UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT
COMPANIES
Investment Company Act file number 811-21348
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.,
President, 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 - 11/30/04
Item 1 - Report to Stockholders
(BULL LOGO)
Merrill Lynch Investment Managers
www.mlim.ml.com
Muni Intermediate Duration
Fund, Inc.
Semi-Annual Report
November 30, 2004
Muni Intermediate Duration Fund, Inc. seeks to provide shareholders
with high current income exempt from federal 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.
This report, including the financial information herein, is
transmitted to shareholders of Muni Intermediate Duration Fund, Inc.
for their information. It is not a prospectus. The Fund has
leveraged its Common Stock and intends to remain leveraged by
issuing Preferred Stock to provide the Common Stock shareholders
with a potentially higher rate 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 this report
should not be considered a representation of future performance.
Statements and other information herein are as dated and are subject
to change.
A description of the policies and procedures that the Fund uses
to determine how to vote proxies relating to portfolio securities
is available (1) without charge, upon request, by calling toll-free
1-800-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 Fund voted proxies
relating to securities held in the Fund's portfolio during the
most recent 12-month period ended June 30 is available (1) at
www.mutualfunds.ml.com; and (2) on the Securities and Exchange
Commission's Web site at http://www.sec.gov.
Muni Intermediate Duration Fund, Inc.
Box 9011
Princeton, NJ 08543-9011
(GO PAPERLESS LOGO)
It's Fast, Convenient, & Timely!
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Muni Intermediate Duration Fund, Inc.
The Benefits and Risks of Leveraging
Muni Intermediate Duration Fund, Inc. utilizes leveraging to seek
to enhance the yield and net asset value of its Common Stock.
However, these objectives cannot be achieved in all interest rate
environments. To leverage, the 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 the 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. Of course, increases in
short-term interest rates would reduce (and even eliminate) the
dividends on the Common Stock.
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 Fund may invest in certain
securities whose potential income return is inversely related to
changes in a floating interest rate ("inverse floaters"). In
general, income on inverse floaters will decrease when short-term
interest rates increase and increase when short-term interest rates
decrease. Investments in inverse floaters may be characterized as
derivative securities and may subject the Fund to the risks of
reduced or eliminated interest payments and losses of invested
principal. In addition, inverse floaters have the effect of
providing investment leverage and, as a result, the market value
of such securities will generally be more volatile than that of
fixed-rate, tax-exempt securities. To the extent the Fund invests
in inverse floaters, the market value of the Fund's portfolio and
the net asset value of the Fund's shares may also be more volatile
than if the Fund did not invest in such securities. As of November
30, 2004, none of the Fund's total net assets were invested in
inverse floaters.
Swap Agreements
The Fund may also invest in swap agreements, which are over-the-
counter contracts in which one party agrees to make periodic
payments based on the change in market value of a specified bond,
basket of bonds or index in return for periodic payments based on a
fixed or variable interest rate or the change in market value of a
different bond, basket of bonds or index. Swap agreements may be
used to obtain exposure to a bond or market without owning or taking
physical custody of securities. Swap agreements involve the risk
that the party with whom the Fund has entered into the swap will
default on its obligation to pay the Fund and the risk that the Fund
will not be able to meet its obligations to pay the other party to
the agreement.
MUNI INTERMEDIATE DURATION FUND, INC., NOVEMBER 30, 2004
A Letter From the President
Dear Shareholder
As we ended the current reporting period, several topics weighed
heavily on investors' minds. Among them were questions about
economic growth, corporate earnings, interest rates and inflation,
politics, the price of oil and terrorism - all issues that are worth
addressing here.
While the pace of economic expansion slowed somewhat between
the first and second quarters of 2004, gross domestic product
reaccelerated in the third quarter and is expected to approach 4%
for the year. The generally favorable economic environment has
benefited American corporations, which continued to post strong
earnings. Although the extraordinary results seen in 2004 are likely
to moderate in 2005, solid productivity, improved revenue growth and
cost discipline all point to a vital corporate sector.
In terms of inflation and interest rates, the Federal Reserve Board
has signaled its confidence in the economic recovery by increasing
the Federal Funds target rate five times since June 2004, from 1% to
2.25% as of the December 14 Federal Open Market Committee meeting.
Inflation, for its part, has remained fairly subdued.
While the re-election of President Bush was generally viewed as
business-friendly, the rising price of oil continued to be a concern
for consumers and corporations. But even having exceeded $50 per
barrel recently, the situation is far from the crisis proportions
we saw in the 1980s. Lastly, but importantly, terrorism and
geopolitical tensions are unwelcome realities we are forced to live
with today. Historically, however, the financial effects of any
single event tend to be short-lived.
Amid the uncertainty, the Lehman Brothers Municipal Bond Index
posted a 12-month return of +4.07% and a six-month return of +4.30%
as of November 30, 2004. Long-term bond yields were volatile, but
ultimately little changed, over the past year.
The key during uncertain times is to remain focused on the big
picture. Investment success comes not from reacting to short-term
volatility, but from maintaining a long-term perspective and
adhering to the disciplines of asset allocation, diversification and
rebalancing. We encourage you to work with your financial advisor to
ensure these time-tested techniques are incorporated into your
investment plan.
Finally, after 35 years in the asset management business, it is
with great satisfaction and some nostalgia that I embark on my
retirement, effective January 1, 2005. The industry has evolved
significantly over the past three and a half decades, and I am
privileged to have been a part of it. I wish you continued success
as you pursue your investment goals and, as always, I thank you for
allowing Merrill Lynch Investment Managers to be a part of your
financial life.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Director
MUNI INTERMEDIATE DURATION FUND, INC., NOVEMBER 30, 2004
A Discussion With Your Fund's Portfolio Manager
The Fund outperformed its comparable Lipper category average and was
effectively able to enhance yield while preserving net asset value
in a volatile interest rate environment.
Describe the recent market environment relative to municipal bonds.
Over the past six months, long-term bond yields declined as their
prices, which move in the opposite direction, increased. The rise in
bond prices came as somewhat of a surprise, as the economy generally
continued to improve. Gross domestic product growth was recently
estimated at 3.7% for the third quarter of 2004, up from 3.4% in the
second quarter. However, recent improvements in domestic business
activity have been offset by modest inflation measures.
For its part, the Federal Reserve Board (the Fed) raised its short-
term interest rate target to 1.25% in June, the first change in
more than a year. In its accompanying statement, the Fed called
for a "measured" approach to interest rate increases, removing much
of the earlier concern that it might embark on a dramatic series
of increases. The prospect for a more moderate tightening sequence
helped support higher bond prices, despite additional Fed rate
increases in August, September, November and December, which raised
the Federal Funds target rate to 2.25%. Long-term Treasury bond
yields stood at 5% at period-end, a decline of 29 basis points
(.29%) over the past six months. The 10-year Treasury note yield was
4.35%, 23 basis points lower than six months earlier.
