BLACKROCK MUNIYIELD QUALITY FUND II, INC.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT

INVESTMENT COMPANIES

Investment Company Act file number: 811-06660

Name of Fund: BlackRock MuniYield Quality Fund II, Inc. (MQT)

Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809

 

Name  and address of agent for service: John M. Perlowski, Chief Executive Officer, BlackRock MuniYield Quality Fund II, Inc., 55 East 52nd Street, New York, NY 10055

Registrant’s telephone number, including area code: (800) 882-0052, Option 4

Date of fiscal year end: 04/30/2018

Date of reporting period: 04/30/2018

 


Item 1 – Report to Stockholders

 


APRIL 30, 2018

 

 

ANNUAL REPORT

 

    LOGO

 

BlackRock MuniYield Fund, Inc. (MYD)

BlackRock MuniYield Quality Fund, Inc. (MQY)

BlackRock MuniYield Quality Fund II, Inc. (MQT)

 

Not FDIC Insured • May Lose Value • No Bank Guarantee


The Markets in Review

Dear Shareholder,

In the 12 months ended April 30, 2018, the strongest corporate profits in seven years drove the equity market higher, while rising interest rates constrained bond returns. While the market’s appetite for risk remained healthy, risk taking varied by asset class, as bond investors cautiously shifted to higher-quality securities, and stock investors continued to embrace risk by investing abroad.

The largest global economies experienced sustained, synchronized growth for the first time since the financial crisis, leading to strong equity performance worldwide. Emerging markets stocks posted the highest return, as accelerating growth in China, the second-largest economy in the world, improved the outlook for corporate profits in most developing nations.

Short-term U.S. Treasury interest rates rose the fastest, while longer-term rates slightly increased, leading to a substantial flattening of the yield curve. The annual return for the three-month Treasury bill surpassed 1.0%, but remained well below the annual headline inflation rate of 2.5%. In contrast, the ten-year U.S. Treasury — a bellwether of the bond market — posted a negative return, as rising inflation expectations drove yields higher. In credit markets, the investment-grade and high-yield bond markets posted modest returns in a relatively benign credit environment.

Even though it faced rising pressure to boost interest rates in 2017, the U.S. Federal Reserve (the “Fed”) increased short-term interest rates just three times during the reporting period. The Fed also announced plans to reduce its $4.4 trillion balance sheet by $420 billion in 2018, which began the process of gradually reversing its unprecedented stimulus measures after the financial crisis. The economy continued to gain momentum despite the Fed’s modest reduction of economic stimulus, as unemployment dipped below 4.0%, wages increased, and job openings reached a record high. Strong economic performance may justify a more rapid pace of rate hikes in 2018, as the headline inflation rate and investors’ expectations for inflation surpassed the Fed’s target of 2.0%.

By contrast, the European Central Bank (“ECB”) and the Bank of Japan (“BoJ”) continued to expand their balance sheets despite nascent signs of sustained economic growth. Rising global growth, as well as limited bond supply, pressured other central banks to follow in the Fed’s footsteps. In October 2017, the ECB pledged to cut its bond purchases in half for 2018, while the BoJ reiterated its commitment to economic stimulus, even though the size of its balance sheet almost matched the total output of the Japanese economy.

The Fed’s measured pace of stimulus reduction could lead to moderately higher inflation, steadily rising interest rates, and improving real growth in 2018. We continue to believe the primary risks to economic expansion are trade protectionism, rapidly rising interest rates, and geopolitical tension. In particular, we are closely monitoring trade protectionism and the rise of populism in Western nations.

In December 2017, Congress passed a sweeping tax reform bill. The U.S. tax overhaul is likely to accentuate the existing reflationary themes, including corporate spending on stock buybacks, mergers & acquisitions and capital investment, which could extend the economic cycle if inflation and interest rates rise at a relatively modest pace.

In this environment, investors need to think globally, extend their scope across a broad array of asset classes, and be nimble as market conditions change. We encourage you to talk with your financial advisor and visit blackrock.com for further insight about investing in today’s markets.

Sincerely,

 

LOGO

Rob Kapito

President, BlackRock Advisors, LLC

LOGO

Rob Kapito

President, BlackRock Advisors, LLC

 

Total Returns as of April 30, 2018
     6-month   12-month

U.S. large cap equities
(S&P 500® Index)

  3.82%   13.27%

U.S. small cap equities
(Russell 2000® Index)

  3.27   11.54

International equities
(MSCI Europe, Australasia,
Far East Index)

  3.41   14.51

Emerging market equities
(MSCI Emerging Markets Index)

  4.80   21.71

3-month Treasury bills
(ICE BofAML 3-Month U.S. Treasury Bill Index)

  0.68   1.17

U.S. Treasury securities
(ICE BofAML 10-Year U.S. Treasury Index)

  (3.79)   (3.64)

U.S. investment grade bonds
(Bloomberg Barclays U.S.
Aggregate Bond Index)

  (1.87)   (0.32)

Tax-exempt municipal bonds
(S&P Municipal Bond Index)

  (0.76)   1.44

U.S. high yield bonds
(Bloomberg Barclays U.S. Corporate High Yield 2% Issuer
Capped Index)

  (0.17)   3.27
Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.
 

 

 

2    THIS PAGE IS NOT PART OF YOUR FUND REPORT


Table of Contents

 

      Page  

The Markets in Review

     2  

Annual Report:

  

Municipal Market Overview

     4  

The Benefits and Risks of Leveraging

     5  

Derivative Financial Instruments

     5  

Fund Summaries

     6  

Financial Statements:

  

Schedules of Investments

     12  

Statements of Assets and Liabilities

     36  

Statements of Operations

     37  

Statements of Changes in Net Assets

     38  

Statements of Cash Flows

     40  

Financial Highlights

     41  

Notes to Financial Statements

     44  

Report of Independent Registered Public Accounting Firm

     54  

Automatic Dividend Reinvestment Plan

     55  

Trustee and Officer Information

     56  

Additional Information

     59  

Glossary of Terms used in this Report

     61  

 

 

     3  


Municipal Market Overview  For the Reporting Period Ended April 30, 2018

 

Municipal Market Conditions

Municipal bonds experienced positive performance during the period despite rising interest rates resulting from continued Fed monetary policy normalization, firmer economic data, and the anticipated impacts of fiscal stimulus. Ongoing reassurance from the Fed that rates would be increased gradually and would likely remain low overall resulted in continued demand for fixed income investments. More specifically, investors favored the tax-exempt income, diversification, quality, and value of municipal bonds amid fiscal policy uncertainty, which saw tax reform ultimately lower the top individual tax rate just 2.6% while eliminating deductions and increasing demand for tax shelter. During the 12 months ended April 30, 2018, municipal bond funds experienced net inflows of approximately $26 billion (based on data from the Investment Company Institute).

 

For the same 12-month period, total new issuance was moderate from a historical perspective at $385 billion (well below the robust $424 billion issued in the prior 12-month period), but displayed significant month to month volatility. Notably, issuance in December posted the highest monthly total on record at $56 billion, as issuers rushed deals to market ahead of the expected elimination of the tax-exemption for advanced refunding bonds and possibly private activity bonds (PABs). Ultimately, the final version of the Tax Cuts and Jobs Act left PABs unchanged, though the elimination of advanced refundings has suppressed supply in 2018, providing a powerful technical tailwind.   S&P Municipal Bond Index

 

Total Returns as of April 30, 2018

 

  6 months: (0.76)%

 

12 months: 1.44%

 

A Closer Look at Yields

 

LOGO

From April 30, 2017 to April 30, 2018, yields on AAA-rated 30-year municipal bonds increased by 7 basis points (“bps”) from 3.02% to 3.09%, while 10-year rates increased by 35 bps from 2.14% to 2.49% and 5-year rates increased by 78 bps from 1.41% to 2.19% (as measured by Thomson Municipal Market Data). The municipal yield curve bear flattened significantly over the 12-month period with the spread between 2- and 30-year maturities flattening by 82 bps, led by 54 bps of flattening between 2- and 10-year maturities.

During the same time period, on a relative basis, tax-exempt municipal bonds strongly outperformed U.S. Treasuries with the greatest outperformance experienced in the front and intermediate portions of the yield curve. The relative positive performance of municipal bonds was driven largely by a supply/demand imbalance within the municipal market as investors sought income and incremental yield in an environment where opportunities became increasingly scarce. The asset class is known for its lower relative volatility and preservation of principal with an emphasis on income as tax rates rise.

Financial Conditions of Municipal Issuers

The majority of municipal credits remain strong, despite well-publicized distress among a few issuers. Four of the five states with the largest amount of debt outstanding — California, New York, Texas and Florida — have exhibited markedly improved credit fundamentals during the slow national recovery. However, several states with the largest unfunded pension liabilities have seen their bond prices decline noticeably and remain vulnerable to additional price deterioration. On the local level, Chicago’s credit quality downgrade is an outlier relative to other cities due to its larger pension liability and inadequate funding remedies. BlackRock maintains the view that municipal bond defaults will remain minimal and in the periphery while the overall market is fundamentally sound. We continue to advocate careful credit research and believe that a thoughtful approach to structure and security selection remains imperative amid uncertainty in a modestly improving economic environment.

