UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-6660
Name of Fund: MuniYield Quality Fund, Inc.
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Terry K. Glenn, President, MuniYield
Quality 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: 04/30/03
Date of reporting period: 11/01/02 - 04/30/03
Item 1 - Attach shareholder report
[LOGO] Merrill Lynch Investment Managers
Semi-Annual Report
April 30, 2003
MuniYield
Quality
Fund, Inc.
www.mlim.ml.com
MUNIYIELD QUALITY FUND, INC.
The Benefits and
Risks of Leveraging
MuniYield Quality 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 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 these securities.
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.
MuniYield Quality Fund, Inc., April 30, 2003
DEAR SHAREHOLDER
For the six months ended April 30, 2003, the Common Stock of MuniYield Quality
Fund, Inc. had a net annualized yield of 6.21%, based on a period-end per share
net asset value of $15.62 and $.481 per share income dividends. Over the same
period, the total investment return on the Fund's Common Stock was +6.35%, based
on a change in per share net asset value from $15.19 to $15.62, and assuming
reinvestment of $.479 per share ordinary income dividends.
For the six-month period ended April 30, 2003, the Fund's Auction Market
Preferred Stock had an average yield of 1.28% for Series A, 1.06% for Series B,
1.20% for Series C and .99% for Series D.
For a description of the Fund's total investment return based on a change in the
per share market value (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 the Financial Statements included
in 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 Fund's market value can
vary significantly from total investment return based on changes in the Fund's
net asset value.
The Municipal Market Environment
During the six-month period ended April 30, 2003, amid considerable weekly and
monthly volatility, long-term fixed income interest rates generally declined.
Geopolitical tensions and volatile equity valuations continued to overshadow
economic fundamentals as they have for most of the last 12 months. Reacting to
the strong U.S. equity rally that began last October, fixed income bond yields
remained under pressure in November 2002, as U.S. equity markets continued to
strengthen. During November, the Standard & Poor's 500 (S&P 500) Index rose an
additional 5.5%. Equity prices were supported by further signs of U.S. economic
recovery, especially improving labor market activity. In late November,
third-quarter 2002 U.S. gross domestic product growth was 4%, well above the
second-quarter 2002 rate of 1.3%. Financial conditions were also strengthened by
a larger-than-expected reduction in short-term interest rates by the Federal
Reserve Board in early November. The Federal Funds target rate was lowered 50
basis points (0.50%) to 1.25%, its lowest level since the 1960s. This action by
the Federal Reserve Board was largely viewed as being taken to bolster the
sputtering U.S. economic recovery. Rebounding U.S. equity markets and the
prospects for a more substantial U.S. economic recovery pushed long-term U.S.
Treasury yield levels to 5.10% by late November.
However, into early 2003, softer equity prices and renewed investor concerns
about U.S. military action against Iraq and North Korea again pushed bond prices
higher. Reacting to disappointing holiday sales and corporate managements'
attempts to scale back analysts' expectation of future earnings, the S&P 500
Index declined more than 10% from December 2002 to February 2003. Fearing an
eventual U.S./Iraq military confrontation in 2003, investors again sought the
safety of U.S. Treasury obligations and the prices of fixed income issues rose.
By the end of February 2003, U.S. Treasury bond yields had declined
approximately 40 basis points to 4.67%.
Bond yields continued to fall into early March. Once direct U.S. military action
against Iraq began, bond yields quickly rose. Prior uncertainty surrounding the
Iraqi situation was obviously removed and early U.S. military successes fostered
the hope that the conflict would be quickly and positively concluded.
Concurrently, the S&P 400 Index rose over 6% as investors, in part, sold fixed
income issues to purchase equities in anticipation of a strong U.S. economic
recovery once the Iraqi conflict was resolved. By mid-March, U.S. Treasury bond
yields again rose to above 5%. However, as there was growing sentiment that
hostilities may not be resolved in a matter of weeks, U.S. Treasury bond yields
again declined to end the month at 4.81%.
For the six months ended April 30, 2003, long-term U.S. Treasury bond yields
ratcheted back to near 5% by mid-April, as U.S. equity markets continued to
improve and the safe-haven premium U.S. Treasury issues had commanded prior to
the beginning of the Iraqi conflict continued to be withdrawn. However, with the
quick positive resolution of the Iraqi war, investors quickly resumed their
focus on the fragile U.S. economic recovery. Business activity in the United
States has remained sluggish, especially job creation. Investors have also been
concerned that the recent SARS outbreak would have a material, negative impact
on world economic conditions, especially in China and Japan. First quarter 2003
U.S. gross domestic product was released in late April initially estimating U.S.
economic activity to be growing at 1.6%, well below many analysts' assessments.
These factors, as well as the possibility that the Federal Reserve Board could
again lower short-term interest rates to encourage more robust U.S. economic
growth, pushed bond prices higher during the last two weeks of the period. By
April 30, 2003, long-term U.S. Treasury bond yields had declined to almost
4.75%. Over the past six months, long-term U.S. bond yields fell more than 20
basis points.
For the six months ended April 30, 2003, long-term tax-exempt bond yields also
fell modestly. Yield volatility was reduced relative to that seen in U.S.
Treasury issues, as municipal bond prices were much less sensitive to worldwide
geopolitical pressures on a daily and weekly basis. Tax-exempt bond yields
generally followed their taxable counterparts higher, responding to a more
positive U.S. fixed income environment and continued slow economic growth. After
rising approximately 10 basis points in November 2002 to 5.30%, municipal bond
yields generally declined through February 2003. At February 28, 2003, long-term
tax-exempt revenue bond yields, as measured by the Bond Buyer Revenue Bond
Index, fell to approximately 5.05%. However, similar to U.S. Treasury bond
yields, once military action began in Iraq, municipal bond yields rose sharply
to nearly 5.20% before declining to approximately 5.10% by the end of April.
Over the past six months, long-term tax-exempt bond yields fell approximately 11
basis points, slightly less than U.S. Treasury obligations.
A number of factors have combined to generate consistently strong demand for
municipal bonds throughout the six-month period ended April 30, 2003. Generally
weak U.S. equity markets have supported continued positive demand for tax-exempt
products as investors have sought the relative security of fixed income issues.
Also, with tax-exempt money market rates near 1%, the demand for longer maturity
municipal issues has increased as investors have opted to buy longer maturity
issues rather than remain in cash reserves. Additionally, investors received
approximately $30 billion in January 2003 from bond maturities, coupon income
and proceeds from early redemptions. However, these positive demand factors were
not totally able to offset the increase in tax-exempt new-issue supply,
preventing more significant declines in tax-exempt bond yields. This modest
underperformance has served to make municipal bonds a particularly attractive
purchase relative to their taxable counterparts. Throughout most of the yield
curve, municipal bonds have been able to be purchased at yields near or
exceeding those of comparable Treasury issues. Compared to their recent
historical averages of 82% - 88% of U.S. Treasury yields, municipal bond yield
ratios in their current 95% - 105% range are likely to prove attractive to
long-term investors.
Declining U.S. equity markets and escalating geopolitical pressures have
resulted in reduced economic activity and consumer confidence. It is important
to note that, despite all the recent negative factors impeding the growth of
U.S. businesses, the U.S. economy still grew at an approximate 2.5% rate for all
of 2002, twice that of 2001. Similar expansion is expected for early 2003. Lower
oil prices, reduced geopolitical uncertainties, increased Federal spending for
defense, and a likely Federal tax cut are all factors which should promote
stronger economic growth later this year. However, it is questionable to expect
that business and investor confidence can be so quickly restored as to trigger
dramatic, explosive U.S. economic growth and engender associated, large-scale
interest rate increases. The resumption of solid economic growth is likely to be
a gradual process accompanied by equally graduated increases in bond
2 & 3
MuniYield Quality Fund, Inc., April 30, 2003
yields. Moderate economic growth, especially within a context of negligible
inflationary pressures, should not greatly endanger the positive fixed income
environments tax-exempt products currently enjoy.
