<PAGE>
MUNICIPAL ADVANTAGE FUND INC.
August 31, 1999
Dear Shareholder:
We are pleased to present the quarterly report of Municipal Advantage Fund Inc.
(the "Fund") for the fiscal quarter ended July 31, 1999.
Municipal bond prices continued to decline in the third fiscal quarter ended
July 31, 1999, extending the moderate downward trend that began early in
calendar 1999. The increase in interest rates in recent months caused bond
prices to decrease due to investor concerns of a tightening job market and the
possibility of an upturn in inflation. At the end of June, the Federal Reserve
increased its target short-term interest rate by one-quarter percentage point in
a preemptive strike against potential inflationary pressures.
All investment markets go through periodic adjustments, and we are not overly
concerned about the municipal bond market's weakness over the past few months.
Recent economic data indicates that inflation, in fact, remains extremely low.
Moreover, quality municipal securities continue to provide tax-exempt yields
well above the inflation rate. We remain generally constructive in our view of
the market and continue to focus on delivering excellent long-term investment
results.
RETURNS FOR THE QUARTER AND NINE MONTHS
Reflecting the downward trend of the market, the Fund's common shares declined
3.7% during the fiscal quarter ended July 31, 1999. This return is based upon
the change in net asset value ("NAV") of the common shares and assumes the
reinvestment of all dividends during the period. The Fund's performance compared
with a 1.7% decline in the Lehman Brothers Municipal Bond Index ("Lehman Index")
and a 3.2% average decline for leveraged closed-end general municipal bond funds
monitored by Lipper Analytical Services, Inc. The Fund's return ranked 37th
among the 47 funds in this Lipper category.
The Fund's results were hindered by its longer-term security positions, prices
of which tend to decrease greater than do shorter issues when the market
weakens. In addition, the Fund utilizes leverage from its preferred stock
issuance to generate additional income for common shareholders. The leverage
causes the Fund to underperform the Lehman Index in a declining market and
outperform the index when bond prices rise.
Based on market total return--dividends plus the price change of the Fund's
common shares on the New York Stock Exchange, assuming reinvestment of
dividends--the Fund declined 1.3% during the quarter.
For the fiscal year to date (nine months ended July 31, 1999), the Fund's common
shares declined 2.9% based upon NAV and 4.8% based upon market price. The Lehman
Index increased 0.7% during this period.
STRONG PERFORMANCE OVER LONGER PERIODS
The Fund continues to deliver strong total returns over most longer periods:
NAV PERFORMANCE VERSUS BENCHMARKS
<TABLE>
<S> <C> <C> <C>
Average for leveraged
closed-end municipal
Average annual total bond funds monitored
return for periods Municipal Lehman Brothers by Lipper Analytical
ended July 31, 1999: Advantage Fund Municipal Bond Index Services
One year 0.2% 2.9% 1.1%
Three years 6.9% 6.3% 6.6%
Five years 7.6% 6.7% 7.1%
Since inception (April 30, 1993) 6.0% 6.0% --
</TABLE>
<PAGE>
Among the funds in the Lipper leveraged closed-end municipal bond fund category,
the Fund ranked 38th among 46 funds for one year, 17th among 44 funds for three
years and 11th among 43 funds for five years.
DIVIDEND PAYMENTS AND YIELD
During the fiscal quarter ended July 31, 1999, the Fund continued to meet its
objective of providing common shareholders with a high level of income exempt
from federal income tax, consistent with the preservation of capital. The Fund
paid regular monthly dividends of 6.65 cents per common share, aggregating 19.95
cents per common share for the quarter.
At July 31, 1999, the yield on the Fund's common shares was 6.2%, based on the
closing market price of $12.875 at the end of July and the annualized current
monthly dividend rate of 6.65 cents per common share. For an investor in the top
federal tax bracket of 39.6%, the Fund's yield was equivalent to 10.3% on a
taxable basis, which we believe is highly competitive in relation to other
quality investments.
INVESTMENT ACTIVITIES DURING THE QUARTER
We continue to be rigorous in our investment philosophy and process, investing
in those sector, maturity and quality groups of the municipal bond market that
we believe offer the most attractive relative value--the highest yield at the
lowest price with the least amount of risk.
As has been true for some time, we have found attractive value in healthcare and
housing securities. These sectors have offered higher yields than other
tax-exempt bonds of comparable quality and maturity.