The opinions expressed are those of BlackRock as of April 30, 2018, and are subject to change at any time due to changes in market or economic conditions. The comments should not be construed as a recommendation of any individual holdings or market sectors. Investing involves risk including loss of principal. Bond values fluctuate in price so the value of your investment can go down depending on market conditions. Fixed income risks include interest-rate and credit risk. Typically, when interest rates rise, there is a corresponding decline in bond values. Credit risk refers to the possibility that the bond issuer will not be able to make principal and interest payments. There may be less information on the financial condition of municipal issuers than for public corporations. The market for municipal bonds may be less liquid than for taxable bonds. Some investors may be subject to Alternative Minimum Tax (“AMT”). Capital gains distributions, if any, are taxable.

The Standard & Poor’s Municipal Bond Index, a broad, market value-weighted index, seeks to measure the performance of the U.S. municipal bond market. All bonds in the index are exempt from U.S. federal income taxes or subject to the AMT. Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. It is not possible to invest directly in an index.

 

 

4    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


The Benefits and Risks of Leveraging

 

The Funds may utilize leverage to seek to enhance the distribution rate on, and net asset value (“NAV”) of, their common shares (“Common Shares”). However, there is no guarantee that these objectives can be achieved in all interest rate environments.

In general, the concept of leveraging is based on the premise that the financing cost of leverage, which is based on short-term interest rates, is normally lower than the income earned by a Fund on its longer-term portfolio investments purchased with the proceeds from leverage. To the extent that the total assets of the Funds (including the assets obtained from leverage) are invested in higher-yielding portfolio investments, the Funds’ shareholders benefit from the incremental net income. The interest earned on securities purchased with the proceeds from leverage is paid to shareholders in the form of dividends, and the value of these portfolio holdings is reflected in the per share NAV.

To illustrate these concepts, assume a Fund’s Common Shares capitalization is $100 million and it utilizes leverage for an additional $30 million, creating a total value of $130 million available for investment in longer-term income securities. If prevailing short-term interest rates are 3% and longer-term interest rates are 6%, the yield curve has a strongly positive slope. In this case, a Fund’s financing costs on the $30 million of proceeds obtained from leverage are based on the lower short-term interest rates. At the same time, the securities purchased by a Fund with the proceeds from leverage earn income based on longer-term interest rates. In this case, a Fund’s financing cost of leverage is significantly lower than the income earned on a Fund’s longer-term investments acquired from such leverage proceeds, and therefore the holders of Common Shares (“Common Shareholders”) are the beneficiaries of the incremental net income.

However, in order to benefit Common Shareholders, the return on assets purchased with leverage proceeds must exceed the ongoing costs associated with the leverage. If interest and other costs of leverage exceed the Funds’ return on assets purchased with leverage proceeds, income to shareholders is lower than if the Funds had not used leverage. Furthermore, the value of the Funds’ portfolio investments generally varies inversely with the direction of long-term interest rates, although other factors can influence the value of portfolio investments. In contrast, the value of the Funds’ obligations under their respective leverage arrangements generally does not fluctuate in relation to interest rates. As a result, changes in interest rates can influence the Funds’ NAVs positively or negatively. Changes in the future direction of interest rates are very difficult to predict accurately, and there is no assurance that the Funds’ intended leveraging strategy will be successful.

The use of leverage also generally causes greater changes in each Fund’s NAV, market price and dividend rates than comparable portfolios without leverage. In a declining market, leverage is likely to cause a greater decline in the NAV and market price of a Fund’s Common Shares than if the Fund were not leveraged. In addition, each Fund may be required to sell portfolio securities at inopportune times or at distressed values in order to comply with regulatory requirements applicable to the use of leverage or as required by the terms of leverage instruments, which may cause the Fund to incur losses. The use of leverage may limit a Fund’s ability to invest in certain types of securities or use certain types of hedging strategies. Each Fund incurs expenses in connection with the use of leverage, all of which are borne by Common Shareholders and may reduce income to the Common Shares. Moreover, to the extent the calculation of the Funds’ investment advisory fees includes assets purchased with the proceeds of leverage, the investment advisory fees payable to the Funds’ investment adviser will be higher than if the Funds did not use leverage.

To obtain leverage, each Fund has issued Variable Rate Demand Preferred Shares (“VRDP Shares”) or Variable Rate Muni Term Preferred Shares (“VMTP Shares”) (collectively, “Preferred Shares”) and/or leveraged its assets through the use of tender option bond trusts (“TOB Trusts”) as described in the Notes to Financial Statements.

Under the Investment Company Act of 1940, as amended (the “1940 Act”), each Fund is permitted to issue debt up to 33 1/3% of its total managed assets or equity securities (e.g., Preferred Shares) up to 50% of its total managed assets. A Fund may voluntarily elect to limit its leverage to less than the maximum amount permitted under the 1940 Act. In addition, a Fund may also be subject to certain asset coverage, leverage or portfolio composition requirements imposed by the Preferred Shares’ governing instruments or by agencies rating the Preferred Shares, which may be more stringent than those imposed by the 1940 Act.

If a Fund segregates or designates on its books and records cash or liquid assets having a value not less than the value of a Fund’s obligations under the TOB Trust (including accrued interest), then the TOB Trust is not considered a senior security and is not subject to the foregoing limitations and requirements imposed by the 1940 Act.

Derivative Financial Instruments

The Funds may invest in various derivative financial instruments. These instruments are used to obtain exposure to a security, commodity, index, market, and/or other assets without owning or taking physical custody of securities, commodities and/or other referenced assets or to manage market, equity, credit, interest rate, foreign currency exchange rate, commodity and/or other risks. Derivative financial instruments may give rise to a form of economic leverage and involve risks, including the imperfect correlation between the value of a derivative financial instrument and the underlying asset, possible default of the counterparty to the transaction or illiquidity of the instrument. The Funds’ successful use of a derivative financial instrument depends on the investment adviser’s ability to predict pertinent market movements accurately, which cannot be assured. The use of these instruments may result in losses greater than if they had not been used, may limit the amount of appreciation a Fund can realize on an investment and/or may result in lower distributions paid to shareholders. The Funds’ investments in these instruments, if any, are discussed in detail in the Notes to Financial Statements.

 

 

THE BENEFITS AND RISKS OF LEVERAGING / DERIVATIVE FINANCIAL INSTRUMENTS      5  


Fund Summary  as of April 30, 2018    BlackRock MuniYield Fund, Inc.

 

Investment Objective

BlackRock MuniYield Fund, Inc.’s (MYD) (the “Fund”) investment objective is to provide shareholders with as high a level of current income exempt from U.S. federal income taxes as is consistent with its investment policies and prudent investment management. The Fund seeks to achieve its investment objective by investing at least 80% of its assets in municipal bonds exempt from U.S. federal income taxes (except that the interest may be subject to the U.S. federal alternative minimum tax). The Fund invests, under normal market conditions, at least 75% of its total assets in municipal bonds rated investment grade or, if unrated, are deemed to be of comparable quality by the investment adviser at the time of investment and invests primarily in long-term municipal bonds with a maturity of more than ten years at the time of investment. The Fund may invest directly in such securities or synthetically through the use of derivatives.

No assurance can be given that the Fund’s investment objective will be achieved.

Fund Information

 

Symbol on New York Stock Exchange (“NYSE”)

  MYD

Initial Offering Date

  November 29, 1991

Yield on Closing Market Price as of April 30, 2018 ($13.12)(a)

  5.58%

Tax Equivalent Yield(b)

  9.43%

Current Monthly Distribution per Common Share(c)

  $0.0610

Current Annualized Distribution per Common Share(c)

  $0.7320

Economic Leverage as of April 30, 2018(d)

  38%

 

  (a)  Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.  
  (b)  Tax equivalent yield assumes the maximum marginal U.S. federal tax rate of 40.8%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields.  
  (c)  The distribution rate is not constant and is subject to change.  
  (d)  Represents VRDP Shares and TOB Trusts as a percentage of total managed assets, which is the total assets of the Fund, including any assets attributable to VRDP Shares and TOB Trusts, minus the sum of its accrued liabilities. For a discussion of leveraging techniques utilized by the Fund, please see The Benefits and Risks of Leveraging on page 5.  

Performance

Returns for the 12 months ended April 30, 2018 were as follows:

 

    Returns Based On  
     Market Price      NAV  

MYD(a)(b)

    (5.85 )%       3.47

Lipper General & Insured Municipal Debt Funds (Leveraged)(c)

    (2.37      2.65  

 

  (a) All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.  
  (b)  The Fund moved from a premium to NAV to a discount during the period, which accounts for the difference between performance based on market price and performance based on NAV.  
  (c)  Average return. Returns reflect reinvestment of dividends and/or distributions at NAV on the ex-dividend date as calculated by Lipper.  

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

Past performance is not indicative of future results.

