MUNIYIELD
QUALITY
FUND II, INC.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Semi-Annual Report
April 30, 2000
<PAGE>
MUNIYIELD QUALITY FUND II, INC.
The Benefits and Risks of Leveraging
MuniYield Quality Fund II, 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.
<PAGE>
MuniYield Quality Fund II, Inc., April 30, 2000
DEAR SHAREHOLDER
For the six months ended April 30, 2000, the Common Stock of MuniYield Quality
Fund II, Inc. earned $0.403 per share income dividends, which included earned
and unpaid dividends of $0.067. This represents a net annualized yield of 6.68%,
based on a month-end per share net asset value of $12.09. Over the same period,
the total investment return on the Fund's Common Stock was +1.89%, based on a
change in per share net asset value from $12.31 to $12.09, and assuming
reinvestment of $0.407 per share income dividends.
For the six-months ended April 30, 2000, the Fund's Auction Market Preferred
Stock had an average yield as follows: Series A, 4.18%; Series B, 4.21%; and
Series C, 3.79%.
The Municipal Market Environment
Since October 1999 through mid-January 2000, fixed-income bond yields rose
steadily higher. US economic growth, in part intensified by Year 2000
preparations, grew at a 7.3% rate in the fourth quarter of 1999 and at a 4.2%
annual rate for all of 1999. Initial estimates for the first quarter of 2000
were reported at 5.4%. However, despite these significant growth rates, no price
measure indicator has shown any considerable signs of future price pressures at
the consumer level, despite the lowest unemployment rates since January 1970.
Given no signs of an economic slowdown, the Federal Reserve Board continued to
raise short-term interest rates in November 1999 and again in February and March
2000. In each instance, the Federal Reserve Board cited both the continued
growth of US employment and the impressive strength of the US equity markets as
reasons for attempting to moderate US economic growth before inflationary price
increases are realized. By mid-January 2000, US Treasury bond yields rose 60
basis points (0.60%) to 6.75%. Similarly, as measured by the Bond Buyer Revenue
Bond Index, long-term tax-exempt bond yields rose approximately 20 basis points
to 6.35%.
Since mid-January, fixed-income markets have largely ignored strong economic
fundamentals and concentrated on very positive technical supply factors.
Declining bond issuance, both current, and more importantly, expected future
issuance, helped push bond yields lower from mid-January to mid-April 2000. In
late January and early February 2000, the US Treasury announced its intention to
reduce the number of issues to be auctioned in the quarterly Treasury note and
bond auctions. Furthermore, budgetary surpluses would allow the US Treasury to
repurchase outstanding, higher-couponed Treasury issues, primarily in the
15-year and longer-term maturity sectors. Both these actions would result in a
significant reduction in the outstanding supply of long-term US Treasury debt.
Domestic and international investors quickly began to accumulate what was
expected to become a scarce commodity and bond prices quickly rose.
By mid-April 2000, US Treasury bond yields had declined over 100 basis points to
5.67%. However, bond yields rose somewhat during the last two weeks of the
period as economic statistics were released, indicating that the economic
strength seen in late 1999 was continuing into early 2000. The decline in
long-term US Treasury bond yields resulted in an inverted taxable yield curve as
short-term and intermediate-term interest rates have not fallen proportionately
since the Federal Reserve Board is expected to continue to raise short-term
interest rates. The current inversion has had much more to do with debt
reduction and Treasury buybacks than with investor expectations of slower
economic growth. Over the last six months, long-term US Treasury bond yields
have fallen almost 20 basis points to close the six-month period ended April 30,
2000 at 5.96%.
Tax-exempt bond yields have also declined in recent months. The decline has
largely been in response to the rally in US Treasury securities, as well as a
continued positive technical supply environment. States such as California and
Maryland have announced that their large current and anticipated future budget
surpluses will permit the cancellation or postponement of expected bond
issuance. Additionally, some issuers have also initiated tenders to repurchase
existing debt, reducing the supply of tax-exempt bonds in the secondary market
as well. Since their recent peak in January 2000, long-term municipal bond
yields declined over 25 basis points to finish the six-month period ended April
30, 2000 at 6.07%. During the last six months, municipal bond yields declined
just 10 basis points overall.
The relative underperformance of the municipal bond market in recent months has
been especially disappointing given the strong technical position the tax-exempt
bond market enjoyed. The issuance of long-term tax-exempt securities has
dramatically declined. Over the last year, $203 billion in new long-term
municipal securities was issued, a decline of almost 25% compared to the same
period a year earlier. For the six months ended April 30, 2000, approximately
$90 billion in new tax-exempt bonds was underwritten, a decline of more than 25%
compared to the same period in 1999. Although investors received over $30
billion in coupon payments, bond maturities, and the proceeds from early bond
redemptions, coupled with the highest municipal bond yields in three years,
overall investor demand has diminished. Long-term municipal bond mutual funds
have seen consistent outflows in recent months as the yields of individual
securities have risen faster than those larger, more diverse mutual funds. Over
the last four months, tax-exempt mutual funds have had net redemptions of more
than $8 billion. Also, the demand from property and casualty insurance companies
has weakened as a result of the losses and anticipated losses incurred from a
series of damaging storms across much of the eastern United States.