In addition, because the yield differences between higher-rated and lower-rated
municipal securities remain relatively small, we see little incentive at this
time to own lower-rated bonds except in specific instances where we have
identified good value. At July 31, 95.3% of the Fund's net assets were invested
in securities rated single-A or higher by Standard & Poor's and/or Moody's, up
from 93.7% and 90.6% at the end of April 1999 and July 1998, respectively. In
particular, the Fund owns many triple-A insured bonds. Because of the large
market supply of these bonds, they currently offer somewhat higher yields than
triple-A non-insured bonds or even double-A securities of comparable maturity.
With our focus on generating a high level of income without taking large risks,
we believe triple-A insured securities are an attractive opportunity.
PORTFOLIO ANALYSIS
The Fund invests substantially all of its assets in long-term tax-exempt
securities that are rated "investment grade" at the time of purchase by at least
one nationally recognized statistical rating organization. At the end of July
1999, 98.8% of the Fund's portfolio was invested in long-term securities and
1.2% in cash equivalents.
We seek to control risk and maximize returns not only by emphasizing investment
quality, but also by diversifying the Fund's portfolio across states and
sectors. The Fund's five largest state positions at the end of July were: New
York representing 12.2% of net assets; California, 9.8%; Texas, 9.7%; Michigan,
8.7%; and Massachusetts, 7.0%. The five largest market sectors were: health and
hospital, representing 20.7% of net assets; housing, 16.4%; general obligations,
15.0%; water and sewer, 12.5%; and airline and airport, 12.5%. There were no
significant changes in either state or sector allocation during the quarter.
The average maturity of the portfolio was 21.2 years at the end of July 1999,
down slightly from 21.3 years at the end of April.
PREFERRED STOCK
The Fund issues preferred stock to generate additional income for holders of the
Fund's common shares. Proceeds from the preferred stock are invested in
municipal bonds that currently yield more than the cost of the preferred. In
addition to increasing income, the use of leverage from the preferred shares
tends to magnify the capital appreciation of the common shares in a rising bond
market and their capital losses in a declining market.
At the most recent auction on August 16, 1999, the Fund sold 28-day auction rate
preferred stock at an annual dividend rate of 3.35%, up from 3.30% on the
previous issue.
<PAGE>
DISCOUNT
The Fund's common shares trade at a discount to their NAV, as is true of many
closed-end municipal bond funds. The size of the discount has fluctuated over
time, based on the performance of the market price in comparison to the NAV. In
the latest quarter, when the market price outperformed the NAV, the discount
narrowed to 8.4% at the end of July from 11.4% three months earlier.
We believe that one way for owners of the Fund's common shares to capitalize on
the discount and acquire an interest in quality securities at a price below NAV
is by reinvesting their dividends.
YEAR 2000 PROCESSING ISSUE
Many computer programs have traditionally used two digits rather than four to
identify the year, rendering them unable to distinguish the year 2000 from the
year 1900. The Year 2000 issue affects virtually all companies and
organizations. The Fund's investment manager and investment adviser have
completed the necessary remediation and testing of the computer systems under
their control to deal with the Year 2000 issue. The Fund's transfer agent,
custodian and other service providers have reported that they are working on
dealing with the Year 2000 issue as well.
There can be no assurance that the problem will be corrected in all respects or
that it will not have a negative effect on the Fund's operations or results. Of
course, we never have and cannot guarantee investment performance. Likewise, we
cannot guarantee that Year 2000 will not result in any portfolio losses.
However, be assured that our analysts and portfolio managers take Year 2000 into
account when they make investment decisions, such as choosing counterparties and
evaluating other risks associated with the purchase or sale of securities. The
type of evaluation conducted can vary depending upon the type of issuer. Our
portfolio managers' job is a difficult one because the amount and type of
information available on issuers and counterparties often varies substantially,
and there often is little or no assurance of its accuracy or completeness.
RECORDED UPDATE
For a periodic update reviewing the municipal bond markets and containing
specific information regarding the Fund and its portfolio, including largest
holdings, asset allocation, NAV, performance and other information, please call
our toll-free number (800) 223-2413.
SUMMARY
At the end of July 1999, yields on long-term triple-A tax-exempt municipal
securities exceeded 90% of the yields on long U.S. Government bonds, well above
the historic norm. This suggests that municipal bonds currently offer attractive
value relative to Government securities.
