities
providing incremental yield. Several of the same credits that contributed to
the Fund's outperformance in previous periods continued to enjoy above-average
price appreciation during the past 12 months. Among them were the bonds of
Pocahontas Parkway, a tollroad in Virginia, which improved following increases
in both toll rates and traffic flow. Spreads on the bonds of National Gypsum
Company, a producer of wallboard for the building industry, continued to
contract on positive earnings releases derived from the strong housing market.
In terms of our yield curve positioning, the Fund began the period with an
emphasis on bonds with maturities between 15 years and 20 years. After the
municipal yield curve steepened to historical levels, we shifted the Fund's
maturity focus to longer maturities (specifically, between 23 years and
28 years). The recent flattening of the yield curve has helped the Fund's
performance as bonds with slightly longer maturities outperformed the broader
market. Notably, although we extended the final maturities out, the Fund's
premium coupon structure enabled us to stay within our intermediate duration
parameters.
For the six-month period ended May 31, 2005, the total investment return on the
Fund's Common Stock was +6.84%, based on a change in per share net asset value
from $15.19 to $15.51, 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 dividends, please refer to the Financial Highlights
section of this report. As a closed-end fund, the Fund's shares may trade in
the secondary market at a premium or discount to the Fund's net asset value. As
a result, total investment returns based on changes in the market value of the
Fund's Common Stock may 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 year?
Over the past 12 months, we concentrated on reducing the Fund's exposure to
spread product and reinvesting the proceeds in the high-grade market, where we
believe a better balance of risk and reward exists. In particular, we reduced
exposure to credits rated BBB and lower, as these securities significantly
outperformed the broader market over the past 20 months.
Purchases during the past 12 months have been aimed at capitalizing on the
relative cheapness of AAA-rated New York, New Jersey and California tax-exempt
bonds. The Fund increased exposure to these states' debt as an increase in new-
issue supply caused a temporarily weak technical market, and presented us with
attractive buying opportunities. In addition, we've taken advantage of the
recent yield curve flattening by shifting a portion of the portfolio's assets
back into the 20-year sector of the curve. Relative value returned to the
20-year sector, allowing us to increase our exposures in that segment of
the curve.
For the six months ended May 31, 2005, the Fund's Auction Market Preferred
Stock (AMPS) had an average yield of 1.89% for Series M7, 1.93% for Series T7,
1.88% for Series W7, 1.91% for Series TH7 and 1.85% for Series F7. The Fed's
interest rate increases are beginning to have an impact on the Fund's borrowing
costs. The Fed raised the short-term interest rate target 200 basis points
during the 12-month period. Still, the tax-exempt yield curve has remained
relatively steep, continuing to generate a material income benefit to the
holders of Common Stock from the leveraging of Preferred Stock. However, should
the spread between short-term and long-term interest rates narrow, the benefits
of leveraging will decline and, as a result, reduce the yield on the Fund's
Common Stock. At the end of the period, the Fund's leverage amount, due to
AMPS, was 32.58% of total net assets. (For a more complete explanation of the
benefits and risks of leveraging, see page 2 of this report to shareholders.)
ANNUAL REPORTS MAY 31, 2005
A Discussion With Your Funds' Portfolio Managers (concluded)
How would you characterize the Fund's position at the close of the period?
Our primary focus is on maintaining the portfolio's current yield and
protecting the Fund's net asset value in case of a future rise in long-term
interest rates. Despite slower GDP growth in the first quarter of 2005, we
expect the economy to continue to remain healthy over the next several
quarters, pushing interest rates slightly higher. We will continue to reduce
our exposure to spread product with the expectation of reaching a market-
neutral exposure within the next three months.
Muni New York Intermediate Duration Fund, Inc.
Describe conditions in the State of New York.
The State of New York maintains credit ratings of A1, AA and AA- from Moody's,
Standard and Poor's (S&P) and Fitch, respectively. Moody's assigns a positive
outlook to the state's rating, reflecting an upgrade in November, while Fitch
and S&P carry stable outlooks. The state economy continues to improve and
revenue collections are increasing.
Recently, for the first time in more than 20 years, New York lawmakers approved
a budget on time. The fiscal year 2006 budget calls for $105 billion in
spending and forecasts a 5% increase in tax receipts. Aided by this revenue
growth, the adopted budget includes the governor's original proposals for
closing an estimated $4 billion deficit. However, this does not factor in a
lawsuit recently won by the Campaign for Fiscal Equity that could add up to
$2 billion in annual state education spending. Crafting balanced budgets beyond
fiscal year 2006 will present a challenge given political resistance to
additional tax hikes and cuts in popular programs, as well as pressure from
local governments for pension and Medicaid relief, and new education spending.
The economy produced good job growth in 2004, with total non-farm labor
increasing .5% from the prior year. This was the first annual gain since 2000.
New York ranks fifth-highest among all states in per capita income. Modest
income growth during 2005 would boost personal income tax receipts, roughly 38%
of general fund receipts.
How did the Fund perform during the fiscal year?
For the 12-month period ended May 31, 2005, the Common Stock of Muni New York
Intermediate Duration Fund, Inc. had net annualized yields of 4.78% and 5.36%,
based on a year-end per share net asset value of $15.05 and a per share market
price of $13.44, respectively, and $.720 per share income dividends. Over the
same period, the total investment return on the Fund's Common Stock was +9.99%,
based on a change in per share net asset value from $14.45 to $15.05, and
assuming reinvestment of all distributions.
The Fund's total return, based on net asset value, lagged the +12.70% average
return of the Lipper New York Municipal Debt Funds category for the 12-month
period. (Funds in this Lipper category limit their investment to securities
exempt from taxation in New York or a city in New York.) Notably, the Lipper
category consists primarily of funds with the ability to invest in municipal
issues with longer durations, whereas the Fund is limited to bonds in the
intermediate duration range. This placed the Fund at a disadvantage relative to
the Lipper average as the yield curve flattened considerably during the past
year, causing shorter-duration and intermediate-duration bonds to underperform
longer-dated municipal investments.
Fund performance during the year largely reflected our relatively short
duration - a function of our investment parameters, but also indicative of
our expectation that interest rates would rise all along the yield curve. Given
the Fed's well advertised monetary tightening campaign, we felt it prudent to
shorten duration (or sensitivity to interest rate changes) to reduce volatility
in the portfolio and mitigate the negative price impact associated with rising
interest rates. However, the expected rise in long-term interest rates never
materialized, and our relatively short duration hindered the Fund's total
return. Performance also was affected by the fact that the Fund was brought to
market in 2003 in a relatively low interest rate environment. Little has
changed since that time, leaving the Fund with lower-yielding bonds than many
of its peers. Despite that fact, we have been able to maintain the Fund's
attractive distribution rate while also modestly increasing the Fund's dividend
reserves. These reserves, representing excess income earned by the Fund, are
retained to benefit shareholders at a future time, and should enable the Fund
to maintain its current distribution rate in the near term.
For the six-month period ended May 31, 2005, the total investment return on the
Fund's Common Stock was +4.34%, based on a change in per share net asset value
from $14.82 to $15.05, and assuming reinvestment of all distributions.
ANNUAL REPORTS MAY 31, 2005
For a description of the Fund's total investment return based on a change in
the per share market value of the Fund's Common Stock (as measured by the
trading price of the Fund's shares on the New York Stock Exchange), and
assuming reinvestment of dividends, please refer to the Financial Highlights
section of this report. As a closed-end fund, the Fund's shares may trade in
the secondary market at a premium or discount to the Fund's net asset value. As
a result, total investment returns based on changes in the market value of the
Fund's Common Stock may 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 year?
We continued to focus on generating attractive tax-exempt income for our
shareholders. To that end, we essentially remained fully invested throughout
the period and employed tax-loss swaps to improve the Fund's book yield, when
market conditions permitted. We also retained our positions in better-
performing credits, those being bonds rated BB and BBB, and sought to add to
our BBB holdings. Our efforts have been somewhat successful, as the Fund's
exposure to BBB-rated credits increased from approximately 10% of net assets
to roughly 16% by period-end. At the same time, we reduced exposure to one
of the poorer performers - the AA sector - from about 25% of net assets to
approximately 16%. Notably, lower-rated, higher-yielding bonds that have been
performing well as credit spreads (versus higher-quality issues of comparable
maturity) continued to contract over the past several months. For example,
airline credits and bonds backed by tobacco revenues were among the market's
better performers during the year and, to the extent that we had exposure to
these lower-rated credits, the Fund's performance benefited.
While looking to enhance income for shareholders, primarily by retaining bonds
booked in the portfolio at yields higher than those available in the current
market, we have seen some erosion in the Fund's average duration. As part of
our ongoing strategy, we continue to look for opportunities to add longer-dated
bonds with attractive yields to the portfolio to improve duration and also to
mitigate the negative impact on total return as higher-coupon bonds are called
at their earliest call date. Should the new-issue market pick up, in terms of
offering more varied names, this could potentially allow us more opportunities
to sell out of shorter-call bonds and move into the lower end of the investment
grade spectrum (BB and BBB), where we have identified the most compelling
relative value. We have seen more opportunities come to market in that area,
and are hopeful that this will allow us to accomplish our restructuring goals
without sacrificing a great deal of yield already booked into the portfolio.
For the six months ended May 31, 2005, the average yield for the Fund's Auction
Market Preferred Stock (AMPS) was 1.89%. The Fed's interest rate increases are
beginning to have an impact on the Fund's borrowing costs. The Fed raised the
short-term interest rate target 200 basis points during the 12-month period.
Still, the tax-exempt yield curve has remained relatively steep, continuing to
generate a material income benefit to the holders of Common Stock from the
leveraging of Preferred Stock. However, should the spread between short-term
and long-term interest rates narrow, the benefits of leveraging will decline
and, as a result, reduce the yield on the Fund's Common Stock. At the end of
the period, the Fund's leverage amount, due to AMPS, was 32.88% of total net
assets. (For a more complete explanation of the benefits and risks of
leveraging, see page 2 of this report to shareholders.)
How would you characterize the Fund's position at the close of the period?
We continue to maintain a fully invested portfolio, and are looking to the new-
issue market for opportunities to increase the Fund's duration. We are
targeting BBB-rated bonds for both their total return potential and attractive
income. Our analysis has found the BBB and BB sectors to be among the market's
top performers, and we expect that trend to continue.
After eight consecutive interest rate hikes, we believe the Fed is closer to
the end than the beginning of its monetary tightening program. Thus, it would
seem that the risk of significantly higher interest rates is somewhat
diminished. However, we do anticipate a considerable amount of volatility in
the financial markets in the near term given inflation concerns and
increasingly mixed economic releases. We expect that this could provide an
opportunity to approach a more neutral duration stance as we aim to trade into
higher yields as the portfolio's shorter bonds are called away.
Robert A. DiMella, CFA
Vice President and Portfolio Manager
Muni Intermediate Duration Fund, Inc.
Timothy T. Browse, CFA
Vice President and Portfolio Manager
Muni New York Intermediate Duration Fund, Inc.
June 15, 2005
ANNUAL REPORTS MAY 31, 2005
Portfolio Information
Quality Profiles as of May 31, 2005
Percent of
Muni Intermediate Duration Fund, Inc. Total
By S&P/Moody's Rating Investments
AAA/Aaa 28.3%
AA/Aa 6.4
A/A 23.2
BBB/Baa 19.6
BB/Ba 8.1
B/B 0.6
CCC/Caa 0.9
NR (Not Rated) 11.9
Other* 1.0
* Includes portfolio holdings in variable rate demand notes.
Muni New York Intermediate Percent of
Duration Fund, Inc. Total
By S&P/Moody's Rating Investments
AAA/Aaa 37.7%
AA/Aa 17.9
A/A 11.7
BBB/Baa 16.1
BB/Ba 3.5
CCC/Caa 2.7
NR (Not Rated) 9.7
Other* 0.7
* Includes portfolio holdings in short-term investments.
Important Tax Information
All of the net investment income distributions paid by Muni Intermediate
Duration Fund, Inc. and Muni New York Intermediate Duration Fund, Inc. during
the taxable period ended May 31, 2005 qualify as tax-exempt interest dividends
for federal income tax purposes.
