MUNIYIELD
QUALITY
FUND, INC.
FUND LOGO
Annual Report
October 31, 1994
Officers and Directors
Arthur Zeikel, President and Director
Kenneth S. Axelson, Director
Herbert I. London, Director
Robert R. Martin, Director
Joseph L. May, Director
Andre F. Perold, Director
Terry K. Glenn, Executive Vice President
Donald C. Burke, Vice President
Vincent R. Giordano, Vice President
Kenneth A. Jacob, Vice President
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Transfer Agents
Common Stock:
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Preferred Stock:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
NYSE Symbol
MQY
<PAGE>
This report, including the financial information herein,
is transmitted to the shareholders of MuniYield Quality
Fund, Inc. for their information. It is not a prospectus,
circular or representation intended for use in the
purchase of shares of the Fund or any securities men-
tioned in the report. 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 vola-
tility 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.
MuniYield
Quality Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
MuniYield Quality Fund, Inc.
TO OUR SHAREHOLDERS
For the year ended October 31, 1994, the Common
Stock of MuniYield Quality Fund, Inc. earned $1.164
per share income dividends, which includes earned
and unpaid dividends of $0.081. This represents a net
annualized yield of 8.87%, based on a month-end net
asset value of $13.16 per share. Over the same period,
the total investment return on the Fund's Common
Stock was -10.00%, based on a change in per share net
asset value from $15.95 to $13.16, and assuming rein-
vestment of $1.167 per share income dividends and
$0.013 per share capital gains distributions.
<PAGE>
For the six-month period ended October 31, 1994, the
total investment return on the Fund's Common Stock
was -2.15%, based on a change in per share net asset
value from $13.98 to $13.16, and assuming reinvest-
ment of $0.476 per share income dividends.
The average yields of the Fund's Auction Market
Preferred Stock for the six months ended October 31,
1994 were as follows: Series A, 3.05%; Series B, 3.10%;
Series C, 3.06%; and Series D, 3.23%.
The Environment
As discussed in our last report to shareholders, the
Federal Reserve Board moved to counteract inflation-
ary pressures by tightening monetary policy. This
trend continued during the May--October period. Des-
pite the series of preemptive strikes against inflation
by the central bank, concerns of increasing inflation-
ary pressures continued to prompt volatility in the
US capital markets during the period. In addition, the
weakness of the US dollar in foreign exchange
markets prolonged stock and bond market declines.
Ongoing strength in the manufacturing sector and
better-than-expected economic results continue to
fuel speculation that the Federal Reserve Board will
continue to raise short-term interest rates in the
months ahead. However, although consumer spending
is increasing, it is doing so at a lower rate than has
been the case in recent economic recoveries. In the
weeks ahead, investors will continue to assess
economic data and inflationary trends in order to gauge
whether further increases in short-term interest rates
are imminent. Continued indications of moderate and
sustainable levels of economic growth would be
positive for the US capital markets. At the same time,
greater US dollar stability in foreign exchange
markets would help to dampen expectations of
significantly higher short-term interest rates.
The Municipal Market
The long-term tax-exempt market continued to erode
throughout the three months ended October 31, 1994.
As measured by the Bond Buyer Revenue Bond Index,
yields on A-rated municipal revenue bonds maturing
in 30 years rose by almost 50 basis points (0.50%) to
6.95% during the October 31, 1994 quarter. This
represents the highest level in tax-exempt bond yields
in over two years. US Treasury bonds suffered even
greater declines during the quarter as Treasury bond
yields rose approximately 60 basis points to end the
quarter at 8.00%.
<PAGE>
The tax-exempt bond market reacted negatively
throughout the October quarter to indications that,
despite a series of interest rate increases by the
Federal Reserve Board, the strength of the domestic
economy seen in recent quarters has not yet been
significantly reduced. While inflationary pressures
have remained well contained, additional Federal
Reserve Board actions have been expected both to
ensure that domestic economic growth is eventually
confined to current levels and to assure nervous
financial markets of its anti-inflationary intentions.
Fortunately, while the demand for tax-exempt bonds
has declined somewhat in recent months, new bond
issuance has remained greatly reduced. During the
quarter ended October 31, 1994, only $32 billion in
long-term tax-exempt securities were issued, a decline
of over 50% versus the October 31, 1993 quarter. Similarly,
for the six months ended October 31, 1994, only $75
billion in municipal securities were underwritten, a
decline of over 50% versus the comparable period a
year earlier. This reduction in issuance in recent
quarters has allowed the municipal bond market to
react to both the decline in investor demand and the
rise in fixed-income yields in a more orderly fashion
than in similar situations in the past, particularly
during 1987.
Long-term tax-exempt revenue bonds currently yield
approximately 7%, or almost 11.5% on an after-tax
equivalent basis, to an investor in the 39.6% Federal
income tax bracket. As inflation has only marginally
increased in the past year, real tax-exempt interest
rates have risen dramatically. The Federal Reserve
Board appears committed to maintaining inflation at
or below its current levels. Indeed, most forecasts ex-
pect inflation to remain in its present range of 3%--4%
throughout 1995 and, potentially, for the remainder of
the 1990s. Real after-tax equivalent interest rates
exceeding 7% represent historically attractive
municipal investments for long-term investors.
<PAGE>
Federal Reserve Board actions taken thus far have yet
to fully impact US domestic growth and expected
additional actions should promote only a modest
economic expansion within a benign inflationary
context beginning sometime early in 1995. Within
such an environment, it is unlikely that tax-exempt
interest rates will remain at their current attractive
levels. Tax-exempt bond issuance is unlikely to return
to the historic high levels seen in 1992 and 1993, while
investor demand should return as markets stabilize.
