UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
Investment Company Act File number 811-5739
Name of Fund: MuniEnhanced 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, MuniEnhanced 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: 01/31/06
Date of reporting period: 08/01/05 - 10/31/05
Item 1 - Schedule of Investments
MuniEnhanced Fund, Inc.
Schedule of Investments as of October 31, 2005 (in Thousands)
Face
State Amount Municipal Bonds Value
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Alabama - 0.9% $ 2,750 Jefferson County, Alabama, Limited Obligation School Warrants, Series A, 5.50%
due 1/01/2022 $ 2,936
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California - 27.4% Alameda Corridor Transportation Authority, California, Capital Appreciation Revenue
Refunding Bonds,
Subordinate Lien, Series A (a):
6,000 5.495%** due 10/01/2012 4,436
9,000 5.543%** due 10/01/2012 6,661
5,000 Anaheim, California, Public Financing Authority, Lease Revenue Bonds
(Public Improvements Project), Senior-Series A, 6% due 9/01/2024 (d) 5,890
California State Department of Water Resources, Power Supply Revenue Bonds, Series A:
1,395 5.375% due 5/01/2022 1,501
1,800 5.375% due 5/01/2022 (f) 1,950
5,400 California State, GO, 5.125% due 2/01/2027 5,577
California State, GO, Refunding:
3,000 5.25% due 9/01/2026 3,148
6,000 5.25% due 2/01/2030 (f) 6,348
5,000 5.125% due 6/01/2031 5,086
2,200 ROLS, Series II-R-272, 7.656% due 2/01/2033 (i)(j) 2,383
8,490 California State, Various Purpose, GO, 5.50% due 11/01/2033 9,099
Golden State Tobacco Securitization Corporation of California, Tobacco Settlement
Revenue Bonds, Series B (g):
3,000 5% due 6/01/2013 (a) 3,218
5,035 5.50% due 6/01/2013 (c) 5,566
1,400 5.625% due 6/01/2013 (c) 1,559
6,800 5.625% due 6/01/2013 (k) 7,571
3,500 Los Angeles, California, Unified School District, GO, Series A, 5% due 1/01/2028 (f) 3,629
5,000 Norco, California, Redevelopment Agency, Tax Allocation Refunding Bonds (Norco
Redevelopment Project - Area Number 1), 5.125% due 3/01/2030 (f) 5,158
Portfolio Abbreviations
To simplify the listings of MuniEnhanced Fund, Inc.'s portfolio holdings in the
Schedule of Investments, we have abbreviated the names of many of the securities
according to the list below.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
DRIVERS Derivative Inverse Tax-Exempt Receipts
EDA Economic Development Authority
GO General Obligation Bonds
HDA Housing Development Authority
HFA Housing Finance Agency
IDA Industrial Development Authority
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
ROLS Reset Option Long Securities
S/F Single-Family
MuniEnhanced Fund, Inc.
Schedule of Investments as of October 31, 2005 (in Thousands)
Face
State Amount Municipal Bonds Value
-----------------------------------------------------------------------------------------------------------------------------------
$ 1,750 Poway, California, Redevelopment Agency, Tax Allocation Refunding Bonds (Paguay
Redevelopment Project), 5.125% due 6/15/2033 (a) $ 1,801
1,000 San Diego, California, Community College District, GO (Election of 2002), 5%
due 5/01/2030 (d) 1,036
1,150 Santa Monica, California, Community College District, GO (Election of 2002),
Refunding, Series C, 5% due 8/01/2029 (f) 1,192
6,145 Stockton, California, Public Financing Authority, Lease Revenue Bonds (Parking &
Capital Projects), 5.125% due 9/01/2030 (b) 6,372
1,600 Tamalpais, California, Union High School District, GO (Election of 2001), 5%
due 8/01/2028 (d) 1,652