Additionally, the following table summarizes the taxable per share
distributions paid by Muni Intermediate Duration Fund, Inc. during the year:
Payable Ordinary Long-Term
Date Income Capital Gains
Common Stock Shareholders 12/29/2004 $.177831 $.010072
Preferred Stock Shareholders:
Series M7 11/16/2004 $10.26 $0.58
11/23/2004 $11.58 $0.66
11/30/2004 $11.17 $0.63
12/07/2004 $11.17 $0.63
12/14/2004 $11.09 $0.63
12/21/2004 $ 0.25 $0.03
Series T7 11/17/2004 $11.69 $0.66
11/24/2004 $11.52 $0.65
12/01/2004 $11.72 $0.66
12/08/2004 $11.17 $0.63
12/15/2004 $ 9.34 $0.54
Series W7 11/18/2004 $ 8.68 $0.49
11/26/2004 $12.75 $0.72
12/02/2004 $ 9.28 $0.52
12/09/2004 $11.03 $0.63
12/16/2004 $10.46 $0.60
12/23/2004 $ 3.08 $0.18
Series TH7 11/19/2004 $11.72 $0.66
11/26/2004 $11.03 $0.63
12/03/2004 $11.80 $0.66
12/10/2004 $11.86 $0.68
12/17/2004 $ 9.35 $0.53
Series F7 11/22/2004 $11.31 $0.65
11/29/2004 $11.05 $0.62
12/06/2004 $11.86 $0.68
12/13/2004 $11.35 $0.63
12/20/2004 $ 9.31 $0.53
ANNUAL REPORTS MAY 31, 2005
Schedule of Investments Muni Intermediate Duration Fund, Inc. (In Thousands)
Face
State Amount Municipal Bonds Value
Alabama--2.2% Jefferson County, Alabama, Limited Obligation School Warrants, Series A:
$ 5,500 5.50% due 1/01/2021 $ 6,073
6,500 5.25% due 1/01/2023 6,997
Arizona--5.0% 3,020 Maricopa County, Arizona, IDA, Education Revenue Bonds (Arizona Charter Schools
Project 1), Series A, 6.625% due 7/01/2020 3,007
3,000 Navajo County, Arizona, IDA, IDR (Stone Container Corporation Project), AMT, 7.20%
due 6/01/2027 3,144
Pima County, Arizona, IDA, Education Revenue Bonds (Arizona Charter Schools Project):
1,000 Series C, 6.70% due 7/01/2021 1,056
1,750 Series K/L, 6.375% due 7/01/2031 1,810
Pinal County, Arizona, COP:
2,760 5.25% due 12/01/2018 2,985
2,910 5.25% due 12/01/2019 3,140
3,065 5.25% due 12/01/2020 3,303
3,230 5.25% due 12/01/2021 3,472
3,405 5.25% due 12/01/2022 3,647
3,630 Vistancia Community Facilities District, Arizona, GO, 5% due 7/15/2014 3,638
Arkansas--1.3% Conway, Arkansas, Public Facilities Board, Capital Improvement Revenue Refunding
Bonds (Hendrix College Projects):
1,500 Series A, 5% due 10/01/2026 1,553
3,755 Series B, 5% due 10/01/2026 3,888
University of Arkansas, University Revenue Refunding Bonds (UAMS Campus), Series A (d):
1,000 5% due 11/01/2013 1,112
1,250 5% due 11/01/2015 1,386
California--25.1% 8,865 California Pollution Control Financing Authority, PCR, Refunding, DRIVERS, AMT,
Series 878Z, 7.143% due 12/01/2009 (d)(k) 10,565
California State Department of Water Resources, Power Supply Revenue Bonds, Series A:
8,500 5.25% due 5/01/2020 9,233
5,000 5.375% due 5/01/2021 5,469
6,500 5.375% due 5/01/2022 7,101
5,000 California State, GO, Refunding, 5.25% due 2/01/2027 (d) 5,392
10,000 California State Public Works Board, Lease Revenue Bonds (Department of Corrections),
Series C, 5.50% due 6/01/2020 11,118
17,500 California State, Various Purpose, GO, 5.50% due 4/01/2028 19,499
2,500 California Statewide Communities Development Authority, Health Facility Revenue
Bonds (Memorial Health Services), Series A, 6% due 10/01/2023 2,810
2,400 Elk Grove, California, Poppy Ridge Community Facilities No. 3 Special Tax, Series 1,
6% due 9/01/2028 2,514
Golden State Tobacco Securitization Corporation of California, Tobacco Settlement
Revenue Bonds, Series B:
5,000 5.625% due 6/01/2020 5,244
7,575 5.75% due 6/01/2022 8,112
7,495 5.75% due 6/01/2023 8,004
Los Angeles, California, Unified School District, GO:
10,485 (Election of 1997), Series F, 5% due 7/01/2025 (b) 11,216
14,075 Series A, 5% due 1/01/2028 (d) 14,958
1,515 Rowland, California, Unified School District, GO (Election of 2000), Series B, 5.25%
due 8/01/2027 (c) 1,644
Portfolio Abbreviations
To simplify the listings of portfolio holdings in the Schedules of Investments,
we have abbreviated the names of many of the securities according to the list
at right.
AMT Alternative Minimum Tax (subject to)
BAN Bond Anticipation Notes
COP Certificates of Participation
DRIVERS Derivative Inverse Tax-Exempt Receipts
EDA Economic Development Authority
GO General Obligation Bonds
HFA Housing Finance Agency
IDA Industrial Development Authority
IDB Industrial Development Board
IDR Industrial Development Revenue Bonds
PCR Pollution Control Revenue Bonds
S/F Single-Family
TAN Tax Anticipation Notes
VRDN Variable Rate Demand Notes
ANNUAL REPORTS MAY 31, 2005
Schedule of Investments (continued) Muni Intermediate Duration Fund, Inc. (In Thousands)
Face
State Amount Municipal Bonds Value
California Sacramento, California, Special Tax (North Natomas Community Facilities), Series 4-C:
(concluded) $ 585 5.60% due 9/01/2020 $ 626
1,720 5.75% due 9/01/2022 1,847
500 5.90% due 9/01/2023 539
3,000 6% due 9/01/2028 3,222
2,680 San Dieguito, California, Public Facilities Authority Revenue Bonds, 5% due
8/01/2021 (a) 2,812
3,000 San Jose, California, Airport Revenue Bonds, Series A, 5.25% due 3/01/2017 (b) 3,277
3,100 San Jose, California, GO (Libraries, Parks and Public Safety Projects), 5% due
9/01/2030 (d) 3,280
4,875 Tamalpais, California, Union High School District, GO (Election of 2001), 5% due
8/01/2028 (c) 5,163
3,765 Ventura, California, Unified School District, GO, Refunding, 5.25% due 8/01/2025 (c) 4,215
Colorado--4.5% Denver, Colorado, City and County Airport Revenue Refunding Bonds (d):
11,000 Series A, 5.50% due 11/15/2025 11,436
2,000 Series E, 5.25% due 11/15/2023 2,104
1,000 Elk Valley, Colorado, Public Improvement Revenue Bonds (Public Improvement Fee),
Series A, 7.10% due 9/01/2014 1,083
2,250 Montrose, Colorado, Memorial Hospital, Revenue Bonds, 6.375% due 12/01/2023 2,470
7,500 Plaza Metropolitan District No. 1, Colorado, Tax Allocation Revenue Bonds (Public
Improvement Fees), 7.50% due 12/01/2015 8,340
1,000 Southlands, Colorado, Medical District, GO (Metropolitan District No. 1), 6.75%
due 12/01/2016 1,104
Connecticut--1.7% 1,160 Connecticut State Development Authority, Airport Facility Revenue Bonds (LearJet Inc.
Project), AMT, 7.95% due 4/01/2026 1,380
8,000 Connecticut State Development Authority, PCR, Refunding (Connecticut Light and Power
Company), Series A, 5.85% due 9/01/2028 8,515
Florida--5.1% 1,000 Broward County, Florida, Airport Exempt Facility Revenue Bonds (Learjet Inc. Project),
AMT, 7.50% due 11/01/2020 1,138
2,970 Harbor Bay, Florida, Community Development District, Capital Improvement Special
Assessment Bonds, 6.75% due 5/01/2034 3,205
3,750 Heritage Isle at Viera Community Development District, Florida, Special Assessment
Bonds, Series B, 5% due 11/01/2009 3,781
3,500 Midtown Miami, Florida, Community Development District, Special Assessment Revenue
Bonds, Series A, 6% due 5/01/2024 3,649
3,670 Orange County, Florida, Health Facilities Authority, Health Care Revenue Refunding
Bonds (Orlando Lutheran), 5% due 7/01/2013 3,676
965 Orlando, Florida, Urban Community Development District, Capital Improvement Special
Assessment Bonds, 6% due 5/01/2020 995
1,085 Portofino Shores, Florida, Community Development District, Special Assessment Bonds,
Series A, 6.40% due 5/01/2034 1,145
5,930 Sarasota County, Florida, Public Hospital Board, Hospital Revenue Bonds (Sarasota
Memorial Hospital), VRDN, Series A, 3.05% due 7/01/2037 (a)(g) 5,930
2,390 South Lake County, Florida, Hospital District Revenue Bonds (South Lake Hospital Inc.),
6.625% due 10/01/2023 2,667
995 Sterling Hill, Florida, Community Development District, Capital Improvement Revenue
Refunding Bonds, Series B, 5.50% due 11/01/2010 1,019
2,660 West Villages Improvement District, Florida, Revenue Bonds, BAN, 5% due 2/01/2006 2,660
Georgia--2.6% 1,500 Atlanta, Georgia, Tax Allocation Revenue Bonds (Atlantic Station Project), 7.90% due
12/01/2024 1,644
5,210 Brunswick & Glynn County, Georgia, Development Authority, First Mortgage Revenue Bonds
(Coastal Community Retirement Corporation Project), Series A, 7.125% due 1/01/2025 5,496
4,500 Fulton County, Georgia, Residential Care Facilities, Revenue Refunding Bonds (Canterbury
Court Project), Series A, 5.80% due 2/15/2018 4,562
Savannah, Georgia, EDA, Revenue Bonds (Marshes of Skidaway), First Mortgage, Series A:
1,245 6.25% due 1/01/2012 1,246
2,245 6.85% due 1/01/2019 2,298
Idaho--0.1% 700 Idaho Housing and Finance Association, S/F Mortgage Revenue Bonds, AMT, Series F-2,
5.85% due 7/01/2015 (e) 707
Illinois--2.8% 2,510 Chicago, Illinois, O'Hare International Airport Revenue Bonds, 3rd Lien, AMT, Series B-2,
6% due 1/01/2029 (f) 2,842
6,000 Hodgkins, Illinois, Environmental Improvement Revenue Bonds (Metro Biosolids Management
LLC Project), AMT, 5.90% due 11/01/2017 6,376
6,930 Illinois Development Finance Authority Revenue Bonds (Community Rehabilitation Providers
Facilities), Series A, 6.625% due 7/01/2032 7,467
Louisiana--2.4% 5,250 Louisiana Public Facilities Authority, FHA Insured Mortgage Revenue Refunding Bonds
(Baton Rouge General Medical Center Project), 5.25% due 7/01/2033 (d)(e) 5,593
Port New Orleans, Louisiana, IDR, Refunding (Continental Grain Company Project):
3,500 7.50% due 7/01/2013 3,619
5,000 6.50% due 1/01/2017 5,143
ANNUAL REPORTS MAY 31, 2005
Schedule of Investments (continued) Muni Intermediate Duration Fund, Inc. (In Thousands)
Face
State Amount Municipal Bonds Value
Maine--1.6% $ 1,965 Portland, Maine, Housing Development Corporation, Senior Living Revenue Bonds
(Avesta Housing Development Corporation Project), Series A, 6% due 2/01/2034 $ 1,968
7,000 Rumford, Maine, Solid Waste Disposal Revenue Refunding Bonds (Boise Cascade
Corporation Project), AMT, 6.875% due 10/01/2026 7,523
Massachusetts--2.1% 4,560 Massachusetts Bay Transportation Authority, Sales Tax Revenue Refunding Bonds, Senior
Series A, 5% due 7/01/2032 4,778
Massachusetts State Development Finance Agency, Resource Recovery Revenue Bonds
(Ogden Haverhill Associates), AMT, Series B:
1,210 5.35% due 12/01/2015 1,228
2,000 5.50% due 12/01/2019 2,046
3,755 Massachusetts State, GO (Consolidated Loan of 2005), Series A, 5% due 3/01/2023 (c) 4,043
Michigan--1.5% 3,325 Macomb County, Michigan, Hospital Finance Authority, Hospital Revenue Bonds (Mount
Clemens General Hospital), Series B, 5.875% due 11/15/2034 3,355
4,795 Michigan State Hospital Finance Authority, Revenue Refunding Bonds (Oakwood Obligated
Group), Series A, 6% due 4/01/2022 5,288
Minnesota--0.7% Minneapolis and Saint Paul, Minnesota, Housing and Redevelopment Authority, Health
Care System Revenue Bonds (Group Health Plan Inc. Project):
1,000 6% due 12/01/2019 1,119
2,545 6% due 12/01/2021 2,831
Mississippi--1.4% Mississippi Business Finance Corporation, Mississippi, PCR, Refunding (System Energy
Resources Inc. Project):
5,000 5.875% due 4/01/2022 5,088
2,910 5.90% due 5/01/2022 2,962
Missouri--3.2% St. Louis, Missouri, Airport Revenue Bonds (Airport Developmental Program), Series A (d):
5,220 5.625% due 7/01/2016 5,805
3,500 5.625% due 7/01/2017 3,896
8,500 5.625% due 7/01/2018 9,452
Montana--0.2% 1,140 Montana State Board of Housing, AMT, S/F Program Revenue Bonds, Series B-2, 6.35% due
12/01/2021 (e) 1,166
Nevada--0.4% 2,250 Clark County, Nevada, Improvement District No. 142 Special Assessment, 6.375% due
8/01/2023 2,322
New Jersey--10.0% Garden State Preservation Trust of New Jersey, Open Space and Farmland Preservation