The following discussion relates to the Fund’s absolute performance based on NAV:

Municipal bonds generated positive returns, with income offsetting a modest downturn in prices. The reporting period began on a strong note, with a favorable balance of supply and demand driving prices higher in the summer of 2017. By autumn, however, accelerating economic growth and emerging inflation pressures sparked concerns that the Fed would need to tighten monetary policy more aggressively than expected. In addition, the prospect of tax reform led to a pick-up in new-issue supply prior to year-end. These factors drove municipal bond prices lower in late 2017, and the selloff picked up speed in late January/early February due to a spike in U.S. Treasury yields. (Prices and yields move in opposite directions.) The tax-exempt market subsequently stabilized at these lower levels, and it traded largely flat with low volatility through the end of the period.

The Fund’s positions in the transportation, tobacco, tax-backed (state) and health care sectors contributed to performance. Holdings in lower-rated investment-grade bonds in the A and BBB rating categories, which performed well amid investors’ hearty appetite for higher-yielding securities, also aided results. Portfolio holdings with the longest maturity dates (typically 20 years and longer) added value given that longer-term bonds outperformed.

Conversely, the Fund’s performance was hurt by positions in shorter-dated holdings — including higher-quality, pre-refunded bonds — that were most affected by the prospect of tighter Fed policy. Intermediate-term holdings, specifically those in the five- to 10-year range, also lagged somewhat.

The Fund sought to manage interest rate risk using U.S. Treasury futures. Given that Treasury yields rose, as prices fell, this aspect of the Fund’s positioning had a positive effect on returns.

Investments in bonds subject to the AMT helped performance. Yield spreads tightened due to legislation in the Tax Cuts and Jobs Act — which was passed in December 2017— that eliminated the corporate AMT and significantly limited the reach of the individual AMT.

The Fund’s use of leverage, while amplifying the impact of weak price performance, was a net contributor since it provided additional income. However, the cost of leverage increased due to rising short-term interest rates.

 

 

6    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Fund Summary  as of April 30, 2018 (continued)    BlackRock MuniYield Fund, Inc.

 

Although yields rose during the period, reinvestment had an adverse effect on the Fund’s income as the proceeds of higher-yielding bonds that matured or were called needed to be reinvested at lower prevailing rates.

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

Market Price and Net Asset Value Per Share Summary

 

    

04/30/18

     04/30/17      Change      High      Low  

Market Price

  $ 13.12      $ 14.75        (11.05)    $ 15.72      $ 13.04  

Net Asset Value

    14.38        14.71        (2.24      15.05        14.34  

Market Price and Net Asset Value History For the Past Five Years

 

LOGO

Overview of the Fund’s Total Investments*

 

SECTOR ALLOCATION

 

Sector   04/30/18     04/30/17  

Transportation

    25     25

Health

    21       21  

Utilities

    11       11  

State

    10       10  

County/City/Special District/School District

    10       9  

Tobacco

    8       6  

Education

    7       10  

Corporate

    7       8  

Housing

    1        

For Fund compliance purposes, the Fund’s sector classifications refer to one or more of the sector sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.

CALL/MATURITY SCHEDULE (c)

 

Calendar Year Ended December 31,

       

2018

    9

2019

    22  

2020

    11  

2021

    11  

2022

    8  

 

  (c)  Scheduled maturity dates and/or bonds that are subject to potential calls by issuers over the next five years.  
  * Excludes short-term securities.  

CREDIT QUALITY ALLOCATION (a)

 

Credit Rating   04/30/18     04/30/17  

AAA/Aaa

   
4

    6

AA/Aa

    41       47  

A

    19       18  

BBB/Baa

    17       17  

BB/Ba

    5       4  

B

    3       2  

N/R

    11 (b)      6  

 

  (a)  For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either Standard & Poor’s (“S&P”) or Moody’s Investors Service (“Moody’s”) if ratings differ. These rating agencies are independent, nationally recognized statistical rating organizations and are widely used. Investment grade ratings are credit ratings of BBB/Baa or higher. Below investment grade ratings are credit ratings of BB/Ba or lower. Investments designated N/R are not rated by either rating agency. Unrated investments do not necessarily indicate low credit quality. Credit quality ratings are subject to change.  
  (b)  The investment adviser evaluates the credit quality of unrated investments based upon certain factors including, but not limited to, credit ratings for similar investments and financial analysis of sectors and individual investments. Using this approach, the investment adviser has deemed certain of these unrated securities as investment grade quality. As of April 30, 2018, the market value of unrated securities deemed by the investment adviser to be investment grade represents 1% of the Fund’s total investments.  
 

 

 

FUND SUMMARY      7  


Fund Summary  as of April 30, 2018 (continued)    BlackRock MuniYield Quality Fund, Inc.

 

Investment Objective

BlackRock MuniYield Quality Fund, Inc.’s (MQY) (the “Fund”) investment objective is to provide shareholders with as high a level of current income exempt from U.S. federal income taxes as is consistent with its investment policies and prudent investment management. The Fund seeks to achieve its investment objective by investing at least 80% of its assets in municipal bonds exempt from U.S. federal income taxes (except that the interest may be subject to the U.S. federal alternative minimum tax). The Fund invests in municipal bonds which are rated in the three highest quality rating categories (A or better), or, if unrated, are deemed to be of comparable quality by the adviser, at the time of investment. The Fund invests primarily in long-term municipal bonds with maturities of more than ten years at the time of investment. The Fund may invest directly in such securities or synthetically through the use of derivatives.

No assurance can be given that the Fund’s investment objective will be achieved.

Fund Information

 

Symbol on NYSE

  MQY

Initial Offering Date

  June 26, 1992

Yield on Closing Market Price as of April 30, 2018 ($13.83)(a)

  5.47%

Tax Equivalent Yield(b)

  9.24%

Current Monthly Distribution per Common Share(c)

  $0.0630

Current Annualized Distribution per Common Share(c)

  $0.7560

Economic Leverage as of April 30, 2018(d)

  40%

 

 

  (a)  Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.  
  (b)  Tax equivalent yield assumes the maximum marginal U.S. federal tax rate of 40.8%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields.  
  (c)  The distribution rate is not constant and is subject to change.  
  (d)  Represents VRDP Shares and TOB Trusts as a percentage of total managed assets, which is the total assets of the Fund, including any assets attributable to VRDP Shares and TOB Trusts, minus the sum of its accrued liabilities. For a discussion of leveraging techniques utilized by the Fund, please see The Benefits and Risks of Leveraging on page 5.  

Performance

Returns for the 12 months ended April 30, 2018 were as follows:

 

    Returns Based On  
     Market Price      NAV  

MQY(a)(b)

    (3.55 )%       3.28

Lipper General & Insured Municipal Debt Funds (Leveraged)(c)

    (2.37      2.65  

 

  (a)  All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.  
  (b)  The Fund’s discount to NAV widened during the period, which accounts for the difference between performance based on market price and performance based on NAV.  
  (c)  Average return. Returns reflect reinvestment of dividends and/or distributions at NAV on the ex-dividend date as calculated by Lipper.  

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

Past performance is not indicative of future results.

The following discussion relates to the Fund’s absolute performance based on NAV:

Municipal bonds generated positive returns, with income offsetting a modest downturn in prices. The reporting period began on a strong note, with a favorable balance of supply and demand driving prices higher in the summer of 2017. By autumn, however, accelerating economic growth and emerging inflation pressures sparked concerns that the Fed would need to tighten monetary policy more aggressively than expected. In addition, the prospect of tax reform led to a pick-up in new-issue supply prior to year-end. These factors drove municipal bond prices lower in late 2017, and the selloff picked up speed in late January/early February due to a spike in U.S. Treasury yields. (Prices and yields move in opposite directions.) The tax-exempt market subsequently stabilized at these lower levels, and it traded largely flat with low volatility through the end of the period.

During the reporting period, the Fund produced a gain at net asset value. Its return was primarily derived from income given that bond prices fell slightly.

The lower end of the investment-grade segment outperformed higher-quality securities in the period. As a result, the Fund’s holdings in bonds rated A and BBB aided returns. Consistent with this trend, allocations to sectors with lower average credit ratings — including transportation and health care — were additive to results.

The Fund benefited from its allocation to longer-term bonds, which outpaced short-term issues. Conversely, holdings in pre-refunded securities experienced poor relative performance due to their shorter maturities.

The Fund sought to manage interest rate risk using U.S. Treasury futures. Given that Treasury yields rose, as prices fell, this aspect of the Fund’s positioning had a positive effect on returns.

The Fund’s position in New Jersey appropriated debt, which benefited from meaningful yield spread tightening, further contributed to results.

 

 

8    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Fund Summary  as of April 30, 2018 (continued)    BlackRock MuniYield Quality Fund, Inc.

 

Investments in bonds subject to the AMT helped performance. Yield spreads tightened due to legislation in the Tax Cuts and Jobs Act — which was passed in December 2017 — that eliminated the corporate AMT and significantly limited the reach of the individual AMT.

The Fund’s use of leverage, while amplifying the impact of weak price performance, was a net contributor since it provided additional income. However, the cost of leverage increased due to rising short-term interest rates.