We remain dedicated to meeting the Fund's objective of providing common
shareholders with a high level of income exempt from federal income tax,
consistent with the preservation of capital. We at the Fund, together with PIMCO
Advisors L.P., the Fund's investment manager, and OpCap Advisors, which provides
advisory and administrative services to the Fund, thank you for investing with
us.
Sincerely,
/s/ Stephen Treadway
--------------------
Stephen Treadway
Chairman
<PAGE>
MUNICIPAL ADVANTAGE FUND INC.
SCHEDULE OF INVESTMENTS
JULY 31, 1999
(UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Principal Credit Rating
Amount (Moody/S&P) Value *
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG-TERM INVESTMENTS--98.0%
ALABAMA--2.6%
$1,000,000 Alabama State Docks Department Facility Revenue
(MBIA insured),
6.15%, 10/1/14............................................ Aaa/AAA $ 1,055,810
1,250,000 Alabama State Public School & College Authority
(FSA insured),
4.25%, 11/1/18............................................ Aaa/AAA 1,051,325
2,000,000 DCH Health Care Authority, Health Care Facilities Revenue,
5.70%, 6/1/15............................................. A1/A+ 2,011,720
-----------
4,118,855
-----------
CALIFORNIA--9.8%
1,000,000 Burbank Redevelopment Agency,
6.00%, 12/1/13............................................ Baa1/A- 1,026,890
2,500,000 California Health Facilities Financing Authority Revenue,
6.25%, 3/1/21............................................. A3/A 2,587,350
1,000,000 California State Public Works Board, Lease Revenue,
6.30%, 10/1/10 (Pre-refunded 10/1/04)+.................... A1/A 1,112,740
1,000,000 Foothill/Eastern Corridor Agency, Toll Road Revenue,
5.75%, 1/15/40............................................ BBB-/Baa3 992,360
1,000,000 Lafayette Elementary School District (FSA insured),
5.90%, 5/15/17............................................ Aaa/AAA 1,054,290
4,000,000 Los Angeles Harbor Department Revenue,
5.375%, 11/1/23........................................... Aa3/AA 3,865,600
1,000,000 Los Angeles Regional Airports Revenue,
6.70%, 1/1/22............................................. NR/A- 1,045,940
1,000,000 Madera County Certificates of Participation (MBIA insured),
6.125%, 3/15/23 (Pre-refunded 3/15/05)+................... Aaa/AAA 1,109,200
2,000,000 San Mateo County JT Powers Authority (MBIA insured),
5.00%, 7/1/21............................................. Aaa/AAA 958,830
2,000,000 Tustin California University School District Special Tax
(FSA insured),
4.50%, 9/1/24............................................. Aaa/AAA 1,710,140
-----------
15,463,340
-----------
COLORADO--4.9%
3,085,000 Colorado Health Facilities Authority Revenue (MBIA insured),
5.95%, 5/15/12............................................ Aaa/AAA 3,232,124
Denver City & County Airport Revenue (MBIA insured),
1,500,000 5.60%, 11/15/25........................................... Aaa/AAA 1,497,810
3,000,000 5.75%, 11/15/17........................................... Aaa/AAA 3,033,210
-----------
7,763,144
-----------
DISTRICT OF COLUMBIA--1.0%
1,850,000 Washington D.C. Convention Center Authority Tax Revenue
(AMBAC insured),
4.75%, 10/1/28............................................ Aaa/AAA 1,610,813
-----------
</TABLE>
<PAGE>
MUNICIPAL ADVANTAGE FUND INC.