1,200 University of California, Limited Project Revenue Bonds, Series B, 5% due 5/15/2033
(d) 1,237
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Colorado - 8.3% 2,135 Boulder County, Colorado, Hospital Development Revenue Bonds (Longmont United Hospital
Project), 5.75% due 12/01/2020 (i) 2,287
140 Colorado HFA Revenue Bonds (S/F Program), AMT, Senior Series A-1, 7.40% due 11/01/2027 142
855 Colorado HFA, Revenue Refunding Bonds (S/F Program), AMT, Senior Series A-2, 7.50%
due 4/01/2031 905
Colorado Health Facilities Authority Revenue Bonds, Series A:
1,200 (Catholic Health Initiatives), 5.50% due 3/01/2032 (h) 1,302
1,200 (Covenant Retirement Communities Inc.), 5.50% due 12/01/2027 (i) 1,262
675 (Covenant Retirement Communities Inc.), 5.50% due 12/01/2033 (i) 706
3,875 Colorado Water Resources and Power Development Authority, Clean Water Revenue Bonds,
Series A, 6.25% due 9/01/2010 (g) 4,348
2,000 Denver, Colorado, City and County Airport Revenue Refunding Bonds, AMT, Series A, 6%
due 11/15/2018 (a) 2,169
5,450 El Paso County, Colorado, School District Number 49, Falcon, GO, Series A, 6%
due 12/01/2018 (d) 6,198
7,900 Northwest Parkway, Colorado, Public Highway Authority, Capital Appreciation Revenue
Bonds, Senior Convertible, Series C, 5.345%** due 6/15/2011 (d) 6,538
1,900 Northwest Parkway, Colorado, Public Highway Authority Revenue Bonds, Series A,
5.50% due 6/15/2021 (a) 2,078
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Florida - 1.3% 4,200 Orange County, Florida, Sales Tax Revenue Refunding Bonds, Series B, 5.125%
due 1/01/2032 (b) 4,345
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Georgia - 12.3% 18,655 Atlanta, Georgia, Airport General Revenue Refunding Bonds, Series B, 5.25%
due 1/01/2033 (d) 19,635
4,875 Atlanta, Georgia, Development Authority, Student Housing Revenue Bonds (Georgia State
University), 5% due 9/01/2035 (c) 4,993
2,610 Augusta, Georgia, Water and Sewer Revenue Bonds, 5.25% due 10/01/2039 (d) 2,754
3,500 Fulton County, Georgia, Water and Sewer Revenue Bonds, 5.25% due 1/01/2035 (b) 3,702
7,725 Georgia Municipal Electric Authority, Power Revenue Refunding Bonds, Series EE, 7%
due 1/01/2025 (a) 10,235
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Illinois - 19.7% 5,125 Chicago, Illinois, Board of Education, GO, RIB, Series 467, 8.54% due 12/01/2027
(a)(j) 5,849
Chicago, Illinois, O'Hare International Airport Revenue Bonds, 3rd Lien, AMT,
Series B-2:
5,670 5.75% due 1/01/2023 (d) 6,186
2,500 6% due 1/01/2029 (c) 2,755
4,550 Chicago, Illinois, O'Hare International Airport, Revenue Refunding Bonds, DRIVERS,
AMT, Series 250, 8.455% 5,217
due 1/01/2021 (f)(j)
MuniEnhanced Fund, Inc.
Schedule of Investments as of October 31, 2005 (in Thousands)
Face
State Amount Municipal Bonds Value
-----------------------------------------------------------------------------------------------------------------------------------
$ 3,000 Cook County, Illinois, Capital Improvement, GO, Series C, 5.50% due 11/15/2026 (a) $ 3,256
2,240 Cook County, Illinois, Community College District Number 508, Chicago, COP, Refunding,
8.75% due 1/01/2007 (b) 2,378
3,000 Illinois Health Facilities Authority, Revenue Refunding Bonds (Servantcor Project),
Series A, 6.375% due 8/15/2006 (d)(g) 3,075
Illinois Sports Facilities Authority, State Tax Supported Revenue Bonds (a):
20,120 5.341%** due 6/15/2010 16,856
4,500 5% due 6/15/2032 4,603
3,000 Metropolitan Pier and Exposition Authority, Illinois, Dedicated State Tax Revenue