Although yields rose during the period, reinvestment had an adverse effect on the Fund’s income as the proceeds of higher-yielding bonds that matured or were called needed to be reinvested at lower prevailing rates.

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

Market Price and Net Asset Value Per Share Summary

 

     04/30/18      04/30/17      Change      High      Low  

Market Price

  $ 13.83      $ 15.14        (8.65)    $ 16.10      $ 13.67  

Net Asset Value

    15.22        15.56        (2.19)        16.05        15.16  

Market Price and Net Asset Value History For the Past Five Years

 

LOGO

Overview of the Fund’s Total Investments*

 

SECTOR ALLOCATION

 

Sector  

04/30/18

    04/30/17  

Transportation

    25     24

County/City/Special District/School District

    17       18  

Utilities

    16       17  

Health

    14       12  

State

    13       17  

Education

    6       7  

Corporate

    5       3  

Housing

    2       1  

Tobacco

    2       1  

For Fund compliance purposes, the Fund’s sector classifications refer to one or more of the sector sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.

CALL/MATURITY SCHEDULE (c)

 

Calendar Year Ended December 31,

       

2018

    10

2019

    10  

2020

    4  

2021

    12  

2022

    6  

 

  (c)  Scheduled maturity dates and/or bonds that are subject to potential calls by issuers over the next five years.  
  * Excludes short-term securities.  

CREDIT QUALITY ALLOCATION (a)

 

Credit Rating  

04/30/18

    04/30/17  

AAA/Aaa

    4     7

AA/Aa

    52       60  

A

    23       19  

BBB/Baa

    10       12  

BB/Ba

    3        

N/R

    8 (b)      2  

 

  (a)  For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either S&P’s or Moody’s if ratings differ. These rating agencies are independent, nationally recognized statistical rating organizations and are widely used. Investment grade ratings are credit ratings of BBB/Baa or higher. Below investment grade ratings are credit ratings of BB/Ba or lower. Investments designated N/R are not rated by either rating agency. Unrated investments do not necessarily indicate low credit quality. Credit quality ratings are subject to change.  
  (b)  The investment adviser evaluates the credit quality of unrated investments based upon certain factors including, but not limited to, credit ratings for similar investments and financial analysis of sectors and individual investments. Using this approach, the investment adviser has deemed certain of these unrated securities as investment grade quality. As of April 30, 2018, the market value of unrated securities deemed by the investment adviser to be investment grade represents less than 1% of the Fund’s total investments.  
 

 

 

FUND SUMMARY      9  


Fund Summary  as of April 30, 2018 (continued)    BlackRock MuniYield Quality Fund II, Inc.

 

Investment Objective

BlackRock MuniYield Quality Fund II, Inc.’s (MQT) (the “Fund”) investment objective is to provide shareholders with as high a level of current income exempt from U.S. federal income taxes as is consistent with its investment policies and prudent investment management. The Fund seeks to achieve its investment objective by investing at least 80% of its assets in municipal bonds exempt from U.S. federal income taxes (except that the interest may be subject to the U.S. federal alternative minimum tax). The Fund invests in municipal bonds which are in the three highest quality rating categories (A or better) or, if unrated, are deemed to be of comparable quality by the investment adviser at the time of investment. The Fund invests primarily in long-term municipal bonds with maturities of more than ten years at the time of investment. The Fund may invest directly in such securities or synthetically through the use of derivatives.

No assurance can be given that the Fund’s investment objective will be achieved.

Fund Information

 

Symbol on NYSE

  MQT

Initial Offering Date

  August 28, 1992

Yield on Closing Market Price as of April 30, 2018 ($11.98)(a)

  5.41%

Tax Equivalent Yield(b)

  9.14%

Current Monthly Distribution per Common Share(c)

  $0.0540

Current Annualized Distribution per Common Share(c)

  $0.6480

Economic Leverage as of April 30, 2018(d)

  40%

 

  (a)  Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.  
  (b)  Tax equivalent yield assumes the maximum marginal U.S. federal tax rate of 40.8%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields.  
  (c)  The distribution rate is not constant and is subject to change.  
  (d)  Represents VMTP Shares and TOB Trusts as a percentage of total managed assets, which is the total assets of the Fund, including any assets attributable to VMTP Shares and TOB Trusts, minus the sum of its accrued liabilities. For a discussion of leveraging techniques utilized by the Fund, please see The Benefits and Risks of Leveraging on page 5.  

Performance

Returns for the 12 months ended April 30, 2018 were as follows:

 

    Returns Based On  
     Market Price      NAV  

MQT(a)(b)

    (2.35 )%       3.01

Lipper General & Insured Municipal Debt Funds (Leveraged)(c)

    (2.37      2.65  

 

  (a)  All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.  
  (b) The Fund’s discount to NAV widened during the period, which accounts for the difference between performance based on market price and performance based on NAV.  
  (c)  Average return. Returns reflect reinvestment of dividends and/or distributions at NAV on the ex-dividend date as calculated by Lipper.  

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

Past performance is not indicative of future results.

The following discussion relates to the Fund’s absolute performance based on NAV:

Municipal bonds generated positive returns, with income offsetting a modest downturn in prices. The reporting period began on a strong note, with a favorable balance of supply and demand driving prices higher in the summer of 2017. By autumn, however, accelerating economic growth and emerging inflation pressures sparked concerns that the Fed would need to tighten monetary policy more aggressively than expected. In addition, the prospect of tax reform led to a pick-up in new-issue supply prior to year-end. These factors drove municipal bond prices lower in late 2017, and the selloff picked up speed in late January/early February due to a spike in U.S. Treasury yields. (Prices and yields move in opposite directions.) The tax-exempt market subsequently stabilized at these lower levels, and it traded largely flat with low volatility through the end of the period.

During the reporting period, the Fund produced a gain at net asset value. Its return was primarily derived from income given that bond prices fell slightly.

The lower end of the investment-grade segment outperformed higher-quality securities in the period. As a result, the fund’s holdings in bonds rated A and BBB aided returns. Consistent with this trend, allocations to sectors with lower average credit ratings — including transportation and health care — were additive to results.

The Fund benefited from its allocation to longer-term bonds, which outpaced short-term issues. Conversely, holdings in pre-refunded securities experienced poor relative performance due to their shorter maturities.

The Fund sought to manage interest rate risk using U.S. Treasury futures. Given that Treasury yields rose, as prices fell, this aspect of the Fund’s positioning had a positive effect on returns.

The Fund’s position in New Jersey appropriated debt, which benefited from meaningful yield spread tightening, further contributed to results.

Investments in bonds subject to the AMT helped performance. Yield spreads tightened due to legislation in the Tax Cuts and Jobs Act — which was passed in December 2017 — that eliminated the corporate AMT and significantly limited the reach of the individual AMT.

 

 

10    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Fund Summary  as of April 30, 2018 (continued)    BlackRock MuniYield Quality Fund II, Inc.

 

The Fund’s use of leverage, while amplifying the impact of weak price performance, was a net contributor since it provided additional income. However, the cost of leverage increased due to rising short-term interest rates.

Although yields rose during the period, reinvestment had an adverse effect on the Fund’s income as the proceeds of higher-yielding bonds that matured or were called needed to be reinvested at lower prevailing rates.

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

Market Price and Net Asset Value Per Share Summary

 

    

04/30/18

    

04/30/17

     Change      High      Low  

Market Price

  $ 11.98      $ 12.94        (7.42)    $ 13.91      $ 11.89  

Net Asset Value

    13.37        13.69        (2.34)        14.08        13.32  

Market Price and Net Asset Value History For the Past Five Years

 

LOGO

Overview of the Fund’s Total Investments*

 

SECTOR ALLOCATION

 

Sector  

04/30/18

    04/30/17  

Transportation

    27     26

County/City/Special District/School District

    17       24  

Health

    16       13  

Utilities

    16       14  

State

    12       12  

Education

    6       6  

Corporate

    2       2  

Housing

    2       2  

Tobacco

    2       1  

For Fund compliance purposes, the Fund’s sector classifications refer to one or more of the sector sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.

CALL/MATURITY SCHEDULE (c)

 

Calendar Year Ended December 31,

       

2018

    10

2019

    13  

2020

    5  

2021

    10  

2022

    7  

 

  (c)  Scheduled maturity dates and/or bonds that are subject to potential calls by issuers over the next five years.  
  * Excludes short-term securities.  

CREDIT QUALITY ALLOCATION (a)

 

Credit Rating  

04/30/18

    04/30/17  

AAA/Aaa

    4     7

AA/Aa

    47       61  

A

    26       17  

BBB/Baa

    14       13  

BB/Ba

    2        

N/R

    7 (b)      2  

 

  (a)  For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either S&P’s or Moody’s if ratings differ. These rating agencies are independent, nationally recognized statistical rating organizations and are widely used. Investment grade ratings are credit ratings of BBB/Baa or higher. Below investment grade ratings are credit ratings of BB/Ba or lower. Investments designated N/R are not rated by either rating agency. Unrated investments do not necessarily indicate low credit quality. Credit quality ratings are subject to change.  
  (b)  The investment adviser evaluates the credit quality of unrated investments based upon certain factors including, but not limited to, credit ratings for similar investments and financial analysis of sectors and individual investments. Using this approach, the investment adviser has deemed certain of these unrated securities as investment grade quality. As of April 30, 2018, the market value of unrated securities deemed by the investment adviser to be investment grade represents less than 1% of the Fund’s total investments.  
 