Revenue Bonds, Series A (c):
3,635 5.80% due 11/01/2021 4,171
5,050 5.80% due 11/01/2023 5,755
New Jersey EDA, Cigarette Tax Revenue Bonds:
10,950 5.625% due 6/15/2018 11,683
9,810 5.75% due 6/15/2029 10,599
17,900 New Jersey EDA, Motor Vehicle Surcharge Revenue Bonds, Series A, 5.25% due
7/01/2033 (d) 19,532
5,540 New Jersey EDA, Special Facility Revenue Bonds (Continental Airlines Inc. Project),
AMT, 6.625% due 9/15/2012 5,228
2,030 Sparta Township, New Jersey, School District, GO, Refunding, 5% due 9/01/2020 (d) 2,122
New Mexico--2.1% Farmington, New Mexico, PCR, Refunding:
3,000 (Public Service Company of New Mexico--San Juan), Series D, 6.375% due 4/01/2022 3,229
9,000 (Tucson Electric Power Co.--San Juan Project), Series A, 6.95% due 10/01/2020 9,439
New York--29.7% 1,200 Dutchess County, New York, IDA, Civic Facility Revenue Bonds (Saint Francis Hospital),
Series B, 7.25% due 3/01/2019 1,252
10,500 Metropolitan Transportation Authority, New York, Revenue Refunding Bonds, Series A,
5.75% due 11/15/2032 11,840
2,635 New York City, New York, City IDA, Civic Facility Revenue Bonds (Special Needs
Facilities Pooled Program), Series C-1, 5.50% due 7/01/2007 2,676
3,500 New York City, New York, City IDA, Special Facility Revenue Bonds (Continental
Airlines Inc. Project), AMT, 8.375% due 11/01/2016 3,492
2,780 New York City, New York, City Transitional Finance Authority, Future Tax Secured
Revenue Bonds, Series C, 5.50% due 5/01/2025 2,994
New York City, New York, GO, Refunding:
5,000 Series B, 5.75% due 8/01/2015 5,603
5,050 Series F, 5.25% due 8/01/2015 (d) 5,367
14,000 New York City, New York, GO, Series C, 5.50% due 8/01/2013 15,683
2,540 New York City, New York, IDA, Civic Facility Revenue Bonds (Special Needs Facilities
Pooled Program), Series C-1, 6.80% due 7/01/2019 2,431
9,150 New York City, New York, Sales Tax Asset Receivable Corporation Revenue Bonds,
Series A, 5.25% due 10/15/2027 (a) 10,089
ANNUAL REPORTS MAY 31, 2005
Schedule of Investments (continued) Muni Intermediate Duration Fund, Inc. (In Thousands)
Face
State Amount Municipal Bonds Value
New York $ 5,580 New York State Dormitory Authority, Lease Revenue Refunding Bonds (Court Facilities),
(concluded) Series A, 5.25% due 5/15/2012 $ 6,142
New York State Dormitory Authority Revenue Bonds:
1,000 (North Shore L.I. Jewish Group), 5% due 5/01/2012 1,073
7,075 (School Districts Financing Program), Series D, 5.25% due 10/01/2023 (d) 7,745
New York State Dormitory Authority, Revenue Refunding Bonds:
7,775 (City University System), Consolidated Second Generation, Series A, 6.125% due
7/01/2013 (a) 8,867
2,350 (Lenox Hill Hospital Obligation Group), 5.75% due 7/01/2016 2,543
7,000 (Mount Sinai Health), Series A, 6.625% due 7/01/2018 7,522
5,000 (Mount Sinai Health), Series A, 6.625% due 7/01/2019 5,380
10,000 (North Shore University Hospital), 5.20% due 11/01/2017 (d) 10,718
5,220 New York State Dormitory Authority, Supported Debt Revenue Refunding Bonds (Department
of Health), Series A, 5.25% due 7/01/2024 5,761
60 New York State Thruway Authority, Local Highway and Bridge Service Contract, Revenue
Refunding Bonds, 5.50% due 4/01/2017 67
New York State Urban Development Corporation, Correctional and Youth Facilities Services
Revenue Refunding Bonds, Series A:
4,500 5% due 1/01/2017 4,835
11,650 5.50% due 1/01/2017 12,810
10,000 New York State Urban Development Corporation, Personal Income Tax Revenue Bonds
(State Facilities), Series A-1, 5.25% due 3/15/2034 (b) 10,856
Tobacco Settlement Financing Corporation of New York Revenue Bonds:
3,340 Series A-1, 5.50% due 6/01/2016 3,647
6,510 Series A-1, 5.25% due 6/01/2022 (a) 7,072
7,000 Series C-1, 5.50% due 6/01/2021 7,718
10,000 Series C-1, 5.50% due 6/01/2022 10,961
North 6,000 North Carolina Medical Care Commission, Health Care Facilities, First Mortgage
Carolina--2.7% Revenue Refunding Bonds (Presbyterian Homes Project), 7% due 10/01/2031 6,429
3,150 North Carolina Medical Care Commission, Health Care Housing Revenue Bonds (The ARC of
North Carolina Projects), Series A, 5.50% due 10/01/2024 3,192
North Carolina Medical Care Commission, Hospital Revenue Bonds (Maria Parham Medical
Center) (h):
2,505 5.50% due 10/01/2013 2,800
2,940 5.50% due 10/01/2016 3,239
North Dakota--0.7% 3,630 Oliver County, North Dakota, PCR, Refunding (Square Butte Electric Cooperative),
Series A, 5.30% due 1/01/2027 (a) 3,858
Ohio--0.6% 2,145 Cleveland-Cuyahoga County, Ohio, Port Authority, Student Housing Facility Revenue
Bonds (Euclid Avenue Housing Corporation--Fenn Tower Project), 5% due 8/01/2028 (a) 2,271
1,280 Port of Greater Cincinnati Development Authority, Ohio, Special Assessment Revenue
Bonds (Cooperative Public Parking Infrastructure Project), 6.30% due 2/15/2024 1,376
Pennsylvania--4.6% 3,500 Montgomery County, Pennsylvania, IDA Revenue Bonds (Whitemarsh Continuing Care Project),
6% due 2/01/2021 3,627
7,710 Pennsylvania Economic Development Financing Authority, Exempt Facilities Revenue Bonds
(National Gypsum Company), AMT, Series A, 6.25% due 11/01/2027 8,307
7,490 Philadelphia, Pennsylvania, Gas Works Revenue Refunding Bonds, 1975 General Ordinance,
17th Series, 5.375% due 7/01/2022 (c) 8,206
Sayre, Pennsylvania, Health Care Facilities Authority, Revenue Refunding Bonds (Guthrie
Healthcare System), Series A:
1,750 6.25% due 12/01/2015 1,969
3,000 6.25% due 12/01/2016 3,366
1,490 6.25% due 12/01/2018 1,666
South Carolina--1.3% Medical University Hospital Authority, South Carolina, FHA-Insured Mortgage Hospital
Facilities, Revenue Refunding Bonds, Series A (d)(e):
4,250 5.25% due 8/15/2023 4,632
3,000 5.25% due 8/15/2024 3,267
ANNUAL REPORTS MAY 31, 2005
Schedule of Investments (continued) Muni Intermediate Duration Fund, Inc. (In Thousands)
Face
State Amount Municipal Bonds Value
Tennessee--3.9% $ 1,800 Johnson City, Tennessee, Health and Educational Facilities Board, Retirement Facility
Revenue Bonds (Appalachian Christian Village Project), Series A, 6% due 2/15/2019 $ 1,808
5,000 McMinn County, Tennessee, IDB, PCR (Calhoun Newsprint Co. Project), AMT, 7.625%
due 3/01/2016 5,009
Shelby County, Tennessee, Health, Educational & Housing Facilities Board Revenue
Bonds (Germantown Village), Series A:
3,550 6.75% due 12/01/2018 3,682
1,450 7% due 12/01/2023 1,511
Shelby County, Tennessee, Health, Educational and Housing Facility Board, Hospital
Revenue Refunding Bonds (Methodist Healthcare):
3,760 6% due 9/01/2012 (j) 4,392
2,190 6.25% due 9/01/2012 (j) 2,593
745 6% due 9/01/2016 (i) 866
1,495 6% due 9/01/2017 (i) 1,738
1,310 6.25% due 9/01/2018 (i) 1,542
Texas--12.6% Austin, Texas, Convention Center Revenue Bonds (Convention Enterprises Inc.), First
Tier, Series A:
6,445 6.375% due 1/01/2016 6,835
10,260 6.70% due 1/01/2032 10,918
1,500 Bexar County, Texas, Health Facilities Development Corporation, Revenue Refunding
Bonds (Army Retirement Residence Project), 6.30% due 7/01/2032 1,626
Brazos River Authority, Texas, PCR, Refunding, AMT, Series A:
1,500 (TXU Energy Company LLC Project), 6.75% due 4/01/2038 1,715
4,885 (Texas Utility Company), 7.70% due 4/01/2033 5,801
1,925 Brazos River, Texas, Harbor Navigation District, Brazoria County Environmental Revenue
Refunding Bonds (Dow Chemical Company Project), AMT, Series A-7, 6.625% due 5/15/2033 2,145
6,110 Dallas-Fort Worth, Texas, International Airport Facility, Improvement Corporation
Revenue Bonds (Learjet Inc.), AMT, Series 2001-A-1, 6.15% due 1/01/2016 6,156
2,440 Gulf Coast, Texas, IDA, Solid Waste Disposal Revenue Bonds (Citgo Petroleum Corporation
Project), AMT, 7.50% due 5/01/2025 2,738
Harris County, Texas, GO, Refunding, Series A:
4,715 5% due 10/01/2020 5,115
3,200 5% due 10/01/2022 3,449
1,500 Houston, Texas, Health Facilities Development Corporation, Retirement Facility Revenue
Bonds (Buckingham Senior Living Community), Series A, 7% due 2/15/2023 1,626
7,420 Lower Colorado River Authority, Texas, PCR (Samsung Austin Semiconductor), AMT, 6.95%
due 4/01/2030 8,478
2,600 Matagorda County, Texas, Navigation District No. 1 Revenue Refunding Bonds (Reliant
Energy Inc.), Series C, 8% due 5/01/2029 2,866
2,300 Port Corpus Christi, Texas, Individual Development Corporation, Environmental Facilities
Revenue Bonds (Citgo Petroleum Corporation Project), AMT, 8.25% due 11/01/2031 2,467
5,000 Sabine River Authority, Texas, PCR, Refunding (TXU Electric Company Project/TXU Energy
Company LLC), AMT, Series B, 5.75% due 5/01/2030 5,359
San Marcos, Texas, Consolidated Independent School District, GO:
3,020 5.625% due 8/01/2025 3,416
3,210 5.625% due 8/01/2026 3,628
Virginia--6.2% James City County, Virginia, IDA, Residential Care Facility Revenue Refunding Bonds,
Series A:
3,285 5.75% due 3/01/2017 3,478
1,150 6% due 3/01/2023 1,240
2,250 Loudoun County, Virginia, IDA, IDR, Refunding (Dulles Airport Marriott Hotel), 7.125%
due 9/01/2015 2,306
2,000 Pittsylvania County, Virginia, IDA Revenue Refunding Bonds, Exempt Facility, AMT,
Series B, 7.65% due 1/01/2010 2,120
11,910 Pocahontas Parkway Association, Virginia, Toll Road Revenue Bonds, Senior Series A,
5.50% due 8/15/2028 11,732
15,435 Tobacco Settlement Financing Corporation of Virginia, Asset-Backed Revenue Bonds,
5.625% due 6/01/2037 15,378
Wyoming--1.5% Sweetwater County, Wyoming, Solid Waste Disposal Revenue Bonds (FMC Corporation
Project), AMT:
3,895 Series A, 7% due 6/01/2024 3,938
5,000 Series B, 6.90% due 9/01/2024 5,076
ANNUAL REPORTS MAY 31, 2005
Schedule of Investments (concluded) Muni Intermediate Duration Fund, Inc. (In Thousands)
Face
Amount Municipal Bonds Value
Guam--0.4% $ 2,250 Commonwealth of the Northern Mariana Islands, Guam, GO, Series A, 6.75% due 10/01/2033 $ 2,478
Puerto Rico--8.6% Puerto Rico Electric Power Authority, Power Revenue Bonds:
17,935 Series NN, 5.50% due 7/01/2018 19,973
9,000 Series RR, 5% due 7/01/2025 (f) 9,709
5,390 Puerto Rico Industrial Medical and Environmental Pollution Control Facilities Financing
Authority, Special Facilities Revenue Bonds (American Airlines Inc.), Series A, 6.45%
due 12/01/2025 4,220
Puerto Rico Public Buildings Authority, Government Facilities, Revenue Refunding Bonds:
5,170 Series D, 5.25% due 7/01/2027 5,477
8,000 Series I, 5.50% due 7/01/2021 8,887
2,525 Puerto Rico Public Finance Corporation, Commonwealth Appropriation Revenue Bonds,
Series E, 5.50% due 8/01/2029 2,712
U.S. Virgin 1,860 Virgin Islands Government Refinery Facilities, Revenue Refunding Bonds (Hovensa Coker
Islands--1.6% Project), AMT, 6.50% due 7/01/2021 2,115
6,750 Virgin Islands Public Finance Authority, Refinery Facilities Revenue Bonds (Hovensa
Refinery), AMT, 6.125% due 7/01/2022 7,420
Total Investments (Cost--$847,855*)--150.4% 887,076
Liabilities in Excess of Other Assets--(2.1%) (12,211)
Preferred Stock, at Redemption Value--(48.3%) (285,063)
----------
Net Assets Applicable to Common Stock--100.0% $ 589,802
==========
* The cost and unrealized appreciation (depreciation) of investments
as of May 31, 2005, as computed for federal income tax
purposes, were as follows:
(in Thousands)
Aggregate cost $ 847,698
=================
Gross unrealized appreciation $ 39,616
Gross unrealized depreciation (238)
-----------------
Net unrealized appreciation $ 39,378
=================
(a) AMBAC Insured.