As we have discussed in earlier reports, the total
number of tax-exempt bonds outstanding is scheduled
to decline dramatically in 1994 and 1995 as a result of
both regular bond maturities and early redemptions.
Investors seeking tax-advantaged issues are likely to
find it very difficult to obtain currently available tax-
exempt yields as the current supply/demand balance
is unlikely to be maintained in the coming quarters.
Portfolio Strategy
During the six months ended October 31, 1994, our
portfolio strategy evolved to reflect a somewhat more
constructive market outlook. While our efforts in that
direction have proven somewhat premature, we
remain convinced that long-term tax-exempt interest
rates represent extraordinary value in light of what
we perceive to be unwarranted inflationary fears
within the investor community. We have kept cash
reserves at low levels in recognition of the strong
technical foundation underlying the municipal
market. Indeed, long-term volume for the year ended
October 31, 1994 is down significantly from one year
ago levels. At the same time, demand for municipals
has also declined sharply this year, muting the
favorable impact of diminished supply. Nevertheless,
we believe that when in fact the market does turn,
scarcity will be a serious obstacle for the under-
invested attempting to enhance total return.
Another phase of our investment strategy has been to
reduce the Fund's holdings of prerefunded bonds and
to reinvest the proceeds in long-term, high-quality
current coupon securities. The former have been
trading at historically overvalued levels, while the
latter are quite attractive when considered on a
taxable equivalent basis. These efforts will not only
maintain a competitive yield over time, but they will
also contribute to the Fund's ability to more fully
benefit from the anticipated rebound in the fixed-
income markets.
<PAGE>
While Preferred Stock interest rates have risen some-
what over the last six months, the rise has been
muted relative to other comparable measures in the
short-term taxable market. As a consequence, the
persistent steepness of the municipal yield curve
continues to benefit the leveraged Common Stock
shareholder. Nonetheless, a portion of the Fund's
Preferred Stock remains in an extended mode, and as
short-term interest rates continue to edge up, we
believe that the Fund's Common Stock is likely to
continue to be at least somewhat insulated from the
consequences of a flattening yield curve. (For a
complete explanation of the benefits and risks of
leveraging, see page 3 of this report to shareholders.)
We appreciate your ongoing interest in MuniYield
Quality Fund, Inc., and we look forward to serving
your investment needs and objectives in the months
and years to come.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Vice President and Portfolio Manager
December 5, 1994
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 inter-
est 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 share-
holders, 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.
<PAGE>
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.
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 pick-up on the Common Stock will be
reduced. At the same time, the market value on 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.
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)
CP Commercial Paper
DATES Daily Adjustable Tax-Exempt Securities
EDA Economic Development Authority
GO General Obligation Bonds
HDA Housing Development Authority
HFA Housing Finance Authority
IDA Industrial Development Authority
IDB Industrial Development Board
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
S/F Single-Family
TAN Tax Anticipation Notes
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Alabama--0.6% BBB Baa1 $ 3,640 Courtland, Alabama, IDB, Solid Waste Disposal Revenue Bonds
(Champion International Corporation Project), AMT, 7%
due 6/01/2022 $ 3,453
Alaska--2.2% A- A 5,000 Alaska Industrial Development and Export Authority Revenue
Bonds (Revolving Fund), AMT, Series A, 6.50% due 4/01/2014 4,736
Valdez, Alaska, Marine Terminal Revenue Refunding Bonds:
NR* NR* 4,250 Amerada Hess Pipeline Corporation), 6.10% due 2/01/2024 3,659
AA- A1 6,000 (BP Pipeline Incorporated Project), Series B, 5.50%
due 10/01/2028 4,793
Arizona--2.0% AAA VMIG1 900 Arizona Educational Loan Marketing Corporation, Educational Loan
Revenue Bonds, VRDN, AMT, Series A, 3.55% due 3/01/2015 (a) (c) 900
SP-1 MIG2 5,700 Maricopa County, Arizona, CP, TAN, 5% due 7/28/1995 5,730
A1+ Aa 5,300 Pima County, Arizona, IDA, M/F Housing Revenue Bonds (Quail
Ridge Apartments), VRDN, Series B, 3.55% due 6/01/2034 (a) 5,300
A1+ P1 200 Pinal County, Arizona, IDA, PCR (Newmont Mining Corp.),