Additionally, many institutional investors who have in recent years been
attracted to the municipal bond market by historically attractive tax-exempt
bond yield ratios of over 90% found other asset classes even more attractive.
Even with a favorable supply position, tax-exempt municipal bond yields have
underperformed their taxable counterparts.
Any significantly lower municipal bond yields are still likely to require weaker
US employment growth and consumer spending. The actions taken in recent months
by the Federal Reserve Board should eventually slow US economic growth. The
recent declines in US home sales are perhaps the first sign that consumer
spending is being slowed by higher interest rates. Until further signs develop,
it is likely that the municipal bond market's current favorable technical
position will dampen significant tax-exempt interest rate volatility and provide
a stable environment for eventual improvement in municipal bond prices.
Portfolio Strategy
For the six months ended April 30, 2000, we focused on seeking to enhance the
level of tax-exempt income to our Common Stock shareholders through the use of
leveraging. (For an explanation of the benefits and risks of leveraging, see
page 1 of this report to shareholders.) The fixed-income marketplace has been
subject to above-average price volatility resulting from continuously strong
economic growth and uncertainty surrounding the magnitude of future monetary
tightening by the Federal Reserve Board. Our fully invested position subjected
the Fund's net asset valuation to the volatility that accompanies such a drastic
rise and fall in interest rates, although we were able to achieve a very
competitive yield. During the period, our primary focus was on the purchase of
bonds in the 15-year-20-year maturity range, with premium coupons. This
strategy allowed us to invest in issues with an attractive yield and less
interest rate risk.
In Conclusion
We appreciate your ongoing interest in MuniYield Quality Fund II, 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/ Vincent R. Giordano
Vincent R. Giordano
Senior Vice President
/s/ Robert A. DiMella
Robert A. DiMella
Vice President and Portfolio Manager
May 30, 2000
2 & 3
<PAGE>
MuniYield Quality Fund II, Inc., April 30, 2000
PROXY RESULTS
During the six-month period ended April 30, 2000, MuniYield Quality Fund II,
Inc.'s Common Stock shareholders voted on the following proposals. The proposals
were approved at a shareholders' meeting on April 27, 2000. The description of
each proposal and number of shares voted are as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. To elect the Fund's Board of Directors: Terry K. Glenn 21,820,361 272,937
Herbert I. London 21,785,922 307,376
Andre F. Perold 21,787,496 305,802
Roberta Cooper Ramo 21,783,638 309,660
Arthur Zeikel 21,765,079 328,219
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Voted Shares Voted
For Against Abstain
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as the Fund's
independent auditors for the current fiscal year. 21,937,172 64,219 91,907
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
During the six-month period ended April 30, 2000, MuniYield Quality Fund II,
Inc.'s Preferred Stock shareholders (Series A, B and C) voted on the following
proposals. The proposals were approved at a shareholders' meeting on April 27,
2000. The description of each proposal and number of shares voted are as
follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. To elect the Fund's Board of Directors: Terry K. Glenn, James H. Bodurtha,
Herbert I. London, Joseph L. May, Andre F. Perold, Roberta Cooper Ramo and
Arthur Zeikel as follows:
Series A 1,468 1
Series B 1,113 0
Series C 1,825 17
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Voted Shares Voted
For Against Abstain
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as the Fund's independent
auditors for the current fiscal year as follows:
Series A 1,469 0 0
Series B 1,113 0 0
Series C 1,808 17 17
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Alabama--2.4% AAA Aaa $10,000 Jefferson County, Alabama, Sewer Revenue Bonds, Series D, 5.70%
due 2/01/2020 (c) $ 9,859
====================================================================================================================================
Alaska--0.6% A- A2 2,580 Alaska Industrial Development and Export Authority Revenue Bonds
(Revolving Fund), AMT, Series A, 6.375% due 4/01/2008 2,657
====================================================================================================================================
Arizona--0.5% BBB+ Baa1 2,170 Arizona Health Facilities Authority Revenue Bonds (Catholic Healthcare
West), Series A, 6.625% due 7/01/2020 2,124
====================================================================================================================================
California--6.9% AAA NR* 2,500 California Health Facilities Finance Authority Revenue Bonds
(Kaiser Permanente), RITR, Series 26, 5.50% due 6/01/2022 (d)(h) 2,272
----------------------------------------------------------------------------------------------------------------
A+ Aa3 15,000 Los Angeles, California, Department of Water and Power, Electric Plant
Revenue Refunding Bonds, 6% due 2/15/2028 15,019
----------------------------------------------------------------------------------------------------------------
AAA Aaa 10,000 Los Angeles, California, Department of Water and Power, Waterworks
Revenue Refunding Bonds, 4.25% due 10/15/2030 (c) 7,498
----------------------------------------------------------------------------------------------------------------
NR* NR* 5,000 Los Angeles County, California, Metropolitan Transportation Authority,
Sales Tax Revenue Bonds, RITR, Series 30, 4.97% due 7/01/2023 (a)(h) 4,148