The municipal bond market benefited from a generally supportive
technical environment throughout the six-month period. Consequently,
while tax-exempt bond yields followed the same pattern as their
taxable counterparts, yield volatility was more subdued than in the
Treasury market. Long-term revenue bond yields, as measured by the
Bond Buyer Revenue Bond Index, fell 19 basis points over the six
months. As reported by Municipal Market Data, AAA-rated issues
maturing in 30 years saw their yields decline 26 basis points to
4.76% over the past six months, while yields on 10-year, AAA-rated
issues declined 29 basis points to 3.66%.
During the period, more than $175 billion in new long-term tax-
exempt bonds was underwritten, a decline of nearly 12% versus the
same six months a year ago. The declining supply trend allowed tax-
exempt bond prices to register significant gains over the six
months.
Relative to Treasury issues, long-term tax-exempt bond yield ratios
have remained in the 88% - 93% range, above their recent historic
average of 85% - 88%. These attractive yield ratios should continue
to attract both traditional and non-traditional investors to the tax-
exempt market.
How did the Fund perform during the period in light of the existing
market conditions?
For the six-month period ended November 30, 2004, the Common Stock
of Muni Intermediate Duration Fund, Inc. had net annualized yields
of 5.67% and 6.32%, based on a period-end per share net asset value
of $15.19 and a per share market price of $13.64, respectively, and
$.432 per share income dividends. Over the same period, the total
investment return on the Fund's Common Stock was +7.98%, based on a
change in per share net asset value from $14.52 to $15.19, and
assuming reinvestment of all distributions.
The Fund's total return, based on net asset value, exceeded the
+6.34% average return of the Lipper General Municipal Debt Funds
(Leveraged) category for the six-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 attributed to our focus on enhancing yield,
with credit selection driven by our team of 12 full-time credit
analysts. Entering the period, the Fund was overweight in the high
yield portion of the market, that being credit spreads. These issues
enjoyed strong performance during the period as investors became
increasingly comfortable assuming risk. Owning these higher-yielding
bonds helped boost the portfolio's yield and total return as
municipal credit spreads tightened. In addition, the advance
refunding of two bonds in the portfolio benefited performance as
these holdings realized a significant increase in their market
values.
MUNI INTERMEDIATE DURATION FUND, INC., NOVEMBER 30, 2004
For a description of the Fund's total investment return based on a
change in the per share market value of the Fund's Common Stock (as
measured by the trading price of the Fund's shares on the New York
Stock Exchange), and assuming reinvestment of dividends, please
refer to the Financial Highlights section of this report. As a
closed-end fund, the Fund's shares may trade in the secondary market
at a premium or discount to the Fund's net asset value. As a result,
total investment returns based on changes in the market value of the
Fund's Common Stock can vary significantly from total investment
returns based on changes in the Fund's net asset value.
What changes were made to the portfolio during the period?
Portfolio activity during the past six months was focused on
reducing the Fund's exposure to spread product - the lower-quality,
higher-yielding portion of the market that had performed so well. In
particular, we trimmed the Fund's exposure to credits rated BBB and
below, as these securities have significantly outperformed the
broader market over the past 18 months. The proceeds from the sales
were reinvested in the high-grade market, where we believe relative
value exists.
Purchases during the period were concentrated on California and New
Jersey tax-exempt bonds, both of which we found to be inexpensive on
a relative basis. In California, we increased exposure by purchasing
insured unified school district bonds, which have the potential to
be refunded. When a bond is refunded, the price will increase
significantly as the effective maturity is reduced to the first call
date. In New Jersey, an increase in the supply of municipal bonds
caused a temporarily weak technical market, offering us a compelling
buying opportunity.
We also started to rebalance the Fund's maturity exposure during the
period, moving further out on the municipal yield curve. The curve
is extremely steep by historical standards, making the 15-year to 20-
year segments quite expensive. The Fund had been concentrated in the
15-year to 20-year range since its inception. However, as these
segments outperformed the rest of the curve, we have taken the
opportunity to shift into longer maturities, favoring the 23-year to
28-year portions of the curve.
For the six-month period ended November 30, 2004, the Fund's Auction
Market Preferred Stock (AMPS) had an average yield of 1.10% for
Series M7, 1.09% for Series T7, 1.12% for Series W7, 1.14% for
Series TH7 and 1.13% for Series F7. These attractive funding levels,
in combination with the steep municipal yield curve, continued to
provide a significant income benefit to the Fund's Common Stock
shareholders from the leveraging of Preferred Stock. While the
Fed is likely to continue raising short-term interest rates, the
increases are expected to be gradual and should not have an
immediate material impact on the positive advantage leverage has
had on the Fund's Common Stock yield. 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 33.03% 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?
At period end, our primary focus was on maintaining the portfolio's
current yield and protecting the Fund's net asset value in case of a
future rise in interest rates. We expect the economy to continue to
strengthen over the next several quarters, pushing interest rates
slightly higher. Against this backdrop, we will continue to reduce
our exposure to spread product and, within three to six months,
expect to have established a neutral portfolio weighting in this
area of the market.
Robert A. DiMella, CFA
Vice President and Portfolio Manager
December 15, 2004
MUNI INTERMEDIATE DURATION FUND, INC., NOVEMBER 30, 2004
Proxy Results
During the six-month period ended November 30, 2004, Muni
Intermediate Duration Fund, Inc.'s Common Stock shareholders
voted on the following proposal. The proposal was approved at a
shareholders' meeting on August 25, 2004. A description of the
proposal and number of shares voted are as follows:
Shares Voted Shares Withheld
For From Voting
1. To elect the Fund's Directors: Terry K. Glenn 36,975,089 1,001,207
Donald W. Burton 36,978,422 997,874
David H. Walsh 36,978,422 997,874
Fred G. Weiss 36,978,422 997,874
During the six-month period ended November 30, 2004, Muni
Intermediate Duration Fund, Inc.'s Preferred Stock shareholders
(Series M7, T7, W7, TH7 & F7) voted on the following proposal. The
proposal was approved at a shareholders' meeting on August 25, 2004.
A description of the proposal and number of shares voted are as
follows:
Shares Voted Shares Withheld
For From Voting
2. To elect the Fund's Board of Directors: Terry K. Glenn,
Donald W. Burton, M. Colyer Crum, Laurie Simon Hodrick,
David H. Walsh and Fred G. Weiss 11,148 18
Quality Profile
The quality ratings of securities in the Fund as of November 30,
2004 were as follows:
Percent of
Total
S&P Rating/Moody's Rating Investments
AAA/Aaa 27.4%
AA/Aa 5.9
A/A 25.0
BBB/Baa 16.8
BB/Ba 9.4
B/B 1.8
CCC/Caa 0.7
NR (Not Rated) 11.4
Other* 1.6
*Includes portfolio holdings in variable rate demand notes.