Portfolio Strategy
For the six months ended April 30, 2003, our principal portfolio strategy was to
maintain the Fund's slightly defensive structure and competitive tax-exempt
yield. We implemented this strategy by remaining fully invested and favoring
premium coupon bonds. We also pursued the strategy of extending out the yield
curve. The municipal yield curve has become exceptionally steep during the past
year, with the ten-year area of the curve exhibiting considerable volatility.
When available, we purchased premium coupon bonds in the 20-year - 25-year
maturity areas and sold bonds with ten-year - 15-year maturities. The larger
issuance of municipal bonds during the period, compared to levels one year ago
assisted in implementing this strategy. We adopted our current strategy in
recognition of relatively low municipal yields within the background of a
cautious economic environment. Despite significant monetary and fiscal stimulus,
the U.S. economy grew at sub-par levels. Additionally, significant international
events contributed to the uncertainty facing the U.S. economy. Looking ahead, we
expect to remain essentially fully invested and to retain the Fund's current
defensive structure. We will wait until the domestic economy strengthens further
before adopting a more defensive position.
During the period, the Fund's borrowing costs remained at very low levels,
generally between 1% and 1.50%. These attractive borrowing levels, in
combination with a steep tax-exempt yield curve, generated a substantial income
benefit to the Fund's Common Stock shareholder from the leveraging of the
Preferred Stock. Further material declines in short-term interest rates would
require significant easing of monetary policy by the Federal Reserve Board.
While such action is not expected, an increase in short-term interest rates by
the Federal Reserve Board is even less anticipated. We expect the Fund's
short-term borrowing costs to remain at current attractive levels for the
foreseeable future. However, should the spread between short-term and long-term
interest rates narrow, the benefits of leverage will decline, and as a result,
reduce the yield on the Fund's Common Stock. (For a more complete explanation of
the benefits and risks of leveraging, see page 1 of this report to
shareholders.)
In Conclusion
We appreciate your ongoing interest in MuniYield Quality Fund, Inc., and we look
forward to serving your investment needs in the months and years to come.
Sincerely,
/s/ Terry K. Glenn
Terry K. Glenn
President and Director
/s/ Kenneth A. Jacob
Kenneth A. Jacob
Senior Vice President
/s/ John M. Loffredo
John M. Loffredo
Senior Vice President
/s/ Michael A. Kalinoski
Michael A. Kalinoski
Vice President and Portfolio Manager
June 2, 2003
PROXY RESULTS
During the six-month period ended April 30, 2003, MuniYield Quality Fund, Inc.'s
Common Stock shareholders voted on the following proposal. The proposal was
approved at a shareholders' meeting on April 28, 2003. 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 29,601,426 501,857
James H. Bodurtha 29,596,461 506,822
Joe Grills 29,597,713 505,570
Roberta Cooper Ramo 29,587,342 515,941
Robert S. Salomon, Jr. 29,598,928 504,355
Stephen B. Swensrud 29,593,123 510,160
- ---------------------------------------------------------------------------------------------------------------------------
During the six-month period ended April 30, 2003, MuniYield Quality Fund, Inc.'s
Preferred Stock shareholders (Series A, B, C & D) voted on the following
proposal. The proposal was approved at a shareholders' meeting on April 28,
2003. 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 Board of Directors: Terry K. Glenn, James H. Bodurtha, Joe Grills,
Herbert I. London, Andre F. Perold, Roberta Cooper Ramo, Robert S. Salomon, Jr.
and Stephen B. Swensrud 7,432 20
- ---------------------------------------------------------------------------------------------------------------------------
4 & 5
MuniYield Quality Fund, Inc., April 30, 2003
SCHEDULE OF INVESTMENTS (in Thousands)
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
====================================================================================================================================
Alaska--0.5% AAA Aaa $ 2,100 Alaska State International Airports Revenue Bonds, Series B, 5.75%
due 10/01/2019 (a) $ 2,358
====================================================================================================================================
Arizona--2.1% AAA NR* 2,345 Maricopa County, Arizona, Public Finance Corporation, Lease Revenue
Bonds, RIB, Series 511X, 9.35% due 7/01/2014 (a)(j) 2,938
-------------------------------------------------------------------------------------------------------------
AAA Aaa 2,000 Mesa, Arizona, IDA, Revenue Bonds (Discovery Health Systems),
Series A, 5.875% due 1/01/2014 (h) 2,295
-------------------------------------------------------------------------------------------------------------
AA+ NR* 3,250 Phoenix, Arizona, GO, Refunding, DRIVERS, Series 173, 13.305% due
7/01/2008 (j) 4,811
====================================================================================================================================
California--3.4% California State Department of Water Resources, Power Supply Revenue
Bonds, Series A:
BBB+ A3 1,400 5.375% due 5/01/2021 1,471
BBB+ A3 1,000 5.375% due 5/01/2022 1,049
-------------------------------------------------------------------------------------------------------------
California State, GO:
A A2 4,000 5.25% due 4/01/2032 4,062
A A2 3,000 Refunding, 5.25% due 2/01/2029 3,048
-------------------------------------------------------------------------------------------------------------
A- A3 4,600 Golden State Tobacco Securitization Corporation, California, Tobacco
Settlement Revenue Bonds, Series 2003-A-1, 6.75% due 6/01/2039 4,069
-------------------------------------------------------------------------------------------------------------
AAA Aaa 2,175 San Diego, California, Unified School District, Election 1998, GO,
Series D, 5.25% due 7/01/2024 (d) 2,321
====================================================================================================================================
Colorado--17.7% Colorado Health Facilities Authority Revenue Bonds, Series A:
AA Aa2 2,475 (Catholic Health Initiatives), 5.50% due 3/01/2032 2,545
AA NR* 1,600 (Covenant Retirement Communities Inc.), 5.50% due 12/01/2027 (l) 1,662
AA NR* 1,000 (Covenant Retirement Communities Inc.), 5.50% due 12/01/2033 (l) 1,036
-------------------------------------------------------------------------------------------------------------
Colorado Housing and Finance Authority Revenue Bonds (S/F
Program) (h):
AAA NR* 1,200 AMT, Series B-2, 6.80% due 4/01/2030 1,268
AAA NR* 3,320 Series B-3, 6.55% due 10/01/2016 3,509
AAA NR* 2,285 Series B-3, 6.50% due 10/01/2029 2,414
-------------------------------------------------------------------------------------------------------------
Colorado Housing and Finance Authority, Revenue Refunding Bonds:
AAA Aaa 8,480 AMT, Series A-2, 6.60% due 5/01/2028 (a) 8,967
AAA NR* 2,345 AMT, Series C-2, 7.05% due 4/01/2031 (e)(h) 2,486
AAA Aaa 5,015 AMT, Series C-2, 7.25% due 10/01/2031 (a) 5,669
AAA Aaa 1,395 AMT, Series E-2, 7% due 2/01/2030 (h) 1,474
AAA Aaa 3,000 (S/F Program), AMT, Series B-2, 6.80% due 2/01/2031 (h) 3,439
AAA NR* 1,455 (S/F Program), AMT, Series C-2, 8.40% due 10/01/2021 (e)(h) 1,540
AAA NR* 1,385 Series C-3, 7.15% due 10/01/2030 (e)(h) 1,473
-------------------------------------------------------------------------------------------------------------
AAA Aaa 8,500 Denver, Colorado, City and County Airport Revenue Bonds, AMT,
Series D, 7.75% due 11/15/2013 (h) 10,786
-------------------------------------------------------------------------------------------------------------
Denver, Colorado, City and County, COP, Series B (a):
AAA Aaa 6,405 5.75% due 12/01/2018 7,326
AAA Aaa 14,590 5.50% due 12/01/2025 15,861
-------------------------------------------------------------------------------------------------------------
Longmont, Colorado, Sales and Use Tax Revenue Bonds (d):
AAA NR* 2,280 5.70% due 11/15/2018 2,594
AAA NR* 2,200 5.75% due 11/15/2019 2,505
-------------------------------------------------------------------------------------------------------------
AAA Aaa 11,000 Northwest Parkway, Colorado, Public Highway Authority, Capital
Appreciation Revenue Bonds, Senior Convertible, Series C, 5.416%**
due 6/15/2025 (f) 7,660
====================================================================================================================================
District of Columbia-- AAA Aaa 6,000 District of Columbia, GO, Refunding, DRIVERS, Series 152, 9.298% due