====================================================================================================================================
Connecticut--8.7% Connecticut State Regional Learning Educational Service Center Revenue Bonds
(Office/Education Center Facility):
NR* NR* 1,075 7.50% due 2/01/2005 1,102
NR* NR* 1,100 7.75% due 2/01/2015 1,161
----------------------------------------------------------------------------------------------------------------
AAA Aaa 6,160 Connecticut State Resource Recovery Authority, Resource Recovery Revenue
Refunding Bonds (American Ref-Fuel Company), AMT, Series A, 5.375% due
11/15/2012 (e) 6,009
----------------------------------------------------------------------------------------------------------------
AAA Aaa 9,695 Connecticut State Resource Recovery Authority, Revenue Refunding Bonds
(Mid-Connecticut System), Series A, 5.50% due 11/15/2011 (e) 9,806
----------------------------------------------------------------------------------------------------------------
AAA Aaa 5,500 Connecticut State Special Tax Obligation Revenue Bonds, Transportation
Infrastructure, Series A, 6% due 12/01/2018 (c) 5,647
----------------------------------------------------------------------------------------------------------------
NR* Baa3 8,500 Mashantucket Western Pequot Tribe, Connecticut, Special Revenue Refunding
Bonds, Sub-Series B, 5.75% due 9/01/2027 7,583
----------------------------------------------------------------------------------------------------------------
AAA Aaa 5,260 University of Connecticut, GO, Series A, 5.75% due 3/01/2014 (c) 5,422
====================================================================================================================================
</TABLE>
Portfolio Abbreviations
To simplify the listings of MuniYield Quality Fund II, 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
GO General Obligation Bonds
HDA Housing Development Authority
HFA Housing Finance Agency
IDB Industrial Development Board
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
S/F Single-Family
VRDN Variable Rate Demand Notes
4 & 5
<PAGE>
MuniYield Quality Fund II, Inc., April 30, 2000
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Florida--2.0% NR* Aaa $ 8,000 Orange County, Florida, School Board COP, RIB, Series 130, 5.25%
due 8/01/2023 (e)(h) $ 6,616
-------------------------------------------------------------------------------------------------------------
NR* B1 2,080 Palm Bay, Florida, Lease Revenue Refunding Bonds (Florida Education
and Research Foundation Project), Series A, 7% due 9/01/2024 1,888
====================================================================================================================================
Georgia--4.2% AAA Aaa 7,850 Atlanta, Georgia, Airport Revenue Refunding Bonds, Series A, 5.875%
due 1/01/2017 (c) 7,978
-------------------------------------------------------------------------------------------------------------
AAA Aaa 10,000 Georgia Municipal Electric Authority, Power Revenue Refunding Bonds,
Series Z, 5.50% due 1/01/2020 (e) 9,799
====================================================================================================================================
Idaho--0.1% NR* NR* 465 Idaho Student Loan Fund Marketing Association, Inc., Student Loan
Revenue Refunding Bonds, AMT, Sub-Series 1, 6.80% due 10/01/2006 471
====================================================================================================================================
Illinois--1.9% AAA Aaa 2,000 Illinois Development Finance Authority, PCR, Refunding (Illinois
Power Company Project), Series B, 5.40% due 3/01/2028 (e) 1,823
-------------------------------------------------------------------------------------------------------------
NR* Aaa 6,000 Illinois Student Assistance Commission, Student Loan Revenue
Refunding Bonds, AMT, Senior Series BB, 6.75% due 3/01/2015 6,210
====================================================================================================================================
Indiana--3.7% AAA NR* 2,675 Indiana Bond Bank Revenue Bonds (State Revolving Fund Program),
Series A, 6.75% due 2/01/2017 2,878
-------------------------------------------------------------------------------------------------------------
AA NR* 3,100 Indianapolis, Indiana, Local Public Improvement Bond Bank, Revenue
Refunding Bonds, Series D, 6.75% due 2/01/2020 3,259
-------------------------------------------------------------------------------------------------------------
AAA Aaa 9,230 Marion County, Indiana, Convention and Recreational Facilities
Authority, Excise Tax Revenue Refunding Bonds, Lease Rental,
Series A, 5.375% due 6/01/2013 (a) 9,055
-------------------------------------------------------------------------------------------------------------
A1+c Aaa 100 Rockport, Indiana, PCR, Refunding (AEP Generating Company Project),
VRDN, Series B, 5.85% due 7/01/2025 (a)(i) 100
====================================================================================================================================
Kentucky--0.7% NR* NR* 3,000 Perry County, Kentucky, Solid Waste Disposal Revenue Bonds
(TJ International Project), AMT, 7% due 6/01/2024 3,053
====================================================================================================================================
Massachusetts--4.2% BBB+ Baa2 2,000 Massachusetts Municipal Wholesale Electric Company, Power Supply
System Revenue Refunding Bonds, Series A, 6.75% due 7/01/2011 2,087
-------------------------------------------------------------------------------------------------------------
A+ Aa3 6,035 Massachusetts State, HFA, S/F Housing Revenue Bonds, AMT, Series 36,
6.60% due 12/01/2026 6,092
-------------------------------------------------------------------------------------------------------------