DATES, 3.70% due 12/01/2009 (a) 200
Arkansas--1.4% AAA NR* 2,675 Arkansas State Development Financial Authority, S/F Mortgage
Revenue Bonds, AMT, Series A, 7.30% due 3/01/2013 (h) 2,694
NR* P1 850 Crosset, Arkansas, PCR (Georgia Pacific Corp. Project),
VRDN, 3.40% due 10/01/2007 (a) 850
A1+ Aaa 5,000 Little Rock, Arkansas, Health Facilities Authority, Hospital Board
Revenue Bonds (Southwest Hospital), VRDN, 3.525%
due 10/01/2018 (a) 5,000
California--4.9% California State, Public Works Board, Lease Revenue Bonds, Series A:
A A 6,800 (Department Of Corrections-Monterey County), 7% due 11/01/2019 6,784
AAA Aaa 7,000 (Various Universities of California Projects), 6.60%
due 12/01/2002 (i) 7,540
AAA Aaa 15,000 Los Angeles County, California, Metropolitan Transportation
Authority, Sales Tax Revenue Refunding Bonds, Proposition A,
Series A, 5% due 7/01/2021 (e) 11,529
AAA Aaa 5,000 Southern California Public Power Authority, Power Project Revenue
Bonds (San Juan Unit 3), Series A, 5% due 1/01/2020 (c) 3,872
Colorado--4.7% Colorado Health Facilities Authority, Hospital Revenue Bonds:
BBB+ Baa1 1,350 (P/SL Healthcare System Project), Series A, 6.875% due 2/15/2023 1,256
BBB- NR* 2,000 Refunding (National Jewish Center Immunization Project),
7.10% due 2/15/2022 1,874
BBB+ Baa1 4,550 (Swedish Medical Center Project), Series A, 6.80% due 1/01/2023 4,193
Denver, Colorado, City and County, Airport Revenue Bonds, AMT:
BB Baa 10,000 Series B, 7.25% due 11/15/2023 9,024
BB Baa 5,000 Series D, 7.75% due 11/15/2013 4,926
BB Baa 7,250 Series D, 7.75% due 11/15/2021 6,950
<PAGE>
Florida--2.3% A1 VMIG1 80 Dade County, Florida, Aviation Revenue Refunding Bonds,
VRDN, Series V, 3.40% due 10/01/2007 (a) 80
AA Aa 7,200 Florida State Board of Education, Capital Outlay Revenue Bonds,
UT, Series E, 5.80% due 6/01/2024 6,370
A+ A1 5,000 Orange County, Florida, Sales Tax Revenue Bonds, Series B,
5.375% due 1/01/2024 4,047
A1 VMIG1 100 Pinellas County, Florida, Health Facilities Authority, Revenue
Refunding Bonds (Pooled Hospital Loan Project), DATES, 3.70%
due 12/01/2015 (a) 100
BBB+ A 3,500 Saint John's County, Florida, IDA, Hospital Revenue Bonds
(Flagler Hospital Project), 6% due 8/01/2022 2,954
Georgia--0.8% AA- A3 4,785 Monroe County, Georgia, Development Authority, PCR, Refunding
(Oglethorpe Power Corporation), Series A, 6.80% due 1/01/2011 4,770
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Illinois--9.2% AA NR* $17,000 Chicago, Illinois, Metropolitan Housing Development
Corporation, Mortgage Revenue Refunding Bonds (Housing
Development), Series A, 6.85% due 7/01/2022 (f) $ 16,546
BBB Baa2 21,000 Illinois Development Finance Authority, PCR, Refunding
(Illinois Power Company Project), Series A, 7.375% due 7/01/2021 21,064
Illinois Health Facilities Authority Revenue Bonds (Mercy Center
for Health Care Services):
NR* A 1,300 6.625% due 10/01/2012 1,260
NR* A 3,330 6.65% due 10/01/2022 3,139
A+ A 2,500 Illinois Health Facilities Authority, Revenue Refunding Bonds
(Lutheran Health System), Series A, 6% due 4/01/2011 2,286
A+ A1 7,500 Illinois Housing Development Authority, M/F Program Bonds,
Series 5, 6.75% due 9/01/2023 7,286
NR* A 3,750 Illinois Student Assistance Commission, Student Loan Revenue
Bonds, AMT, Sub-Series CC, 6.875% due 3/01/2015 3,657
Indiana--2.9% A+ A1 5,000 Fort Wayne, Indiana, Hospital Authority, Hospital Revenue
Refunding Bonds (Parkview Memorial Hospital Incorporated
Project), 6.40% due 11/15/2022 4,562
BBB Baa2 7,800 Indianapolis, Indiana, Airport Authority, Special Facilities
Revenue Bonds (Federal Express Corporation Project), AMT,
7.10% due 1/15/2017 7,605
A+ NR* 5,000 Indianapolis, Indiana, Local Public Improvement Bond Bank,
Revenue Refunding Bonds, Series D, 6.75% due 2/01/2020 4,767
<PAGE>
Iowa--0.8% A1+ NR* 500 Iowa Finance Authority, Solid Waste Disposal Revenue Bonds
(Cedar River Paper Company Project), VRDN, Series A, 3.80%
due 6/01/2024 (a) 500
NR* A 4,070 Iowa Student Loan Liquidity Corporation, Student Loan
Revenue Bonds (Iowa Partnership), AMT, 6.60% due 7/01/2008 3,998
Kansas--0.8% AAA Aaa 5,000 Kansas City, Kansas, Utility System, Revenue Refunding and
Improvement Bonds, 6.375% due 9/01/2023 (e) 4,830
Kentucky--2.7% NR* Baa1 5,000 Ashland, Kentucky, PCR, Refunding (Ashland Oil Incorporated
Project), 6.65% due 8/01/2009 4,880
NR* NR* 3,000 Perry County, Kentucky, Solid Waste Disposal Revenue Bonds
(TJ International Project), AMT, 7% due 6/01/2024 2,806
AA Aa2 8,680 Trimble County, Kentucky, PCR (Louisville Gas & Electric Company,
AMT, Series B, 6.55% due 11/01/2020 8,285
Louisiana--2.9% NR* Baa3 11,115 Lake Charles, Louisiana, Harbor and Terminal District, Port
Facilities Revenue Refunding Bonds (Trunkline Long Company
Project), 7.75% due 8/15/2022 11,609