2.1% 6/01/2013 (f)(j) 7,445
-------------------------------------------------------------------------------------------------------------
AAA Aaa 2,500 District of Columbia, Revenue Refunding Bonds (Catholic University
of America Project), 5.625% due 10/01/2029 (a) 2,712
====================================================================================================================================
Florida--0.5% AA NR* 2,240 Beacon Tradeport Community Development District, Florida, Special
Assessment Revenue Refunding Bonds (Commercial Project), Series A,
5.625% due 5/01/2032 (l) 2,385
====================================================================================================================================
Georgia--1.7% AAA Aaa 2,000 Atlanta, Georgia, Airport Revenue Refunding Bonds, Series A, 5.60%
due 1/01/2030 (d) 2,176
-------------------------------------------------------------------------------------------------------------
A A3 4,785 Monroe County, Georgia, Development Authority, PCR, Refunding
(Oglethorpe Power Corporation--Scherer), Series A, 6.80% due 1/01/2011 5,718
====================================================================================================================================
Hawaii--0.5% AAA Aaa 2,000 Hawaii State, GO, Series CX, 5.50% due 2/01/2021 (f) 2,181
====================================================================================================================================
Illinois--15.1% NR* Aaa 5,000 Chicago, Illinois, Board of Education, GO, RIB, Series 467, 9.85%
due 12/01/2027 (a)(j) 6,054
-------------------------------------------------------------------------------------------------------------
Chicago, Illinois, Capital Appreciation, GO, Project and Refunding,
Series A (h):
AAA Aaa 1,000 5.422%** due 1/01/2027 708
AAA Aaa 1,000 5.435%** due 1/01/2028 706
AAA Aaa 1,000 5.448%** due 1/01/2029 703
AAA Aaa 1,000 5.46%** due 1/01/2030 702
-------------------------------------------------------------------------------------------------------------
Chicago, Illinois, GO (Lakefront Millennium Parking Facilities) (h):
AAA Aaa 5,000 5.125% due 1/01/2028 5,139
AAA Aaa 2,500 5.444%** due 1/01/2029 2,247
-------------------------------------------------------------------------------------------------------------
AAA NR* 6,835 Chicago, Illinois, O'Hare International Airport, Revenue Refunding
Bonds, DRIVERS, AMT, Series 250, 9.78% due 1/01/2021 (h)(j) 7,958
-------------------------------------------------------------------------------------------------------------
AAA Aaa 1,410 Chicago, Illinois, S/F Mortgage Revenue Bonds, AMT, Series C, 7% due
3/01/2032 (g)(h) 1,485
-------------------------------------------------------------------------------------------------------------
AAA Aaa 6,200 Cook County, Illinois, Capital Improvement, GO, Series C, 5.50% due
11/15/2026 (a) 6,687
-------------------------------------------------------------------------------------------------------------
AAA Aaa 2,130 Illinois Development Finance Authority Revenue Bonds (Presbyterian
Home Lake Project), Series B, 6.25% due 9/01/2017 (f) 2,417
-------------------------------------------------------------------------------------------------------------
Illinois State, GO, First Series:
AAA Aaa 1,000 5.50% due 2/01/2018 (d) 1,107
AAA Aaa 10,000 5.50% due 8/01/2018 (f) 11,106
AAA Aaa 3,000 5.625% due 6/01/2025 (h) 3,291
-------------------------------------------------------------------------------------------------------------
NR* A1 3,750 Illinois Student Assistance Commission, Student Loan Revenue
Refunding Bonds, AMT, Sub-Series CC, 6.875% due 3/01/2015 3,794
-------------------------------------------------------------------------------------------------------------
Portfolio
Abbreviations
To simplify the listings of MuniYield Quality 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 and at right.
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
IDB Industrial Development Board
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
S/F Single-Family
6 & 7
MuniYield Quality Fund, Inc., April 30, 2003
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
====================================================================================================================================
Illinois NR* Aaa $ 5,295 Kane and De Kalb Counties, Illinois, Community Unity School District
(concluded) Number 302, GO, 5.80% due 2/01/2022 (d) $ 6,029
-------------------------------------------------------------------------------------------------------------
Metropolitan Pier and Exposition Authority, Illinois, Dedicated
State Tax Revenue Refunding Bonds:
AAA Aaa 7,000 (McCormick Place Expansion Project), 5.50% due 12/15/2024 (d) 7,575
AAA Aaa 3,500 (McCormick Place Expansion Project), Series B, 5.75% due
6/15/2023 (h) 3,923
====================================================================================================================================
Indiana--4.0% De Kalb County, Indiana, Redevelopment Authority Revenue Bonds
(Mini-Mill), Series A (a):
AAA NR* 3,000 6.50% due 1/15/2014 3,295
AAA NR* 3,220 6.625% due 1/15/2017 3,537
-------------------------------------------------------------------------------------------------------------
AAA NR* 2,500 Indiana Bond Bank Revenue Bonds, Guarantee State Revolver, 6.875%
due 2/01/2012 (a) 2,769
-------------------------------------------------------------------------------------------------------------
BBB Baa2 8,800 Indianapolis, Indiana, Airport Authority, Special Facilities Revenue
Bonds (Federal Express Corporation Project), AMT, 7.10% due 1/15/2017 9,355
====================================================================================================================================
Kansas--0.5% AAA Aaa 2,360 Kansas City, Kansas, Utility System Revenue Refunding Bonds, 6.375%
due 9/01/2023 (d) 2,552
====================================================================================================================================
Kentucky--3.1% AAA Aaa 2,020 Kentucky Housing Corporation, Housing Revenue Bonds, AMT, Series B,
6.625% due 7/01/2026 (e)(h) 2,101
-------------------------------------------------------------------------------------------------------------
AAA Aaa 6,570 Lexington--Fayette Urban County Government, Kentucky, Governmental
Program Revenue Bonds (University of Kentucky Alumni Association
Inc. Project), 6.75% due 11/01/2004 (h)(i) 7,242
-------------------------------------------------------------------------------------------------------------
BBB Baa2 5,250 Perry County, Kentucky, Solid Waste Disposal Revenue Bonds (TJ
International Project), AMT, 7% due 6/01/2024 5,448
====================================================================================================================================
Louisiana--2.3% AAA Aaa 9,000 Louisiana Local Government, Environmental Facilities, Community
Development Authority Revenue Bonds (Capital Projects and Equipment
Acquisition), Series A, 6.30% due 7/01/2030 (a) 11,062
====================================================================================================================================
Massachusetts--5.9% Massachusetts Bay, Massachusetts, Transportation Authority, General
Transportation System Revenue Refunding Bonds, Series A (h):
AAA Aaa 3,730 7% due 3/01/2011 4,628
AAA Aaa 3,550 7% due 3/01/2014 4,533
-------------------------------------------------------------------------------------------------------------
AAA Aaa 1,000 Massachusetts State, GO, Refunding, Consolidated Loan, Series D,
5.375% due 8/01/2022 (h) 1,081
-------------------------------------------------------------------------------------------------------------
AAA Aaa 7,005 Massachusetts State, HFA, Rental Housing Mortgage Revenue Bonds,
AMT, Series C, 5.60% due 1/01/2045 (f) 7,300
-------------------------------------------------------------------------------------------------------------
Massachusetts State, HFA, S/F Housing Revenue Bonds (h):
AAA Aaa 2,185 6.35% due 6/01/2017 2,287
AAA Aaa 1,975 Series 37, 6.35% due 6/01/2017 2,067
-------------------------------------------------------------------------------------------------------------
AAA Aaa 2,625 Massachusetts State Port Authority, Special Facilities Revenue Bonds
(Delta Air Lines Inc. Project), AMT, Series A, 5.50% due 1/01/2019 (a) 2,744
-------------------------------------------------------------------------------------------------------------
NR* Aa3 2,500 Massachusetts State Revenue Bonds, RIB, Series 420, 9.86% due
12/15/2014 (j) 3,262
====================================================================================================================================
Michigan--5.2% Detroit, Michigan, City School District, GO, Series A (f):