(b) FGIC Insured.
(c) FSA Insured.
(d) MBIA Insured.
(e) Federal Housing Administration/Veterans' Administration Mortgages.
(f) XL Capital Insured.
(g) 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.
(h) Radian Insured.
(i) Escrowed to maturity.
(j) Prerefunded.
(k) The rate disclosed is that currently in effect. The rate changes
periodically and inversely based upon prevailing market rates.
Forward interest rate swaps outstanding as of May 31, 2005
were as follows:
(in Thousands)
Notional Unrealized
Amount Depreciation
Receive a variable rate equal to
7-Day Bond Market Association
Municipal Swap Index Rate and
pay a fixed rate of 3.859%
Broker, JPMorgan Chase Bank
Expires June 2015 $68,000 $(2,442)
Receive a variable rate equal to
7-Day Bond Market Association
Municipal Swap Index Rate and
pay a fixed rate of 3.853%
Broker, Morgan Stanley
Capital Services, Inc.
Expires June 2015 $40,000 (1,392)
Receive a variable rate equal to
7-Day Bond Market Association
Municipal Swap Index Rate and
pay a fixed rate of 3.82%
Broker, JPMorgan Chase Bank
Expires November 2018 $ 7,800 (178)
--------
Total $(4,012)
========
See Notes to Financial Statements.
ANNUAL REPORTS MAY 31, 2005
Schedule of Investments Muni New York Intermediate Duration Fund, Inc. (In Thousands)
Face
Amount Municipal Bonds Value
New York--135.3%
$ 760 Albany County, New York, IDA, IDR (Albany College of Pharmacy), Series A, 5.25%
due 12/01/2019 $ 807
1,000 Albany, New York, Municipal Water Finance Authority, Second Resolution Revenue Bonds,
Series B, 5.25% due 12/01/2023 (c) 1,051
480 Dutchess County, New York, IDA, Civic Facility Revenue Bonds (Saint Francis Hospital),
Series B, 7.25% due 3/01/2019 501
1,155 Erie County, New York, GO, Public Improvement, Series A, 6% due 7/01/2012 (a) 1,310
2,000 Erie County, New York, IDA, Life Care Community Revenue Bonds (Episcopal Church Home),
Series A, 5.875% due 2/01/2018 2,071
Erie County, New York, IDA, School Facility Revenue Bonds (City of Buffalo Project) (b):
3,835 5.75% due 5/01/2024 4,240
1,000 5.75% due 5/01/2026 1,149
2,000 Hempstead Town, New York, IDA, Resource Recovery Revenue Refunding Bonds (American
Refinery--Fuel Co. Project), 5% due 12/01/2010 2,093
1,615 New York City, New York, City Housing Development Corporation, Presidential Revenue
Bonds (The Animal Medical Center), Series A, 5.50% due 12/01/2033 1,716
1,415 New York City, New York, City IDA, Civic Facility Revenue Bonds (PSCH Inc. Project),
6.20% due 7/01/2020 1,530
1,000 New York City, New York, City IDA, Revenue Bonds (Visy Paper Inc. Project), AMT, 7.95%
due 1/01/2028 1,049
New York City, New York, City IDA, Special Facilities Revenue Bonds, AMT:
1,000 (British Airways Plc Project), 7.625% due 12/01/2032 1,115
1,000 (Continental Airlines Inc. Project), 8.375% due 11/01/2016 998
730 (Northwest Airlines Inc.), 6% due 6/01/2027 496
1,000 New York City, New York, City Municipal Water Finance Authority, Water and Sewer
System Revenue Refunding Bonds, Series A, 5.25% due 6/15/2011 1,108
2,980 New York City, New York, City Transitional Finance Authority, Future Tax Secured
Revenue Bonds, Series C, 5.50% due 5/01/2025 3,210
New York City, New York, GO, Refunding:
1,000 Series F, 5.25% due 8/01/2009 1,079
2,000 Series G, 5.50% due 8/01/2012 (d) 2,253
1,505 Series G, 5% due 12/01/2021 (a) 1,628
New York City, New York, GO, Series J:
1,500 5.25% due 5/15/2018 (c) 1,660
3,000 5.50% due 6/01/2021 3,290
1,500 New York City, New York, IDA, Special Facilities Revenue Bonds (1990 American Airlines
Inc. Project), AMT, 5.40% due 7/01/2020 1,036
500 New York City, New York, Trust for Cultural Resources Revenue Bonds (Museum of
American Folk Art), 6.125% due 7/01/2030 (h) 548
1,000 New York State Dormitory Authority, Non-State Supported Debt, Insured Revenue Bonds
(United Cerebral Palsy Affiliates--Pooled Loan Program), Series A, 5% due 7/01/2034 1,063
1,000 New York State Dormitory Authority, Non-State Supported Debt, Insured Revenue Refunding
Bonds (Canisius College), 5% due 7/01/2018 (c) 1,090
500 New York State Dormitory Authority, Non-State Supported Debt, Revenue Bonds (Rochester
General Hospital), 5% due 12/01/2025 (f) 530
New York State Dormitory Authority Revenue Bonds:
1,500 (North Shore Long Island Jewish Group), 5% due 5/01/2013 1,614
1,735 (Winthrop S. Nassau University), 5.50% due 7/01/2011 1,896
New York State Dormitory Authority, Revenue Refunding Bonds:
1,360 (Lenox Hill Hospital Obligation Group), 5.25% due 7/01/2010 1,457
1,305 (Lenox Hill Hospital Obligation Group), 5.75% due 7/01/2017 1,414
1,000 (Mount Sinai Health), Series A, 6.50% due 7/01/2015 1,068
1,000 (Mount Sinai Health), Series A, 6.625% due 7/01/2018 1,075
4,000 (North Shore University Hospital), 5.20% due 11/01/2017 (c) 4,287
1,000 (State University Educational Facilities), Series A, 5.50% due 5/15/2013 1,128
1,500 New York State Dormitory Authority, Supported Debt Revenue Refunding Bonds (Department
of Health), Series A, 5% due 7/01/2025 (i) 1,600
ANNUAL REPORTS MAY 31, 2005
Schedule of Investments (continued) Muni New York Intermediate Duration Fund, Inc. (In Thousands)
Face
Amount Municipal Bonds Value
New York (concluded)
$ 1,000 New York State Environmental Facilities Corporation, Solid Waste Disposal Revenue
Bonds (Waste Management Inc. Project), AMT, Series A, 4.45% due 7/01/2017 $ 1,025
1,000 New York State Environmental Facilities Corporation, State Clean Water and Drinking
Revolving Funds Revenue Bonds, Series G, 5.25% due 10/15/2014 1,102
1,355 New York State, HFA, Service Contract Revenue Refunding Bonds, Series K, 5% due
9/15/2009 1,454
3,500 New York State Local Government Assistance Corporation, Revenue Refunding Bonds,
Sub-Lien, Series A-1, 5% due 4/01/2012 (b) 3,858
1,000 New York State Mortgage Agency, Homeowner Mortgage Revenue Bonds, AMT, Series 117,
4% due 4/01/2013 993
2,000 New York State Municipal Bond Bank Agency, Special School Purpose Revenue Bonds,
Series C, 5.25% due 12/01/2018 2,183
New York State Thruway Authority, Highway and Bridge Trust Fund Revenue Bonds, Series C:
1,500 5.25% due 4/01/2015 (e) 1,601
1,575 5% due 4/01/2018 1,636
1,000 New York State Thruway Authority, Highway and Bridge Trust Fund Revenue Refunding Bonds,
Series B, 5.25% due 4/01/2014 (e) 1,083
3,000 New York State Urban Development Corporation, Correctional and Youth Facilities Services
Revenue Refunding Bonds, Series A, 5% due 1/01/2017 3,223
2,000 New York State Urban Development Corporation Revenue Bonds, Subordinate Lien, Corporation
Purpose, Series A, 5.125% due 7/01/2019 2,168
Saratoga County, New York, IDA, Civic Facility Revenue Refunding Bonds (The Saratoga
Hospital Project), Series A (f):
365 4.375% due 12/01/2013 384
380 4.50% due 12/01/2014 401
395 4.50% due 12/01/2015 414
500 Schenectady, New York, BAN, 5.25% due 5/26/2006 500
1,000 Schenectady, New York, GO, TAN, 5.90% due 12/30/2005 999
1,085 Suffolk County, New York, IDA, IDR, Refunding (Nissequogue Cogen Partners Facility),
AMT, 4.875% due 1/01/2008 1,109
Tobacco Settlement Financing Corporation of New York, Asset-Backed Revenue Bonds,
Series A-1:
1,000 5.25% due 6/01/2013 1,057
1,000 5.25% due 6/01/2016 1,078
1,000 Tobacco Settlement Financing Corporation of New York Revenue Bonds, Series C-1, 5.50%
due 6/01/2022 1,096
Tompkins County, New York, IDA, Care Community Revenue Refunding Bonds (Kendal at Ithaca),
Series A-2:
250 5.75% due 7/01/2018 260
1,000 6% due 7/01/2024 1,044
1,250 Utica, New York, IDA, Civic Facility Revenue Bonds (Utica College Project), Series A,
6.875% due 12/01/2024 1,346
Westchester County, New York, IDA, Civic Facility Revenue Bonds (Special Needs Facilities
Pooled Program):
515 Series D-1, 6.80% due 7/01/2019 546
920 Series E-1, 5.50% due 7/01/2007 934
Guam--1.7%
1,000 A.B. Won Guam International Airport Authority, General Revenue Refunding Bonds, AMT,
Series C, 5.25% due 10/01/2022 (c) 1,069
Puerto Rico--7.0%
Children's Trust Fund Project of Puerto Rico, Tobacco Settlement Revenue Refunding Bonds:
750 5% due 5/15/2011 788
1,045 5.375% due 5/15/2033 1,057
425 Puerto Rico Housing Financing Authority, Capital Funding Program Revenue Bonds, 5% due
12/01/2019 455
1,900 Puerto Rico Public Finance Corporation, Commonwealth Appropriation Revenue Bonds,
Series E, 5.70% due 2/01/2010 (g) 2,120
ANNUAL REPORTS MAY 31, 2005
Schedule of Investments (concluded) Muni New York Intermediate Duration Fund, Inc. (In Thousands)
Face
Amount Municipal Bonds Value
U.S. Virgin Islands--2.6%
$ 500 Virgin Islands Government Refinery Facilities, Revenue Refunding Bonds (Hovensa
Coker Project), AMT, 6.50% due 7/01/2021 $ 569
1,000 Virgin Islands Public Finance Authority, Senior Lien Revenue Bonds (Matching Fund
Loan Note), Series A, 5.25% due 10/01/2024 1,076
Total Municipal Bonds (Cost--$88,967)--146.6% 92,788
Shares
Held Short-Term Securities
618 CMA New York Municipal Money Fund (j) 618
Total Short-Term Securities (Cost--$618)--1.0% 618
Total Investments (Cost--$89,585*)--147.6% 93,406
Other Assets Less Liabilities--1.4% 884
Preferred Stock, at Redemption Value--(49.0%) (31,000)
----------
Net Assets Applicable to Common Stock--100.0% $ 63,290
==========
* The cost and unrealized appreciation (depreciation) of investments as
of May 31, 2005, as computed for federal income tax purposes,
were as follows:
(in Thousands)
Aggregate cost $ 89,547
=================
Gross unrealized appreciation $ 3,907
Gross unrealized depreciation (48)
-----------------
Net unrealized appreciation $ 3,859
=================
(a) AMBAC Insured.