MUNI INTERMEDIATE DURATION FUND, INC., NOVEMBER 30, 2004
Schedule of Investments (In Thousands)
Face
State Amount Municipal Bonds Value
Arizona--1.5% $ 3,020 Maricopa County, Arizona, IDA, Education Revenue Bonds (Arizona Charter
Schools Project 1), Series A, 6.625% due 7/01/2020 $ 2,975
3,000 Navajo County, Arizona, IDA, IDR (Stone Container Corporation Project),
AMT, 7.20% due 6/01/2027 3,140
Pima County, Arizona, IDA, Education Revenue Bonds (Arizona Charter
Schools Project):
1,000 Series C, 6.70% due 7/01/2021 1,044
1,750 Series K/L, 6.375% due 7/01/2031 1,772
Arkansas--0.4% University of Arkansas, University Revenue Refunding Bonds (UAMS Campus),
Series A (d):
1,000 5% due 11/01/2013 1,099
1,250 5% due 11/01/2015 1,364
California--23.4% 12,500 California Pollution Control Financing Authority, PCR, Refunding (Pacific
Gas & Electric), AMT, Series A, 5.35% due 12/01/2016 (d) 13,365
California State Department of Water Resources, Power Supply Revenue
Bonds, Series A:
8,500 5.25% due 5/01/2020 9,028
5,000 5.375% due 5/01/2021 5,343
6,500 5.375% due 5/01/2022 6,909
5,000 California State, GO, Refunding, 5.25% due 2/01/2027 (d) 5,216
10,000 California State Public Works Board, Lease Revenue Bonds (Department of
Corrections), Series C, 5.50% due 6/01/2020 10,857
17,500 California State, Various Purpose, GO, 5.50% due 4/01/2028 18,544
2,500 California Statewide Communities Development Authority, Health Facility
Revenue Bonds (Memorial Health Services), Series A, 6% due 10/01/2023 2,683
2,400 Elk Grove, California, Poppy Ridge Community Facilities Number 3 Special
Tax, Series 1, 6% due 9/01/2028 2,438
Golden State Tobacco Securitization Corporation of California, Tobacco
Settlement Revenue Bonds, Series B:
5,000 5.625% due 6/01/2020 5,199
2,000 5.75% due 6/01/2021 2,117
7,575 5.75% due 6/01/2022 7,994
7,495 5.75% due 6/01/2023 7,885
10,975 Los Angeles, California, Unified School District, GO, Series A, 5% due
1/01/2028 (d) 11,166
1,515 Rowland, California, Unified School District, GO (Election of 2000),
Series B, 5.25% due 8/01/2027 (c) 1,584
Sacramento, California, Special Tax (North Natomas Community Facilities),
Series 4-C:
585 5.60% due 9/01/2020 605
1,720 5.75% due 9/01/2022 1,766
500 5.90% due 9/01/2023 513
3,000 6% due 9/01/2028 3,087
4,545 San Bernardino, California, Community College District, GO (Election of 2002),
Series B, 5.25% due 8/01/2028 (d) 4,759
2,680 San Dieguito, California, Public Facilities Authority Revenue Bonds, 5%
due 8/01/2021 (a) 2,747
San Jose, California, Airport Revenue Bonds, Series A (b):
2,040 5.25% due 3/01/2016 2,208
3,000 5.25% due 3/01/2017 3,242
1,330 Stanislaus, California, Waste-to-Energy Financing Agency, Solid Waste
Facility Revenue Refunding Bonds (Ogden Martin System Inc. Project), VRDN,
1.67% due 1/01/2010 (d)(g) 1,330
4,350 Tamalpais, California, Union High School District, GO (Election of 2001),
5% due 8/01/2028 (c) 4,420
Portfolio Abbreviations
To simplify the listings of Muni Intermediate Duration Fund, Inc.'s
portfolio holdings in the Schedule of Investments, we have
abbreviated the names of many of the securities according to the
list at right.
AMT Alternative Minimum Tax (subject to)
EDA Economic Development Authority
GO General Obligation Bonds
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
MUNI INTERMEDIATE DURATION FUND, INC., NOVEMBER 30, 2004
Schedule of Investments (continued) (In Thousands)
Face
State Amount Municipal Bonds Value
Colorado--4.5% Denver, Colorado, City and County Airport Revenue Refunding Bonds (d):
$11,000 Series A, 5.50% due 11/15/2025 $ 11,627
2,000 Series E, 5.25% due 11/15/2023 2,129
1,000 Elk Valley, Colorado, Public Improvement Revenue Bonds (Public
Improvement Fee), Series A, 7.10% due 9/01/2014 1,042
2,250 Montrose, Colorado, Memorial Hospital, Revenue Bonds, 6.375% due 12/01/2023 2,383
7,500 Plaza Metropolitan District No. 1, Colorado, Tax Allocation Revenue Bonds
(Public Improvement Fees), 7.50% due 12/01/2015 7,787
1,000 Southlands, Colorado, Medical District, GO (Metropolitan District #1),
6.75% due 12/01/2016 994
Connecticut--1.7% 1,160 Connecticut State Development Authority, Airport Facility Revenue Bonds
(LearJet Inc. Project), AMT, 7.95% due 4/01/2026 1,355
8,000 Connecticut State Development Authority, PCR, Refunding (Connecticut Light
and Power Company), Series A, 5.85% due 9/01/2028 8,527
Florida--5.2% 1,000 Broward County, Florida, Airport Exempt Facility Revenue Bonds (Learjet Inc.