BBB Baa2 3,000 Saint Charles Parish, Louisiana, Solid Waste Disposal Revenue
Bonds (Louisiana Power and Light Company Project), AMT, Series A,
7% due 12/01/2022 2,862
BBB- Baa3 3,000 West Feliciana Parish, Louisiana, PCR (Gulf STS Utilities),
Series C, 7% due 11/01/2015 2,901
Maine--1.0% BBB Baa1 6,380 Bucksport, Maine, Solid Waste Disposal Revenue Bonds
(Champion International Corporation Project), 6.25% due 5/01/2010 5,792
Maryland--1.1% A A 5,365 Maryland State Health and Higher Educational Facilities Authority,
Revenue Refunding Bonds (Peninsula Regional Medical Center
Project), 5% due 7/01/2023 3,997
NR* Aaa 1,950 Prince Georges County, Maryland, Hospital Revenue Bonds
(Dimensions Health Corporation), 7% due 7/01/2002 (i) 2,130
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Massachusetts--7.7% Massachusetts Bay Transportation Authority, Massachusetts, General
Transportation Systems, Revenue Refunding Bonds, Series A:
A+ A $ 3,730 7% due 3/01/2011 $ 3,840
A+ A 3,550 7% due 3/01/2014 3,629
Massachusetts Municipal Wholesale Electric Company,
Power Supply System Revenue Refunding Bonds, Series B:
NR* Aaa 1,045 6.75% due 7/01/2002 (i) 1,126
BBB+ A 455 6.75% due 7/01/2017 440
Massachusetts State Health and Educational Facilities Authority
Revenue Bonds:
A A1 3,595 (Brigham & Women's Hospital), Series C, 7% due 6/01/2018 3,586
A- NR* 2,500 Refunding (Melrose-Wakefield Hospital), Series B, 6.375%
due 7/01/2016 2,237
BBB Baa1 10,500 (Sisters of Providence Health System), Series A, 6.625% due
11/15/2022 9,242
Massachusetts State HFA, S/F Housing Revenue Bonds:
A+ Aa 4,090 Series 33, 6.35% due 6/01/2017 3,812
A+ Aa 3,035 Series 37, 6.35% due 6/01/2017 2,829
Massachusetts State Water Resources Authority, Revenue
Refunding Bonds:
AAA Aaa 6,500 General, Series B, 5% due 3/01/2022 (c) 4,977
AAA Aaa 10,000 Series A, 6.50% due 12/01/2001 (i) 10,631
Michigan--0.7% A- A 4,375 Michigan State Hospital Finance Authority, Revenue
Refunding Bonds (Detroit Medical Center Obligation Group),
Series A, 6.50% due 8/15/2018 3,996
Missouri--0.6% AA- Aa3 4,000 Saint Louis, Missouri, Parking Facility Revenue Bonds, 6.625% due
12/15/2021 3,856
Montana--0.7% BBB+ Baa1 5,000 Forsyth, Montana, PCR, Refunding (Montana Power Company
Colstrip Project), Series A, 6.125% due 5/01/2023 4,418
Nevada--0.1% BBB+ NR* 1,000 Las Vegas, Nevada, Downtown Redevelopment Agency, Tax Increment
Revenue Bonds (Housing Project), Sub-Lien, Series B, 6.10% due
6/15/2014 888
New Hampshire--0.7% NR* Baa1 4,290 New Hampshire Higher Educational and Health Facilities Authority,
Revenue Refunding Bonds (Saint Anselm College), 6.20% due
7/01/2013 3,926
<PAGE>
New Jersey--2.0% A A 7,700 New Jersey State Turnpike Authority, Turnpike Revenue
Refunding Bonds, Series C, 6.50% due 1/01/2016 7,604
AA- Aa 5,000 Ocean County, New Jersey, Utilities Authority, Wastewater
Revenue Refunding Bonds, Series A, 5.75% due 1/01/2018 4,423
New Mexico--0.8% A A3 5,000 Lordsburg, New Mexico, PCR, Refunding (Phelps Dodge
Corporation Project), 6.50% due 4/01/2013 4,849
New York--9.1% New York City, New York, GO, UT:
AAA Aaa 1,000 Refunding, Series C, 6% due 8/01/2012 (b) 932
A- Baa1 5,000 Series A, 7.75% due 8/15/2017 5,299
A- Baa1 4,000 Series H, 7.10% due 2/01/2012 4,010
A- Baa1 8,470 Series H, 7% due 2/01/2019 8,342
AAA Aaa 2,500 New York City, New York, Municipal Water Finance Authority,
Water and Sewer System Revenue Bonds, Series B, 5.375%
due 6/15/2019 (c) 2,044
BBB+ Baa1 3,250 New York State Dormitory Authority, Educational Facilities
Revenue Bonds (State University), Series B, 5.75% due 5/15/2024 2,707
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
New York New York State Environmental Facilities Corporation, PCR
(concluded) (State Water Revolving Fund-Pooled Loan):
AA Aa $ 3,415 Series A, 5.60% due 9/15/2013 $ 2,956
AA Aa 6,000 Series B, 5.90% due 11/15/2014 5,474
A Aa 2,500 Series E, 6.50% due 6/15/2014 2,446
New York State Local Government Assistance Corporation
Revenue Bonds:
A A 6,250 Refunding, Series C, 5% due 4/01/2021 4,778
A A 13,450 Series A, 6.50% due 4/01/2020 12,886
A- A 3,000 New York State Thruway Authority Revenue Bonds (Highway
and Bridge Trust Fund), Series A, 6% due 4/01/2014 2,752
North Carolina--1.6% NR* Aa1 700 Craven County, North Carolina, Industrial Facilities and Pollution
Control Finance Authority Revenue Bonds (Cravenwood Energy
Resources), VRDN, AMT, Series B, 3.85% due 5/01/2011 (a) 700
A A2 9,500 Martin County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority Revenue Bonds (Solid
Waste-Weyerhaeuser Company), AMT, 5.65% due 12/01/2023 7,705
A+ A 1,500 North Carolina Medical Care Community, Hospital Revenue Bonds
(Moore Regional Hospital Project), 5% due 10/01/2018 1,157
<PAGE>