(b) FSA Insured.
(c) MBIA Insured.
(d) XL Capital Insured.
(e) FGIC Insured.
(f) Radian Insured.
(g) Prerefunded.
(h) ACA Insured.
(i) CIFG Insured.
(j) Investments in companies considered to be an affiliate of the Fund
(such companies are defined as "Affiliated Companies" in Section
2(a)(3) of the Investment Company Act of 1940) were as follows:
(in Thousands)
Net Dividend
Affiliate Activity Income
CMA New York Municipal
Money Fund 8 $8
See Notes to Financial Statements.
ANNUAL REPORTS MAY 31, 2005
Statements of Net Assets
Muni Muni New York
Intermediate Intermediate
Duration Duration
As of May 31, 2005 Fund, Inc. Fund, Inc.
Assets
Investments in unaffiliated securities, at value* $ 887,075,594 $ 92,788,284
Investments in affiliated securities, at value** -- 617,543
Cash 6,850 66,086
Interest receivable 14,193,521 1,445,548
Receivable for securities sold 80,000 --
Dividends receivable from affiliates -- 36
Prepaid expenses 37,120 19,965
--------------- ---------------
Total assets 901,393,085 94,937,462
--------------- ---------------
Liabilities
Payable for securities purchased 21,678,920 527,970
Unrealized depreciation on forward interest rate swaps 4,012,470 --
Dividends payable to Common Stock shareholders 519,610 59,465
Payable to investment adviser 219,784 23,562
Payable to other affiliates 9,922 984
Accrued expenses and other liabilities 87,565 35,277
--------------- ---------------
Total liabilities 26,528,271 647,258
--------------- ---------------
Preferred Stock
Preferred Stock, at redemption value, par value $.10 per share++ of
AMPS+++ at $25,000 per share liquidation preference 285,062,782 31,000,000
--------------- ---------------
Net Assets Applicable to Common Stock
Net assets applicable to Common Stock $ 589,802,032 $ 63,290,204
=============== ===============
Analysis of Net Assets Applicable to Common Stock
Undistributed investment income--net $ 4,700,475 $ 411,104
Undistributed (accumulated) realized capital gains (losses)--net 8,896,806 (572,101)
Unrealized appreciation--net 35,208,215 3,821,089
--------------- ---------------
Total accumulated earnings--net 48,805,496 3,660,092
--------------- ---------------
Common Stock, par value $.10 per share++++ 3,803,493 420,644
Paid-in capital in excess of par $ 537,193,043 $ 59,209,468
--------------- ---------------
Net Assets Applicable to Common Stock $ 589,802,032 $ 63,290,204
=============== ===============
Net asset value per share of Common Stock $ 15.51 $ 15.05
=============== ===============
Market price per share of Common Stock $ 13.94 $ 13.44
=============== ===============
* Identified cost $ 847,854,909 $ 88,967,195
=============== ===============
** Identified cost on affiliated securities -- $ 617,543
=============== ===============
++ Preferred Stock authorized, issued and outstanding:
Series M7 Shares 2,000 --
=============== ===============
Series T7 Shares 2,700 --
=============== ===============
Series W7 Shares 2,000 --
=============== ===============
Series TH7 Shares 2,700 --
=============== ===============
Series F7 Shares 2,000 1,240
=============== ===============
++++ Common Stock issued and outstanding 38,034,934 4,206,439
=============== ===============
+++ Auction Market Preferred Stock.
See Notes to Financial Statements.
ANNUAL REPORTS MAY 31, 2005
Statements of Operations
Muni Muni New York
Intermediate Intermediate
Duration Duration
For the Year Ended May 31, 2005 Fund, Inc. Fund, Inc.
Investment Income
Interest $ 43,814,917 $ 4,302,286
Dividends from affiliates -- 7,937
--------------- ---------------
Total Income 43,814,917 4,310,223
--------------- ---------------
Expenses
Investment advisory fees $ 4,734,036 $ 513,945
Commission fees 747,477 79,881
Accounting services 255,277 58,648
Transfer agent fees 103,234 34,989
Professional fees 62,152 47,793
Listing fees 45,827 21,503
Custodian fees 44,183 7,711
Printing and shareholder reports 43,242 26,560
Trustees' fees and expenses 27,563 27,527
Pricing fees 27,015 8,666
Other 62,090 31,798
--------------- ---------------
Total expenses before waiver and reimbursement 6,152,096 859,021
Waiver and reimbursement of expenses (1,291,101) (142,920)
--------------- ---------------
Total expenses after waiver and reimbursement 4,860,995 716,101
--------------- ---------------
Investment income--net 38,953,922 3,594,122
--------------- ---------------
Realized & Unrealized Gain (Loss)--Net
Realized gain (loss) on:
Investments--net 15,312,216 342,722
Forward interest rate swaps--net (4,893,470) (857,432)
--------------- ---------------
Total realized gain (loss)--net 10,418,746 (514,710)
Change in unrealized appreciation/depreciation on:
Investments--net 37,445,913 3,017,898
Forward interest rate swaps--net (4,250,268) (74,113)
--------------- ---------------
Total change in unrealized appreciation/depreciation--net 33,195,645 2,943,785
--------------- ---------------
Total realized and unrealized gain--net 43,614,391 2,429,075
--------------- ---------------
Dividends & Distributions to Preferred Stock Shareholders
Investment income--net (4,268,692) (481,976)
Realized gain--net (667,430) --
--------------- ---------------
Total dividends and distributions to Preferred Stock shareholders (4,936,122) (481,976)
--------------- ---------------
Net Increase in Net Assets Resulting from Operations $ 77,632,191 $ 5,541,221
=============== ===============
See Notes to Financial Statements.
ANNUAL REPORTS MAY 31, 2005
Statements of Changes in Net Assets Muni Intermediate Duration Fund, Inc.
For the For the Period
Year Ended August 1, 2003++
May 31, to May 31,
Increase (Decrease) in Net Assets: 2005 2004
Operations
Investment income--net $ 38,953,922 $ 29,600,531
Realized gain--net 10,418,746 6,184,907
Change in unrealized appreciation/depreciation--net 33,195,645 2,012,570
Dividends and distributions to Preferred Stock shareholders (4,936,122) (2,161,817)
--------------- ---------------
Net increase in net assets resulting from operations 77,632,191 35,636,191
--------------- ---------------
Dividends & Distributions to Common Stock Shareholders
Investment income--net (32,862,183) (24,453,825)
Realized gain--net (7,146,878) --
--------------- ---------------
Net decrease in net assets resulting from dividends and distributions to
Common Stock shareholders (40,009,061) (24,453,825)
--------------- ---------------
Stock Transactions
Net proceeds from issuance of Common Stock -- 543,991,875
Offering costs resulting from the issuance of Common Stock -- (662,473)
Offering and underwriting costs resulting from the issuance of Preferred Stock -- (3,205,458)
Value of shares issued to Common Stock shareholders in reinvestment of dividends -- 772,589
--------------- ---------------
Net increase in net assets derived from stock transactions -- 540,896,533
--------------- ---------------
Net Assets Applicable to Common Stock
Total increase in net assets applicable to Common Stock 37,623,130 552,078,899
Beginning of period 552,178,902 100,003
--------------- ---------------
End of period* $ 589,802,032 $ 552,178,902
=============== ===============
* Undistributed investment income--net $ 4,700,475 $ 2,964,351
=============== ===============
++ Commencement of operations.
See Notes to Financial Statements.
ANNUAL REPORTS MAY 31, 2005
Statements of Changes in Net Assets Muni New York Intermediate Duration Fund, Inc.
For the For the Period
Year Ended August 1, 2003++
May 31, to May 31,
Increase (Decrease) in Net Assets: 2005 2004
Operations
Investment income--net $ 3,594,122 $ 2,818,267
Realized loss--net (514,710) (57,391)
Change in unrealized appreciation--net 2,943,785 877,304
Dividends to Preferred Stock shareholders (481,976) (233,616)
--------------- ---------------
Net increase in net assets resulting from operations 5,541,221 3,404,564
--------------- ---------------
Dividends to Common Stock Shareholders
Investment income--net (3,028,634) (2,257,059)
--------------- ---------------
Net decrease in net assets resulting from dividends to Common Stock shareholders (3,028,634) (2,257,059)
--------------- ---------------
Stock Transactions
Net proceeds from issuance of Common Stock -- 59,806,875
Offering costs resulting from the issuance of Common Stock -- (125,250)
Offering and underwriting costs resulting from the issuance of Preferred Stock -- (513,526)
Value of shares issued to Common Stock shareholders in reinvestment of dividends -- 362,010
--------------- ---------------
Net increase in net assets derived from stock transactions -- 59,530,109
--------------- ---------------
Net Assets Applicable to Common Stock
Total increase in net assets applicable to Common Stock 2,512,587 60,677,614
Beginning of period 60,777,617 100,003
--------------- ---------------
End of period* $ 63,290,204 $ 60,777,617
=============== ===============
* Undistributed investment income--net $ 411,104 $ 327,592
=============== ===============
++ Commencement of operations.
See Notes to Financial Statements.
ANNUAL REPORTS MAY 31, 2005
Financial Highlights Muni Intermediate Duration Fund, Inc.
For the For the Period
Year Ended August 1, 2003++
The following per share data and ratios have been derived May 31, to May 31,
from information provided in the financial statements. 2005 2004
Per Share Operating Performance
Net asset value, beginning of period $ 14.52 $ 14.33
--------------- ---------------
Investment income--net 1.02+++++ .79
Realized and unrealized gain--net 1.15 .21
Dividends and distributions to Preferred Stock shareholders:
Investment income--net (.11) (.06)
Realized gain--net (.02) --
--------------- ---------------
Total from investment operations 2.04 .94
--------------- ---------------
Less dividends and distributions to Common Stock shareholders:
Investment income--net (.86) (.65)
Realized gain--net (.19) --
--------------- ---------------
Total dividends and distributions to Common Stock shareholders (1.05) (.65)
--------------- ---------------
Offering costs resulting from issuance of Common Stock -- (.02)
--------------- ---------------
Offering and underwriting costs resulting from issuance of Preferred Stock -- (.08)
--------------- ---------------
Net asset value, end of period $ 15.51 $ 14.52
=============== ===============
Market price per share, end of period $ 13.94 $ 13.10
=============== ===============
Total Investment Return**
Based on net asset value per share 15.36% 6.09%+++
=============== ===============
Based on market price per share 14.93% (8.59%)+++
=============== ===============
Ratios Based on Average Net Assets of Common Stock
Expenses, net of waiver*** .84% .75%*
=============== ===============
Expenses*** 1.07% 1.03%*
=============== ===============
Investment income--net*** 6.77% 6.51%*
=============== ===============
Amount of dividends to Preferred Stock shareholders .74% .48%*
=============== ===============
Investment income--net, to Common Stock shareholders 6.03% 6.03%*
=============== ===============
Ratios Based on Average Net Assets of Preferred Stock
Dividends to Preferred Stock shareholders 1.50% .97%*
=============== ===============
ANNUAL REPORTS MAY 31, 2005
Financial Highlights (concluded) Muni Intermediate Duration Fund, Inc.