AAA Aaa 4,000 5.50% due 5/01/2019 4,415
AAA Aaa 3,625 5.50% due 5/01/2020 3,975
-------------------------------------------------------------------------------------------------------------
AAA NR* 3,040 Michigan Higher Education Student Loan Authority, Student Loan
Revenue Refunding Bonds, AMT, Series XVII-G, 5.20% due 9/01/2020 (a) 3,148
-------------------------------------------------------------------------------------------------------------
Michigan State Strategic Fund, Limited Obligation Revenue Refunding
Bonds (Detroit Edison Company Project), AMT (b):
AAA Aaa 3,650 5.45% due 9/01/2029 3,853
AAA Aaa 3,300 Series C, 5.65% due 9/01/2029 3,467
AAA Aaa 5,800 Series C, 5.45% due 12/15/2032 6,021
====================================================================================================================================
Mississippi--0.5% AAA Aaa 2,230 Mississippi Home Corporation, S/F Revenue Refunding Bonds, AMT,
Series I, 7.375% due 6/01/2028 (g)(h) 2,466
====================================================================================================================================
Missouri--0.3% AAA Aaa 1,185 Missouri State Housing Development Commission, S/F Mortgage Revenue
Bonds (Homeowner Loan), AMT, Series B-1, 7.45% due 9/01/2031 (h) 1,297
====================================================================================================================================
Nebraska--0.5% A+ A1 2,300 Washington County, Nebraska, Wastewater Facilities Revenue Bonds
(Cargill Inc. Project), AMT, 5.90% due 11/01/2027 2,366
====================================================================================================================================
Nevada--2.7% Director of the State of Nevada, Department of Business and
Industry Revenue Bonds (Las Vegas Monorail Company Project), First
Tier (a):
AAA Aaa 1,000 5.625% due 1/01/2032 1,101
AAA Aaa 4,800 5.375% due 1/01/2040 5,084
-------------------------------------------------------------------------------------------------------------
AAA Aaa 5,710 Washoe County, Nevada, School District, GO, 5.875% due
12/01/2009 (f)(i) 6,751
====================================================================================================================================
New Hampshire-- AAA Aaa 10,000 New Hampshire Health and Education Facilities Authority Revenue
3.4% Bonds (Dartmouth--Hitchcock Obligation Group, 5.50% due 8/01/2027 (f) 10,763
-------------------------------------------------------------------------------------------------------------
AAA Aaa 5,000 New Hampshire State Business Finance Authority, PCR, Refunding
(Public Service Company), AMT, Series D, 6% due 5/01/2021 (h) 5,551
====================================================================================================================================
New Jersey--1.1% A- A3 5,700 Tobacco Settlement Financing Corporation of New Jersey Revenue
Bonds, 6.75% due 6/01/2039 5,042
====================================================================================================================================
New York--12.4% AAA Aaa 8,085 New York City, New York, City Municipal Water Finance Authority,
Water and Sewer System Revenue Bonds, RITR, Series FR-6, 9.645% due
6/15/2026 (h)(j) 9,825
-------------------------------------------------------------------------------------------------------------
New York City, New York, GO:
AAA A2 3,500 DRIVERS, Series 194, 9.91% due 2/01/2015 (f)(j) 4,197
A Aaa 6,920 RIB, Series 394, 10.082% due 8/01/2016 (h)(j) 8,998
AAA Aaa 5,000 Series B, 5.875% due 8/15/2013 (b) 5,606
AAA Aaa 9,055 Series F, 5.75% due 2/01/2019 (b) 9,944
AAA Aaa 1,495 Series I, 6.25% due 4/15/2017 (b) 1,705
-------------------------------------------------------------------------------------------------------------
New York City, New York, GO, Refunding:
AAA A2 5,000 Series E, 6.50% due 2/15/2006 (b) 5,617
AAA Aaa 9,325 Series G, 5.75% due 2/01/2017 (f) 10,254
AAA Aaa 2,315 Series J, 6% due 8/01/2017 (b) 2,638
====================================================================================================================================
Ohio--0.5% AA NR* 2,000 Jackson, Ohio, Hospital Facilities Revenue Bonds (Consolidated
Health System--Jackson Hospital), 6.125% due 10/01/2020 (l) 2,227
====================================================================================================================================
Oklahoma--0.8% Tulsa, Oklahoma, Airports Improvement Trust, General Revenue Bonds
(Tulsa International Airport), AMT (d) :
AAA Aaa 1,250 Series A, 6% due 6/01/2020 1,478
AAA Aaa 1,000 Series B, 6% due 6/01/2019 1,098
AAA Aaa 1,000 Series B, 6.125% due 6/01/2026 1,119
====================================================================================================================================
Oregon--2.2% NR* Aaa 7,500 Portland, Oregon, Sewer System Revenue Bonds, RIB, Series 386, 9.78%
due 8/01/2020 (d)(j) 10,587
====================================================================================================================================
8 & 9
MuniYield Quality Fund, Inc., April 30, 2003
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
====================================================================================================================================
Pennsylvania--4.5% AAA Aaa $ 2,000 Allegheny County, Pennsylvania, Port Authority, Special
Transportation Revenue Bonds, 6% due 3/01/2009 (h)(i) $ 2,366
-------------------------------------------------------------------------------------------------------------
AAA Aaa 800 Allegheny County, Pennsylvania, Sanitation Authority, Sewer Revenue
Bonds, 5.50% due 12/01/2030 (h) 868
-------------------------------------------------------------------------------------------------------------
AAA Aaa 6,250 Philadelphia, Pennsylvania, Authority for Industrial Development,
Lease Revenue Bonds, Series B, 5.50% due 10/01/2021 (f) 6,823
-------------------------------------------------------------------------------------------------------------
Philadelphia, Pennsylvania, School District, GO, Series B (d):
AAA Aaa 1,500 5.625% due 8/01/2020 1,662
AAA Aaa 3,670 5.625% due 8/01/2021 4,050
AAA Aaa 2,000 5.625% due 8/01/2022 2,199
-------------------------------------------------------------------------------------------------------------
AAA Aaa 3,000 Washington County, Pennsylvania, Capital Funding Authority Revenue
Bonds (Capital Projects and Equipment Program), 6.15% due
12/01/2029 (a) 3,610
====================================================================================================================================
Rhode Island--0.6% AAA Aaa 2,500 Providence, Rhode Island, GO, Series A, 5.70% due 7/15/2019 (f) 2,811
====================================================================================================================================
South Carolina-- A A2 3,645 Lexington County, South Carolina, Health Services District Inc.,
3.8% Hospital Revenue Refunding and Improvement Bonds, 5.75% due 11/01/2028 3,812
-------------------------------------------------------------------------------------------------------------
AA NR* 4,500 South Carolina Educational Facilities Authority for Private
Nonprofit Institutions Revenue Bonds (The Benedict College), 5.625%
due 7/01/2031 (l) 4,774
-------------------------------------------------------------------------------------------------------------
AAA NR* 3,045 South Carolina State Public Service Authority, Revenue Refunding
Bonds, DRIVERS, Series 277, 9.81% due 1/01/2022 (h)(j) 3,675
-------------------------------------------------------------------------------------------------------------
NR* A1 3,800 Spartanburg County, South Carolina, Solid Waste Disposal Facilities
Revenue Bonds (BMW Project), AMT, 7.55% due 11/01/2024 4,127
-------------------------------------------------------------------------------------------------------------
A- A3 2,000 Tobacco Settlement Revenue Management Authority, South Carolina,
Tobacco Settlement Revenue Bonds, Series B, 6.375% due 5/15/2030 1,700
====================================================================================================================================
Tennessee--6.3% AAA Aaa 17,000 Chattanooga, Tennessee, IDB, Lease Rent Revenue Bonds (Southside
Redevelopment Corporation), 5.875% due 10/01/2024 (a) 19,280
-------------------------------------------------------------------------------------------------------------
AAA Aaa 5,000 Memphis--Shelby County, Tennessee, Airport Authority, Airport
Revenue Bonds, AMT, Series D, 6.25% due 3/01/2018 (a) 5,619
-------------------------------------------------------------------------------------------------------------