Project), AMT, 7.50% due 11/01/2020 1,100
4,000 Broward County, Florida, Educational Facilities Authority Revenue Refunding
Bonds (Nova Southeastern University), Series C, 1.68% due 4/01/2024 4,000
3,000 Harbor Bay, Florida, Community Development District, Capital Improvement
Special Assessment Bonds, 6.75% due 5/01/2034 3,198
4,060 Heritage Isle at Viera Community Development District, Florida, Special
Assessment Bonds, Series B, 5% due 11/01/2009 4,065
800 Jacksonville, Florida, Electric Authority Revenue Bonds (Electric System),
VRDN, Series B, 1.66% due 10/01/2030 (g) 800
6,400 Manatee County, Florida, PCR, Refunding (Florida Power and Light Company
Project), VRDN, 1.66% due 9/01/2024 (g) 6,400
3,500 Midtown Miami, Florida, Community Development District, Special Assessment
Revenue Bonds, Series A, 6% due 5/01/2024 3,596
1,000 Orlando, Florida, Urban Community Development District, Capital Improvement
Special Assessment Bonds, 6% due 5/01/2020 1,014
1,085 Portofino Shores, Florida, Community Development District, Special Assessment
Bonds, Series A, 6.40% due 5/01/2034 1,129
1,000 Sarasota County, Florida, Public Hospital Board, Hospital Revenue Bonds
(Sarasota Memorial Hospital), VRDN, Series A, 1.69% due 7/01/2037 (a)(g) 1,000
2,390 South Lake County, Florida, Hospital District Revenue Bonds (South Lake
Hospital Inc.), 6.625% due 10/01/2023 2,511
1,000 Sterling Hill, Florida, Community Development District, Capital Improvement
Revenue Refunding Bonds, Series B, 5.50% due 11/01/2010 1,014
Georgia--2.6% 1,500 Atlanta, Georgia, Tax Allocation Revenue Bonds (Atlantic Station Project),
7.90% due 12/01/2024 1,632
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 5,114
4,500 Fulton County, Georgia, Residential Care Facilities, Revenue Refunding
Bonds (Canterbury Court Project), Series A, 5.80% due 2/15/2018 4,535
Savannah, Georgia, EDA, Revenue Bonds (Marshes of Skidaway), First Mortgage,
Series A:
1,245 6.25% due 1/01/2012 1,235
2,245 6.85% due 1/01/2019 2,271
Idaho--0.1% 810 Idaho Housing and Finance Association, S/F Mortgage Revenue Bonds, AMT,
Series F-2, 5.85% due 7/01/2015 (f) 811
Illinois--11.3% 2,800 Chicago, Illinois, Board of Education, GO, VRDN, Series C-1, 1.64% due
3/01/2031 (c)(g) 2,800
2,510 Chicago, Illinois, O'Hare International Airport Revenue Bonds, Third Lien,
AMT, Series B-2, 6% due 1/01/2029 (e) 2,735
Chicago, Illinois, O'Hare International Airport Revenue Refunding Bonds,
Third Lien, AMT, Series A-2:
18,955 6% due 1/01/2017 21,115
12,300 5.75% due 1/01/2019 (c) 13,484
4,000 Chicago, Illinois, Wastewater Transmission Revenue Bonds, Second Lien,
5.25% due 1/01/2008 (a)(i) 4,394
Hodgkins, Illinois, Environmental Improvement Revenue Bonds, AMT:
5,280 (MBM Project), 6% due 11/01/2015 5,333
6,000 (Metro Biosolids Management LLC Project), 5.90% due 11/01/2017 6,032
6,930 Illinois, Development Finance Authority Revenue Bonds (Community
Rehabilitation Providers Facilities), Series A, 6.625% due 7/01/2032 7,254
2,070 Illinois Health Facilities Authority Revenue Bonds (University of Chicago
Hospital System), 5.375% due 8/15/2017 (d) 2,227
MUNI INTERMEDIATE DURATION FUND, INC., NOVEMBER 30, 2004
Schedule of Investments (continued) (In Thousands)
Face
State Amount Municipal Bonds Value
Louisiana--1.5% Port New Orleans, Louisiana, IDR, Refunding (Continental Grain
Company Project):
$ 3,500 7.50% due 7/01/2013 $ 3,620
5,000 6.50% due 1/01/2017 5,108
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 1,930
7,000 Rumford, Maine, Solid Waste Disposal Revenue Refunding Bonds (Boise Cascade
Corporation Project), AMT, 6.875% due 10/01/2026 7,335
Massachusetts--0.5% Massachusetts State Development Finance Agency, Resource Recovery Revenue
Bonds (Ogden Haverhill Associates), AMT, Series B:
1,210 5.35% due 12/01/2015 1,190
2,000 5.50% due 12/01/2019 1,969
Michigan--1.4% 3,325 Macomb County, Michigan, Hospital Finance Authority, Hospital Revenue Bonds
(Mount Clemens General Hospital), Series B, 5.875% due 11/15/2034 3,153
4,795 Michigan State Hospital Finance Authority, Revenue Refunding Bonds (Oakwood
Obligated Group), Series A, 6% due 4/01/2022 5,176
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 1,065
2,545 6% due 12/01/2021 2,686
Mississippi--1.4% Mississippi Business Finance Corporation, Mississippi, PCR, Refunding
(System Energy Resources Inc. Project):
5,000 5.875% due 4/01/2022 5,011
2,910 5.90% due 5/01/2022 2,935
Missouri--3.3% St. Louis, Missouri, Airport Revenue Bonds (Airport Developmental Program),
Series A (d):
5,220 5.625% due 7/01/2016 5,802
3,500 5.625% due 7/01/2017 3,893
8,500 5.625% due 7/01/2018 9,436
Montana--0.2% 1,220 Montana State Board of Housing, AMT, S/F Program Revenue Bonds, Series B-2,
6.35% due 12/01/2021 (f) 1,258
Nevada--0.4% 2,250 Clark County, Nevada, Improvement District No. 142 Special Assessment,
6.375% due 8/01/2023 2,318
New Jersey--12.9% 7,735 Casino Reinvestment Development Authority, New Jersey, Parking Fee Revenue
Bonds, 5% due 10/01/2021 (a) 8,057
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 3,993
5,050 5.80% due 11/01/2023 5,503
New Jersey EDA, Cigarette Tax Revenue Bonds:
10,950 5.625% due 6/15/2018 11,506
9,810 5.75% due 6/15/2029 10,019
17,900 New Jersey EDA, Motor Vehicle Surcharge Revenue Bonds, Series A, 5.25%
due 7/01/2033 (d) 18,722
5,540 New Jersey EDA, Special Facility Revenue Bonds (Continental Airlines Inc.