For the For the Period
Year Ended August 1, 2003++
The following per share data and ratios have been derived May 31, to May 31,
from information provided in the financial statements. 2005 2004
Supplemental Data
Net assets applicable to Common Stock, end of period (in thousands) $ 589,802 $ 552,179
=============== ===============
Preferred Stock outstanding, end of period (in thousands) $ 285,000 $ 285,000
=============== ===============
Portfolio turnover 54.55% 70.29%
=============== ===============
Leverage
Asset coverage per $1,000 $ 3,069 $ 2,937
=============== ===============
Dividends Per Share on Preferred Stock Outstanding++++
Series M7--Investment income--net $ 372 $ 190
=============== ===============
Series T7--Investment income--net $ 377 $ 192
=============== ===============
Series W7--Investment income--net $ 374 $ 188
=============== ===============
Series TH7--Investment income--net $ 375 $ 188
=============== ===============
Series F7--Investment income--net $ 373 $ 189
=============== ===============
* Annualized.
** Total investment returns based on market value, which can be significantly greater or lesser than
the net asset value, may result in substantially different returns. Total investment returns exclude
the effects of sales charges.
*** Do not reflect the effect of dividends to Preferred Stock shareholders.
++ Commencement of operations.
++++ The Fund's Preferred Stock was issued on August 20, 2003.
+++ Aggregate total investment return.
+++++ Based on average shares outstanding.
See Notes to Financial Statements.
ANNUAL REPORTS MAY 31, 2005
Financial Highlights Muni New York Intermediate Duration Fund, Inc.
For the For the Period
Year Ended August 1, 2003++
The following per share data and ratios have been derived May 31, to May 31,
from information provided in the financial statements. 2005 2004
Per Share Operating Performance
Net asset value, beginning of period $ 14.45 $ 14.33
--------------- ---------------
Investment income--net .85+++++ .68
Realized and unrealized gain--net .58 .19
Dividends to Preferred Stock shareholders from investment income--net (.11) (.06)
--------------- ---------------
Total from investment operations 1.32 .81
--------------- ---------------
Less dividends to Common Stock shareholders from investment income--net (.72) (.54)
--------------- ---------------
Offering costs resulting from issuance of Common Stock -- (.03)
--------------- ---------------
Offering and underwriting costs resulting from issuance of Preferred Stock -- (.12)
--------------- ---------------
Net asset value, end of period $ 15.05 $ 14.45
=============== ===============
Market price per share, end of period $ 13.44 $ 12.79
=============== ===============
Total Investment Return**
Based on net asset value per share 9.99% 4.71%+++
=============== ===============
Based on market price per share 10.97% (11.46%)+++
=============== ===============
Ratios Based on Average Net Assets of Common Stock
Total expenses, net of waiver and reimbursement*** 1.15% .81%*
=============== ===============
Total expenses*** 1.38% 1.19%*
=============== ===============
Total investment income--net*** 5.75% 5.40%*
=============== ===============
Amount of dividends to Preferred Stock shareholders .77% .45%*
=============== ===============
Investment income--net, to Common Stock shareholders 4.98% 4.95%*
=============== ===============
Ratios Based on Average Net Assets of Preferred Stock
Dividends to Preferred Stock shareholders 1.55% .96%*
=============== ===============
Supplemental Data
Net assets applicable to Common Stock, end of period (in thousands) $ 63,290 $ 60,778
=============== ===============
Preferred Stock outstanding, end of period (in thousands) $ 31,000 $ 31,000
=============== ===============
Portfolio turnover 16.51% 21.02%
=============== ===============
Leverage
Asset coverage per $1,000 $ 3,042 $ 2,961
=============== ===============
Dividends Per Share on Preferred Stock Outstanding++++
Series F7--Investment income--net $ 389 $ 188
=============== ===============
* Annualized.
** Total investment returns based on market value, which can be significantly greater or lesser than
the net asset value, may result in substantially different returns. Total investment returns exclude
the effects of sales charges.
*** Do not reflect the effect of dividends to Preferred Stock shareholders.
++ Commencement of operations.
++++ The Fund's Preferred Stock was issued on August 20, 2003.
+++ Aggregate total investment return.
+++++ Based on average shares outstanding.
See Notes to Financial Statements.
ANNUAL REPORTS MAY 31, 2005
Notes to Financial Statements
1. Significant Accounting Policies:
Muni Intermediate Duration Fund, Inc. and Muni New York Intermediate Duration
Fund, Inc. (the "Funds" or individually as the "Fund") are registered under the
Investment Company Act of 1940, as amended, as non-diversified, closed-end
management investment companies. The Funds' 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 Funds determine and make available for publication
the net asset values of their Common Stock on a daily basis. Each Fund's Common
Stock shares are listed on the New York Stock Exchange under the symbol MUI for
Muni Intermediate Duration Fund, Inc. and MNE for Muni New York Intermediate
Duration Fund, Inc.
(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 Funds under the general
direction of the Board of Directors. Such valuations and procedures are
reviewed periodically by the Board of Directors of the Funds. Financial futures
contracts and options thereon, which are traded on exchanges, are valued at
their closing prices as of the close of such exchanges. Options written or
purchased are valued at the last sale price in the case of exchange-traded
options. In the case of options traded in the OTC market, valuation is 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 Funds'
pricing service. Short-term investments with a remaining maturity of 60 days or
less are valued at amortized cost, which approximates market value, under which
method the investment is valued at cost and any premium or discount is
amortized on a straight line basis to maturity. Investments in open-end
investment companies are valued at their net asset value each business day.
Securities and other assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
direction of the Board of Directors of the Funds.
(b) Derivative financial instruments--Each Fund may engage in various portfolio
investment strategies both to increase the return of the Fund and to hedge, or
protect, their 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.
* Financial futures contracts--Each Fund may purchase or sell financial futures
contracts and options on such futures contracts. 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.
* Options--Each Fund may purchase and write call and 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.
ANNUAL REPORTS MAY 31, 2005
Notes to Financial Statements (continued)
* Forward interest rate swaps--Each 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. When the
agreement is closed, the Fund records a realized gain or loss in an amount
equal to the value of the agreement. These periodic payments received or made
by the Fund is 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 based on
dealer-supplied valuations 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 each 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. Dividend income is recorded on the ex-dividend dates.
Interest income is recognized on the accrual basis. The Funds amortize 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) Offering expenses--Direct expenses relating to the public offering of each
Fund's Preferred Stock were charged to capital at the time of issuance of the
shares.
(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, $86,923 has been reclassified between undistributed net
investment income and undistributed net realized capital gains as a result of
permanent differences attributable to amortization methods on fixed income
securities in the Muni Intermediate Duration Fund, Inc. This reclassification
has no effect on net assets or net asset values per share.
There were no reclassifications for Muni New York Intermediate Duration
Fund, Inc.
2. Investment Advisory Agreement and Transactions with Affiliates:
Each Fund has entered into an Investment Advisory Agreement with Fund Asset
Management, L.P. ("FAM"). The general partner of FAM is Princeton Services,
Inc. ("PSI"), an indirect, wholly-owned subsidiary of Merrill Lynch & Co., Inc.
("ML & Co."), which is the limited partner.
FAM is responsible for the management of each Fund's portfolio and provides the
necessary personnel, facilities, equipment and certain other services necessary
to the operations of the Funds. For such services, each Fund pays a monthly fee
at an annual rate of .55% of the Fund's average daily net assets, including
proceeds from the issuance of Preferred Stock. FAM has contractually agreed to
waive a portion of its fee during the first seven years of each Fund's
operations ending July 31, 2010, as follows:
Fee Waiver
(As a Percentage
of Average Daily
Net Assets)
Years 1 through 5 .15%
Year 6 .10%
Year 7 .05%
Year 8 and thereafter .00%
FAM has not agreed to waive any portion of its fee beyond July 31, 2010.
For the year ended May 31, 2005, FAM earned fees and a portion of its fees
as follows:
Investment
Advisory Fees Fees
Fund Earned Waived
Muni Intermediate
Duration Fund, Inc. $4,734,036 $1,291,101
Muni New York
Intermediate Duration
Fund, Inc. $ 513,945 $ 140,167
ANNUAL REPORTS MAY 31, 2005
Notes to Financial Statements (continued)
In addition, FAM has agreed to reimburse its management fee by the
amount of management fees Muni New York Intermediate Duration Fund,
Inc. pays to FAM indirectly through its investment in CMA New York
Municipal Money Fund. For the year ended May 31, 2005, FAM reimbursed
the Fund in the amount of $2,753.
For the year ended May 31, 2005, the Funds reimbursed FAM for certain
accounting services. The reimbursements were as follows:
Fund Reimbursement
Muni Intermediate Duration Fund, Inc. $18,877
Muni New York Intermediate Duration Fund, Inc. $ 2,195
Certain officers and/or directors of the Funds are officers and/or directors
of FAM, PSI, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
year ended May 31, 2005 were as follows:
Muni Muni New York
Intermediate Intermediate
Duration Duration
Fund, Inc. Fund, Inc.
Total Purchases $465,636,305 $14,966,593
Total Sales $464,111,893 $15,563,601
4. Stock Transactions:
Each Fund is authorized to issue 200,000,000 shares of stock, including
Preferred Stock, par value $.10 per share, all of which were initially
classified as Common Stock. The Board of Directors is authorized, however, to
reclassify any unissued shares of beneficial interest without approval of the
holders of Common Stock.
Common Stock
Muni Intermediate Duration Fund, Inc.
Shares issued and outstanding during the year ended May 31, 2005 remained
constant and during the period August 1, 2003 to May 31, 2004 increased by
37,975,000 from shares sold and 52,953 from reinvestments of dividends.
Muni New York Intermediate Duration Fund, Inc.
Shares issued and outstanding during the year ended May 31, 2005 remained
constant and during the period August 1, 2003 to May 31, 2004 increased by
4,175,000 from shares sold and 24,454 from reinvestment of dividends.
Preferred Stock
Auction Market Preferred Stock are redeemable shares of Preferred Stock of
the Fund, with a par value of $.10 per share and a liquidation preference of
$25,000 per share plus accrued and unpaid dividends, that entitle their holders
to receive cash dividends at an annual rate that may vary for the successive
dividend periods. The yields in effect at May 31, 2005 were as follows:
Muni Muni New York
Intermediate Intermediate
Duration Duration
Fund, Inc. Fund, Inc.
Series M7 2.75% --
Series T7 2.85% --
Series W7 2.70% --
Series TH7 2.60% --
Series F7 2.01% 2.35%
Muni Intermediate Duration Fund, Inc.
Shares issued and outstanding during the year ended May 31, 2005 remained
constant and during the period August 1, 2003 to May 31, 2004 increased by
11,400 from the issuance of Preferred Stock.
Muni New York Intermediate Duration Fund, Inc.
Shares issued and outstanding during the year ended May 31, 2005 remained
constant and during the period August 1, 2003 to May 31, 2004 increased by
1,240 from the issuance of Preferred Stock.
Each Fund pays commissions to certain broker-dealers at the end of each auction
at an annual rate ranging from .25% to .375%, calculated on the proceeds of
each auction. For the year ended May 31, 2005, Merrill Lynch, Pierce, Fenner &
Smith Incorporated, an affiliate of FAM, earned $633,837 relating to Muni
Intermediate Duration Fund, Inc. and $65,053 relating to Muni New York
Intermediate Duration Fund, Inc., as commissions.
ANNUAL REPORTS MAY 31, 2005
Notes to Financial Statements (concluded)
5. Distributions to Shareholders:
Each Fund paid a tax-exempt income dividend to holders of Common Stock in
the amounts of $.072000 per share and $.060000 per share relating to Muni
Intermediate Duration Fund, Inc. and Muni New York Intermediate Duration Fund,
Inc., respectively, on June 29, 2005 to shareholders of record on June 14,
2005.
Muni Intermediate Duration Fund, Inc.
The tax character of distributions paid during the fiscal year ended
May 31, 2005 and the period August 1, 2003 to May 31, 2004 was as follows:
8/01/2003++
5/31/2005 to 5/31/2004
Distributions paid from:
Tax-exempt income $ 37,130,875 $ 26,615,642
Ordinary income 7,395,390 --
Long-term capital gain 418,918 --
-------------- --------------
Total distributions $ 44,945,183 $ 26,615,642
============== ==============
++ Commencement of operations.
As of May 31, 2005, the components of accumulated earnings on a tax basis
were as follows:
Undistributed tax-exempt income--net $ 4,543,421
Undistributed ordinary income--net 1,312,749
Undistributed long-term capital gains--net 7,584,057
--------------
Total undistributed earnings--net 13,440,227
Capital loss carryforward --
Unrealized gains--net 35,365,269*
--------------
Total accumulated earnings--net $ 48,805,496
==============
* The difference between book-basis and tax-basis net unrealized
gains is attributable primarily to the difference between book and
tax amortization methods for premiums and discounts on fixed
income securities.