SCHEDULE OF INVESTMENTS
JULY 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Principal Credit Rating
Amount (Moody/S&P) Value *
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG-TERM INVESTMENTS (CONTINUED)
FLORIDA--0.8%
$1,500,000 Florida State Board of Education (FSA insured),
4.50%, 6/1/22............................................. Aaa/AAA $1,292,190
----------
GEORGIA--2.6%
1,750,000 Cherokee County Water & Sewer Authority Revenue
(MBIA Insured),
5.50%,8/1/23.............................................. Aaa/AAA 1,780,485
1,000,000 Savannah Hospital Authority Revenue,
6.125%, 7/1/12 (Pre-refunded 7/1/03)+..................... A3/NR 1,077,930
1,260,000 Toombs County Hospital Authority Revenue,
7.00%, 12/1/17............................................ NR/BBB 1,334,819
----------
4,193,234
----------
ILLINOIS--3.9%
1,000,000 Chicago Water Revenue (FGIC insured),
5.25%, 11/1/17............................................ Aaa/AAA 975,840
1,000,000 Illinois Educational Facilities Authority Revenue,
5.25%, 9/1/24............................................. NR/A- 900,920
2,670,000 Illinois Health Facilities Authority Revenue,
9.00%, 11/15/15........................................... Baa1/AAA 2,904,346
1,355,000 Illinois Housing Development Authority Revenue,
6.70%, 8/1/25............................................. Aa2/AA 1,420,406
----------
6,201,512
----------
KENTUCKY--0.7%
1,000,000 Louisville & Jefferson Counties Metropolitan Sewer District
(AMBAC insured),
6.50%, 5/15/24 (Pre-refunded 11/15/04)+................... Aaa/AAA 1,114,990
----------
LOUISIANA--1.0%
1,500,000 New Orleans General Obligation Bonds (AMBAC insured),
6.125%, 10/1/16........................................... Aaa/AAA 1,590,315
----------
MAINE--0.4%
555,000 Maine State Housing Authority, Mortgage Purchase,
7.55%, 11/15/22........................................... Aa2/AA 577,489
----------
MARYLAND--0.6%
945,000 Maryland State Community Development Administration
(FHA insured),
7.60%, 4/1/23............................................. Aa2/NR 977,395
----------
MASSACHUSETTS--7.0%
Massachusetts Bay Transportation Authority Revenue,
1,000,000 Ser. A, 5.00%, 3/1/27 (FGIC insured)...................... Aaa/AAA 917,470
3,000,000 Ser. D, 5.00%, 3/1/27..................................... Aa3/AA- 2,752,410
Massachusetts State Health & Education Facilities Authority
Revenue,
1,000,000 5.125%, 7/1/19............................................ A1/AA- 935,390
2,250,000 6.25%, 12/1/22............................................ A1/A 2,356,830
</TABLE>
<PAGE>
MUNICIPAL ADVANTAGE FUND INC.
SCHEDULE OF INVESTMENTS
JULY 31, 1999
(UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Principal Credit Rating
Amount (Moody/S&P) Value *
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG-TERM INVESTMENTS (CONTINUED)
MASSACHUSETTS (CONTINUED)
$1,175,000 Massachusetts State Water Pollution Abatement Trust,
6.375%, 2/1/15............................................ Aa3/AA+ $1,272,607
3,250,000 Massachusetts State Water Resource Authority (FSA insured),
4.50%, 8/1/22............................................. Aaa/AAA 2,779,562
----------
11,014,269
----------
MICHIGAN--8.6%
1,000,000 Dearborn School District,
6.00%, 5/1/14 (Pre-refunded 5/1/01)+...................... Aa2/AA+ 1,051,370
1,000,000 Michigan Municipal Bond Authority Revenue,
4.75%, 10/1/18............................................ Aa1/AA+ 911,760
Michigan State Hospital Finance Authority Revenue,
1,000,000 5.50%, 10/1/18.............................................. Baa2/BBB 940,160
2,000,000 8.125%, 10/1/21 (Pre-refunded 10/1/05)+..................... Baa2/AAA 2,409,280
1,000,000 Michigan State Pollution Control Revenue,
6.20%, 9/1/20............................................. A2/A 1,052,800
Wayne County Airport Revenue (MBIA insured),
4,000,000 5.00%, 12/1/22.............................................. Aaa/AAA 3,669,760
4,000,000 5.00%, 12/1/28.............................................. Aaa/AAA 3,613,440
----------
13,648,570
----------
MINNESOTA--3.8%
Minnesota State Housing Finance Agency,
1,410,000 6.00%, 2/1/14............................................... Aa2/AA 1,455,797
2,530,000 6.10%, 8/1/22............................................... Aa2/AA 2,611,921
1,865,000 6.25%, 8/1/22............................................... Aa2/AA 1,886,876
----------
5,954,594
----------
NEVADA--6.0%
2,000,000 Clark County General Obligation Bonds (MBIA insured),
6.00%, 6/1/13 (Pre-refunded 6/1/04)+...................... Aaa/AAA 2,154,100
1,000,000 Clark County Industrial Development Revenue,
5.60%, 10/1/30............................................ NR/BBB 933,160
2,000,000 Clark County Passenger Facility Charge Revenue
(MBIA insured),
5.75%, 7/1/23............................................. Aaa/AAA 2,021,420
2,400,000 Henderson Nevada Water & Sewer Revenue (FGIC insured),
4.75%, 9/1/18............................................. Aaa/AAA 2,180,880
Nevada Housing Division Revenue (FHA insured),
1,055,000 6.20%, 4/1/17............................................... Aaa/AAA 1,100,112
990,000 6.20%, 10/1/28.............................................. Aaa/NR 1,027,739
----------
9,417,411
----------
NEW HAMPSHIRE--1.8%
1,000,000 New Hampshire Higher Educational & Health Facilities
Authority Revenue,
6.125%, 10/1/13........................................... Baa1/NR 1,013,710
</TABLE>
<PAGE>
MUNICIPAL ADVANTAGE FUND INC.