Refunding Bonds (McCormick Place Expansion Project), Series B, 5.75% due 6/15/2023 (f) 3,339
10,115 Regional Transportation Authority, Illinois, Revenue Bonds, Series A, 7.20%
due 11/01/2020 (a) 12,608
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Indiana - 4.3% 4,080 Hammond, Indiana, Multi-School Building Corporation, First Mortgage Revenue Refunding
Bonds, 6.125% due 7/15/2019 (f) 4,303
Indiana Transportation Finance Authority, Highway Revenue Bonds, Series A (b):
4,250 5.25% due 6/01/2028 4,503
3,750 5.25% due 6/01/2029 3,965
1,500 Indianapolis, Indiana, Local Public Improvement Bond Bank Revenue Bonds (Waterworks
Project), Series A, 5.25% due 7/01/2012 (f)(g) 1,570
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Louisiana - 4.3% 6,000 Louisiana Local Government, Environmental Facilities, Community Development Authority
Revenue Bonds (Capital Projects and Equipment Acquisition), Series A, 6.30%
due 7/01/2030 (a) 6,518
3,735 Louisiana State Transportation Authority, Senior Lien Toll Revenue Capital
Appreciation Bonds, Series B, 5.31%** due 12/01/2027 (a) 1,169
5,150 New Orleans, Louisiana, Ernest N. Morial Exhibit Hall Authority, Special Tax,
Sub-Series A, 5.25% due 7/15/2028 (a) 5,341
1,400 Terrebonne Parish, Louisiana, Hospital Service District Number 1, Hospital Revenue
Bonds (Terrebonne General Medical Center Project), 5.50% due 4/01/2033 (a) 1,485
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Massachusetts - 12.3% Massachusetts Bay Transportation Authority, Sales Tax Revenue Refunding Bonds, Senior
Series A:
1,500 5% due 7/01/2032 1,535
1,625 5% due 7/01/2035 1,658
2,500 Massachusetts State, Consolidated Loan, GO, Series C, 5% due 9/01/2025 2,604
2,800 Massachusetts State, HFA, Housing Revenue Bonds, DRIVERS, AMT, Series 982, 7.478%
due 1/01/2011 (d)(j) 2,923
4,985 Massachusetts State Port Authority, Special Facilities Revenue Bonds, DRIVERS, AMT,
Series 501, 7.947% due 7/01/2009 (a)(j) 5,378
13,450 Massachusetts State School Building Authority, Dedicated Sales Tax Revenue Bonds,
Series A, 5% due 8/15/2030 (d) 13,901
11,800 Massachusetts State Special Obligation Dedicated Tax Revenue Bonds, 5.25%
due 1/01/2014 (b)(g) 12,793
650 Massachusetts State Water Resource Authority, General Revenue Refunding Bonds,
Series B, 5.125% due 8/01/2027 (f) 677
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MuniEnhanced Fund, Inc.
Schedule of Investments as of October 31, 2005 (in Thousands)
Face
State Amount Municipal Bonds Value
-----------------------------------------------------------------------------------------------------------------------------------
Michigan - 6.1% $ 6,200 Detroit, Michigan, Water Supply System Revenue Bonds, Series B, 5.25% due 7/01/2032
(f) $ 6,519
2,200 Michigan Higher Education Student Loan Authority, Student Loan Revenue Refunding
Bonds, AMT, Series XVII-G, 5.20% due 9/01/2020 (a) 2,274
Michigan State Strategic Fund, Limited Obligation Revenue Refunding Bonds (Detroit
Edison Company Project), AMT (c):
1,300 Series A, 5.50% due 6/01/2030 1,371
2,500 Series C, 5.65% due 9/01/2029 2,633
4,300 Series C, 5.45% due 12/15/2032 4,480
3,090 Wayne County, Michigan, Airport Authority Revenue Bonds, DRIVERS, AMT, Series 986,
7.459% due 6/01/2013 (f)(j) 3,355
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Mississippi - 0.8% 2,400 Walnut Grove, Mississippi, Correctional Authority, COP, 6% due 11/01/2009 (a)(g) 2,671
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Nebraska - 0.5% 1,700 Washington County, Nebraska, Wastewater Facilities Revenue Bonds (Cargill Inc.