Muni New York Intermediate Duration Fund, Inc.
The tax character of distributions paid during the fiscal year ended
May 31, 2005 and the period August 1, 2003 to May 31, 2004 was as follows:
8/01/2003++
5/31/2005 to 5/31/2004
Distributions paid from:
Tax-exempt income $ 3,510,610 $ 2,490,675
-------------- --------------
Total distributions $ 3,510,610 $ 2,490,675
============== ==============
++ Commencement of operations.
As of May 31, 2005, the components of accumulated earnings on a tax basis
were as follows:
Undistributed tax-exempt income--net $ 373,181
Undistributed long-term capital gains--net --
--------------
Total undistributed earnings--net 373,181
Capital loss carryforward (572,101)*
Unrealized gains--net 3,859,012**
--------------
Total accumulated earnings--net $ 3,660,092
==============
* On May 31, 2005, the Fund had a net capital loss carryforward of
$572,101, of which $57,391 expires in 2012 and $514,710 expires
in 2013. 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 difference between book and
tax amortization methods for premiums and discounts on fixed
income securities.
ANNUAL REPORTS MAY 31, 2005
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
of Muni Intermediate Duration Fund, Inc.
and Muni New York Intermediate Duration Fund, Inc.:
We have audited the accompanying statements of net assets of Muni Intermediate
Duration Fund, Inc. and Muni New York Intermediate Duration Fund, Inc. (the
"Funds"), including the schedules of investments, as of May 31, 2005, and the
related statements of operations for the year then ended, the statements of
changes in net assets and financial highlights for the year then ended and for
the period August 1, 2003 (commencement of operations) to May 31, 2004. These
financial statements and financial highlights are the responsibility of the
Funds' 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 audits to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. We were not engaged to perform an audit of the Funds' internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Funds' 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 and financial highlights, 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, 2005, by correspondence
with the custodian and brokers. 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 Muni
Intermediate Duration Fund, Inc. and Muni New York Intermediate Duration Fund,
Inc. at May 31, 2005, the results of their operations for the year then ended,
the changes in their net assets and the financial highlights for the respective
periods then ended, in conformity with U.S. generally accepted accounting
principles.
(Ernst & Young LLP)
Philadelphia, Pennsylvania
July 13, 2005
Fund Certifications (unaudited)
In September 2004, Muni Intermediate Duration Fund, Inc. and Muni New York
Intermediate Duration Fund, Inc. filed their Chief Executive Officer
Certifications for the prior year with the New York Stock Exchange pursuant
to Section 303A. 12(a) of the New York Stock Exchange Corporate Governance
Listing Standards.
The Funds' 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.
ANNUAL REPORTS MAY 31, 2005
Automatic Dividend Reinvestment Plan
The following description of the Funds' Automatic Dividend Reinvestment Plan
(the "Plan") is sent to you annually as required by federal securities laws.
Pursuant to the Funds' Plan, unless a holder of Common Stock otherwise elects,
all dividend and capital gains distributions will be automatically reinvested
by EquiServe (the "Plan Agent"), as agent for shareholders in administering the
Plan, in additional shares of Common Stock of the Fund. Holders of Common Stock
who elect not to participate in the Plan will receive all distributions in cash
paid by check mailed directly to the shareholder of record (or, if the shares
are held in street or other nominee name then to such nominee) by EquiServe, as
dividend paying agent. Such participants may elect not to participate in the
Plan and to receive all distributions of dividends and capital gains in cash by
sending written instructions to EquiServe, as dividend paying agent, at the
address set forth below. Participation in the Plan is completely voluntary and
may be terminated or resumed at any time without penalty by written notice if
received by the Plan Agent not less than ten days prior to any dividend record
date; otherwise such termination will be effective with respect to any
subsequently declared dividend or distribution.
Whenever the Funds declare an income dividend or capital gains distribution
(collectively referred to as "dividends") payable either in shares or in cash,
non-participants in the Plan will receive cash and participants in the Plan
will receive the equivalent in shares of Common Stock. The shares will be
acquired by the Plan Agent for the participant's account, depending upon the
circumstances described below, either (i) through receipt of additional
unissued but authorized shares of Common Stock from each Fund ("newly issued
shares") or (ii) by purchase of outstanding shares of Common Stock on the open
market ("open-market purchases") on the New York Stock Exchange or elsewhere.
If, on the payment date for the dividend, the net asset value per share of the
Common Stock is equal to or less than the market price per share of the Common
Stock plus estimated brokerage commissions (such conditions being referred to
herein as "market premium"), the Plan Agent will invest the dividend amount in
newly issued shares on behalf of the participant. The number of newly issued
shares of Common Stock to be credited to the participant's account will be
determined by dividing the dollar amount of the dividend by the net asset value
per share on the date the shares are issued, provided that the maximum discount
from the then current market price per share on the date of issuance may not
exceed 5%. If, on the dividend payment date, the net asset value per share is
greater than the market value (such condition being referred to herein as
"market discount"), the Plan Agent will invest the dividend amount in shares
acquired on behalf of the participant in open-market purchases.
In the event of a market discount on the dividend payment date, the Plan Agent
will have until the last business day before the next date on which the shares
trade on an "ex-dividend" basis or in no event more than 30 days after the
dividend payment date (the "last purchase date") to invest the dividend amount
in shares acquired in open-market purchases. It is contemplated that each Fund
will pay monthly income dividends. Therefore, the period during which open-
market purchases can be made will exist only from the payment date on the
dividend through the date before the next "ex-dividend" date, which typically
will be approximately ten days. If, before the Plan Agent has completed its
open-market purchases, the market price of a share of Common Stock exceeds the
net asset value per share, the average per share purchase price paid by the
Plan Agent may exceed the net asset value of each Fund's shares, resulting in
the acquisitions of fewer shares than if the dividend had been paid in newly
issued shares on the dividend payment date. Because of the foregoing difficulty
with respect to open-market purchases, the Plan provides that if the Plan Agent
is unable to invest the full dividend amount in open-market purchases during
the purchase period or if the market discount shifts to a market premium during
the purchase period, the Plan Agent will cease making open-market purchases and
will invest the uninvested portion of the dividend amount in newly issued
shares at the close of business on the last purchase date determined by
dividing the uninvested portion of the dividend by the net asset value per
share.
ANNUAL REPORTS MAY 31, 2005
The Plan Agent maintains all shareholders' accounts in the Plan and furnishes
written confirmation of all transactions in the account, including information
needed by shareholders for tax records. Shares in the account of each Plan
participant will be held by the Plan Agent in non-certificated form in the name
of the participant, and each shareholder's proxy will include those shares
purchased or received pursuant to the Plan. The Plan Agent will forward all
proxy solicitation materials to participants and vote proxies for shares held
pursuant to the Plan in accordance with the instructions of the participants.
In the case of shareholders such as banks, brokers or nominees which hold
shares of others who are the beneficial owners, the Plan Agent will administer
the Plan on the basis of the number of shares certified from time to time by
the record shareholders as representing the total amount registered in the
record shareholder's name and held for the account of beneficial owners who are
to participate in the Plan.
There will be no brokerage charges with respect to shares issued directly by
the Funds as a result of dividends or capital gains distributions payable
either in shares or in cash. However, each participant will pay a pro rata
share of brokerage commissions incurred with respect to the Plan Agent's open-
market purchases in connection with the reinvestment of dividends.
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.
Shareholders participating in the Plan may receive benefits not available
to shareholders not participating in the Plan. If the market price plus
commissions of the Funds' shares is above the net asset value, participants in
the Plan will receive shares of the Funds at less than they could otherwise
purchase them and will have shares with a cash value greater than the value of
any cash distribution they would have received on their shares. If the market
price plus commissions is below the net asset value, participants will receive
distributions in shares with a net asset value greater than the value of any
cash distribution they would have received on their shares. However, there may
be insufficient shares available in the market to make distributions in shares
at prices below the net asset value. Also, since the Funds do not redeem
shares, the price on resale may be more or less than the net asset value.
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 each Fund's shares are trading at a
premium over net asset value, each 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 such discount (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.
Experience under the Plan may indicate that changes are desirable. Accordingly,
the Funds reserve the right to amend or terminate the Plan. There is no direct
service charge to participants in the Plan; however, the Funds reserve the
right to amend the Plan to include a service charge payable by the
participants.
All correspondence concerning the Plan should be directed to the
Plan Agent at EquiServe, P.O. Box 43010, Providence, RI 02940-3010,
Telephone: 800-426-5523.
ANNUAL REPORTS MAY 31, 2005
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 Funds Served Principal Occupation(s) During Past 5 Years Director Director
Interested Director
Robert C. Doll, Jr.* President 2005 to President of the MLIM/FAM-advised funds since 125 Funds None
P.O. Box 9011 and present 2005; President of MLIM and FAM since 2001; 169 Portfolios
Princeton, Director Co-Head (Americas Region) thereof from 2000
NJ 08543-9011 to 2001 and Senior Vice President from 1999
Age: 50 to 2001; President and Director of Princeton
Services, Inc. ("Princeton Services") since 2001;
President of Princeton Administrators, L.P.
("Princeton Administrators") since 2001; Chief
Investment Officer of Oppenheimer Funds, 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 MLIM or FAM acts as investment adviser.
Mr. Doll is an "interested person," as defined in the Investment Company Act,
of the Fund based on his current positions with MLIM, FAM, Princeton Services
and Princeton Administrators. 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.
ANNUAL REPORTS MAY 31, 2005
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 Funds Served Principal Occupation(s) During Past 5 Years Director Director
Independent Directors*
Donald W. Burton Director 2003 to General Partner of The Burton Partnership, 23 Funds Knology, Inc.
P.O. Box 9095 present Limited Partnership (an investment 42 Portfolios (telecommuni-
Princeton, partnership) since 1979; Managing General cations) and
NJ 08543-9095 Partner of the South Atlantic Venture Funds Symbion, Inc.
Age: 61 since 1983; Member of the Investment Advisory (healthcare)
Council of the Florida State Board of
Administration since 2001.
Laurie Simon Hodrick Director 2003 to Professor of Finance and Economics, Graduate 23 Funds None
P.O. Box 9095 present School of Business, Columbia University 42 Portfolios
Princeton, since 1998.
NJ 08543-9095
Age: 42
John Francis O'Brien Director 2004 to President and Chief Executive Officer of 23 Funds ABIOMED
P.O. Box 9095 present Allmerica Financial Corporation (financial 42 Portfolios (medical device
Princeton, services holding company) from 1995 to 2002 manufacturer),
NJ 08543-9095 and Director from 1995 to 2003; President of Cabot
Age: 62 Allmerica Investment Management Co., Inc. Corporation
(investment adviser) from 1989 to 2002; (chemicals),
Director from 1989 to 2002 and Chairman of LKQ Corporation
the Board from 1989 to 1990; President, (auto parts
Chief Executive Officer and Director of manufacturing)
First Allmerica Financial Life Insurance and TJX
Company from 1989 to 2002 and Director of Companies, Inc.
various other Allmerica Financial companies (retailer)
until 2002; Director since 1989 and since 2004
member of the Governance Nominating Committee;
Member of the Compensation Committee of ABIOMED
since 1989 and Member of the Audit Committee
of ABIOMED from 1990 to 2004; Director and
member of the Governance and Nomination
Committee of Cabot Corporation and member of
the Audit Committee since 1990; Director and
member of the Audit Committee and Compensation
Committee of LKQ Corporation from 2003; and Lead
Director of TJX Companies, Inc. since 1999;
Trustee of the Woods Hole Oceanographic Institute
since 2003.
David H. Walsh Director 2003 to Consultant with Putnam Investments from 1993 23 Funds None
P.O. Box 9095 present to 2003, and employed in various capacities 42 Portfolios
Princeton, therewith from 1973 to 1992; Director, The
NJ 08543-9095 National Audubon Society since 1998; Director,
Age: 63 The American Museum of Fly Fishing since 1997.
Fred G. Weiss Director 2003 to Managing Director of FGW Associates since 23 Funds Watson
P.O. Box 9095 present 1997; Vice President, Planning, Investment 42 Portfolios Pharmaceuticals,
Princeton, and Development of Warner Lambert Co. from Inc.
NJ 08543-9095 1979 to 1997; Director of the Michael J. (pharmaceutical
Age: 63 Fox Foundation for Parkinson's Research since company)
2000; Director of BTG International Plc (a
global technology commercialization company)
since 2001.
* Directors serve until their resignation, removal or death, or until December 31
of the year in which they turn 72.