 

 

FUND SUMMARY      11  


Schedule of Investments

April 30, 2018

  

BlackRock MuniYield Fund, Inc. (MYD)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  

Municipal Bonds — 119.4%

 

Alabama — 2.1%  

County of Jefferson Alabama Sewer, Refunding RB:

   

Senior Lien, Series A (AGM), 5.00%, 10/01/44

  $ 1,665     $ 1,813,019  

Senior Lien, Series A (AGM), 5.25%, 10/01/48

    3,175       3,491,103  

Sub-Lien, Series D, 6.00%, 10/01/42

    7,410       8,518,758  
   

 

 

 
      13,822,880  
Alaska — 0.1%  

Northern Tobacco Securitization Corp., Refunding RB, Tobacco Settlement, Asset-Backed, Series A, 4.63%, 06/01/23

    785       807,427  
   

 

 

 
Arizona — 2.7%  

City of Phoenix Arizona IDA, RB, Legacy Traditional Schools Projects, Series A, 5.00%, 07/01/46(a)

    3,575       3,646,786  

Salt Verde Financial Corp., RB, Senior:

   

5.00%, 12/01/32

    7,365       8,544,726  

5.00%, 12/01/37

    5,000       5,838,450  
   

 

 

 
      18,029,962  
California — 11.4%  

California Health Facilities Financing Authority, RB:

   

St. Joseph Health System, Series A, 5.75%, 07/01/39

    4,425       4,621,116  

Sutter Health, Series B, 6.00%, 08/15/20(b)

    6,465       7,059,586  

California Health Facilities Financing Authority, Refunding RB, Series A:

   

Dignity Health, 6.00%, 07/01/19(b)

    3,155       3,306,850  

St. Joseph Health System, 5.00%, 07/01/33

    2,560       2,864,205  

California Municipal Finance Authority, RB, Senior, Caritas Affordable Housing, Inc. Projects, S/F Housing, Series A:

   

5.25%, 08/15/39

    305       332,709  

5.25%, 08/15/49

    770       834,549  

California Municipal Finance Authority, Refunding RB, Community Medical Centers, Series A:

   

5.00%, 02/01/36

    670       737,704  

5.00%, 02/01/37

    505       554,838  

California Pollution Control Financing Authority, RB, Poseidon Resources (Channel Side) LP Desalination Project, AMT, 5.00%, 11/21/45(a)

    6,900       7,313,931  

California Statewide Communities Development Authority, RB, Series A:

   

John Muir Health, 5.13%, 07/01/19(b)

    2,300       2,387,630  

Loma Linda University Medical Center, 5.00%, 12/01/41(a)

    1,100       1,162,051  

Loma Linda University Medical Center, 5.00%, 12/01/46(a)

    955       1,005,520  

California Statewide Financing Authority, RB, Asset-Backed, Tobacco Settlement, Series A, 6.00%, 05/01/43

    3,285       3,285,657  

City of Los Angeles California Department of Airports, Refunding ARB, Los Angeles International Airport, Series A, 5.25%, 05/15/39

    1,605       1,660,228  

City of Stockton California Public Financing Authority, RB, Delta Water Supply Project, Series A:

   

6.25%, 10/01/38

    405       474,506  

6.25%, 10/01/40

    335       390,295  

Golden State Tobacco Securitization Corp., Refunding RB, Asset-Backed, Senior Series A-1:

   

5.13%, 06/01/47

    6,205       6,204,814  

5.75%, 06/01/47

    4,740       4,876,133  

State of California, GO:

   

Various Purposes, 6.50%, 04/01/19(b)

    7,625       7,946,851  

(AMBAC), 5.00%, 04/01/31

    10       10,026  

Various Purposes, 6.00%, 03/01/33

    5,085       5,473,494  

Various Purposes, 6.50%, 04/01/33

    6,450       6,722,835  
Security   Par
(000)
    Value  
California (continued)  

State of California Public Works Board, LRB, Various Capital Projects:

   

Series I, 5.00%, 11/01/38

  $ 1,605     $ 1,784,616  

Sub-Series I-1, 6.38%, 11/01/19(b)

    2,385       2,547,681  

Tobacco Securitization Authority of Southern California, Refunding RB, Tobacco Settlement, Asset-Backed, Senior Series A-1:

   

4.75%, 06/01/25

    1,200       1,202,568  

5.00%, 06/01/37

    1,775       1,780,112  
   

 

 

 
      76,540,505  
Colorado — 0.9%  

Denver Connection West Metropolitan District, GO, Series A, 5.38%, 08/01/47

    1,250       1,239,863  

University of Colorado, RB, Series A(b):

   

5.25%, 06/01/19

    2,250       2,331,180  

5.38%, 06/01/19

    1,250       1,296,762  

5.38%, 06/01/19

    830       861,050  
   

 

 

 
      5,728,855  
Connecticut — 0.8%  

Connecticut State Health & Educational Facility Authority, RB, Ascension Health Senior Credit, Series A, 5.00%, 11/15/40

    2,770       2,885,648  

Connecticut State Health & Educational Facility Authority, Refunding RB, Wesleyan University, Series G, 5.00%, 07/01/20(b)

    2,225       2,369,024  
   

 

 

 
      5,254,672  
Delaware — 2.0%  

County of Sussex Delaware, RB, NRG Energy, Inc., Indian River Power LLC Project, 6.00%, 10/01/40

    2,305       2,432,490  

Delaware Transportation Authority, RB, U.S. 301 Project, 5.00%, 06/01/55

    2,430       2,648,821  

State of Delaware EDA, RB, Exempt Facilities, Indian River Power LLC Project, 5.38%, 10/01/45

    8,275       8,581,258  
   

 

 

 
      13,662,569  
District of Columbia — 4.5%  

District of Columbia, Refunding RB, Georgetown University:

   

5.00%, 04/01/35

    910       1,033,114  

Issue, 5.00%, 04/01/42

    1,050       1,174,803  

District of Columbia, Tax Allocation Bonds, City Market at O Street Project, 5.13%, 06/01/41

    4,440       4,743,918  

Metropolitan Washington Airports Authority, Refunding RB:

   

CAB, 2nd Senior Lien, Series B (AGC), 0.00%, 10/01/31(c)

    8,350       4,993,300  

CAB, 2nd Senior Lien, Series B (AGC), 0.00%, 10/01/32(c)

    15,000       8,559,750  

Dulles Toll Road, 1st Senior Lien, Series A, 5.25%, 10/01/44

    2,425       2,517,708  

Dulles Toll Road, CAB, 2nd Senior Lien, Series B (AGC), 0.00%, 10/01/33(c)

    13,410       7,293,967  
   

 

 

 
      30,316,560  
Florida — 5.8%  

City of Atlantic Beach Florida, RB, Health Care Facilities, Fleet Landing Project, Series B, 5.63%, 11/15/43

    2,805       3,090,717  

City of Clearwater Florida Water & Sewer Revenue, RB, Series A, 5.25%, 12/01/19(b)

    6,900       7,261,422  

Country of Broward Florida Airport System, ARB, AMT, 5.00%, 10/01/47

    615       684,255  

County of Alachua Florida Health Facilities Authority, RB, Shands Teaching Hospital and Clinics, Series A, 5.00%, 12/01/44

    4,825       5,194,064  
 

 

 

12    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (continued)

April 30, 2018

  

BlackRock MuniYield Fund, Inc. (MYD)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Florida (continued)  

County of Broward Florida Water & Sewer Utility, Refunding RB, Series A, 5.25%, 10/01/18(b)

  $ 2,155     $ 2,186,291  

County of Collier Florida Health Facilities Authority, Refunding RB, Series A, 5.00%, 05/01/45

    2,790       3,053,181  

County of Miami-Dade Florida Aviation, Refunding ARB, Miami International Airport, Series A-1, 5.38%, 10/01/41

    7,530       8,070,503  

Mid-Bay Florida Bridge Authority, RB, Springing Lien, Series A, 7.25%, 10/01/21(b)

    6,150       7,139,474  

Santa Rosa Bay Bridge Authority, RB, 6.25%, 07/01/28(d)(e)

    3,521       2,605,292  
   

 

 

 
      39,285,199  
Georgia — 1.8%  

City of Atlanta Georgia Water & Wastewater Revenue, Refunding RB, 5.00%, 11/01/40

    1,980       2,221,639  

County of Dalton Whitfield Joint Development Authority, RB, Hamilton Health Care System Obligation, 4.00%, 08/15/48

    6,660       6,659,667  

County of Gainesville Georgia & Hall Hospital Authority, Refunding RB, Northeast Georgia Health System, Inc. Project, Series A, 5.50%, 08/15/54