Project), AMT, 6.625% due 9/15/2012 4,981
2,030 Sparta Township, New Jersey, School District, GO, Refunding, 5% due
9/01/2020 (d) 2,141
9,535 Tobacco Settlement Financing Corporation of New Jersey, Asset-Backed Revenue
Bonds, 5.75% due 6/01/2016 9,425
New Mexico--2.2% Farmington, New Mexico, PCR, Refunding:
3,000 (Public Service Company of New Mexico--San Juan), Series D, 6.375% due
4/01/2022 3,192
9,000 (Tucson Electric Power Co.--San Juan Project), Series A, 6.95% due
10/01/2020 9,420
New York--29.3% 1,250 Dutchess County, New York, IDA, Civic Facility Revenue Bonds (Saint Francis
Hospital), Series B, 7.25% due 3/01/2019 1,250
10,500 Metropolitan Transportation Authority, New York, Revenue Refunding Bonds,
Series A, 5.75% due 11/15/2032 11,494
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 2,668
New York City, New York, City IDA, Special Facility Revenue Bonds, AMT:
1,250 (British Airways PLC Project), 7.625% due 12/01/2032 1,239
3,000 (Continental Airlines Inc. Project), 8.375% due 11/01/2016 2,569
2,780 New York City, New York, City Transitional Finance Authority, Future Tax
Secured Revenue Bonds, Series C, 5.50% due 5/01/2025 2,986
MUNI INTERMEDIATE DURATION FUND, INC., NOVEMBER 30, 2004
Schedule of Investments (continued) (In Thousands)
Face
State Amount Municipal Bonds Value
New York $ 5,000 New York City, New York, GO, Refunding, Series B, 5.75% due 8/01/2015 $ 5,531
(concluded) 5,050 New York City, New York, GO, Refunding, Series F, 5.25% due 8/01/2015 (d) 5,426
14,000 New York City, New York, GO, Series C, 5.50% due 8/01/2013 15,559
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 2,652
New York City, New York, Sales Tax Asset Receivable Corporation Revenue
Bonds, Series A (a):
9,150 5.25% due 10/15/2027 9,662
7,500 5% due 10/15/2029 7,628
5,580 New York State Dormitory Authority, Lease Revenue Refunding Bonds (Court
Facilities), Series A, 5.25% due 5/15/2012 6,120
New York State Dormitory Authority Revenue Bonds:
1,000 (North Shore L.I. Jewish Group), 5% due 5/01/2012 1,067
7,075 (School Districts Financing Program), Series D, 5.25% due 10/01/2023 (d) 7,508
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) 8,920
2,350 (Lenox Hill Hospital Obligation Group), 5.75% due 7/01/2016 2,496
7,000 (Mount Sinai Health), Series A, 6.625% due 7/01/2018 7,429
5,000 (Mount Sinai Health), Series A, 6.625% due 7/01/2019 5,309
10,000 (North Shore University Hospital), 5.20% due 11/01/2017 (d) 10,757
60 New York State Thruway Authority, Local Highway and Bridge Service Contract
Revenue Refunding Bonds, 5.50% due 4/01/2017 66
New York State Urban Development Corporation, Correctional and Youth
Facilities Services Revenue Refunding Bonds, Series A:
4,500 5% due 1/01/2017 4,831
11,650 5.50% due 1/01/2017 12,823
2,000 Schenectady, New York, GO, TAN, 6.25% due 12/30/2004 1,999
Tobacco Settlement Financing Corporation of New York Revenue Bonds:
3,340 Series A-1, 5.50% due 6/01/2016 3,623
9,010 Series A-1, 5.25% due 6/01/2022 (a) 9,558
7,000 Series C-1, 5.50% due 6/01/2021 7,567
10,000 Series C-1, 5.50% due 6/01/2022 10,744
North Carolina--2.7% 6,000 North Carolina Medical Care Commission, Health Care Facilities, First
Mortgage Revenue Refunding Bonds (Presbyterian Homes Project), 7% due
10/01/2031 6,368
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 3,116
North Carolina Medical Care Commission, Hospital Revenue Bonds (Maria
Parham Medical Center) (h):
2,505 5.50% due 10/01/2013 2,766
2,940 5.50% due 10/01/2016 3,186
Ohio--0.2% 1,280 Port of Greater Cincinnati Development Authority, Ohio, Special Assessment
Revenue Bonds (Cooperative Public Parking Infrastructure Project), 6.30%
due 2/15/2024 1,290
Pennsylvania--4.2% 9,000 Pennsylvania Economic Development Financing Authority, Exempt Facilities
Revenue Bonds (National Gypsum Company), AMT, Series A, 6.25% due 11/01/2027 9,364
7,490 Philadelphia, Pennsylvania, Gas Works Revenue Refunding Bonds, 1975 General
Ordinance, 17th Series, 5.375% due 7/01/2022 (c) 8,029
Sayre, Pennsylvania, Health Care Facilities Authority, Revenue Refunding
Bonds, Series A:
1,750 (Guthrie Health), 6.25% due 12/01/2015 1,938
3,000 (Guthrie Health), 6.25% due 12/01/2016 3,306
1,490 (Guthrie Healthcare System), 6.25% due 12/01/2018 1,626
South Carolina--1.0% 5,000 South Carolina State Public Service Authority, Revenue Refunding Bonds,
Series A, 5.50% due 1/01/2010 (c) 5,563
Tennessee--4.2% 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 1,786
5,000 McMinn County, Tennessee, IDB, PCR (Calhoun Newsprint Co. Project), AMT,
7.625% due 3/01/2016 5,005
1,500 Sevier County, Tennessee, Public Building Authority Revenue Bonds, Local
Government Public Improvement, VRDN, Series IV-1, 1.67% due 6/01/2023 (c)(g) 1,500
Shelby County, Tennessee, Health, Educational and Housing Facilities Board
Revenue Bonds (Germantown Village), Series A:
3,550 6.75% due 12/01/2018 3,630
1,450 7% due 12/01/2023 1,477
MUNI INTERMEDIATE DURATION FUND, INC., NOVEMBER 30, 2004
Schedule of Investments (continued) (In Thousands)
Face
State Amount Municipal Bonds Value
Tennessee Shelby County, Tennessee, Health, Educational and Housing Facility Board,
(concluded) Hospital Revenue Refunding Bonds (Methodist Healthcare):
$ 3,760 6% due 9/01/2012 (i) $ 4,374
2,190 6.25% due 9/01/2012 (i) 2,584
745 6% due 9/01/2016 (j) 864
1,495 6% due 9/01/2017 (j) 1,729
1,310 6.25% due 9/01/2018 (j) 1,537
Texas--12.0% Austin, Texas, Convention Center Revenue Bonds (Convention Enterprises
Inc.), First Tier, Series A:
6,445 6.375% due 1/01/2016 6,728
10,260 6.70% due 1/01/2032 10,820
1,500 Bexar County, Texas, Health Facilities Development Corporation, Revenue
Refunding Bonds (Army Retirement Residence Project), 6.30% due 7/01/2032 1,571
Brazos River Authority, Texas, PCR, Refunding, AMT, Series A:
1,500 (TXU Energy Company LLC Project), 6.75% due 4/01/2038 1,716
4,885 (Texas Utility Company), 7.70% due 4/01/2033 5,765
1,700 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 1,867
6,185 Dallas-Fort Worth, Texas, International Airport Facility, Improvement
Corporation Revenue Bonds (Learjet Inc.), AMT, Series 2001-A-1, 6.15%
due 1/01/2016 6,203
2,440 Gulf Coast, Texas, IDA, Solid Waste Disposal Revenue Bonds (Citgo Petroleum
Corporation Project), AMT, 7.50% due 5/01/2025 2,665
1,500 Houston, Texas, Health Facilities Development Corporation, Retirement