SCHEDULE OF INVESTMENTS
JULY 31, 1999
(UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Principal Credit Rating
Amount (Moody/S&P) Value *
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG-TERM INVESTMENTS (CONTINUED)
NEW HAMPSHIRE (CONTINUED)
New Hampshire State Housing Finance Authority,
$ 810,000 6.50%, 7/1/14............................................... Aa3/NR $ 848,167
940,000 6.90%, 7/1/19............................................... Aa/NR 984,565
----------
2,846,442
----------
NEW JERSEY--0.6%
1,000,000 New Jersey Economic Development Authority,
Heating & Cooling Revenue,
6.20%, 12/1/07............................................ NR/BBB- 1,026,350
----------
NEW YORK--12.0%
1,000,000 Long Island Power Authority, Electric System Revenue,
5.50%, 12/1/29............................................ Baa1/A- 972,610
1,000,000 Municipal Assistance Corporation, City of Troy
(MBIA insured),
5.00%, 1/15/16............................................ Aaa/AAA 965,170
New York City General Obligation Bonds,
2,000,000 5.75%, 2/1/17............................................... A3/A- 2,047,220
1,500,000 5.75%, 2/1/19............................................... A3/A- 1,519,095
1,000,000 5.875%, 3/15/18............................................. A3/A- 1,022,650
1,000,000 6.00%, 8/1/14............................................... A3/A- 1,051,090
1,000,000 6.00%, 8/1/16............................................... A3/A- 1,053,990
1,000,000 6.95%, 8/15/12 (MBIA insured) (Pre-refunded 8/15/04)+....... Aaa/AAA 1,124,110
2,140,000 7.00%, 10/1/09 (Pre-refunded 10/1/02)+...................... A3/A- 2,345,740
3,000,000 New York City Industrial Development Agency,
Special Facilities Revenue,
6.125%, 1/1/24............................................ A3/A 3,105,000
1,500,000 New York State Dormitory Authority Revenue,
5.75%, 5/15/24 (Pre-refunded 5/15/04)+.................... Aaa/AAA 1,589,175
New York State Medical Care Facilities,
Finance Agency Revenue,
15,000 6.50%, 8/15/24............................................ A3/A- 16,239
985,000 6.50%, 8/15/24 (Pre-refunded 8/15/04)+.................... A3/A- 1,089,164
1,080,000 New York State Urban Development Corporation,
Correctional Capital Facility,
5.375%, 1/1/25............................................ Baa1/BBB+ 1,034,521
----------
18,935,774
----------
NORTH CAROLINA--1.1%
North Carolina Medical Care Community Hospital Revenue,
1,000,000 4.75%, 12/1/28............................................ Aa3/AA- 853,970
1,000,000 4.75%, 12/1/28 (MBIA insured)............................. Aaa/AAA 871,700
----------
1,725,670
----------
NORTH DAKOTA--0.9%
1,495,000 North Dakota State Housing Finance Agency,
5.50%, 7/1/18............................................. Aa3/NR 1,479,332
----------
<PAGE>
MUNICIPAL ADVANTAGE FUND INC.