A+ Aa3 5,455 Massachusetts State, HFA, S/F Housing Revenue Refunding Bonds,
AMT, Series 40, 6.60% due 12/01/2024 5,560
-------------------------------------------------------------------------------------------------------------
AA+ Aaa 2,500 Massachusetts State Health and Educational Facilities Authority Revenue
Bonds (Daughters of Charity-Carney), Series D, 6.10% due 7/01/2006 (g) 2,626
-------------------------------------------------------------------------------------------------------------
Massachusetts State Health and Educational Facilities Authority, Revenue
Refunding Bonds (New England Memorial Hospital), Series B (f):
NR* Ca 2,416 6% due 7/01/2008 483
NR* Ca 4,201 6.125% due 7/01/2013 840
====================================================================================================================================
Michigan--2.8% AA+ NR* 2,685 Michigan State, HDA, Revenue Refunding Bonds, Series C, 5.90%
due 12/01/2015 (j) 2,724
-------------------------------------------------------------------------------------------------------------
NR* Aaa 9,830 Wayne Charter County, Michigan, Airport Revenue Bonds, RIB, AMT,
Series 68, 5.265% due 12/01/2017 (e)(h) 8,776
====================================================================================================================================
Minnesota--0.4% A1+ NR* 1,600 Beltrami County, Minnesota, Environmental Control Revenue Refunding
Bonds (Northwood Panelboard Co. Project), VRDN, 6.05% due 12/01/2021 (i) 1,600
====================================================================================================================================
Mississippi--2.9% A A2 6,000 Lowndes County, Mississippi, Solid Waste Disposal and PCR, Refunding
(Weyerhaeuser Company Project), Series A, 6.80% due 4/01/2022 6,464
-------------------------------------------------------------------------------------------------------------
BBB- Ba1 6,600 Mississippi Business Finance Corporation, Mississippi, PCR, Refunding
(System Energy Resources Inc. Project), 5.875% due 4/01/2022 5,707
====================================================================================================================================
New Jersey--3.7% AAA Aaa 5,000 Cape May County, New Jersey, Industrial Pollution Control Financing
Authority, Revenue Refunding Bonds (Atlantic City Electric Company
Project), Series B, 7% due 11/01/2029 (e) 5,410
-------------------------------------------------------------------------------------------------------------
AAA Aaa 10,000 Salem County, New Jersey, Industrial Pollution Control Financing
Authority, Revenue Refunding Bonds (Public Service Electric and Gas
Company Project), Series B, 6.25% due 6/01/2031 (e) 10,236
====================================================================================================================================
New Mexico--1.2% BBB A3 5,000 Lordsburg, New Mexico, PCR, Refunding (Phelps Dodge Corporation Project),
6.50% due 4/01/2013 5,086
====================================================================================================================================
New York--17.8% Long Island Power Authority, New York, Electric System Revenue Refunding
Bonds, Series A:
AAA Aaa 5,000 5.125% due 12/01/2022 (d) 4,428
AAA Aaa 10,000 5.25% due 12/01/2026 (e) 8,984
AAA Aaa 12,400 5.50% due 12/01/2029 (e) 11,546
-------------------------------------------------------------------------------------------------------------
AAA Aaa 9,280 Nassau Health Care Corporation, New York, Health System Revenue Bonds,
5.75% due 8/01/2022 (d) 9,108
-------------------------------------------------------------------------------------------------------------
AAA NR* 2,890 New York City, New York, GO, Refunding, Series I, 5.875% due 3/15/2018 (d) 2,911
-------------------------------------------------------------------------------------------------------------
AAA Aaa 3,400 New York State Dormitory Authority Revenue Bonds (Saint John's University),
5.60% due 7/01/2016 (e) 3,379
-------------------------------------------------------------------------------------------------------------
New York State Dormitory Authority, Revenue Refunding Bonds:
AAA Aaa 4,625 (City University), Series F, 5.50% due 7/01/2012 (c) 4,637
BBB+ Baa1 5,000 (Mount Sinai Health), Series A, 6.50% due 7/01/2025 4,915
-------------------------------------------------------------------------------------------------------------
AAA Baa1 10,505 New York State Thruway Authority, Service Contract Revenue Bonds
(Local Highway and Bridge), 5.625% due 4/01/2013 (e) 10,620
-------------------------------------------------------------------------------------------------------------
A Baa1 14,000 New York State Thruway Authority, Service Contract Revenue Refunding
Bonds (Local Highway and Bridge), 6% due 4/01/2012 14,339
====================================================================================================================================
North Carolina--4.4% A A2 14,750 Martin County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority Revenue Bonds (Solid Waste Disposal--
Weyerhaeuser Company), AMT, 6.80% due 5/01/2024 15,037
-------------------------------------------------------------------------------------------------------------
AAA Aaa 3,825 Wilmington, North Carolina, COP, Series A, 5.30% due 6/01/2019 (e) 3,588
====================================================================================================================================
Ohio--4.4% BBB NR* 10,875 Dayton, Ohio, Special Facilities Revenue Refunding Bonds (Emery
Air Freight), Series A, 5.625% due 2/01/2018 9,827
-------------------------------------------------------------------------------------------------------------