Tennessee HDA, Homeownership Revenue Bonds, AMT, Series 2-C (a):
AAA Aaa 2,075 6.10% due 7/01/2013 2,263
AAA Aa2 2,390 6.20% due 7/01/2015 2,620
====================================================================================================================================
Texas--16.9% Austin, Texas, Convention Center Revenue Bonds (Convention
Enterprises Inc.), Trust Certificates, Second Tier, Series B:
A+ Aa3 5,000 6% due 1/01/2023 5,418
A+ Aa3 1,400 5.75% due 1/01/2032 1,465
-------------------------------------------------------------------------------------------------------------
NR* Aaa 1,000 Bell County, Texas, Health Facilities Development Revenue Bonds
(Lutheran General Health Care System), 6.50% due 7/01/2019 (c) 1,269
-------------------------------------------------------------------------------------------------------------
Dallas-Fort Worth, Texas, International Airport Revenue Refunding
and Improvement Bonds, AMT, Series A (d):
AAA Aaa 1,835 5.875% due 11/01/2017 2,046
AAA Aaa 2,145 5.875% due 11/01/2018 2,375
AAA Aaa 2,385 5.875% due 11/01/2019 2,628
AAA Aaa 800 5.50% due 11/01/2035 833
-------------------------------------------------------------------------------------------------------------
NR* Aaa 5,235 Denton, Texas, Utility System Revenue Bonds, RIB, Series 369, 10.30%
due 12/01/2017 (f)(j) 7,011
-------------------------------------------------------------------------------------------------------------
Gregg County, Texas, Health Facilities Development Corporation,
Hospital Revenue Bonds (Good Shepherd Medical Center Project) (l):
AA NR* 6,000 6.875% due 10/01/2020 7,119
AA NR* 2,600 6.375% due 10/01/2025 2,934
-------------------------------------------------------------------------------------------------------------
Harris County, Houston, Texas, Sports Authority, Revenue Refunding
Bonds, Senior Lien, Series G (h):
AAA Aaa 2,670 5.75% due 11/15/2019 2,989
AAA Aaa 4,000 5.75% due 11/15/2020 4,462
-------------------------------------------------------------------------------------------------------------
Houston, Texas, Airport System Revenue Refunding Bonds, Sub-Lien (f):
AAA Aaa 1,500 AMT, Series A, 5.50% due 7/01/2023 1,564
AAA Aaa 2,700 Series B, 5.50% due 7/01/2030 2,883
-------------------------------------------------------------------------------------------------------------
AA NR* 2,800 Sam Rayburn, Texas, Municipal Power Agency, Revenue Refunding Bonds,
5.75% due 10/01/2021 (l) 3,006
-------------------------------------------------------------------------------------------------------------
San Antonio, Texas, Airport System Improvement Revenue Bonds, AMT (d):
AAA Aaa 2,010 5.75% due 7/01/2016 2,242
AAA Aaa 3,000 5.75% due 7/01/2017 3,319
-------------------------------------------------------------------------------------------------------------
AAA Aaa 3,200 San Benito, Texas, Consolidated Independent School District, GO,
5.75% due 2/15/2016 (h) 3,603
-------------------------------------------------------------------------------------------------------------
AAA Aaa 7,200 Texas State Turnpike Authority, Central Texas Turnpike System
Revenue Bonds, First Tier, Series A, 5.75% due 8/15/2038 (a) 7,905
-------------------------------------------------------------------------------------------------------------
Travis County, Texas, Health Facilities Development Corporation,
Revenue Refunding Bonds (Ascension Health Credit), Series A (i):
AAA Aaa 8,100 5.875% due 11/15/2009 (a) 9,631
AAA Aaa 4,600 6.25% due 11/15/2009 (h) 5,572
====================================================================================================================================
Utah--4.2% AAA Aaa 15,000 Salt Lake City, Utah, Hospital Revenue Refunding Bonds (IHC
Hospitals Inc.), 6.30% due 2/15/2015 (h)(k) 18,230
-------------------------------------------------------------------------------------------------------------
NR* Aaa 1,500 Utah Water Finance Agency Revenue Bonds (Pooled Loan Financing
Program), Series A, 5.70% due 10/01/2020 (a) 1,688
====================================================================================================================================
Virginia--2.1% AAA Aaa 6,000 Fairfax County, Virginia, EDA, Resource Recovery Revenue Refunding
Bonds, AMT, Series A, 6.05% due 2/01/2009 (a) 6,901
-------------------------------------------------------------------------------------------------------------
AAA Aaa 3,100 Halifax County, Virginia, IDA, Exempt Facility Revenue Refunding
Bonds (Old Dominion Electric Cooperative Project), AMT, 5.625%
due 6/01/2028 (a) 3,319
====================================================================================================================================
Washington--10.1% AAA NR* 10,000 Energy Northwest, Washington, Electric Revenue Bonds, DRIVERS,
Series 242, 9.81% due 7/01/2017 (h)(j) 12,647
-------------------------------------------------------------------------------------------------------------
AAA Aaa 2,675 Energy Northwest, Washington, Electric Revenue Refunding Bonds
(Columbia Generating), Series B, 6% due 7/01/2018 (a) 3,073
-------------------------------------------------------------------------------------------------------------
AAA Aaa 2,835 King County, Washington, Sewer Revenue Refunding Bonds, Series B,
5.50% due 1/01/2027 (f) 3,036
-------------------------------------------------------------------------------------------------------------
AAA NR* 5,000 Tacoma, Washington, Electric System Revenue Refunding Bonds, RIB,
Series 512X, 9.85% due 1/01/2017 (f)(j) 6,183
-------------------------------------------------------------------------------------------------------------
Washington State, GO (f):
AAA Aaa 7,500 Series A and AT-6, 6.25% due 2/01/2011 8,916
AAA Aaa 9,000 Series S-4, 5.75% due 1/01/2013 10,293
-------------------------------------------------------------------------------------------------------------
AAA Aaa 3,595 Washington State, Various Purpose, GO, Series A, 5.625% due
7/01/2021 (f) 3,989
====================================================================================================================================
10 & 11
MuniYield Quality Fund, Inc., April 30, 2003
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
===================================================================================================================================
Wisconsin--0.6% A- A3 $ 2,000 Badger, Wisconsin, Tobacco Asset Securitization Corporation,
Asset-Backed Revenue Bonds, 6.375% due 6/01/2032 $ 1,678
------------------------------------------------------------------------------------------------------------
NR* Aaa 1,000 Milwaukee County, Wisconsin, Airport Revenue Bonds, AMT, Series A,
5.75% due 12/01/2025 (d) 1,064
===================================================================================================================================
Puerto Rico--0.7% AAA Aaa 2,435 Puerto Rico Electric Power Authority, Power Revenue Bonds, Trust
Receipts, Class R, Series 16 HH, 9.81% due 7/01/2013 (f)(j) 3,332
===================================================================================================================================
Total Municipal Bonds (Cost--$603,564)--138.8% 659,622
===================================================================================================================================
Shares
Held Short-Term Securities
===================================================================================================================================
1,970 Merrill Lynch Institutional Tax-Exempt Fund (m) 1,970
===================================================================================================================================
Total Short-Term Securities (Cost--$1,970)--0.4% 1,970
===================================================================================================================================
Total Investments (Cost--$605,534)--139.2% 661,592
Variation Margin on Financial Futures Contracts***--(0.1%) (386)
Other Assets Less Liabilities--3.0% 14,218
Preferred Stock, at Redemption Value--(42.1%) (200,047)
--------
Net Assets Applicable to Common Stock--100.0% $475,377
========
===================================================================================================================================
(a) AMBAC Insured.
(b) XL Capital Insured.
(c) Escrowed to maturity.
(d) FGIC Insured.
(e) FHA Insured.
(f) FSA Insured.
(g) FNMA/GNMA Collateralized.
(h) MBIA Insured.
(i) Prerefunded.
(j) The interest rate is subject to change periodically and inversely based
upon prevailing market rates. The interest rate shown is the rate in
effect at April 30, 2003.
(k) All or a portion of security held as collateral in connection with open
financial futures contracts.
(l) Radian Insured.