SCHEDULE OF INVESTMENTS
JULY 31, 1999
(UNAUDITED) (CONTINUED)
</TABLE>
<TABLE>
<CAPTION>
Principal Credit Rating
Amount (Moody/S&P) Value *
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG-TERM INVESTMENTS (CONTINUED)
PENNSYLVANIA--5.2%
$2,000,000 Allegheny County Hospital Development Authority
(MBIA insured),
6.00%, 7/1/23............................................. Aaa/AAA $2,126,520
1,750,000 Philadelphia Hospitals & Higher Facilities Authority Revenue
(AMBAC insured),
5.125%, 5/15/18........................................... Aaa/AAA 1,665,703
1,500,000 Philadelphia Water and Wastewater Revenue (MBIA insured),
5.25%, 6/15/23............................................ Aaa/AAA 1,436,940
3,000,000 Southeastern Pennsylvania Transit Authority Revenue
(FGIC insured),
5.375%, 3/1/22............................................ Aaa/AAA 2,932,710
----------
8,161,873
----------
SOUTH CAROLINA--0.9%
1,450,000 York County Industrial Revenue,
5.70%, 1/1/24............................................. A2/A+ 1,449,928
----------
SOUTH DAKOTA--0.7%
1,000,000 Heartland Consumers Power District Revenue,
7.00%, 1/1/16............................................. Aaa/AAA 1,151,310
----------
TENNESSEE--1.3%
2,000,000 Tennessee Housing Development Agency,
6.375%, 7/1/22............................................ Aa2/AA 2,098,960
----------
TEXAS--9.2%
1,000,000 Alliance Airport Authority Revenue,
6.375%, 4/1/21............................................ Baa2/BBB 1,037,270
1,195,000 Arlington General Obligation Bonds,
5.00%, 8/15/16............................................ Aa3/AA 1,148,586
1,000,000 Denton County General Obligation Bonds (AMBAC insured),
5.00%, 7/15/16............................................ Aaa/AAA 959,120
1,000,000 Harlandale Independent School District,
4.50%, 8/15/23............................................ Aaa/NR 853,260
1,500,000 Harris County Port Authority General Obligation Bonds,
5.75%, 10/1/17............................................ Aa2/AA 1,528,950
785,000 Harris County Toll Road Subordinated Lien,
6.50%, 8/15/15............................................ Aa2/AA 841,002
1,250,000 Houston General Obligation Bonds,
5.00%, 3/1/13............................................. Aa3/AA- 1,224,613
1,000,000 Houston Independent School District,
4.75%, 2/15/26............................................ Aaa/AAA 887,010
Houston Water Conveyance System, Certificates of
Participation
(AMBAC insured),
1,000,000 6.25%, 12/15/14............................................. Aaa/AAA 1,105,660
1,400,000 7.50%, 12/15/15............................................. Aaa/AAA 1,733,368
2,500,000 Houston Water & Sewer Systems Revenue (FGIC insured),
5.00%, 12/1/25............................................ Aaa/AAA 2,307,425
</TABLE>
<PAGE>
MUNICIPAL ADVANTAGE FUND INC.
SCHEDULE OF INVESTMENTS
JULY 31, 1999
(UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Principal Credit Rating
Amount (Moody/S&P) Value *
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG-TERM INVESTMENTS (CONTINUED)
TEXAS (CONTINUED)
$1,000,000 North East Independent School District,
4.50%, 2/1/16............................................. Aaa/AAA $ 890,450
----------
14,516,714
----------
UTAH--0.7%
Utah Housing Finance Agency (FHA insured),
795,000 6.35%, 7/1/11............................................. Aa1/NR 832,015
265,000 6.55%, 7/1/26............................................. Aa2/AAA 277,100
----------
1,109,115
----------
VERMONT--0.9%
1,475,000 Vermont Housing Finance Agency (FHA insured),
7.85%, 12/1/29............................................ A1/A- 1,506,963
----------
VIRGINIA--3.4%
4,200,000 Virginia Housing Development Authority, Commonwealth
Mortgage,
6.50%, 1/1/13............................................. Aa1/AA+ 4,345,572
1,000,000 Virginia Housing Development Authority, Multi-Family
Housing,
5.20%, 11/1/15............................................ Aa1/AA+ 981,640
----------
5,327,212
----------
WASHINGTON--0.7%
1,000,000 Seattle Museum Development Authority,
6.30%, 7/1/13............................................. Aa1/AA+ 1,061,390
----------
WEST VIRGINIA--1.9%
Braxton County Solid Waste Disposal Revenue,
1,000,000 6.125%, 4/1/26............................................ A2/A 1,021,470
1,000,000 6.50%, 4/1/25............................................. A2/A 1,066,530
1,000,000 West Virginia General Obligation Bonds, (FGIC insured),
4.50%, 6/1/23............................................. Aaa/AAA 858,510
----------
2,946,510
----------
WISCONSIN--3.0%
1,500,000 Wisconsin General Obligation Bonds,
5.30%, 5/1/23............................................. Aa2/AA 1,456,485
3,500,000 Wisconsin Health & Educational Facilities Authority Revenue
(MBIA insured),
5.25%, 8/15/27............................................ Aaa/AAA 3,276,105
----------
4,732,590
----------
Total Long-Term Investments (cost--$152,636,438)............ 155,014,254
-----------
</TABLE>
<PAGE>
MUNICIPAL ADVANTAGE FUND INC.