Ohio--3.7% BB Ba2 5,000 Ohio State Air Quality, Development Authority, PCR, Refunding
(Cleveland Electric Company), AMT, 6.85% due 7/01/2023 4,331
AA- A1 15,000 Ohio State Air Quality, Development Authority, Revenue
Refunding Bonds (Dayton Power & Light Project), Series B,
6.40% due 8/15/2027 14,121
AA- A1 5,000 Ohio State Turnpike Commission, Turnpike Revenue Bonds,
Series A, 5.75% due 2/15/2024 4,336
Oregon--0.7% AA A1 5,000 Eugene, Oregon, Electric Utility Revenue Bonds, Series C, 5.80%
due 8/01/2019 4,432
Pennsylvania--1.2% NR* A 4,000 Allegheny County, Pennsylvania, Hospital Development Authority,
Revenue Refunding Bonds (Health Facilities--South Hills Health),
6% due 5/01/2020 3,443
Philadelphia, Pennsylvania, Hospitals and Higher Educational
Facilities Authority, Hospital Revenue Bonds, Series A:
BBB Baa1 2,250 (Frankford Hospital), 6% due 6/01/2014 1,912
BBB+ Baa1 2,150 Refunding (Temple University Hospital), 6.625% due 11/15/2023 1,915
South Carolina--5.8% A A1 12,000 Fairfield County, South Carolina, PCR (South Carolina
Electric & Gas Company), 6.50% due 9/01/2014 11,635
A- A1 9,000 Richland County, South Carolina, Solid Waste Disposal Facilities
Revenue Bonds (Union Camp Corporation Project), AMT, Series A,
6.75% due 5/01/2022 8,590
BBB- Baa 5,000 South Carolina Jobs, EDA, Economic Development Revenue Bonds
(Franciscan Sisters of the Poor), 7% due 7/01/2015 4,684
A+ Aaa 9,500 South Carolina State Public Service Authority Revenue
Bonds (Santee Cooper), Series D, 6.625% due 7/01/2002 (i) 10,150
South Dakota--0.8% AA+ Aa1 5,500 South Dakota HDA, Homeownership Mortgage Revenue
Refunding Bonds, Series A, 6.45% due 5/01/2022 5,114
Tennessee--0.4% BBB- Baa1 2,500 McMinn County, Tennessee, IDB, Solid Waste Revenue Bonds
(Recycling Facility-Calhoun Newsprint-Bowater), AMT, 7.40%
due 12/01/2022 2,471
Texas--6.5% BB+ Baa2 5,000 Alliance Airport Authority Incorporated, Texas, Special Facilities
Revenue Bonds (American Airlines Incorporated Project),
AMT, 7.50% due 12/01/2029 4,729
NR* Aaa 1,000 Bell County, Texas, Health Facilities Development Corporation
Revenue Bonds (Lutheran General Health Care System-Parkside
Medical Services Corporation), 6.50% due 7/01/2019 1,003
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Texas Gulf Coast Waste Disposal Authority, Texas, Revenue Bonds
(concluded) (Champion International), AMT:
BBB Baa1 $ 1,840 7.45% due 5/01/2026 $ 1,846
BBB Baa1 5,000 Series A, 6.875% due 12/01/2028 4,669
A- A 5,000 Harris County, Texas, Health Facilities Development Corporation,
Hospital Revenue Bonds (Memorial Hospital Systems Project),
Series A, 6.60% due 6/01/2014 4,725
AA Aa1 4,655 San Antonio, Texas, Electric and Gas Revenue Refunding Bonds,
Series A, 6.50% due 2/01/2012 4,551
A+ Aa 10,215 Texas Housing Agency, Residential Development Revenue Mortgage
Bonds, Series A, 7.50% due 7/01/2015 (h) 10,081
AA Aa 3,250 Texas State, GO (Veterans' Land Board), AMT, 6.40% due 12/01/2024 3,055
AA Aa 4,000 Texas State, Registered RIB, UT, Series B-1 and B-2, 9.176%
due 9/30/2011 (g) 3,760
Utah--2.4% AA Aa 15,000 Salt Lake City, Utah, Hospital Revenue Refunding Bonds
(IHC Hospitals Incorporated), 6.30% due 2/15/2015 14,258
Vermont--0.4% AAA Aaa 2,500 Vermont State Student Assistance Corporation, Educational Loan
Revenue Bonds (Financing Program), AMT, Series B,
6.70% due 12/15/2012 (d) 2,466
Virginia--5.3% AA+ Aa 22,000 Virginia State HDA, Commonwealth Mortgage Revenue Bonds,
Series A, 7.15% due 1/01/2033 22,084
AA Aa 10,000 Virginia State, Transportation Board, Transportation Contract
Revenue Refunding Bonds (Route 28 Project), 6.50% due 4/01/2018 9,799
Washington--6.2% AA+ Aa1 5,000 King County, Washington, Sewer Bonds, GO, Series A, 6.25%
due 1/01/2034 4,555
AA Aaa 12,500 Lewis County, Washington, Public Utility Revenue Bonds, District
No. 001 (Cowlitz Falls Hydroelectric Project), 7% due 10/01/2001 (i) 13,654
Washington State Public Power Supply System, Revenue Refunding
Bonds (Nuclear Project No. 2), Series A:
AA Aa 5,220 6.25% due 7/01/2012 4,896
AA Aa 15,000 6.30% due 7/01/2012 14,442
West Virginia--0.9% BBB+ A3 5,600 Putnam County, West Virginia, PCR, Refunding (Appalachian
Power Company Project), Series C, 6.60% due 7/01/2019 5,220
Wisconsin-1.0% A A1 3,800 Wisconsin Housing and EDA Housing Revenue Bonds, AMT, Series D,
7.20% due 11/01/2013 3,800
NR* A 2,550 Wisconsin State Health and Educational Facilities Authority
Revenue Bonds (Mercy Hospital of Janesville Incorporated),
6.60% due 8/15/2022 2,393
Puerto Rico--0.1% A1+ VMIG1 400 Puerto Rico Maritime Shipping Authority Revenue Bonds, CP,
3.40% due 11/01/1994 400
<PAGE>
Total Investments (Cost--$629,205)--99.7% 598,363
Other Assets Less Liabilities--0.3% 2,024
--------
Net Assets--100.0% $600,387
========
<FN>
* Not Rated.