(m) Investments in companies considered to be an affiliate of the Fund (such
companies are defined as "Affiliated Companies" in section 2(a)(3) of the
Investment Company Act of 1940) are as follows:
(in Thousands)
--------------------------------------------------------------------------
Net Dividend
Affiliate Activity Income
--------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund 180 $27
--------------------------------------------------------------------------
* Not Rated.
** Represents a zero coupon or step bond; the interest rate shown reflects
the effective yield at the time of purchase by the Fund.
*** Financial futures contracts sold as of April 30, 2003 were as follows:
(in Thousands)
--------------------------------------------------------------------------
Number of
Expiration Contracts Issue Date Value
--------------------------------------------------------------------------
650 U.S. Treasury Bonds June 2003 $74,831
--------------------------------------------------------------------------
Total Financial Futures Contracts Sold
(Total Contract Price--$75,110) $74,831
=======
--------------------------------------------------------------------------
See Notes to Financial Statements.
STATEMENT OF NET ASSETS
As of April 30, 2003
===============================================================================================================================
Assets: Investments, at value (identified cost--$605,534,024) ............. $ 661,591,698
Cash .............................................................. 73,777
Receivables:
Interest ........................................................ $ 11,766,992
Securities sold ................................................. 3,004,641
Dividends ....................................................... 63 14,771,696
-------------
Prepaid expenses .................................................. 36,196
-------------
Total assets ...................................................... 676,473,367
-------------
===============================================================================================================================
Liabilities: Payables:
Variation margin ................................................ 385,937
Dividends to Common Stock shareholders .......................... 346,985
Investment adviser .............................................. 283,658
Other affiliates ................................................ 5,138 1,021,718
-------------
Accrued expenses .................................................. 27,138
-------------
Total liabilities ................................................. 1,048,856
-------------
===============================================================================================================================
Preferred Stock: Preferred Stock, at redemption value, par value $.05 per share
(2,000 Series A shares, 2,000 Series B shares, 2,000 Series C
shares and 2,000 Series D shares of AMPS* issued and outstanding
at $25,000 per share liquidation preference) ...................... 200,047,460
-------------
===============================================================================================================================
Net Assets Applicable Net assets applicable to Common Stock ............................. $ 475,377,051
To Common Stock: =============
===============================================================================================================================
Analysis of Net Common Stock, par value $.10 per share (30,425,258 shares issued
Assets Applicable and outstanding) .................................................. $ 3,042,526
To Common Stock: Paid-in capital in excess of par .................................. 423,867,385
Undistributed investment income--net .............................. $ 6,576,225
Accumulated realized capital losses on investments--net ........... (14,446,056)
Unrealized appreciation on investments--net ....................... 56,336,971
-------------
Total accumulated earnings--net ................................... 48,467,140
-------------
Total--Equivalent to $15.62 net asset value per share of Common
Stock (market price--$14.50) ...................................... $ 475,377,051
=============
===============================================================================================================================
* Auction Market Preferred Stock.
See Notes to Financial Statements.
12 & 13
MuniYield Quality Fund, Inc., April 30, 2003
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2003
===============================================================================================================================
Investment Interest .......................................................... $ 18,194,837
Income: Dividends ......................................................... 27,469
-------------
Total income ...................................................... 18,222,306
-------------
===============================================================================================================================
Expenses: Investment advisory fees .......................................... $ 1,652,535
Commission fees ................................................... 250,381
Accounting services ............................................... 103,969
Transfer agent fees ............................................... 38,759
Professional fees ................................................. 34,282
Printing and shareholder reports .................................. 20,454
Custodian fees .................................................... 19,362
Directors' fees and expenses ...................................... 15,997
Listing fees ...................................................... 15,572
Pricing fees ...................................................... 12,490
Other ............................................................. 25,556
-------------
Total expenses before reimbursement ............................... 2,189,357
Reimbursement of expenses ......................................... (5,126)
-------------
Total expenses after reimbursement ................................ 2,184,231
-------------
Investment income--net ............................................ 16,038,075
-------------
===============================================================================================================================
Realized & Unrealized Realized loss on investments--net ................................. (1,972,676)
Gain (Loss) on Change in unrealized appreciation/depreciation on investments--net 14,839,137
Investments--Net: -------------
Total realized and unrealized gain on investments--net ............ 12,866,461
-------------
===============================================================================================================================
Dividends to Preferred Investment income--net ............................................ (1,124,800)
Stock Shareholders: -------------
Net Increase in Net Assets Resulting from Operations .............. $ 27,779,736
=============
===============================================================================================================================
See Notes to Financial Statements.
STATEMENTS OF CHANGES IN NET ASSETS
For the Six For the
Months Ended Year Ended
April 30, October 31,
Increase (Decrease) in Net Assets: 2003 2002
===============================================================================================================================
Operations: Investment income--net ........................................... $ 16,038,075 $ 32,175,086
Realized loss on investments--net ................................ (1,972,676) (2,864,003)
Change in unrealized appreciation/depreciation on investments--net 14,839,137 (910,451)
Dividends and distributions to Preferred Stock shareholders ...... (1,124,800) (2,830,360)
------------- -------------
Net increase in net assets resulting from operations ............. 27,779,736 25,570,272
------------- -------------
===============================================================================================================================
Dividends & Investment income--net ........................................... (14,558,486) (27,778,261)
Distributions to Realized gain on investments--net ................................ -- (157,998)
Common Stock ------------- -------------
Shareholders: Net decrease in net assets resulting from dividends and
distributions to Common Stock shareholders ....................... (14,558,486) (27,936,259)
------------- -------------
===============================================================================================================================
Net Assets Applicable Total increase (decrease) in net assets applicable to Common Stock 13,221,250 (2,365,987)
To Common Stock: Beginning of period .............................................. 462,155,801 464,521,788
------------- -------------
End of period* ................................................... $ 475,377,051 $ 462,155,801
============= =============
===============================================================================================================================
*Undistributed investment income--net ............................. $ 6,576,225 $ 6,221,436
============= =============
===============================================================================================================================
See Notes to Financial Statements.