Facility Revenue Bonds (Buckingham Senior Living Community), Series A, 7% due
2/15/2023 1,574
7,420 Lower Colorado River Authority, Texas, PCR (Samsung Austin Semiconductor),
AMT, 6.95% due 4/01/2030 8,443
2,600 Matagorda County, Texas, Navigation District Number 1 Revenue Refunding
Bonds (Reliant Energy Inc.), Series C, 8% due 5/01/2029 2,876
2,300 Port Corpus Christi, Texas, Individual Development Corporation, Environmental
Facilities Revenue Bonds (Citgo Petroleum Corporation Project), AMT, 8.25%
due 11/01/2031 2,454
Sabine River Authority, Texas, PCR, Refunding, (TXU Electric Company
Project/TXU Energy Company LLC), Series B:
4,120 6.15% due 8/01/2022 4,442
5,000 AMT, 5.75% due 5/01/2030 5,419
San Marcos, Texas, Consolidated Independent School District, GO:
3,020 5.625% due 8/01/2025 3,311
3,210 5.625% due 8/01/2026 3,503
Virginia--5.3% 10,000 Giles County, Virginia, IDA, Revenue Bonds (Hoechst Celanese Corporation),
AMT, 6.45% due 5/01/2026 9,959
James City County, Virginia, IDA, Residential Care Facility Revenue Refunding
Bonds, Series A:
3,285 5.75% due 3/01/2017 3,418
1,150 6% due 3/01/2023 1,205
2,250 Loudoun County, Virginia, IDA, IDR, Refunding (Dulles Airport Marriott Hotel),
7.125% due 9/01/2015 2,300
2,500 Pittsylvania County, Virginia, IDA, Revenue Refunding Bonds, Exempt Facility,
AMT, Series B, 7.65% due 1/01/2010 2,570
11,910 Pocahontas Parkway Association, Virginia, Toll Road Revenue Bonds, Senior
Series A, 5.50% due 8/15/2028 10,891
West Virginia--1.4% 7,470 West Virginia State School Building Authority, Lottery Capital Improvement
Revenue Bonds, 5.25% due 1/01/2011 (d) 8,280
Wyoming--1.6% Sweetwater County, Wyoming, Solid Waste Disposal Revenue Bonds (FMC
Corporation Project), AMT:
3,895 Series A, 7% due 6/01/2024 3,964
5,000 Series B, 6.90% due 9/01/2024 5,070
Guam--0.4% 2,250 Commonwealth of the Northern Mariana Islands, Guam, GO, Series A, 6.75%
due 10/01/2033 2,299
Puerto Rico--6.9% 17,935 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series NN, 5.50%
due 7/01/2018 19,614
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 3,826
Puerto Rico Public Buildings Authority, Government Facilities Revenue
Refunding Bonds:
5,170 Series D, 5.25% due 7/01/2027 5,346
8,000 Series I, 5.50% due 7/01/2021 8,630
2,525 Puerto Rico Public Finance Corporation, Commonwealth Appropriation Revenue
Bonds, Series E, 5.50% due 8/01/2029 2,639
MUNI INTERMEDIATE DURATION FUND, INC., NOVEMBER 30, 2004
Schedule of Investments (concluded) (In Thousands)
Face
State Amount Municipal Bonds Value
U.S. Virgin Islands-- $ 2,500 Virgin Islands Government Refinery Facilities, Revenue Refunding Bonds
1.7% (Hovensa Coker Project), AMT, 6.50% due 7/01/2021 $ 2,713
6,750 Virgin Islands Public Finance Authority, Refinery Facilities Revenue
Bonds (Hovensa Refinery), AMT, 6.125% due 7/01/2022 7,194
Total Investments (Cost--$830,679*)--147.7% 853,680
Other Assets Less Liabilities--1.6% 9,312
Preferred Stock, at Redemption Value--(49.3%) (285,053)
----------
Net Assets Applicable to Common Stock--100.0% $ 577,939
==========
(a) AMBAC Insured.
(b) FGIC Insured.
(c) FSA Insured.
(d) MBIA Insured.
(e) XL Capital Insured.
(f) Federal Housing Administration/Veterans' Administration Mortgages
packaged by the Federal National Mortgage Association.
(g) The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in effect
at November 30, 2004.
(h) Radian Insured.
(i) Prerefunded.
(j) Escrowed to maturity.
* The cost and unrealized appreciation/depreciation of investments
as of November 30, 2004, as computed for federal income tax
purposes, were as follows:
(in Thousands)
Aggregate cost $ 830,510
==============
Gross unrealized appreciation $ 24,996
Gross unrealized depreciation (1,826)
--------------
Net unrealized appreciation $ 23,170
==============
Forward interest rate swaps outstanding as of November 30, 2004
were as follows:
(in Thousands)
Notional Unrealized
Amount Appreciation
Receive a variable rate equal to
7-Day Bond Market Association
Municipal Swap Index Rate and pay
a fixed rate of 3.686% interest
Broker, J.P. Morgan Chase Bank
Expires March 2015 $68,000 $421
Receive a variable rate equal to
7-Day Bond Market Association
Municipal Swap Index Rate and pay
a fixed rate of 3.837% interest
Broker, J.P. Morgan Chase Bank
Expires November 2018 $ 7,800 107
Receive a variable rate equal to
7-Day Bond Market Association
Municipal Swap Index Rate and pay
a fixed rate of 3.68% interest
Broker, Morgan Stanley
Capital Services, Inc.
Expires March 2015 $40,000 304
----
Total $832
====
See Notes to Financial Statements.
MUNI INTERMEDIATE DURATION FUND, INC., NOVEMBER 30, 2004
Statement of Net Assets
As of November 30, 2004
Assets
Investments in unaffiliated securities, at value (identified cost--$830,678,988) $ 853,679,941
Cash 30,931
Unrealized appreciation on forward interest rate swaps 832,119
Receivables:
Interest $ 14,423,532
Securities sold 8,135,000 22,558,532
---------------
Prepaid expenses and other assets 71,680
---------------
Total assets 877,173,203
---------------
Liabilities
Payables:
Securities purchased 13,545,919
Dividends to Common Stock shareholders 573,694
Investment adviser 18,961
Other affiliates 7,438 14,146,012
---------------
Accrued expenses and other liabilities 35,173
---------------
Total liabilities 14,181,185
---------------
Preferred Stock
Preferred Stock, at redemption value, par value $.10 per share
(2,000 Series M7 Shares, 2,700 Series T7 Shares, 2,000 Series W7 Shares,
2,700 Series TH7 Shares, 2,000 Series F7 Shares of AMPS* authorized, issued
and outstanding at $25,000 per share liquidation preference) 285,053,026
---------------
Net Assets Applicable to Common Stock
Net assets applicable to Common Stock $ 577,938,992
===============
Analysis of Net Assets Applicable to Common Stock
Common Stock, par value $.10 per share (38,034,934 shares issued
and outstanding) $ 3,803,493
Paid-in capital in excess of par 537,193,043
Undistributed investment income--net $ 4,438,945
Undistributed realized capital gains--net 8,670,439
Unrealized appreciation--net 23,833,072
---------------
Total accumulated earnings--net 36,942,456
---------------
Total--Equivalent to $15.19 net asset value per share of Common Stock
(market price--$13.64) $ 577,938,992
===============
* Auction Market Preferred Stock.
See Notes to Financial Statements.