    1,075       1,227,510  

DeKalb Georgia Private Hospital Authority, Refunding RB, Children’s Healthcare, 5.25%, 11/15/39

    1,700       1,781,311  
   

 

 

 
      11,890,127  
Hawaii — 0.4%  

State of Hawaii Harbor System, RB, Series A, 5.25%, 07/01/30

    2,760       2,933,825  
   

 

 

 
Idaho — 1.5%  

County of Power Idaho Industrial Development Corp., RB, FMC Corp. Project, AMT, 6.45%, 08/01/32

    10,000       10,040,200  
   

 

 

 
Illinois — 16.3%  

Bolingbrook Special Service Area No. 1, Special Tax Bonds, Forest City Project, 5.90%, 03/01/27

    1,000       1,000,820  

Chicago Board of Education, GO, Series H, 5.00%, 12/01/36

    460       457,778  

Chicago Board of Education, GO, Refunding, Dedicated Revenues:

   

5.00%, 12/01/25

    1,735       1,833,496  

Series G, 5.00%, 12/01/34

    455       456,010  

Chicago Board of Education, GO, Series D:

   

Refunding, 5.00%, 12/01/31

    1,000       1,007,530  

Refunding Series F, 5.00%, 12/01/22

    1,305       1,376,410  

City of Chicago Illinois, GO, Project, Series A, 5.00%, 01/01/34

    3,570       3,613,840  

City of Chicago Illinois, GO, Refunding, Project, Series A, 5.25%, 01/01/32

    6,390       6,613,969  

City of Chicago Illinois O’Hare International Airport, GARB, 3rd Lien:

   

5.63%, 01/01/21(b)

    3,390       3,696,049  

5.63%, 01/01/35

    810       874,808  

Series A, 5.75%, 01/01/21(b)

    2,940       3,214,890  

Series A, 5.75%, 01/01/39

    560       607,051  

Series C, 6.50%, 01/01/21(b)

    11,920       13,248,484  

City of Chicago Illinois Transit Authority, RB, Sales Tax Receipts, 5.25%, 12/01/40

    2,130       2,271,347  

County of Cook Illinois Community College District No. 508, GO, City College of Chicago, 5.50%, 12/01/38

    1,635       1,717,306  

Illinois Finance Authority, RB, Chicago LLC, University of Illinois at Chicago Project, Series A:

   

5.00%, 02/15/47

    425       449,217  

5.00%, 02/15/50

    210       221,143  
Security   Par
(000)
    Value  
Illinois (continued)  

Illinois Finance Authority, Refunding RB:

   

Ascension Health, Series A, 5.00%, 11/15/37

  $ 1,970     $ 2,128,033  

Central Dupage Health, Series B, 5.50%, 11/01/19(b)

    3,235       3,403,155  

Presence Health Network, Series C, 4.00%, 02/15/41

    3,000       2,968,860  

Metropolitan Pier & Exposition Authority, Refunding RB, McCormick Place Expansion Project:

   

CAB, Series B (AGM), 0.00%, 06/15/47(c)

    27,225       6,763,507  

Series B (AGM), 5.00%, 06/15/50

    12,435       12,952,047  

Series B-2, 5.00%, 06/15/50

    5,085       5,153,037  

Railsplitter Tobacco Settlement Authority, RB(b):

   

5.50%, 06/01/21

    2,730       3,002,863  

6.00%, 06/01/21

    2,335       2,603,011  

State of Illinois, GO:

   

5.50%, 07/01/38

    4,000       4,117,240  

5.00%, 02/01/39

    3,195       3,207,429  

Series A, 5.00%, 04/01/38

    2,510       2,520,743  

State of Illinois, RB, Build Illinois, Series B, 5.25%, 06/15/19(b)

    1,275       1,322,634  

State of Illinois Toll Highway Authority, RB:

   

Senior, Series C, 5.00%, 01/01/36

    5,435       5,983,446  

Senior, Series C, 5.00%, 01/01/37

    5,815       6,379,869  

Series A, 5.00%, 01/01/38

    2,535       2,762,111  

University of Illinois, RB, Auxiliary Facilities System, Series A, 5.00%, 04/01/44

    2,045       2,192,854  
   

 

 

 
      110,120,987  
Indiana — 4.9%  

City of Valparaiso Indiana, RB, Exempt Facilities, Pratt Paper LLC Project, AMT:

   

6.75%, 01/01/34

    1,635       1,908,519  

7.00%, 01/01/44

    3,950       4,634,535  

Indiana Finance Authority, RB, Series A:

   

CWA Authority Project, 1st Lien, 5.25%, 10/01/38

    6,665       7,267,916  

Private Activity Bond, Ohio River Bridges East End Crossing Project, AMT, 5.00%, 07/01/44

    910       969,059  

Private Activity Bond, Ohio River Bridges East End Crossing Project, AMT, 5.00%, 07/01/48

    3,015       3,201,930  

Private Activity Bond, Ohio River Bridges East End Crossing Project, AMT, 5.25%, 01/01/51

    840       900,648  

Sisters of St. Francis Health Services, 5.25%, 11/01/19(b)

    1,690       1,771,644  

Indiana Finance Authority, Refunding RB, Parkview Health System, Series A:

   

5.75%, 05/01/19(b)

    5,450       5,650,778  

5.75%, 05/01/31

    1,195       1,240,721  

Indiana Municipal Power Agency, RB, Series B, 6.00%, 01/01/19(b)

    2,230       2,290,857  

Indianapolis Local Public Improvement Bond Bank, RB, Series A, 5.00%, 01/15/40

    2,580       2,834,336  
   

 

 

 
      32,670,943  
Iowa — 1.9%  

Iowa Finance Authority, Refunding RB, Iowa Fertilizer Co. Project:

   

Series B, 5.25%, 12/01/50(f)

    5,720       6,007,773  

Midwestern Disaster Area, 5.50%, 12/01/22

    15       15,218  

Midwestern Disaster Area, 5.25%, 12/01/25

    940       1,000,151  

Midwestern Disaster Area, 5.88%, 12/01/26(a)

    835       880,299  

Iowa Student Loan Liquidity Corp., Refunding RB, Student Loan, Senior Series A-1, AMT, 5.15%, 12/01/22

    1,885       1,944,359  

Iowa Tobacco Settlement Authority, Refunding RB, Asset-Backed, CAB, Series B, 5.60%, 06/01/34

    2,695       2,722,785  
   

 

 

 
      12,570,585  
 

 

 

SCHEDULES OF INVESTMENTS      13  


Schedule of Investments  (continued)

April 30, 2018

  

BlackRock MuniYield Fund, Inc. (MYD)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Kansas — 0.7%  

Kansas Development Finance Authority, Refunding RB, Adventist Health System/Sunbelt Obligated Group, Series C:

   

5.75%, 11/15/19(b)

  $ 95     $ 100,198  

5.75%, 11/15/38

    4,285       4,530,188  
   

 

 

 
      4,630,386  
Kentucky — 1.1%  

Kentucky Economic Development Finance Authority, RB, Catholic Health Initiatives, Series A, 5.25%, 01/01/45

    2,055       2,182,944  

Kentucky Economic Development Finance Authority, Refunding RB, Louisville Arena Authority, Inc. (AGM), 5.00%, 12/01/45

    2,625       2,860,489  

Kentucky Public Transportation Infrastructure Authority, RB, Downtown Crossing Project, Convertible CAB, 1st Tier, Series C, 0.00%, 07/01/43(g)

    2,485       2,296,513  
   

 

 

 
      7,339,946  
Louisiana — 2.0%  

East Baton Rouge Sewerage Commission, RB, Series A, 5.25%, 02/01/19(b)

    1,610       1,651,602  

New Orleans Aviation Board, RB, Passenger Facility Charge, Series A, 5.25%, 01/01/41

    1,260       1,315,868  

Tobacco Settlement Financing Corp., Refunding RB, Asset-Backed, Series A:

   

5.50%, 05/15/30

    2,055       2,190,568  

5.25%, 05/15/31

    1,750       1,880,813  

5.25%, 05/15/32

    2,240       2,432,886  

5.25%, 05/15/33

    2,430       2,619,103  

5.25%, 05/15/35

    1,025       1,108,630  
   

 

 

 
      13,199,470  
Maine — 0.5%  

Maine Health & Higher Educational Facilities Authority, RB, Series A:

   

5.00%, 07/01/19(b)

    980       1,014,555  

5.00%, 07/01/39

    2,160       2,222,251  
   

 

 

 
      3,236,806  
Maryland — 0.7%  

County of Prince George’s Maryland, Special Obligation, Remarketing, National Harbor Project, 5.20%, 07/01/34

    1,398       1,403,159  

Maryland EDC, RB, Transportation Facilities Project, Series A, 5.75%, 06/01/20(b)

    880       946,343  

Maryland EDC, Refunding RB, CNX Marine Terminals, Inc., 5.75%, 09/01/25

    1,545       1,611,852  

Maryland Health & Higher Educational Facilities Authority, RB, Trinity Health Credit Group, Series 2017, 5.00%, 12/01/46

    880       990,651  
   

 

 