ANNUAL REPORTS MAY 31, 2005
Officers and Directors (concluded)
Position(s) Length of
Held with Time
Name, Address & Age Funds Served Principal Occupation(s) During Past 5 Years
Fund Officers*
Donald C. Burke Vice 2003 to First Vice President of MLIM and FAM since 1997 and Treasurer thereof since 1999;
P.O. Box 9011 President present Senior Vice President and Treasurer of Princeton Services since 1999 and Director
Princeton, and since 2004; Vice President of FAM Distributors, Inc. ("FAMD") since 1999; Vice
NJ 08543-9011 Treasurer President of MLIM and FAM from 1990 to 1997; Director of Taxation of MLIM from
Age: 45 1990 to 2001; Vice President, Treasurer and Secretary of the IQ Funds since 2004.
Kenneth A. Jacob Senior 2003 to Managing Director of MLIM since 2000; Director (Tax-Exempt Fund Management)
P.O. Box 9011 Vice present of MLIM from 1997 to 2000.
Princeton, President
NJ 08543-9011
Age: 54
John M. Loffredo Senior 2003 to Managing Director of MLIM since 2000; Director (Tax-Exempt Fund Management)
P.O. Box 9011 Vice present of MLIM from 1997 to 2000.
Princeton, President
NJ 08543-9011
Age: 41
Timothy T. Browse Vice 2004 to Vice President (Tax-Exempt Fixed Income) and portfolio manager with the Tax-Exempt
P.O. Box 9011 President present Fixed Income group of MLIM; Vice President, portfolio manager and team leader of
Princeton, the Municipal Investments Team with Lord Abbett & Co. from 2000 to 2003; Vice
NJ 08543-9011 President and portfolio manager in the municipal fund management group of Eaton
Age: 46 Vance Management, Inc. from 1992 to 2000.
Robert A. DiMella Vice 2003 to Managing Director of MLIM since 2004; Director (Municipal Tax-Exempt Fund
P.O. Box 9011 President present Management) of MLIM from 2002 to 2004; Vice President of MLIM from 1996
Princeton, to 2001.
NJ 08543-9011
Age: 38
Jeffrey Hiller Chief 2004 to Chief Compliance Officer of the MLIM/FAM-advised funds and First Vice President
P.O. Box 9011 Compliance present and Chief Compliance Officer of MLIM (Americas Region) since 2004; Chief
Princeton, Officer Compliance Officer of the IQ Funds since 2004; Global Director of Compliance at
NJ 08543-9011 Morgan Stanley Investment Management from 2002 to 2004; Managing Director
Age: 53 and Global Director of Compliance at Citigroup Asset Management from 2000 to
2002; Chief Compliance Officer at Soros Fund Management in 2000; Chief Compliance
Officer at Prudential Financial from 1995 to 2000; Senior Counsel in the
Commission's Division of Enforcement in Washington, D.C. from 1990 to 1995.
Alice A. Pellegrino Secretary 2004 to Director (Legal Advisory) of MLIM since 2002; Vice President of MLIM from 1999 to
P.O. Box 9011 present 2002; Attorney associated with MLIM since 1997; Secretary of MLIM, FAM, FAMD
Princeton, and Princeton Services since 2004.
NJ 08543-9011
Age: 45
* Officers of the Funds serve at the pleasure of the Board of Directors.
Custodian
State Street Bank and
Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agents
Common Stock:
EquiServe
(c/o Computershare
Investor Services)
P.O. Box 43010
Providence, RI 02940-3010
1-800-426-5523
Preferred Stock:
The Bank of New York
101 Barclay Street - 7 West
New York, NY 10286
Investment Objectives
NYSE Symbol Muni Intermediate Duration Fund, Inc. seeks to provide shareholders with high current income exempt from federal
MUI incometaxes by investing primarily in a portfolio of municipal obligations, the interest on which, in the
opinion of bond counsel to the issuer, is exempt from federal income taxes.
NYSE Symbol Muni New York Intermediate Duration Fund, Inc. seeks to provide shareholders with high current income exempt from
MNE federal income taxes and New York State and New York City personal income taxes by investing primarily in a
portfolio of municipal obligations, the interest on which, in the opinion of bond counsel to the issuer, is exempt
from federal income taxes and New York State and New York City personal income taxes.
ANNUAL REPORTS MAY 31, 2005
Swap Agreements
The Funds 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 each Fund has entered into the swap will default on its obligation to
pay the Funds and the risk that the Funds will not be able to meet their
obligations to pay the other party to the agreement.
Availability of Quarterly Schedule of Investments
The Funds file their complete schedules 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 Funds' Forms N-Q are available on the
SEC's Web site at http://www.sec.gov. The Funds' 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.
Electronic Delivery
The Funds offer electronic delivery of communications to their shareholders. In
order to receive this service, you must register your account and provide us
with e-mail information. To sign up for this service, simply access this Web
site at http://www.icsdelivery.com/live and follow the instructions. When you
visit this site, you will obtain a personal identification number (PIN). You
will need this PIN should you wish to update your e-mail address, choose to
discontinue this service and/or make any other changes to the service. This
service is not available for certain retirement accounts at this time.
ANNUAL REPORTS MAY 31, 2005
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
upon request by calling toll-free 1-800-MER-FUND (1-800-637-3863).
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) Donald
W. Burton, (2) M. Colyer Crum (retired as of December 31, 2004), (3)
Laurie Simon Hodrick, (4) John F. O'Brien (as of November 22, 2004),
(5) David H. Walsh and (6) Fred G. Weiss.
The registrant's board of directors has determined that Laurie Simon
Hodrick and M. Colyer Crum qualify as financial experts pursuant to
Item 3(c)(4) of Form N-CSR.
Ms. Hodrick has a thorough understanding of generally accepted
accounting principals, financial statements, and internal controls
and procedures for financial reporting. Ms. Hodrick earned a Ph.D. in
economics and has taught courses in finance for over 15 years. Her
M.B.A.-level course centers around the evaluation and analysis of
firms' corporate financial statements. She has also taught in
financial analysts' training programs. Ms. Hodrick has also worked
with several prominent corporations in connection with the analysis
of financial forecasts and projections and analysis of the financial
statements of those companies, serving on the Financial Advisory
Council of one of these major corporations. She has also served
as the Treasurer and Finance Chair of a 501(c)(3) organization.
Ms. Hodrick has published a number of articles in leading economic
and financial journals and is the associate editor of two leading
finance journals.
M. Colyer Crum also possesses a thorough understanding of generally
accepted accounting principals, financial statements, and internal
controls and procedures for financial reporting through a combination
of education and experience. Professor Crum was a professor of
investment management at the Harvard Business School for 25 years.
The courses taught by Professor Crum place a heavy emphasis on the
analysis of underlying company financial statements with respect to
stock selection and the analysis of credit risk in making loans.
Professor Crum has also served on a number of boards of directors and
has served on the audit committees, and in some cases chaired the
audit committee, for several major corporations and financial
institutions. For two such organizations, Professor Crum has
performed extensive investment analysis of financial statements in
connection with investment management decisions. From these
experiences, he has gained significant experience with the
establishment of reserves and accounting policies, differences
between U.S. GAAP and Canadian GAAP and executive compensation
issues.
Item 4 - Principal Accountant Fees and Services
(a) Audit Fees - Fiscal Year Ending May 31, 2005 - $33,000
Fiscal Year Ending May 31, 2004 - $38,500*
* $7,500 of this amount relates to the seed audit as of the Fund's
commencement of operations.
(b) Audit-Related Fees - Fiscal Year Ending May 31, 2005 - $3,500**
Fiscal Year Ending May 31, 2004 - $28,000***
The nature of the services include assurance and related services
reasonably related to the performance of the audit of financial statements
not included in Audit Fees.
** Relates to year-end agreed upon compliance procedures associated with
the Fund's AMPS.
*** Amounts relating to procedures performed with respect to the Fund's
initial offerings of common and preferred shares totaled $25,000. The
remaining $3,000 relates to year-end agreed upon compliance procedures
associated with the Fund's AMPS.
(c) Tax Fees - Fiscal Year Ending May 31, 2005 - $5,700
Fiscal Year Ending May 31, 2004 - $5,200
The nature of the services include tax compliance, tax advice and tax
planning.
(d) All Other Fees - Fiscal Year Ending May 31, 2005 - $0
Fiscal Year Ending May 31, 2004 - $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 Ending May 31, 2005 - $9,200
Fiscal Year Ending May 31, 2004 - $8,200
(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) - $0, 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)):
Donald W. Burton
M. Colyer Crum (retired as of December 31, 2004)
Laurie Simon Hodrick
John F. O'Brien (as of November 22, 2004)
David H. Walsh
Fred G. Weiss
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies -
Proxy Voting Policies and Procedures
Each Fund's Board of Directors/Trustees has delegated to Merrill
Lynch Investment Managers, L.P. and/or Fund Asset Management, L.P.
(the "Investment Adviser") authority to vote all proxies relating to
the Fund's portfolio securities. The Investment Adviser has adopted
policies and procedures ("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 Investment Adviser'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 Investment Adviser 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
Investment Adviser considers the interests of its clients, including
the Funds, and not the interests of the Investment Adviser, when
voting proxies and that real (or perceived) material conflicts that
may arise between the Investment Adviser's interest and those of the
Investment Adviser's clients are properly addressed and resolved.
In order to implement the Proxy Voting Procedures, the Investment
Adviser has formed a Proxy Voting Committee (the "Committee").
The Committee is comprised of the Investment Adviser's Chief
Investment Officer (the "CIO"), one or more other senior investment
professionals appointed by the CIO, portfolio managers and investment
analysts appointed by the CIO and any other personnel the CIO deems
appropriate. The Committee will also include two non-voting
representatives from the Investment Adviser's Legal department
appointed by the Investment Adviser's General Counsel. The
Committee's membership shall be limited to full-time employees of the
Investment Adviser. No person with any investment banking, trading,
retail brokerage or research responsibilities for the Investment
Adviser'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 Investment Adviser 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
Investment Adviser 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 Investment Adviser 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 Investment Adviser 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 Investment
Adviser 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 Investment Adviser will
generally seek to vote proxies over which the Investment Adviser
exercises voting authority in a uniform manner for all the Investment
Adviser'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 Investment Adviser 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 Investment
Adviser by ISS include in-depth research, voting recommendations
(although the Investment Adviser 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 Investment Adviser's Proxy Voting Procedures also address special
circumstances that can arise in connection with proxy voting. For
instance, under the Proxy Voting Procedures, the Investment Adviser
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 Investment Adviser 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 Investment Adviser may be required to vote proxies in
respect of an issuer where an affiliate of the Investment Adviser (each, an
"Affiliate"), or a money management or other client of the Investment Adviser
(each, a "Client") is involved. The Proxy Voting Procedures and the Investment
Adviser'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 Investment
Adviser'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 powers of the Committee shall pass to a
subcommittee, appointed by the CIO (with advice from the Secretary
of the Committee), consisting solely of Committee members selected
by the CIO. The CIO 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 Investment Adviser'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
Investment Adviser'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 Investment Adviser's normal voting guidelines or, on
matters where the Investment Adviser'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 Investment Adviser 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
Investment Adviser's fiduciary duties
In addition to the general principles outlined above, the Investment
Adviser 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
Investment Adviser 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 Investment Adviser has adopted specific voting guidelines with
respect to the following proxy issues:
* 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 history of
representing shareholder interests as a director of other companies or other
factors, to the extent the Committee deems relevant.
* 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.
* 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.
* 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.
* 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.
* Routine proposals related to requests regarding the formalities of corporate
meetings.
* 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, that the
Investment Company Act envisions will be approved directly by shareholders.
* 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.
Item 8 - Portfolio Managers of Closed-End Management Investment Companies -
Not Applicable at this time
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable
Item 10 - Submission of Matters to a Vote of Security Holders - Not Applicable
Item 11 - Controls and Procedures
11(a) - The registrant's certifying officers have reasonably designed such
disclosure controls and procedures to ensure material information
relating to the registrant is made known to us by others particularly
during the period in which this report is being prepared. The
registrant's certifying officers have determined that the
registrant's disclosure controls and procedures are effective based
on our evaluation of these controls and procedures as of a date
within 90 days prior to the filing date of this report.
11(b) - There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Act
(17 CFR 270.30a-3(d)) that occurred during the second fiscal half-
year of the period covered by this report that has materially
affected, or is 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.
Muni Intermediate Duration Fund, Inc.
By: /s/ Robert C. Doll, Jr.
-------------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
Muni Intermediate Duration Fund, Inc.
Date: July 15, 2005
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
Muni Intermediate Duration Fund, Inc.
Date: July 15, 2005
By: /s/ Donald C. Burke
-------------------------------
Donald C. Burke,
Chief Financial Officer of
Muni Intermediate Duration Fund, Inc.
Date: July 15, 2005