Project), AMT, 5.90% due 11/01/2027 1,825
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Nevada - 6.5% 3,100 Carson City, Nevada, Hospital Revenue Bonds (Carson-Tahoe Hospital Project),
Series A, 5.50% due 9/01/2033 (i) 3,242
Clark County, Nevada, Airport System Subordinate Lien Revenue Bonds, Series A-2 (b):
1,500 5% due 7/01/2030 1,538
3,200 5% due 7/01/2036 3,272
10,450 Washoe County, Nevada, Gas and Water Facilities, Revenue Refunding Bonds (Sierra
Pacific Power Company), 6.30% due 12/01/2014 (a) 10,628
3,000 Washoe County, Nevada, Water Facility Revenue Bonds (Sierra Pacific Power Company),
AMT, 6.65% due 6/01/2017 (f) 3,071
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New Hampshire - 2.4% 7,390 New Hampshire Health and Education Facilities Authority Revenue Bonds
(Dartmouth-Hitchcock Obligation Group), 5.50% due 8/01/2027 (d) 8,021
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New Jersey - 9.7% New Jersey EDA, Cigarette Tax Revenue Bonds:
700 5.50% due 6/15/2031 720
1,165 5.75% due 6/15/2034 1,218
New Jersey EDA, Motor Vehicle Surcharge Revenue Bonds, Series A (f):
2,600 5% due 7/01/2029 2,698
7,250 5.25% due 7/01/2031 7,700
5,200 5.25% due 7/01/2033 5,523
New Jersey EDA, Revenue Bonds, ROLS (e)(j):
7,625 Series II-R-309-1, 8.173% due 6/15/2024 8,669
2,500 Series II-R-309-2, 8.173% due 6/15/2031 2,854
3,100 New Jersey EDA, School Facilities Construction Revenue Bonds, Series O, 5.125%
due 3/01/2028 3,215
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New York - 7.6% 5,000 New York City, New York, City Municipal Water Finance Authority, Water and Sewer
System, Revenue Refunding Bonds, Series A, 5% due 6/15/2035 (f) 5,130
6,960 New York City, New York, GO, DRIVERS, Series 356, 7.995% due 6/01/2011 (c)(j) 8,314
MuniEnhanced Fund, Inc.
Schedule of Investments as of October 31, 2005 (in Thousands)
Face
State Amount Municipal Bonds Value
-----------------------------------------------------------------------------------------------------------------------------------
New York City, New York, GO, Refunding, Series A (b):
$ 2,000 6.375% due 5/15/2010 (g) $ 2,265
440 6.375% due 5/15/2013 495
435 6.375% due 5/15/2014 489
550 6.375% due 5/15/2015 619
7,650 Tobacco Settlement Financing Corporation of New York Revenue Bonds, Series A-1, 5.25% 8,192
due 6/01/2022 (a)
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Pennsylvania - 6.3% 8,750 Pennsylvania State Public School Building Authority, School Lease Revenue Bonds (The
School District of Philadelphia Project), 5% due 6/01/2033 (d) 8,966
6,500 Philadelphia, Pennsylvania, Authority for Industrial Development, Lease Revenue
Bonds, Series B, 5.50% due 10/01/2020 (d) 7,072
4,500 Philadelphia, Pennsylvania, School District, GO, Series B, 5.625% due 8/01/2012 (b)(g) 4,998
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Rhode Island - 2.6% 4,345 Providence, Rhode Island, Public Building Authority, General Revenue Bonds,
Series A, 6.25% due 12/15/2020 (d) 4,885
3,355 Rhode Island State Economic Development Corporation, Airport Revenue Bonds,
Series B, 6.50% due 7/01/2010 (b)(g) 3,815
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South Dakota - 2.2% 7,000 South Dakota State Health and Educational Facilities Authority, Revenue Refunding
Bonds, Series A, 7.625% due 1/01/2008 (f)(g) 7,569
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Tennessee - 0.7% 2,280 Tennessee HDA, Revenue Refunding Bonds (Homeownership Program), AMT, Series 1, 5.95% 2,348
due 7/01/2012 (f)
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Texas - 10.3% 1,615 Bexar, Texas, Metropolitan Water District, Waterworks System Revenue Refunding Bonds,
6.35% due 5/01/2025 (f) 1,651
Dallas-Fort Worth, Texas, International Airport Revenue Bonds, DRIVERS, AMT (j):
2,000 Series 202, 8.956% due 11/01/2028 (b) 2,295
7,250 Series 353, 7.957% due 5/01/2011 (f) 7,957
900 Houston, Texas, Airport System Revenue Refunding Bonds, Sub-Lien, Series B, 5.50%
due 7/01/2030 (d) 960
9,345 Leander, Texas, Independent School District, Capital Appreciation, GO, Refunding
(School Building), 5.84%** due 8/15/2029 (b) 2,631
5,820 North Harris County, Texas, Regional Water Authority, Senior Lien Revenue Bonds,
5.125% due 12/15/2035 (f) 6,034
6,250 Texas State Turnpike Authority, Central Texas Turnpike System Revenue Bonds, First
Tier, Series A, 5.50% due 8/15/2039 (a) 6,729
5,200 Travis County, Texas, Health Facilities Development Corporation, Revenue Refunding
Bonds, RITR, Series 4, 8.66% due 11/15/2024 (a)(j) 6,227
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Virginia - 4.0% 10,000 Fairfax County, Virginia, EDA, Resource Recovery Revenue Refunding Bonds, AMT,
Series A, 6.10% due 2/01/2010 (a) 10,875
2,300 Halifax County, Virginia, IDA, Exempt Facility, Revenue Refunding Bonds (Old Dominion
Electric Cooperative Project), AMT, 5.625% due 6/01/2028 (a) 2,481
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MuniEnhanced Fund, Inc.