BBB+ Baa1 10,000 Ohio State Solid Waste Disposal Revenue Bonds (USG Corporation Project),
AMT, 5.65% due 3/01/2033 8,565
====================================================================================================================================
Oregon--2.5% NR* Baa2 9,500 Oregon State Economic Development Revenue Refunding Bonds (Georgia
Pacific Corp. Project), AMT, Series 183, 5.70% due 12/01/2025 8,313
-------------------------------------------------------------------------------------------------------------
BBB+ Baa1 2,000 Port Umpqua, Oregon, PCR, Refunding (International Paper Co. Projects),
Series B, 5.20% due 6/01/2011 1,910
====================================================================================================================================
</TABLE>
6 & 7
<PAGE>
MuniYield Quality Fund II, Inc., April 30, 2000
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Pennsylvania--3.2% AAA Aaa $ 6,675 Delaware River Port Authority of Pennsylvania and New Jersey Revenue
Bonds, 6% due 1/01/2017 (d) $ 6,867
------------------------------------------------------------------------------------------------------------
AAA Aaa 7,000 Southeastern Pennsylvania Transportation Authority, Special Revenue
Bonds, 5.375% due 3/01/2017 (c) 6,741
====================================================================================================================================
Rhode Island--1.6% Rhode Island Depositors Economic Protection Corporation,
Special Obligation Revenue Refunding Bonds, Series A (b):
A- Baa1 1,120 5.75% due 8/01/2021 1,109
A- NR* 1,880 5.75% due 8/01/2021 (g) 1,862
------------------------------------------------------------------------------------------------------------
AAA Aaa 4,010 Rhode Island State Health and Educational Building Corporation, Higher
Education Facilities Revenue Bonds (University of Rhode Island),
Series A, 5.70% due 9/15/2024 (e) 3,862
====================================================================================================================================
South Carolina--2.8% A- A2 5,765 Berkeley County, South Carolina, Pollution Control Facilities Revenue
Refunding Bonds (South Carolina Electric and Gas Company), 6.50% due
10/01/2014 6,025
------------------------------------------------------------------------------------------------------------
A A1 2,950 Fairfield County, South Carolina, PCR (South Carolina Electric and
Gas Company), 6.50% due 9/01/2014 3,106
------------------------------------------------------------------------------------------------------------
NR* NR* 2,500 Spartanburg County, South Carolina, Solid Waste Disposal Facilities Revenue
Bonds (BMW Project), AMT, 7.55% due 11/01/2024 2,647
====================================================================================================================================
Tennessee--1.2% BBB Baa3 5,000 McMinn County, Tennessee, IDB, Solid Waste Revenue Bonds (Recycling
Facility--Calhoun Newsprint), AMT, 7.40% due 12/01/2022 5,156
====================================================================================================================================
Texas--12.9% BBB- Baa1 10,000 Dallas-Fort Worth, Texas, International Airport Facilities, Improvement
Corporation Revenue Bonds (American Airlines Inc.), AMT, 6.375% due 5/01/2035 9,499
------------------------------------------------------------------------------------------------------------
BBB Baa1 4,200 Gulf Coast Waste Disposal Authority, Texas, Revenue Bonds (Champion
International Corporation), AMT, 7.375% due 10/01/2025 4,356
------------------------------------------------------------------------------------------------------------
AAA Aaa 8,950 Harris County, Texas, Health Facilities Development Corporation, Hospital
Revenue Refunding Bonds (Memorial Hermann Hospital System Project), 5.25%
due 6/01/2027 (d) 7,870
------------------------------------------------------------------------------------------------------------
AAA Aaa 14,455 Houston, Texas, Independent School District, GO, Refunding, 5.25% due
8/15/2016 13,710
------------------------------------------------------------------------------------------------------------
BB Baa3 4,000 Lower Colorado River Authority, Texas, PCR (Samsung Austin Semiconductor),
AMT, 6.375% due 4/01/2027 3,701
------------------------------------------------------------------------------------------------------------
A1+c VMIG1+ 1,000 Sabine River Authority, Texas, PCR, Refunding (Texas Utilities Electric
Company Project), VRDN, Series A, 5.85% due 3/01/2026 (a)(i) 1,000
------------------------------------------------------------------------------------------------------------
NR* Aa1 13,500 San Antonio, Texas, Electric and Gas Revenue Refunding Bonds, RIB,
Series 77, 5.045% due 2/01/2016 (h) 12,030
------------------------------------------------------------------------------------------------------------
BBB Baa3 1,935 Tarrant County, Texas, Health Facilities Development Corporation, Hospital
Revenue Refunding Bonds (Fort Worth), 7% due 5/15/2028 1,813
====================================================================================================================================
Virginia--1.1% BBB- Baa3 26,500 Pocahontas Parkway Association, Virginia, Toll Road Revenue Bonds,
Senior-Series B, 5.875%** due 8/15/2024 4,696
====================================================================================================================================
Total Investments (Cost--$425,286)--98.8% 415,285
Other Assets Less Liabilities--1.2% 5,241
--------
Net Assets--100.0% $420,526
========
====================================================================================================================================
</TABLE>
(a) AMBAC Insured.