(a)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rates shown are the rates in
effect at October 31, 1994.
(b)AMBAC Insured.
(c)MBIA Insured.
(d)FSA Insured.
(e)FGIC Insured.
(f)FHA Insured.
(g)The interest rate is subject to change periodically and inversely
based upon prevailing market rates. The interest rates shown
are the rates in effect at October 31, 1994.
(h)GNMA Collateralized.
(i)Prerefunded.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL INFORMATION
<CAPTION>
Statement of Assets, Liabilities and Capital as of October 31, 1994
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$629,205,411) (Note 1a) $598,362,635
Cash 3,094,539
Interest receivable 12,126,055
Deferred organization expense (Note 1e) 20,019
Prepaid registration fees and other assets (Note 1e) 117,405
------------
Total assets 613,720,653
------------
<PAGE>
Liabilities: Payables:
Securities purchased $ 11,809,711
Dividends to shareholders (Note 1g) 1,109,412
Investment adviser (Note 2) 259,029 13,178,152
------------
Accrued expenses and other liabilities 155,417
------------
Total liabilities 13,333,569
------------
Net Assets: Net assets $600,387,084
============
Capital: Capital Stock (200,000,000 shares authorized) (Note 4):
Preferred Stock, par value $.10 per share (4,000 shares of AMPS* issued and
outstanding at $50,000 per liquidation preference) $200,000,000
Common Stock, par value $.10 per share (30,425,258 shares issued
and outstanding) $ 3,042,526
Paid-in capital in excess of par 423,867,420
Undistributed investment income--net 3,737,933
Undistributed realized capital gains on investments--net 581,981
Unrealized depreciation on investments--net (30,842,776)
------------
Total--Equivalent to $13.16 net asset value per share of Common Stock
(market price--$11.00) 400,387,084
------------
Total capital $600,387,084
============
<FN>
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL INFORMATION (continued)
<CAPTION>
Statement of Operations
For the Year
Ended October 31, 1994
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 39,947,264
(Note 1d):
<PAGE>
Expenses: Investment advisory fees (Note 2) $ 3,234,653
Commission fees (Note 4) 587,491
Transfer agent fees 114,604
Professional fees 83,581
Accounting services (Note 2) 60,713
Printing and shareholder reports 55,326
Registration fees (Note 1e) 39,075
Custodian fees 28,613
Directors' fees and expenses 23,009
Pricing fees 13,660
Amortization of organization expenses (Note 1e) 7,541
Other 34,676
------------
Total expenses 4,282,942
------------
Investment income--net 35,664,322
------------
Realized & Realized gain on investments--net 582,012
Unrealized Gain Change in unrealized appreciation/depreciation on investments--net (79,089,878)
(Loss) on ------------
Investments--Net Net Decrease in Net Assets Resulting from Operations $(42,843,544)
(Notes 1d & 3): ============
</TABLE>
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended October 31,
Increase (Decrease) in Net Assets: 1994 1993
<S> <S> <C> <C>
Operations: Investment income--net $ 35,664,322 $ 35,963,672
Realized gain on investments--net 582,012 8,560,711
Change in unrealized appreciation/depreciation on investments--net (79,089,878) 69,627,484
------------ ------------
Net increase (decrease) in net assets resulting from operations (42,843,544) 114,151,867
------------ ------------
Dividends & Investment income--net:
Distributions to Common Stock (29,359,370) (30,199,772)
Shareholders Preferred Stock (4,942,790) (5,952,010)
(Note 1g): Realized gain on investments--net:
Common Stock (6,545,051) --
Preferred Stock (1,298,020) --
------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (42,145,231) (36,151,782)
------------ ------------
<PAGE>
Common Stock Value of shares issued to Common Stock shareholders in reinvestment of
Transactions dividends and distributions -- 3,837,626
(Note 4): ------------ ------------
Net increase in net assets derived from stock transactions -- 3,837,626
------------ ------------
Net Assets: Total increase (decrease) in net assets (84,988,775) 81,837,711
Beginning of year 685,375,859 603,538,148
------------ ------------
End of year* $600,387,084 $685,375,859
============ ============
<FN>
*Undistributed investment income--net $ 3,737,933 $ 2,375,771
============ ============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights
<CAPTION>
For the
Period
The following per share data and ratios have been derived June 26,
from information provided in the financial statements. For the Year Ended 1992++ to
October 31, October
Increase (Decrease) in Net Asset Value: 1994 1993 31, 1992
<S> <S> <C> <C> <C>
Per Share Net asset value, beginning of period $ 15.95 $ 13.38 $ 14.18
Operating -------- -------- --------
Performance: Investment income--net 1.16 1.18 .32
Realized and unrealized gain (loss) on investments--net (2.57) 2.58 (.75)
-------- -------- --------
Total from investment operations (1.41) 3.76 (.43)
-------- -------- --------
Less dividends and distributions to Common Stock shareholders:
Investment income--net (.96) (.99) (.20)
Realized gain on investments--net (.22) -- --
-------- -------- --------