MUNI INTERMEDIATE DURATION FUND, INC., NOVEMBER 30, 2004
Statement of Operations
For the Six Months Ended November 30, 2004
Investment Income
Interest $ 21,922,816
---------------
Expenses
Investment advisory fees $ 2,355,368
Commission fees 373,978
Accounting services 127,421
Transfer agent fees 45,767
Professional fees 37,255
Printing and shareholder reports 26,270
Listing fees 23,010
Custodian fees 22,594
Directors' fees and expenses 12,655
Pricing fees 12,077
Other 29,873
---------------
Total expenses before waiver 3,066,268
Waiver of expenses (642,373)
---------------
Total expenses after waiver 2,423,895
---------------
Investment income--net 19,498,921
---------------
Realized & Unrealized Gain (Loss)--Net
Realized gain (loss) on:
Investments--net 8,272,331
Forward interest rate swaps--net (5,460,899) 2,811,432
---------------
Change in unrealized appreciation on:
Investments--net 21,226,181
Forward interest rate swaps--net 594,321 21,820,502
--------------- ---------------
Total realized and unrealized gain--net 24,631,934
---------------
Dividends & Distributions to Preferred Stock Shareholders
Investment income--net (1,593,235)
Realized gain--net (346,438)
---------------
Total dividends and distributions to Preferred Stock Shareholders (1,939,673)
---------------
Net Increase in Net Assets Resulting from Operations $ 42,191,182
===============
See Notes to Financial Statements.
MUNI INTERMEDIATE DURATION FUND, INC., NOVEMBER 30, 2004
Statements of Changes in Net Assets
For the Six For the Period
Months Ended August 1, 2003++
November 30, to May 31,
Increase (Decrease) in Net Assets: 2004 2004
Operations
Investment income--net $ 19,498,921 $ 29,600,531
Realized gain--net 2,811,432 6,184,907
Change in unrealized appreciation--net 21,820,502 2,012,570
Dividends and distributions to Preferred Stock shareholders (1,939,673) (2,161,817)
--------------- ---------------
Net increase in net assets resulting from operations 42,191,182 35,636,191
--------------- ---------------
Dividends to Common Stock Shareholders
Investment income--net (16,431,092) (24,453,825)
--------------- ---------------
Net decrease in net assets resulting from dividends to Common Stock
shareholders (16,431,092) (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 25,760,090 552,078,899
Beginning of period 552,178,902 100,003
--------------- ---------------
End of period* $ 577,938,992 $ 552,178,902
=============== ===============
* Undistributed investment income--net $ 4,438,945 $ 2,964,351
=============== ===============
++ Commencement of operations.
See Notes to Financial Statements.
MUNI INTERMEDIATE DURATION FUND, INC., NOVEMBER 30, 2004
Financial Highlights
The following per share data and ratios have been derived For the Six For the Period
from information provided in the financial statements. Months Ended August 1, 2003++
November 30, to May 31,
Increase (Decrease) in Net Asset Value: 2004 2004
Per Share Operating Performance
Net asset value, beginning of period $ 14.52 $ 14.33
--------------- ---------------
Investment income--net .51+++++ .79
Realized and unrealized gain--net .64 .21
Dividends and distributions to Preferred Stock shareholders:
Investment income--net (.04) (.06)
Realized gain--net (.01) --
--------------- ---------------
Total from investment operations 1.10 .94
--------------- ---------------
Less dividends to Common Stock shareholders from investment income--net (.43) (.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 $ 15.19 $ 14.52
=============== ===============
Market price per share, end of period $ 13.64 $ 13.10
=============== ===============
Total Investment Return**
Based on net asset value per share 7.98%+++ 6.09%+++
=============== ===============
Based on market price per share 7.47%+++ (8.59%)+++
=============== ===============
Ratios Based on Average Net Assets of Common Stock
Total expenses, net of waiver*** .85%* .75%*
=============== ===============
Total expenses*** 1.07%* 1.03%*
=============== ===============
Investment income--net*** 6.83%* 6.51%*
=============== ===============
Amount of dividends to Preferred Stock shareholders .56%* .48%*
=============== ===============
Investment income--net, to Common Stock shareholders 6.27%* 6.03%*
=============== ===============
Ratios Based on Average Net Assets of Common & Preferred Stock***
Total expenses, net of waiver .57%* .50%*
=============== ===============
Total expenses .72%* .69%*
=============== ===============
Total investment income--net 4.55%* 4.37%*
=============== ===============
Ratios Based on Average Net Assets of Preferred Stock
Dividends to Preferred Stock shareholders 1.12%* .97%*
=============== ===============
Supplemental Data
Net assets applicable to Common Stock, end of period (in thousands) $ 577,939 $ 552,179
=============== ===============
Preferred Stock outstanding, end of period (in thousands) $ 285,000 $ 285,000
=============== ===============
Portfolio turnover 31.79% 70.29%
=============== ===============
MUNI INTERMEDIATE DURATION FUND, INC., NOVEMBER 30, 2004
Financial Highlights (concluded)
For the Six For the Period
Months Ended August 1, 2003++
The following per share data and ratios have been derived November 30, to May 31,
from information provided in the financial statements. 2004 2004
Leverage
Asset coverage per $1,000 $ 3,028 $ 2,937
=============== ===============
Dividends Per Share on Preferred Stock Outstanding++++
Series M7--Investment income--net $ 137 $ 190
=============== ===============
Series T7--Investment income--net $ 136 $ 192
=============== ===============
Series W7--Investment income--net $ 140 $ 188
=============== ===============
Series TH7--Investment income--net $ 143 $ 188
=============== ===============
Series F7--Investment income--net $ 142 $ 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. The Fund's Investment Adviser voluntarily waived a portion
of its management fee. Without such waiver, the Fund's performance would have been lower.
*** 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.
MUNI INTERMEDIATE DURATION FUND, INC., NOVEMBER 30, 2004
Notes to Financial Statements
1. Significant Accounting Policies:
Muni Intermediate Duration Fund, Inc. (the "Fund") is registered
under the Investment Company Act of 1940, as amended, as a non-
diversified, closed-end management investment company. The Fund's
financial statements are prepared in conformity with U.S. generally
accepted accounting principles, which may require the use of
management accruals and estimates. Actual results may differ from
these estimates. These unaudited financial statements reflect all
adjustments, which are, in the opinion of management necessary to
present a fair statement of the results for the interim period. The
Fund determines and makes available for publication the net asset
value of its Common Stock on a daily basis. The Fund's Common Stock
is listed on the New York Stock Exchange under the symbol MUI. The
following is a summary of significant accounting policies followed
by the Fund.