(b) Escrowed to maturity.
(c) FGIC Insured.
(d) FSA Insured.
(e) MBIA Insured.
(f) Non-income producing security.
(g) Prerefunded.
(h) 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, 2000.
(i) The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate
in effect at April 30, 2000.
(j) FHA Insured.
* Not Rated.
** Represents a zero coupon bond; the interest rate shown
reflects the effective yield at the time of purchase by the
Fund.
+ Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
Quality Profile
The quality ratings of securities in the Fund as of April 30, 2000 were as
follows:
--------------------------------------------------------------------------------
Percent of
S&P Rating/Moody's Rating Net Assets
--------------------------------------------------------------------------------
AAA/Aaa ....................................................... 51.4%
AA/Aa ......................................................... 10.6
A/A ........................................................... 13.2
BBB/Baa ....................................................... 19.1
B/B ........................................................... 0.5
CC/Ca ......................................................... 0.3
NR (Not Rated) ................................................ 3.0
Other* ........................................................ 0.7
--------------------------------------------------------------------------------
* Temporary investments in short-term municipal securities.
8 & 9
<PAGE>
MuniYield Quality Fund II, Inc., April 30, 2000
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<TABLE>
<CAPTION>
As of April 30, 2000
===================================================================================================================================
<S> <C> <C> <C>
Assets: Investments, at value (identified cost--$425,285,769) ................ $ 415,284,672
Cash ................................................................. 39,549
Receivables:
Interest .......................................................... $ 7,323,899
Securities sold ................................................... 3,303,108 10,627,007
-------------
Prepaid expenses and other assets .................................... 72,245
-------------
Total assets ......................................................... 426,023,473
-------------
===================================================================================================================================
Liabilities: Payables:
Securities purchased .............................................. 4,944,292
Dividends to shareholders ......................................... 331,748
Investment adviser ................................................ 163,336 5,439,376
-------------
Accrued expenses and other liabilities ............................... 58,355
-------------
Total liabilities .................................................... 5,497,731
-------------
===================================================================================================================================
Net Assets: Net assets ........................................................... $ 420,525,742
=============
===================================================================================================================================
Capital: Capital Stock (200,000,000 shares authorized):
Preferred Stock, par value $.05 per share (6,000 shares of AMPS*
issued and outstanding at $25,000 per share liquidation preference) $ 150,000,000
Common Stock, par value $.10 per share (22,366,930 shares issued
and outstanding) .................................................. $ 2,236,693
Paid-in capital in excess of par ..................................... 311,763,292
Undistributed investment income--net ................................. 3,686,911
Accumulated realized capital losses on investments--net .............. (25,080,858)
Accumulated distributions in excess of realized capital gains on
investments--net .................................................... (12,079,199)
Unrealized depreciation on investments--net .......................... (10,001,097)
-------------
Total--Equivalent to $12.09 net asset value per share of Common Stock
(market price--$11.00) .............................................. 270,525,742
-------------
Total capital ........................................................ $ 420,525,742
=============
===================================================================================================================================
</TABLE>
* Auction Market Preferred Stock.
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Six Months Ended April 30, 2000
===================================================================================================================================
<S> <C> <C> <C>
Investment Interest and amortization of premium and discount earned ............. $ 12,750,684
Income:
===================================================================================================================================
Expenses: Investment advisory fees ............................................. $ 1,049,700
Commission fees ...................................................... 187,016
Transfer agent fees .................................................. 50,627
Professional fees .................................................... 49,248
Accounting services .................................................. 30,640
Listing fees ......................................................... 19,049
Printing and shareholder reports ..................................... 16,031
Custodian fees ....................................................... 13,365
Directors' fees and expenses ......................................... 12,984
Pricing fees ......................................................... 5,387
Other ................................................................ 18,740
-------------
Total expenses ....................................................... 1,452,787
-------------
Investment income--net ............................................... 11,297,897
-------------
===================================================================================================================================
Realized & Realized loss on investments--net .................................... (20,789,235)
Unrealized Gain (Loss) Change in unrealized depreciation on investments--net ................ 16,866,690
On Investments -- Net: -------------
Net Increase in Net Assets Resulting from Operations ................. $ 7,375,352
=============
===================================================================================================================================
</TABLE>
See Notes to Financial Statements.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: April 30, 2000 Oct. 31, 1999
===================================================================================================================================
<S> <C> <C> <C>
Operations: Investment income--net ............................................... $ 11,297,897 $ 23,189,221
Realized loss on investments--net .................................... (20,789,235) (9,987,837)
Change in unrealized appreciation/depreciation on investments--net ... 16,866,690 (49,375,676)
------------- -------------
Net increase (decrease) in net assets resulting from operations ...... 7,375,352 (36,174,292)
------------- -------------
===================================================================================================================================
Dividends & Investment income--net:
Distributions to Common Stock ...................................................... (9,092,157) (19,226,452)
Shareholders: Preferred Stock ................................................... (3,038,740) (4,115,440)
In excess of realized gain on investments--net:
Common Stock ...................................................... -- (10,757,359)
Preferred Stock ................................................... -- (1,321,840)
------------- -------------
Net decrease in net assets resulting from dividends and distributions
to shareholders ..................................................... (12,130,897) (35,421,091)
------------- -------------
===================================================================================================================================
Capital Stock Value of shares issued to Common Stock shareholders in reinvestment of
Transactions: dividends and distributions ......................................... -- 4,380,299
------------- -------------
===================================================================================================================================
Net Assets: Total decrease in net assets ......................................... (4,755,545) (67,215,084)
Beginning of period .................................................. 425,281,287 492,496,371
------------- -------------
End of period* ....................................................... $ 420,525,742 $ 425,281,287
============= =============
===================================================================================================================================
*Undistributed investment income--net ................................ $ 3,686,911 $ 4,519,911
============= =============
===================================================================================================================================
</TABLE>
See Notes to Financial Statements.