SCHEDULE OF INVESTMENTS
JULY 31, 1999
(UNAUDITED) (CONCLUDED)
<TABLE>
<CAPTION>
Principal Credit Rating
Amount (Moody/S&P) Value *
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS--1.2%
ALABAMA--0.4%
$ 600,000 Phenix County Industrial Development Board,
Environmental Improvement Revenue, VRDN,
3.45%, 6/1/28............................................. NR/A1+ $ 600,000
----------
MICHIGAN--0.1%
200,000 Delta County Economic Development Corp.,
Environmental Improvement Revenue, VRDN,
3.35%, 12/1/23............................................ NR/A1+ 200,000
----------
NEW YORK--0.2%
300,000 New York State Energy Research & Development Authority,
Pollution Control Revenue, VRDN,
3.30%, 10/1/29............................................ NR/VMIG1 300,000
----------
TEXAS--0.5%
800,000 Grapevine Industrial Development Revenue, VRDN,
3.40%, 12/1/24............................................ P1/A1 800,000
----------
Total Short-Term Investments (cost--$1,900,000)............. 1,900,000
----------
Total Investments (cost--$154,536,438)...................... 99.2% $156,914,254
Other assets less liabilities............................... 0.8 1,216,119
------ ------------
Total Net Assets............................................ 100.0% $158,130,373
====== ============
</TABLE>
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* Debt securities are valued by an independent pricing service as authorized
by the Board of Directors.
+ Pre-refunded bonds are collateralized by U.S. Government or other eligible
securities which are held in escrow and used to pay principal and interest
and retire the bonds at the earliest refunding date.
VRDN--Variable rate demand notes are instruments whose interest rates change on
a specified date (such as a coupon date or interest payment date) and/or whose
interest rates vary with changes in a designated base rate (such as the prime
interest rate). Maturity date shown is the date of next rate change.
<PAGE>
The financial information included herein is taken from the records of the Fund
without examination by independent accountants who do not express an opinion
thereon.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that from time to time the Fund may purchase
shares of its common stock in the open market.
<PAGE>
Municipal Advantage Fund Inc.
Directors and Principal Officers
Stephen J. Treadway
Director and Chairman of the Board
Raymond D. Horton
Director
Robert L. Rosen
Director
Jeswald W. Salacuse
Director
Bernard H. Garil
President
Newton B. Schott, Jr.
Executive Vice President and Assistant Secretary
Robert J. Bluestone
Executive Vice President
Matthew Greenwald
Executive Vice President
Deborah Kaback
Secretary
Lawrence K. Becker
Treasurer
Brian S. Shlissel
Assistant Treasurer
Investment Manager
PIMCO Advisors L.P.
800 Newport Center Drive
Newport Beach, CA 92660
Investment Adviser
OpCap Advisors
1345 Avenue of the Americas
New York, NY 10105
Transfer Agent, Dividend Paying Agent and Registrar
EquiServe L.P.
Post Office Box 8200
Boston, MA 02266
Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
This report, including the financial information herein, is transmitted to the
shareholders of Municipal Advantage Fund Inc. for their information. It is not a
prospectus, circular or representation intended for use in the purchase of
shares of the Fund or any securities mentioned in this report.
July 31, 1999
Municipal Advantage Fund Inc.