 
      4,952,005  
Massachusetts — 1.5%  

Massachusetts Bay Transportation Authority, Refunding RB, Senior Series A-1, 5.25%, 07/01/29

    3,250       4,036,988  

Massachusetts Development Finance Agency, Refunding RB, Covanta Energy Project, Series C, AMT, 5.25%, 11/01/42(a)

    4,565       4,567,739  

Massachusetts Health & Educational Facilities Authority, Refunding RB, Partners Healthcare System, Series J1, 5.00%, 07/01/19(b)

    1,640       1,697,826  
   

 

 

 
      10,302,553  
Michigan — 4.4%  

City of Detroit Michigan Sewage Disposal System, Refunding RB, Senior Lien, Series A, 5.25%, 07/01/39

    8,995       9,617,544  
Security   Par
(000)
    Value  
Michigan (continued)  

Kalamazoo Hospital Finance Authority, Refunding RB, Bronson Methodist Hospital:

   

5.50%, 05/15/20(b)

  $ 1,545     $ 1,649,797  

5.50%, 05/15/36

    1,250       1,317,087  

Michigan Finance Authority, Refunding RB:

   

Detroit Water & Sewage Department Project, Senior Lien, Series C-1, 5.00%, 07/01/44

    1,830       1,978,889  

Henry Ford Health System, 4.00%, 11/15/46

    20       19,865  

Michigan State Hospital Finance Authority, Refunding RB, Henry Ford Health System, 5.75%, 11/15/19(b)

    6,085       6,432,271  

Royal Oak Hospital Finance Authority, Refunding RB, William Beaumont Hospital, Series V, 8.00%, 09/01/18(b)

    2,000       2,040,720  

Royal Oak Hospital Finance Authority Michigan, Refunding RB, William Beaumont Hospital, Series V, 8.25%, 09/01/18(b)

    6,365       6,499,811  
   

 

 

 
      29,555,984  
Mississippi — 0.0%  

University of Southern Mississippi, RB, Campus Facilities Improvements Project, 5.38%, 09/01/19(b)

    280       292,944  
   

 

 

 
Missouri — 1.1%  

Bi-State Development Agency of the Missouri-Illinois Metropolitan District, Refunding RB, Combined Lien, Series A, 5.00%, 10/01/44

    510       560,051  

State of Missouri Health & Educational Facilities Authority, Refunding RB:

   

Mercy Health, Series C, 5.00%, 11/15/47

    5,470       6,064,808  

St. Louis College of Pharmacy Project, 5.50%, 05/01/43

    510       546,965  
   

 

 

 
      7,171,824  
Nebraska — 0.4%  

Central Plains Nebraska Energy Project, RB, Gas Project No. 3:

   

5.25%, 09/01/37

    1,670       1,834,996  

5.00%, 09/01/42

    925       1,007,020  
   

 

 

 
      2,842,016  
New Jersey — 6.8%  

Casino Reinvestment Development Authority, Refunding RB:

   

5.25%, 11/01/39

    3,490       3,697,760  

5.25%, 11/01/44

    3,180       3,370,005  

County of Essex New Jersey Improvement Authority, RB, AMT, 5.25%, 07/01/45(a)

    2,250       2,270,880  

New Jersey EDA, RB, AMT:

   

Continental Airlines, Inc. Project, 4.88%, 09/15/19

    890       910,283  

Continental Airlines, Inc. Project, 5.25%, 09/15/29

    975       1,057,836  

Kapkowski Road Landfill Project, Series B, 6.50%, 04/01/31

    2,500       2,841,975  

New Jersey EDA, Refunding ARB, Port Network Container Terminal LLC Project, AMT, 5.00%, 10/01/47

    3,040       3,242,008  

New Jersey State Turnpike Authority, RB:

   

Series A, 5.00%, 07/01/22(b)

    1,355       1,508,562  

Series A, 5.00%, 07/01/22(b)

    1,150       1,277,903  

Series A, 5.00%, 01/01/43

    685       742,136  

Series E, 5.00%, 01/01/45

    5,425       5,948,621  

New Jersey Transportation Trust Fund Authority, RB:

   

CAB, Transportation System, Series C (AMBAC),
0.00%, 12/15/35(c)

    7,395       3,211,648  

Transportation Program, Series AA, 5.00%, 06/15/44

    1,360       1,417,365  

Transportation Program, Series AA, 5.00%, 06/15/44

    2,515       2,620,806  

Transportation System, Series A, 5.50%, 06/15/41

    3,630       3,786,925  

Transportation System, Series B, 5.25%, 06/15/36

    4,990       5,188,801  
 

 

 

14    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (continued)

April 30, 2018

  

BlackRock MuniYield Fund, Inc. (MYD)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
New Jersey (continued)  

Tobacco Settlement Financing Corp. New Jersey, Refunding RB:

   

Series A, 5.25%, 06/01/46

  $ 1,120     $ 1,243,906  

Sub-Series B, 5.00%, 06/01/46

    1,585       1,663,014  
   

 

 

 
      46,000,434  
New York — 8.1%  

City of New York New York Transitional Finance Authority Future Tax Secured, RB, Fiscal 2012, Sub-Series E-1, 5.00%, 02/01/42

    4,235       4,573,461  

Counties of New York Tobacco Trust IV, Refunding RB, Settlement Pass-Through Turbo, Series A, 6.25%, 06/01/41(a)

    3,700       3,853,180  

County of Westchester New York Healthcare Corp., RB, Senior Lien, Series A, 5.00%, 11/01/44

    457       485,048  

Erie Tobacco Asset Securitization Corp., Refunding RB, Asset-Backed, Series A, 5.00%, 06/01/45

    4,070       3,981,193  

Hudson Yards Infrastructure Corp., Refunding RB, Series A,
5.00%, 02/15/39

    1,945       2,201,662  

Metropolitan Transportation Authority, RB, Series B:

   

5.25%, 11/15/38

    4,960       5,595,277  

5.25%, 11/15/39

    1,765       1,990,020  

Metropolitan Transportation Authority, Refunding RB, Dedicated Tax Fund, Series B, 5.00%, 11/15/19(b)

    4,910       5,146,956  

Metropolitan Transportation Authority Hudson Rail Yards Trust Obligations, Refunding RB, Series A, 5.00%, 11/15/56

    2,230       2,396,982  

New York Liberty Development Corp., Refunding RB:

   

2nd Priority, Bank of America Tower at One Bryant Park Project, Class 3, 6.38%, 07/15/49

    2,480       2,623,319  

3 World Trade Center Project, Class 1, 5.00%, 11/15/44(a)

    8,145       8,556,648  

3 World Trade Center Project, Class 2, 5.15%, 11/15/34(a)

    705       767,075  

3 World Trade Center Project, Class 2, 5.38%, 11/15/40(a)

    1,760       1,916,957  

New York Transportation Development Corp., ARB, LaGuardia Airport Terminal B Redevelopment Project, Series A, AMT, 5.25%, 01/01/50

    1,525       1,648,891  

Port Authority of New York & New Jersey, ARB, Special Project, JFK International Air Terminal LLC Project, Series 8:

   

6.00%, 12/01/36

    2,625       2,874,559  

6.00%, 12/01/42

    1,485       1,623,818  

Port Authority of New York & New Jersey, Refunding RB, Consolidated, 205th Series, 5.00%, 11/15/47

    3,925       4,463,628  
   

 

 

 
      54,698,674  
North Carolina — 1.2%  

North Carolina Capital Facilities Finance Agency, Refunding RB, Solid Waste Disposal Facility, Duke Energy Carolinas Project, Series B, 4.63%, 11/01/40

    1,140       1,188,438  

North Carolina Medical Care Commission, RB, Health Care Facilities, Duke University Health System, Series A, 5.00%, 06/01/19(b)

    2,000       2,067,940  

North Carolina Medical Care Commission, Refunding RB, 1st Mortgage:

   

Aldersgate, 6.25%, 07/01/35

    2,970       3,319,896  

Retirement Facilities Whitestone Project, Series A,
7.75%, 03/01/21(b)

    1,210       1,390,738  
   

 

 

 
      7,967,012  
Ohio — 3.1%  

Buckeye Tobacco Settlement Financing Authority, RB, Asset-Backed, Senior Turbo Term, Series A-2, 5.88%, 06/01/47

    9,385       9,384,906  
Security   Par
(000)
    Value  
Ohio (continued)  

County of Allen Ohio Hospital Facilities, Refunding RB, Mercy Health, Series A, 4.00%, 11/01/44

  $ 4,160     $ 4,159,875  

County of Franklin Ohio, RB:

   

Health Care Facilities Improvement, OPRS Communities Obligation Group, Series A, 6.13%, 07/01/40

    1,380       1,504,076  

Trinity Health Credit Group, Series 2017, 5.00%, 12/01/46

    840       940,044  

County of Montgomery Ohio, Refunding RB, Catholic Health:

   

5.00%, 05/01/19(b)

    990       1,020,175  

Series A, 5.00%, 05/01/39

    1,850       1,884,984  

State of Ohio, RB, Portsmouth Bypass Project, AMT,
5.00%, 06/30/53

    1,685       1,835,993  
   

 