10 & 11
<PAGE>
MuniYield Quality Fund II, Inc., April 30, 2000
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For the Six
The following per share data and ratios have been derived Months Ended
from information provided in the financial statements. April 30, For the Year Ended October 31,
-----------------------------------------
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period .................. $ 12.31 $ 15.52 $ 15.46 $ 14.86 $ 14.64
Operating -------- -------- -------- -------- --------
Performance: Investment income--net ................................ .51 1.04 1.10 1.15 1.16
Realized and unrealized gain (loss) on investments--net (.18) (2.65) .46 .64 .23
-------- -------- -------- -------- --------
Total from investment operations ...................... .33 (1.61) 1.56 1.79 1.39
-------- -------- -------- -------- --------
Less dividends and distributions to Common Stock
shareholders:
Investment income--net .............................. (.41) (.86) (.87) (.91) (.92)
Realized gain on investments--net ................... -- -- (.34) (.03) --
In excess of realized gain on investments--net ...... -- (.49) -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions to Common Stock
shareholders ......................................... (.41) (1.35) (1.21) (.94) (.92)
-------- -------- -------- -------- --------
Effect of Preferred Stock activity:
Dividends and distributions to Preferred Stock
shareholders:
Investment income--net ........................... (.14) (.19) (.17) (.24) (.25)
Realized gain on investments--net ................ -- -- (.12) (.01) --
In excess of realized gain on investments--net ... -- (.06) -- -- --
-------- -------- -------- -------- --------
Total effect of Preferred Stock activity .............. (.14) (.25) (.29) (.25) (.25)
-------- -------- -------- -------- --------
Net asset value, end of period ........................ $ 12.09 $ 12.31 $ 15.52 $ 15.46 $ 14.86
======== ======== ======== ======== ========
Market price per share, end of period ................. $ 11.00 $ 11.50 $15.1875 $ 14.375 $ 13.50
======== ======== ======== ======== ========
===================================================================================================================================
Total Based on market price per share ....................... (.77%)++ (16.70%) 14.51% 13.86% 14.50%
Investment ======== ======== ======== ======== ========
Return:** Based on net asset value per share .................... 1.89%++ (12.74%) 8.80% 11.24% 8.68%
======== ======== ======== ======== ========
===================================================================================================================================
Ratios Based Total expenses*** ..................................... 1.07%* .99% .95% .95% .98%
on Average ======== ======== ======== ======== ========
Net Assets Total investment income--net*** ....................... 8.32%* 7.31% 7.21% 7.50% 7.88%
Of Common ======== ======== ======== ======== ========
Stock: Amount of dividends to Preferred Stock shareholders ... 2.24%* 1.30% 1.12% 1.55% 1.67%
======== ======== ======== ======== ========
Investment income--net, to Common Stock shareholders .. 6.08%* 6.01% 6.09% 5.95% 6.21%
======== ======== ======== ======== ========
===================================================================================================================================
Ratios Based Total expenses ........................................ .69%* .67% .66% .66% .67%
on Total ======== ======== ======== ======== ========
Average Net Total investment income--net .......................... 5.37%* 4.97% 4.98% 5.22% 5.36%
Assets:***+ ======== ======== ======== ======== ========
===================================================================================================================================
Ratios Based Dividends to Preferred Stock shareholders ............. 4.06%* 2.75% 2.53% 3.48% 3.61%
on Average ======== ======== ======== ======== ========
Net Assets
Of Preferred
Stock:
===================================================================================================================================
Supplemental Net assets, net of Preferred Stock, end of period
Data: (in thousands) ....................................... $270,526 $275,281 $342,496 $341,230 $327,881
======== ======== ======== ======== ========
Preferred Stock outstanding, end of period
(in thousands) ....................................... $150,000 $150,000 $150,000 $150,000 $150,000
======== ======== ======== ======== ========
Portfolio turnover .................................... 69.55% 164.45% 154.08% 201.87% 95.49%
======== ======== ======== ======== ========
===================================================================================================================================
Leverage: Asset coverage per $1,000 ............................. $ 2,804 $ 2,835 $ 3,283 $ 3,275 $ 3,186
======== ======== ======== ======== ========
===================================================================================================================================
Dividends Per Series A--Investment income--net ...................... $ 522 $ 706 $ 629 $ 869 $ 897
Share On ======== ======== ======== ======== ========
Preferred Series B--Investment income--net ...................... $ 525 $ 702 $ 634 $ 868 $ 899
Stock ======== ======== ======== ======== ========
Outstanding: Series C--Investment income--net ...................... $ 473 $ 650 $ 634 $ 872 $ 910
======== ======== ======== ======== ========
===================================================================================================================================
</TABLE>
* 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.