14 & 15
MuniYield Quality Fund, Inc., April 30, 2003
FINANCIAL HIGHLIGHTS
The following per share data and ratios have
been derived from information provided in the For the Six For the
financial statements. Months Ended Year Ended October 31,
April 30, ----------------------------------------------
Increase (Decrease) in Net Asset Value: 2003 2002 2001 2000 1999
==================================================================================================================================
Per Share Net asset value, beginning of period .......... $ 15.19 $ 15.27 $ 14.18 $ 13.54 $ 15.58
Operating --------- --------- --------- --------- ---------
Performance:+ Investment income--net ........................ .53++ 1.06 1.06 1.07 1.07
Realized and unrealized gain (loss) on
investments--net .............................. .42 (.13) 1.08 .66 (2.04)
Dividends and distributions to Preferred Stock
shareholders:
Investment income--net ....................... (.04) (.09) (.21) (.27) (.21)
Realized gain on investments--net ............ -- --@@ -- -- --
--------- --------- --------- --------- ---------
Total from investment operations .............. .91 .84 1.93 1.46 (1.18)
--------- --------- --------- --------- ---------
Less dividends and distributions to Common
Stock shareholders:
Investment income--net ....................... (.48) (.91) (.84) (.82) (.86)
Realized gain on investments--net ............ -- (.01) -- -- --
--------- --------- --------- --------- ---------
Total dividends and distributions to Common
Stock shareholders ............................ ( .48) ( .92) ( .84) ( .82) ( .86)
--------- --------- --------- --------- ---------
Net asset value, end of period ................ $ 15.62 $ 15.19 $ 15.27 $ 14.18 $ 13.54
========= ========= ========= ========= =========
Market price per share, end of period ......... $ 14.50 $ 13.74 $ 14.24 $ 12.0625 $ 12.0625
========= ========= ========= ========= =========
==================================================================================================================================
Total Investment Based on market price per share ............... 9.14%@ 2.94% 25.47% 7.03% (17.61%)
Return:** ========= ========= ========= ========= =========
Based on net asset value per share ............ 6.35%@ 6.12% 14.46% 12.09% (7.62%)
========= ========= ========= ========= =========
==================================================================================================================================
Ratios Based on Total expenses, net of reimbursement*** ....... .95%* .96% .98% .99% .95%
Average Net Assets ========= ========= ========= ========= =========
Of Common Stock: Total expenses*** ............................. .95%* .96% .98% .99% .95%
========= ========= ========= ========= =========
Total investment income--net*** ............... 6.94%* 7.03% 7.18% 7.74% 7.17%
========= ========= ========= ========= =========
Amount of dividends to Preferred Stock
shareholders .................................. .49%* .61% 1.45% 1.94% 1.41%
========= ========= ========= ========= =========
Investment income--net, to Common Stock
shareholders .................................. 6.46%* 6.42% 5.73% 5.81% 5.76%
========= ========= ========= ========= =========
==================================================================================================================================
Ratios Based on Total expenses, net of reimbursement .......... .66%* .67% .68% .67% .66%
Average Net Assets ========= ========= ========= ========= =========
Of Common & Total expenses ................................ .66%* .67% .68% .67% .66%
Preferred Stock:*** ========= ========= ========= ========= =========
Total investment income--net .................. 4.86%* 4.89% 4.97% 5.23% 4.99%
========= ========= ========= ========= =========
==================================================================================================================================
Ratios Based on Dividends to Preferred Stock shareholders ..... 1.13%* 1.40% 3.27% 4.03% 3.21%
Average Net Assets of ========= ========= ========= ========= =========
Preferred Stock:
==================================================================================================================================
Supplemental Net assets applicable to Common Stock, end of
Data: period (in thousands) ......................... $ 475,377 $ 462,156 $ 464,522 $ 431,471 $ 411,883
========= ========= ========= ========= =========
Preferred Stock outstanding, end of period
(in thousands) ................................ $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000
========= ========= ========= ========= =========
Portfolio turnover ............................ 12.83% 46.29% 89.58% 51.19% 91.78%
========= ========= ========= ========= =========
==================================================================================================================================
Leverage: Asset coverage per $1,000 ..................... $ 3,377 $ 3,311 $ 3,323 $ 3,157 $ 3,059
========= ========= ========= ========= =========
==================================================================================================================================
Dividends Per Share Series A--Investment income--net .............. $ 158 $ 370 $ 852 $ 1,024 $ 824
On Preferred Stock ========= ========= ========= ========= =========
Outstanding: Series B--Investment income--net .............. $ 132 $ 337 $ 792 $ 1,015 $ 779
========= ========= ========= ========= =========
Series C--Investment income--net .............. $ 149 $ 349 $ 832 $ 999 $ 809
========= ========= ========= ========= =========
Series D--Investment income--net .............. $ 123 $ 339 $ 791 $ 1,002 $ 787
========= ========= ========= ========= =========
==================================================================================================================================
* Annualized.
** Total investment returns based on market value, which can be significantly
greater or lesser than the net asset value, may result in substantially
different returns. Total investment returns exclude the effects of sales
charges.
*** Do not reflect the effect of dividends to Preferred Stock shareholders.
+ Certain prior year amounts have been reclassified to conform to current
year presentation.
++ Based on average shares outstanding.
@ Aggregate total investment return.
@@ Amount is less than $(.01) per share.
See Notes to Financial Statements.
16 & 17
MuniYield Quality Fund, Inc., April 30, 2003
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniYield Quality Fund, Inc. (the "Fund") is registered under the Investment
Company Act of 1940 as a non-diversified, closed-end management investment
company. The Fund's financial statements are prepared in conformity with
accounting principles generally accepted in the United States of America, which
may require the use of management accruals and estimates. These unaudited
financial statements reflect all adjustments, which are, in the opinion of
management, necessary to a fair statement of the results for the interim period
presented. All such adjustments are of a normal, recurring nature. The Fund
determines and makes available for publication the net asset value of its Common
Stock on a weekly basis. The Fund's Common Stock is listed on the New York Stock
Exchange under the symbol MQY. 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 markets and are valued at the most recent bid price or yield
equivalent as obtained by the Fund's pricing service from dealers that make
markets in such securities. 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). Securities with remaining
maturities of sixty days or less are valued at amortized cost, which
approximates market value. Securities and assets for which market quotations are
not readily available are valued at their fair value as determined in good faith
by or under the direction of the Board of Directors of the Fund, including
valuations furnished by Fund, which may utilize a matrix system for valuations.
The procedures of the pricing service and its valuations are reviewed by the
officers of the Fund under the general supervision of the Board of Directors.
(b) Derivative financial instruments -- The Fund may engage in various portfolio
investment strategies both to increase the return of the Fund and to hedge, or
protect, its exposure to interest rate movement 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.
o 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.
o Options -- The Fund is authorized to write covered call options and purchase
put options. When the Fund writes an option, an amount equal to the premium
received by the Fund is reflected as an asset and an equivalent liability. The
amount of the liability is subsequently marked to market to reflect the current
market value of the option written.
When a security is purchased or sold through an exercise of an option, the
related premium paid (or received) is added to (or deducted from) the basis of
the security acquired or deducted from (or added to) the proceeds of the
security sold. When an option expires (or the Fund enters into a closing
transaction), the Fund realizes a gain or loss on the option to the extent of
the premiums received or paid (or gain or loss to the extent the cost of the
closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
o Forward interest rate swaps -- The Fund is authorized to enter into forward
interest rate swaps. In a forward interest rate swap, the Fund and the
counterparty agree to pay or receive interest on a specified notional contract
amount, commencing on a specified future effective date, unless terminated
earlier. The value of the agreement is determined by quoted fair values received
daily by the Fund from the counterparty. When the agreement is closed, the Fund
records a realized gain or loss in an amount equal to the value of the
agreement.
(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) 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 .50% of the Fund's
average weekly net assets, including proceeds from the issuance of Preferred
Stock. For the six months ended April 30, 2003, FAM reimbursed the Fund in the
amount of $5,126.
For the six months ended April 30, 2003, the Fund reimbursed FAM $7,487 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 April 30, 2003 were $84,101,483 and $88,597,230, respectively.
Net realized gains (losses) for the six months ended April 30, 2003 and net
unrealized gains as of April 30, 2003 were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Gains (Losses) Gains
- --------------------------------------------------------------------------------
Long-term investments ................... $ 1,808,604 $56,057,674
Financial futures contracts ............. (3,781,280) 279,297
----------- -----------
Total ................................... $(1,972,676) $56,336,971
=========== ===========
- --------------------------------------------------------------------------------
As of April 30, 2003, net unrealized appreciation for Federal income tax
purposes aggregated $56,090,861, of which $57,528,923 related to appreciated
securities and $1,438,062 related to depreciated securities. The aggregate cost
of investments at April 30, 2003 for Federal income tax purposes was
$605,500,837.
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 the holders of Common Stock.
18 & 19
MuniYield Quality Fund, Inc., April 30, 2003
NOTES TO FINANCIAL STATEMENTS (concluded)
Common Stock
Shares issued and outstanding during the six months ended April 30, 2003 and the
year ended October 31, 2002 remained constant.
Preferred Stock
Auction Market Preferred Stock ("AMPS") are redeemable shares of Preferred Stock
of the Fund, with a par value of $.05 per share and a liquidation preference of
$25,000 per share, plus accrued and unpaid dividends, that entitle their holders
to receive cash dividends at an annual rate that may vary for the successive
dividend periods. The yields in effect at April 30, 2003 were as follows: Series
A, .97%; Series B, 1.25%; Series C, .95%; and Series D, 1.15%.
Shares issued and outstanding during the six months ended April 30, 2003 and the
year ended October 31, 2002 remained constant.
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 April 30, 2003, Merrill Lynch, Pierce, Fenner
& Smith Incorporated, an affiliate of FAM, earned $104,675 as commissions.
5. Capital Loss Carryforward:
On October 31, 2002, the Fund had a net capital loss carryforward of $7,974,254,
of which $4,695,349 expires in 2008 and $3,278,905 expires in 2010. This amount
will be available to offset like amounts of any future taxable gains.
6. Subsequent Event:
The Fund paid a tax-exempt income dividend to holders of Common Stock in the
amount of $.081000 per share on May 29, 2003 to shareholders of record on May
16, 2003.