Schedule of Investments as of October 31, 2005 (in Thousands)
Face
State Amount Municipal Bonds Value
-----------------------------------------------------------------------------------------------------------------------------------
Washington - 2.4% $ 2,150 King County, Washington, Sewer Revenue Refunding Bonds, Series B, 5.50% due 1/01/2027
(d) $ 2,309
3,600 Seattle, Washington, Municipal Light and Power Revenue Refunding Bonds, 5%
due 11/01/2028 (d) 3,698
2,000 Snohomish County, Washington, Public Utility District Number 001, Electric Revenue
Refunding Bonds, 5.375% due 12/01/2009 (d)(g) 2,167
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Total Municipal Bonds (Cost - $490,631) - 152.9% 513,718
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Shares
Held Short-Term Securities
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1,600 Merrill Lynch Institutional Tax-Exempt Fund (l) 1,600
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Total Short-Term Securities (Cost - $1,600) - 0.5% 1,600
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Total Investments (Cost - $492,231*) - 153.4% 515,318
Other Assets Less Liabilities - 2.3% 7,697
Preferred Stock, at Redemption Value - (55.7%) (187,024)
----------
Net Assets Applicable to Common Stock - 100.0% $ 335,991
==========
* The cost and unrealized appreciation (depreciation) of investments as of
October 31, 2005, as computed for federal income tax purposes, were as
follows:
Aggregate cost $ 492,231
=========
Gross unrealized appreciation $ 24,388
Gross unrealized depreciation (1,301)
---------
Net unrealized appreciation $ 23,087
=========
** Represents a zero coupon or a step bond; the interest rate shown is the
effective yield at the time of purchase.
(a) AMBAC Insured.
(b) FGIC Insured.
(c) XL Capital Insured.
(d) FSA Insured.
(e) AGC Insured.
(f) MBIA Insured.
(g) Prerefunded.
(h) Escrowed to maturity.
(i) Radian Insured.
(j) The rate disclosed is that currently in effect. This rate changes
periodically and inversely based upon prevailing market rates.
(k) CIFG Insured.
MuniEnhanced Fund, Inc.
Schedule of Investments as of October 31, 2005 (in Thousands)
(l) Investments in companies considered to be an affiliate of the Fund, for
purposes of Section 2(a)(3) of the Investment Company Act of 1940, were as
follows:
--------------------------------------------------------------------------
Net Dividend
Activity Income
Affiliate
--------------------------------------------------------------------------
Merrill Lynch Institutional
Tax-Exempt Fund 1,600 $ 55
--------------------------------------------------------------------------
Forward interest rate swaps outstanding as of October 31, 2005 were as
follows:
--------------------------------------------------------------------------
Notional Unrealized
Amount Appreciation
--------------------------------------------------------------------------
Pay a fixed rate of 3.801% and receive
a floating rate based on 1-week Bond
Market Association Rate
Broker, JPMorgan Chase Bank
Expires November 2015 $ 35,000 $ 180
Pay a fixed rate of 3.80% and receive a
floating rate based on 1-week Bond
Market Association Rate
Broker, JPMorgan Chase Bank
Expires January 2016 $ 20,000 140
--------------------------------------------------------------------------
Total $ 320
=========
Item 2 - Controls and Procedures
2(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.
2(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 quarter 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 3 - Exhibits
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.
MuniEnhanced Fund, Inc.
By: /s/ Robert C. Doll, Jr.
---------------------------
Robert C. Doll, Jr.
Chief Executive Officer
MuniEnhanced Fund, Inc.
Date: December 17, 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
MuniEnhanced Fund, Inc.
Date: December 17, 2005
By: /s/ Donald C. Burke
---------------------------
Donald C. Burke
Chief Financial Officer
MuniEnhanced Fund, Inc.
Date: December 17, 2005