+ Includes Common and Preferred Stock average net assets.
++ Aggregate total investment return.
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniYield Quality Fund II, 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 accordance 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 MQT. 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 a pricing service retained by the 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 to increase or decrease the level of risk to which the
Fund is exposed more quickly and efficiently than transactions in other types of
instruments. 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 for the purpose of hedging the
market risk on existing securities or the intended purchase of securities.
Futures contracts are contracts for delayed delivery of securities at a specific
future date and at a specific price or yield. Upon
12 & 13
<PAGE>
MuniYield Quality Fund II, Inc., April 30, 2000
NOTES TO FINANCIAL STATEMENTS (concluded)
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.
(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).
Interest income is recognized on the accrual basis. Discounts and market
premiums are amortized into interest income. Realized gains and losses on
security transactions are determined on the identified cost basis.
(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. Distributions in excess of realized capital gains are due
primarily to differing tax treatments for futures transactions.
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.
Accounting services are provided to the Fund by FAM at cost.
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, 2000 were $283,388,015 and $283,155,840, respectively.
Net realized losses for the six months ended April 30, 2000 and net unrealized
losses as of April 30, 2000 were as follows:
--------------------------------------------------------------------------------
Realized Unrealized
Losses Losses
--------------------------------------------------------------------------------
Long-term investments .................. $(18,036,850) $(10,001,097)
Financial futures contracts ............ (2,752,385) --
------------ ------------
Total .................................. $(20,789,235) $(10,001,097)
============ ============
--------------------------------------------------------------------------------
As of April 30, 2000, net unrealized depreciation for Federal income tax
purposes aggregated $10,001,097, of which $5,273,871 related to appreciated
securities and $15,274,968 related to depreciated securities. The aggregate cost
of investments at April 30, 2000 for Federal income tax purposes was
$425,285,769.
4. Capital Stock Transactions:
The Fund is authorized to issue 200,000,000 shares of capital 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 capital stock without approval of the holders
of Common Stock.
Common Stock
Shares issued and outstanding during the six months ended April 30, 2000
remained constant and during the year ended October 31, 1999 increased by
296,045 as a result of dividend reinvestment.
Preferred Stock
Auction Market Preferred Stock ("AMPS") are shares of Preferred Stock of the
Fund, with a par value of $.05 per share and a liquidation preference of $25,000
per share, 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, 2000 were as follows: Series A, 4.20%; Series B, 4.25%; and Series C,
4.25%.
Shares issued and outstanding during the six months ended April 30, 2000 and the
year ended October 31, 1999 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, 2000, Merrill Lynch, Pierce, Fenner
& Smith Incorporated, an affiliate of FAM, earned $113,390 as commissions.
5. Capital Loss Carryforward:
At October 31, 1999, the Fund had a net capital loss carryforward of
approximately $14,562,000, all of which expires in 2007. This amount will be
available to offset like amounts of any future taxable gains.
6. Subsequent Event:
On May 5, 2000, the Fund's Board of Directors declared an ordinary income
dividend to Common Stock shareholders in the amount of $.066500 per share,
payable on May 30, 2000 to shareholders of record as of May 16, 2000.
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 Assets, Liabilities and Capital, which comprises part of the
Financial Information included in this report.
14 & 15
<PAGE>
Officers and Directors
Terry K. Glenn, President and Director
James H. Bodurtha, Director
Herbert I. London, Director
Joseph L. May, Director
Andre F. Perold, Director
Roberta Cooper Ramo, Director
Arthur Zeikel, Director
Vincent R. Giordano, Senior Vice President
Robert A. DiMella, Vice President
Kenneth A. Jacob, Vice President
Donald C. Burke, Vice President and Treasurer
Alice A. Pellegrino, Secretary
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Transfer Agents
Common Stock:
The Bank of New York
101 Barclay Street
New York, NY 10286
Preferred Stock:
The Bank of New York
100 Church Street
New York, NY 10286
NYSE Symbol
MQT
MuniYield Quality Fund II, 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 II, 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 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 II, Inc.
Box 9011
Princeton, NJ
08543-9011 #16433--4/00
[RECYCLE LOGO] Printed on post-consumer recycled paper