MANAGED DIVIDEND POLICY
The Fund's dividend policy is to distribute all or a portion of its net
investment income to its shareholders on a monthly basis. In order to provide
shareholders with a more consistent yield to the current trading price of shares
of Common Stock of the Fund, the Fund may at times pay out less than the entire
amount of net investment income earned in any particular month and may at times
in any month pay out such accumulated but undistributed income in addition to
net investment income earned in that month. As a result, the dividends paid by
the Fund for any particular month may be more or less than the amount of net
investment income earned by the Fund during such month. The Fund's current
accumulated but undistributed net investment income, if any, is disclosed in the
Statement of Net Assets, which comprises part of the financial information
included in this report.
20 & 21
MuniYield Quality Fund, Inc., April 30, 2003
QUALITY PROFILE
The quality ratings of securities in the Fund as of April 30, 2003 were as
follows:
- --------------------------------------------------------------------------------
Percent of
Total
S&P Rating/Moody's Rating Investments
- --------------------------------------------------------------------------------
AAA/Aaa ................................................. 84.7%
AA/Aa ................................................... 6.5
A/A ..................................................... 6.3
BBB/Baa ................................................. 2.2
NR (Not Rated) .......................................... 0.3
- --------------------------------------------------------------------------------
OFFICERS AND DIRECTORS
Terry K. Glenn, President and Director
James H. Bodurtha, Director
Joe Grills, Director
Herbert I. London, Director
Andre F. Perold, Director
Roberta Cooper Ramo, Director
Robert S. Salomon, Jr., Director
Stephen B. Swensrud, Director
Kenneth A. Jacob, Senior Vice President
John M. Loffredo, Senior Vice President
Michael A. Kalinoski, Vice President
Donald C. Burke, Vice President and Treasurer
Brian D. Stewart, Secretary
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agents
Common Stock:
EquiServe Trust Company, I.A.
P.O. Box 43010
Providence, RI 02940-3010
Preferred Stock:
The Bank of New York
100 Church Street
New York, NY 10286
NYSE Symbol
MQY
- --------------------------------------------------------------------------------
Melvin R. Seiden, Director of MuniYield Quality Fund, Inc., has recently
retired. The Fund's Board of Directors wishes Mr. Seiden well in his retirement.
- --------------------------------------------------------------------------------
[LOGO] Merrill Lynch Investment Managers
[GRAPHICS OMITTED]
MuniYield Quality Fund, Inc. seeks to provide shareholders with as high a level
of current income exempt from Federal income taxes as is consistent with its
investment policies and prudent investment management by investing primarily in
a portfolio of long-term, high-grade municipal obligations the interest on which
is exempt from Federal income taxes in the opinion of bond counsel to the
issuer.
This report, including the financial information herein, is transmitted to
shareholders of MuniYield Quality Fund, Inc. for their information. It is not a
prospectus. Past performance results shown in this report should not be
considered a representation of future performance. 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.
Statements and other information herein are as dated and are subject to change.
MuniYield Quality Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
[RECYCLED LOGO] Printed on post-consumer recycled paper #16352--4/03
Item 2 - Did registrant adopt a code of ethics, as of the end of the period
covered by this report, that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant
or a third party? If not, why not? Briefly describe any amendments or
waivers that occurred during the period. State here if code of
ethics/amendments/waivers are on website and give website address-.
State here if fund will send code of ethics to shareholders without
charge upon request-- N/A (not answered until July 15, 2003 and only
annually for funds)
Item 3 - Did the registrant's board of directors determine that the registrant
either: (i) has at least one audit committee financial expert serving
on its audit committee; or (ii) does not have an audit committee
financial expert serving on its audit committee? If yes, disclose name
of financial expert and whether he/she is "independent," (fund may, but
is not required, to disclose name/independence of more than one
financial expert) If no, explain why not. -N/A (not answered until July
15, 2003 and only annually for funds)
Item 4 - Disclose annually only (not answered until December 15, 2003)
(a) Audit Fees - Disclose aggregate fees billed for each of the last two
fiscal years for professional services rendered by the
principal accountant for the audit of the registrant's
annual financial statements or services that are
normally provided by the accountant in connection with
statutory and regulatory filings or engagements for
those fiscal years. N/A.
(b) Audit-Related Fees - Disclose aggregate fees billed in each of the
last two fiscal years for assurance and related
services by the principal accountant that are
reasonably related to the performance of the
audit of the registrant's financial statements
and are not reported under paragraph (a) of this
Item. Registrants shall describe the nature of
the services comprising the fees disclosed under
this category. N/A.
(c) Tax Fees - Disclose aggregate fees billed in each of the last two
fiscal years for professional services rendered by the
principal accountant for tax compliance, tax advice, and
tax planning. Registrants shall describe the nature of the
services comprising the fees disclosed under this category.
N/A.
(d) All Other Fees - Disclose aggregate fees billed in each of the last
two fiscal years for products and services provided
by the principal accountant, other than the services
reported in paragraphs (a) through (c) of this Item.
Registrants shall describe the nature of the
services comprising the fees disclosed under this
category. N/A.
(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X. N/A.
(e)(2) Disclose the percentage of services described in each of paragraphs
(b) through (d) of this Item that were approved by the audit
committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of
Regulation S-X. N/A.
(f) If greater than 50%, disclose the percentage of hours expended on
the principal accountant's engagement to audit the registrant's
financial statements for the most recent fiscal year that were
attributed to work performed by persons other than the principal
accountant's full-time, permanent employees. N/A.
(g) Disclose the aggregate non-audit fees billed by the registrant's
accountant for services rendered to the registrant, and rendered to
the registrant's investment adviser (not including any sub-adviser
whose role is primarily portfolio management and is subcontracted
with or overseen by another investment adviser), and any entity
controlling, controlled by, or under common control with the adviser
that provides ongoing services to the registrant for each of the
last two fiscal years of the registrant. N/A.
(h) Disclose whether the registrant's audit committee has considered
whether the provision of non-audit services that were rendered to
the registrant's investment adviser (not including any subadviser
whose role is primarily portfolio management and is subcontracted
with or overseen by another investment adviser), and any entity
controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence. N/A.
Item 5 - If the registrant is a listed issuer as defined in Rule 10A-3 under the
Exchange Act, state whether or not the registrant has a
separately-designated standing audit committee established in
accordance with Section 3(a)(58)(A) of the Exchange Act. If the
registrant has such a committee, however designated, identify each
committee member. If the entire board of directors is acting as the
registrant's audit committee in Section 3(a)(58)(B) of the Exchange
Act, so state.
If applicable, provide the disclosure required by Rule 10A-3(d) under
the Exchange Act regarding an exemption from the listing standards for
audit committees.
(Listed issuers must be in compliance with the new listing rules by the
earlier of their first annual shareholders meeting after January 2004,
or October 31, 2004 (annual requirement))
Item 6 - Reserved
Item 7 - For closed-end funds that contain voting securities in their portfolio,
describe the policies and procedures that it uses to determine how to
vote proxies relating to those portfolio securities. N/A (not answered
until July 1, 2003)
Item 8 -- Reserved
Item 9(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.
Item 9(b) -- There were no significant changes in the registrant's internal
controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including any
corrective actions with regard to significant deficiencies and
material weaknesses.
Item 10 - Exhibits
10(a) - Attach code of ethics or amendments/waivers, unless code of ethics or
amendments/waivers is on website or offered to shareholders upon
request without charge. N/A.
10(b) - Attach certifications pursuant to Section 302 of the Sarbanes-Oxley Act.
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.
MuniYield Quality Fund, Inc.
By: /s/ Terry K. Glenn
----------------------------
Terry K. Glenn,
President of
MuniYield Quality Fund, Inc.
Date: June 23, 2003
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/ Terry K. Glenn
----------------------------
Terry K. Glenn,
President of
MuniYield Quality Fund, Inc.
Date: June 23, 2003
By: /s/ Donald C. Burke
----------------------------
Donald C. Burke,
Chief Financial Officer of
MuniYield Quality Fund, Inc.
Date: June 23, 2003
Attached hereto as an exhibit are the certifications pursuant to Section 906 of
the Sarbanes-Oxley Act.