(a) Valuation of investments--Municipal bonds are traded primarily
in the over-the-counter market and are valued at the last available
bid price in the over-the-counter market or on the basis of values
as obtained by a pricing service. Pricing services use valuation
matrixes that incorporate both dealer-supplied valuations and
valuation models. The procedures of the pricing service and its
valuations are reviewed by the officers of the Fund under the
general direction of the Board of Directors. Such valuations and
procedures will be reviewed periodically by the Board of Directors
of the Fund. Financial futures contracts and options thereon, which
are traded on exchanges, are valued at their closing prices as of
the close of such exchanges. Options written or purchased are valued
at the last sale price in the case of exchange-traded options. In
the case of options traded in the over-the-counter market, valuation
is the last asked price (options written) or the last bid price
(options purchased). Swap agreements are valued by quoted fair
values received daily by the Fund's pricing service. Short-term
investments with a remaining maturity of 60 days or less are valued
at amortized cost, which approximates market value, under which
method the investment is valued at cost and any premium or discount
is amortized on a straight line basis to maturity. Investments in
open-end investment companies are valued at their net asset value
each business day. Securities and other assets for which market
quotations are not readily available are valued at fair value as
determined in good faith by or under the direction of the Board of
Directors of the Fund.
(b) Derivative financial instruments--The Fund may engage in various
portfolio investment strategies both to increase the return of the
Fund and to hedge, or protect, its exposure to interest rate
movements and movements in the securities markets. Losses may arise
due to changes in the value of the contract or if the counterparty
does not perform under the contract.
* Financial futures contracts--The 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--The Fund may write covered call options and purchase 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).
MUNI INTERMEDIATE DURATION FUND, INC., NOVEMBER 30, 2004
Notes to Financial Statements (continued)
Written and purchased options are non-income producing investments.
* Forward interest rate swaps--The Fund may enter into forward
interest rate swaps. In a forward interest rate swap, the Fund and
the counterparty agree to make periodic net payments on a specified
notional contract amount, commencing on a specified future effective
date, unless terminated earlier. When the agreement is closed, the
Fund records a realized gain or loss in an amount equal to the value
of the agreement.
(c) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no federal income tax
provision is required.
(d) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Realized gains and losses on security
transactions are determined on the identified cost basis. Dividend
income is recorded on the ex-dividend dates. Interest income is
recognized on the accrual basis. The Fund amortizes all premiums and
discounts on debt securities.
(e) Offering expenses--Direct expenses relating to the public
offering of the Fund's Common and Preferred Stock were charged to
capital at the time of issuance of the shares.
(f) Dividends and distributions--Dividends from net investment
income are declared and paid monthly. Distributions of capital gains
are recorded on the ex-dividend dates.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect, wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee 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 the 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 six months ended November 30, 2004, FAM earned fees of
$2,355,368, of which $642,373 was waived.
For the six months ended November 30, 2004, the Fund reimbursed FAM
$9,147 for certain accounting services.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended November 30, 2004 were $267,669,201 and
$289,118,722, respectively.
4. Stock Transactions:
The 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 stock
without approval of holders of Common Stock.
MUNI INTERMEDIATE DURATION FUND, INC., NOVEMBER 30, 2004
Notes to Financial Statements (concluded)
Common Stock
Shares issued and outstanding during the six months ended November
30, 2004 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 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
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 yield in effect at November 30, 2004 was Series M7, 1.60%;
Series T7, 1.68%; Series TH7, 1.69%; Series W7, 1.55%; and
Series F7, 1.70%.
Shares issued and outstanding during the six months ended November
30, 2004 remained constant and during the period August 1, 2003 to
May 31, 2004 increased by 11,400 from issuance of Preferred Stock.
The 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 six months
ended November 30, 2004, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, an affiliate of FAM, earned $327,424 as commissions.
5. Subsequent Event:
The Fund paid a tax-exempt income dividend to holders of Common
Stock in the amount of $.072000 per share on December 29, 2004 to
shareholders of record on December 15, 2004.
In addition, the Fund paid to holders of Common Stock an ordinary
income dividend in the amount of $.177831 per share and a long-term
capital gain dividend in the amount of $.010072 per share on
December 29, 2004 to shareholders of record on December 15, 2004.
MUNI INTERMEDIATE DURATION FUND, INC., NOVEMBER 30, 2004
Officers and Directors
Terry K. Glenn, President and Director
Donald W. Burton, Director
M. Colyer Crum, Director
Laurie Simon Hodrick, Director
John F. O'Brien, Director
David H. Walsh, Director
Fred G. Weiss, Director
Kenneth A. Jacob, Senior Vice President
John M. Loffredo, Senior Vice President
Robert A. DiMella, Vice President
Donald C. Burke, Vice President and Treasurer
Jeffrey Hiller, Chief Compliance Officer
Alice A. Pellegrino, Secretary
Custodian
State Street Bank & Trust
P.O. Box 351
Boston, MA 02101
Transfer Agents
Common Stock:
EquiServe
P.O. Box 43010
Providence, RI 02940-3010
Preferred Stock:
The Bank of New York
101 Barclay Street--7 West
New York, NY 10286
NYSE Symbol
MUI
Effective January 1, 2005, Terry K. Glenn, President and Director
and M. Colyer Crum, Director of Muni Intermediate Duration Fund,
Inc. will retire. The Fund's Board of Directors wishes Mr. Glenn and
Professor Crum well in their retirements.
Effective January 1, 2005, Robert C. Doll, Jr. will become Executive
Vice President of the Fund.
MUNI INTERMEDIATE DURATION FUND, INC., NOVEMBER 30, 2004
Availability of Quarterly Schedule of Investments
The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission ("SEC") for the first and third
quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q are
available on the SEC's Web site at http://www.sec.gov. The Fund's
Forms N-Q may also be reviewed and copied at the SEC's Public
Reference Room in Washington, DC. Information on the operation of
the Public Reference Room may be obtained by calling 1-800-SEC-0330.
MUNI INTERMEDIATE DURATION FUND, INC., NOVEMBER 30, 2004
Electronic Delivery
The Fund offers electronic delivery of communications to its
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
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.
MUNI INTERMEDIATE DURATION FUND, INC., NOVEMBER 30, 2004
Item 2 - Code of Ethics - Not Applicable to this semi-annual report
Item 3 - Audit Committee Financial Expert - Not Applicable to this
semi-annual report
Item 4 - Principal Accountant Fees and Services - Not Applicable to
this semi-annual report
Item 5 - Audit Committee of Listed Registrants - Not Applicable to
this semi-annual report
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for
Closed-End Management Investment Companies - Not Applicable to this
semi-annual report
Item 8 - Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers - Not Applicable
Item 9 - Submission of Matters to a Vote of Security Holders - Not
Applicable
Item 10 - Controls and Procedures
10(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.
10(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 last 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 11 - Exhibits attached hereto
11(a)(1) - Code of Ethics - Not Applicable to this semi-annual
report
11(a)(2) - Certifications - Attached hereto
11(a)(3) - Not Applicable
11(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.,
President of
Muni Intermediate Duration Fund, Inc.
Date: January 13, 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.,
President of
Muni Intermediate Duration Fund, Inc.
Date: January 13, 2005
By: _/s/ Donald C. Burke________
Donald C. Burke,
Chief Financial Officer of
Muni Intermediate Duration Fund, Inc.
Date: January 13, 2005