Total dividends and distributions (1.18) (.99) (.20)
-------- -------- --------
Capital charge resulting from issuance of Common Stock -- -- (.01)
-------- -------- --------
Effect of Preferred Stock activity:
Dividends and distributions to Preferred Stock shareholders:
Investment income--net (.16) (.20) (.03)
Realized gain on investments--net (.04) -- --
Capital charge resulting from issuance of Preferred Stock -- -- (.13)
-------- -------- --------
Total effect of Preferred Stock activity (.20) (.20) (.16)
-------- -------- --------
Net asset value, end of period $ 13.16 $ 15.95 $ 13.38
======== ======== ========
Market price per share, end of period $ 11.00 $ 15.250 $ 13.625
======== ======== ========
<PAGE>
Total Investment Based on market price per share (21.32%) 19.68% (7.83%)+++
Return:** ======== ======== ========
Based on net asset value per share (10.00%) 27.46% (4.25%)+++
======== ======== ========
Ratios to Average Expenses, net of reimbursement .66% .60% .14%*
Net Assets:*** ======== ======== ========
Expenses .66% .61% .59%*
======== ======== ========
Investment income--net 5.50% 5.52% 5.71%*
======== ======== ========
Supplemental Net assets, net of Preferred Stock, at end of period (in thousands) $400,387 $485,376 $403,538
Data: ======== ======== ========
Preferred Stock outstanding, at end of period (in thousands) $200,000 $200,000 $200,000
======== ======== ========
Portfolio turnover 42.31% 66.14% 10.12%
======== ======== ========
Dividends Per Series A--Investment income--net $ 1,141 $ 1,425 $ 187
Share On Series B--Investment income--net 1,254 1,370 193
Preferred Stock Series C--Investment income--net 1,154 1,493 199
Outstanding: Series D--Investment income--net 1,395 1,664 205
<FN>
*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 loads.
***Do not reflect the effect of dividends to Preferred Stock shareholders.
++Commencement of Operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
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 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, which are traded on
exchanges, are valued at their closing prices as of the
close of such exchanges. Options, which are traded on
exchanges, are valued at their last sale price as of the
close of such exchanges or, lacking any sales, at the
last available bid price. Securities with remaining
maturities of sixty days or less are valued at amortized
cost, which approximates market value. Securities 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.
(b) Financial futures contracts--The Fund may
purchase or sell interest rate 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
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.
(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) Deferred organization expenses--Deferred organi-
zation expenses are amortized on a straight-line basis
over a five-year period. Prepaid registration fees are
charged to expense as the related shares are issued.
(f) Non-income producing investments--Written
and purchased options are non-income producing
investments.
(g) 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"). Effective January 1, 1994, the investment
advisory business of FAM was reorganized from a
corporation to a limited partnership. Both prior to
and after the reorganization, ultimate control of
FAM was vested with Merrill Lynch & Co., Inc.
("ML & Co."). The general partner of FAM is Princeton
Services, Inc. ("PSI"), an indirect wholly-owned sub-
sidiary of ML & Co. The limited partners are ML & Co.
and Fund Asset Management, Inc. ("FAMI"), which is
also an indirect wholly-owned subsidiary of ML & Co.
<PAGE>
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 0.50% of the Fund's average weekly net assets.
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, FAMI, Merrill
Lynch, Pierce, Fenner & Smith Inc. ("MLPF&S"),
and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding
short-term securities, for the year ended October 31,
1994 were $270,077,891 and $259,267,487, respectively.
Net realized and unrealized gains (losses) as of
October 31, 1994 were as follows:
Realized Unrealized
Gains Gains
(Losses) (Losses)
Long-term investments $(3,429,183) $(30,846,992)
Short-term investments (3,500) 4,216
Financial futures contracts 4,014,695 --
----------- ------------
Total $ 582,012 $(30,842,776)
=========== ============
As of October 31, 1994, net unrealized depreciation
for Federal income tax purposes aggregated
$30,842,776, of which $2,661,543 related to appreciated
securities and $33,504,319 related to depreciated
securities. The aggregate cost of investments at
October 31, 1994 for Federal income tax purposes was
$629,205,411.
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.
<PAGE>
Common Stock
For the year ended October 31, 1994, shares issued
and outstanding remained constant at 30,425,258.
At October 31, 1994, total paid-in capital amounted
to $426,909,946.
Preferred Stock
Auction Market Preferred Stock ("AMPS") are shares of
Preferred Stock of the Fund 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 October 31, 1994 were as follows: Series A, 3.287%;
Series B, 3.10%; Series C, 3.50%; and Series D, 3.23%.
For the year ended October 31, 1994, there were
4,000 AMPS shares authorized, issued and outstanding
with a liquidation preference of $50,000 per share,
plus accumulated and unpaid dividends of $869,730.
Effective December 1, 1994, as a result of a two-for-one
stock split, there will be 8,000 AMPS share with a
liquidation preference of $25,000 per share.
The Fund pays commissions to certain broker-dealers
at the end of each auction at an annual rate ranging
from 0.25% to 0.375%, calculated on the proceeds of
each auction. For the six months ended October 31,
1994, MLPF&S, an affiliate of FAMI, earned $205,009
as commissions.
5. Subsequent Event:
On November 8, 1994, the Fund's Board of Directors
declared an ordinary income dividend to Common
Stock shareholders in the amount of $0.080628 per
share, payable on November 29, 1994 to shareholders
on record as of November 18, 1994.
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of
MuniYield Quality Fund, Inc.:
We have audited the accompanying statement of
assets, liabilities and capital, including the schedule
of investments, of MuniYield Quality Fund, Inc. as of
October 31, 1994, the related statements of operations
for the year then ended and of changes in net assets
for each of the years in the two-year period then ended,
and the financial highlights for the two-year period
then ended and the period June 26, 1992 (commence-
ment of operations) to October 31, 1992. These finan-
cial statements and the financial highlights are the
responsibility of the Fund's management. Our respon-
sibility is to express an opinion on these financial
statements and the financial highlights based on
our audits.
<PAGE>
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reason-
able assurance about whether the financial statements
and the financial highlights are free of material
misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and dis-
closures in the financial statements. Our procedures
included confirmation of securities owned at October
31, 1994 by correspondence with the custodian and
brokers. An audit also includes assessing the account-
ing principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial
highlights present fairly, in all material respects, the
financial position of MuniYield Quality Fund, Inc. as
of October 31, 1994, the results of its operations, the
changes in its net assets, and the financial highlights
for the respective stated periods in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
December 5, 1994
</AUDIT-REPORT>
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid monthly
by MuniYield Quality Fund, Inc. during its taxable year ended
October 31, 1994 qualify as tax-exempt interest dividends for
Federal income tax purposes.
Additionally, the following table summarizes the per share
capital gains distributions paid by the Fund during the year:
<PAGE>
Payable Short-Term Long-Term
Date Capital Gains Capital Gains
Common Stock Shareholders 12/30/93 $ 0.202496 $ 0.012623
Preferred Stock Series A 12/01/93 $179.34 $10.38
Shareholders: 12/31/93 $113.18 $ 7.85
Series B 11/23/93 $ 36.61 $ 2.12
11/30/93 $ 36.89 $ 2.15
12/07/93 $ 36.56 $ 2.17
12/14/93 $ 28.33 $ 1.71
12/21/93 $ 32.47 $ 1.98
12/28/93 $ 35.26 $ 2.20
1/04/94 $ 39.34 $ 2.54
1/11/94 $ 28.08 $ 1.94
1/18/94 $ 7.65 $ 0.72
Series C 11/26/93 $146.44 $ 8.49
12/23/93 $143.58 $ 8.85
1/21/94 $ 16.44 $ 1.76
Series D 12/01/93 $209.74 $12.15
12/31/93 $131.95 $ 9.15
Please retain this information for your records.
PER SHARE INFORMATION (unaudited)
<TABLE>
Per Share Selected Quarterly Financial Data*
<CAPTION>
Net Realized Unrealized Dividends/Distributions
Investment Gains Gains Net Investment Income Capital Gains
For the Quarter Income (Losses) (Losses) Common Preferred Common Preferred
<S> <C> <C> <C> <C> <C> <C> <C>
November 1, 1992 to January 31, 1993 $.30 $(.04) $ .94 $.25 $.05 -- --
February 1, 1993 to April 30, 1993 .29 .15 .52 .24 .05 -- --
May 1, 1993 to July 31, 1993 .30 .08 .25 .25 .05 -- --
August 1, 1993 to October 31, 1993 .29 .10 .58 .25 .05 -- --
November 1, 1993 to January 31, 1994 .30 .03 .13 .25 .01 $.22 $.04
February 1, 1994 to April 30, 1994 .28 .07 (1.97) .24 .05 -- --
May 1, 1994 to July 31, 1994 .29 (.09) .33 .23 .05 -- --
August 1, 1994 to October 31, 1994 .29 .01 (1.08) .24 .05 -- --
<PAGE>
<CAPTION>
Net Asset Value Market Price**
For the Quarter High Low High Low Volume***
<S> <C> <C> <C> <C> <C>
November 1, 1992 to January 31, 1993 $14.28 $13.38 $14.625 $13.50 2,290
February 1, 1993 to April 30, 1993 15.30 14.28 15.00 14.375 3,139
May 1, 1993 to July 31, 1993 15.46 14.84 15.125 14.25 2,767
August 1, 1993 to October 31, 1993 16.17 15.29 15.75 14.875 4,395
November 1, 1993 to January 31, 1994 15.96 15.44 15.50 14.00 3,394
February 1, 1994 to April 30, 1994 15.85 13.48 15.375 12.50 2,781
May 1, 1994 to July 31, 1994 14.61 13.67 13.125 12.50 3,406
August 1, 1994 to October 31, 1994 14.25 13.16 12.875 10.875 4,978
<FN>
*Calculations are based upon shares of Common Stock outstanding at the end of each quarter.
**As reported in the consolidated transaction reporting system.
***In thousands.
</TABLE>