 

 
      20,730,053  
Oklahoma — 1.0%  

Oklahoma Development Finance Authority, RB, OU Medicine Project, Series B, 5.50%, 08/15/57

    2,460       2,729,075  

Oklahoma Turnpike Authority, RB, 2nd Series C, 4.00%, 01/01/42

    4,115       4,208,698  
   

 

 

 
      6,937,773  
Pennsylvania — 3.6%  

Allentown Neighborhood Improvement Zone Development Authority, Refunding RB, Series A, 5.00%, 05/01/42

    5,250       5,434,327  

City of Philadelphia Pennsylvania Airport Revenue, Refunding ARB, AMT, Series B, 5.00%, 07/01/47

    945       1,042,014  

City of Philadelphia Pennsylvania Hospitals & Higher Education Facilities Authority, RB, Temple University Health System, Series A, 5.63%, 07/01/42

    1,325       1,432,087  

Commonwealth Financing Authority, RB, Tobacco Master Settlement Payment:

   

5.00%, 06/01/33

    215       240,445  

5.00%, 06/01/34

    285       316,689  

County of Montgomery Higher Education & Health Authority, Refunding RB, Thomas Jefferson University, Series A:

   

4.00%, 09/01/49

    1,185       1,166,206  

5.00%, 09/01/43

    2,610       2,898,927  

Pennsylvania Economic Development Financing Authority, RB:

   

AMT, 5.00%, 06/30/42

    1,765       1,889,309  

Aqua Pennsylvania, Inc. Project, Series B, 5.00%, 11/15/40

    3,805       3,956,820  

Pennsylvania Economic Development Financing Authority, Refunding RB, National Gypsum Co., AMT, 5.50%, 11/01/44

    3,210       3,374,352  

Pennsylvania Turnpike Commission, RB, Series A, 5.00%, 12/01/44

    2,305       2,508,001  
   

 

 

 
      24,259,177  
Puerto Rico — 1.1%  

Children’s Trust Fund, Refunding RB, Tobacco Settlement Asset-Backed Bonds:

   

5.50%, 05/15/39

    3,870       3,775,727  

5.63%, 05/15/43

    3,690       3,528,784  
   

 

 

 
      7,304,511  
Rhode Island — 2.8%  

Central Falls Detention Facility Corp., Refunding RB, 7.25%, 07/15/35(d)(e)

    4,155       747,900  

Tobacco Settlement Financing Corp., Refunding RB, Series B:

   

4.50%, 06/01/45

    8,215       8,299,122  

5.00%, 06/01/50

    9,875       10,117,036  
   

 

 

 
      19,164,058  
 

 

 

SCHEDULES OF INVESTMENTS      15  


Schedule of Investments  (continued)

April 30, 2018

  

BlackRock MuniYield Fund, Inc. (MYD)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
South Carolina — 4.3%  

State of South Carolina Ports Authority, ARB:

   

5.25%, 07/01/40

  $ 6,695     $ 7,094,758  

AMT, 5.25%, 07/01/55

    2,690       2,971,535  

State of South Carolina Public Service Authority, RB, Santee Cooper, Series A, 5.50%, 12/01/54

    8,090       8,830,154  

State of South Carolina Public Service Authority, Refunding RB, Series E, 5.25%, 12/01/55

    9,550       10,388,777  
   

 

 

 
      29,285,224  
Tennessee — 0.7%  

City of Chattanooga Health Educational & Housing Facility Board, RB, Catholic Health Initiatives, Series A, 5.25%, 01/01/45

    2,855       3,032,752  

County of Nashville & Davidson Metropolitan Government Health & Educational Facilities Board, RB, Vanderbilt University Medical Center, Series A, 5.00%, 07/01/40

    1,440       1,582,503  
   

 

 

 
      4,615,255  
Texas — 8.4%  

Central Texas Regional Mobility Authority, Refunding RB:

   

Senior Lien, 6.25%, 01/01/21(b)

    4,365       4,817,432  

Sub-Lien, 5.00%, 01/01/33

    725       782,072  

City of Dallas Texas Waterworks & Sewer System Revenue, Refunding RB, 5.00%, 10/01/20(b)

    1,415       1,511,064  

City of Houston Texas Airport System, RB, AMT, Series B-1, 5.00%, 07/15/30

    3,600       3,902,832  

City of Houston Texas Airport System, Refunding ARB:

   

Senior Lien, Series A, 5.50%, 07/01/39

    3,100       3,118,104  

United Airlines, Inc. Terminal E Project, AMT, 5.00%, 07/01/29

    2,200       2,379,916  

Clifton Higher Education Finance Corp., RB, Idea Public Schools, 6.00%, 08/15/43

    1,525       1,729,868  

County of Harris Texas Cultural Education Facilities Finance Corp., RB, 1st Mortgage, Brazos Presbyterian Homes, Inc. Project, Series B:

   

7.00%, 01/01/23(b)

    485       582,626  

6.38%, 01/01/33

    460       515,375  

County of Matagorda Texas Navigation District No. 1, Refunding RB, Central Power & Light Co., Project, Series A, 6.30%, 11/01/29

    4,320       4,614,322  

La Vernia Higher Education Finance Corp., RB, Kipp, Inc., Series A, 6.38%, 08/15/19(b)

    1,000       1,055,500  

North Texas Tollway Authority, RB, CAB, Special Project System, Series B, 0.00%, 09/01/31(b)(c)

    4,110       1,741,489  

North Texas Tollway Authority, Refunding RB, Series A, 5.00%, 01/01/38

    1,910       2,087,191  

San Antonio Water System, Refunding RB, Junior Lien, Series A, 5.00%, 05/15/48(h)

    5,260       5,980,094  

Texas Private Activity Bond Surface Transportation Corp., RB, Senior Lien:

   

LBJ Infrastructure Group LLC, 7.00%, 06/30/40

    6,000       6,584,280  

NTE Mobility Partners LLC, North Tarrant Express Managed Lanes Project, 6.88%, 12/31/39

    6,255       6,724,625  

University of Texas System, Refunding RB, Permanent University Fund, Series B, 4.00%, 07/01/41

    7,905       8,171,873  
   

 

 

 
      56,298,663  
Utah — 0.3%  

Salt Lake City Corp. Airport Revenue, ARB, Series A, AMT, 5.00%, 07/01/47

    1,920       2,131,315  
   

 

 

 
Virginia — 2.5%  

County of Fairfax Virginia IDA, Refunding RB, Health Care-Inova Health(b):

   

5.50%, 05/15/19

    2,195       2,275,666  

5.50%, 05/15/19

    4,075       4,226,916  
Security   Par
(000)
    Value  
Virginia (continued)  

Hampton Roads Transportation Accountability Commission, RB, Transportation Fund, Senior Lien, Series A, 5.50%, 07/01/57

  $ 2,330     $ 2,755,318  

Virginia Small Business Financing Authority, RB, Senior Lien, Elizabeth River Crossings OpCo LLC Project, AMT:

   

5.25%, 01/01/32

    3,270       3,553,182  

6.00%, 01/01/37

    3,900       4,340,037  
   

 

 

 
      17,151,119  
Washington — 1.5%  

Port of Seattle Washington, ARB, Intermediate Lien, Series C, AMT, 5.00%, 05/01/42

    3,120       3,491,311  

Port of Seattle Washington, RB, Intermediate Lien, Series C, AMT, 5.00%, 04/01/40

    1,565       1,687,586  

Washington Health Care Facilities Authority, RB, Catholic Health Initiatives, Series A, 5.75%, 01/01/45

    4,745       5,172,762  
   

 

 

 
      10,351,659  
Wisconsin — 3.5%  

State of Wisconsin, Refunding RB, Series A, 6.00%, 05/01/19(b)

    14,300       14,890,876  

State of Wisconsin Health & Educational Facilities Authority, RB, Ascension Health Senior Credit Group, Series E, 5.00%, 11/15/33

    4,970       5,183,611  

Wisconsin Health & Educational Facilities Authority, Refunding RB, Medical College of Wisconsin, Inc., 4.00%, 12/01/46

    3,790       3,817,174  
   

 

 

 
      23,891,661  
Wyoming — 1.0%  

County of Sweetwater Wyoming, Refunding RB, Idaho Power Co. Project, Remarketing, 5.25%, 07/15/26

    6,195       6,447,570  

Wyoming Municipal Power Agency, Inc., RB, Series A, 5.00%, 01/01/19(b)

    595       607,335  
   

 

 

 
      7,054,905  
   

 

 

 

Total Municipal Bonds — 119.4%
(Cost — $758,493,939)

 

    805,040,723  
   

 

 

 

Municipal Bonds Transferred to Tender Option Bond Trusts(i)

 

California — 9.1%  

Bay Area Toll Authority, Refunding RB, San Francisco Bay Area:

   

Toll Bridge, 4.00%, 04/01/42(j)

    6,496       6,722,510  

Series F-1, 5.63%, 04/01/19(b)

    6,582       6,814,363  

California Educational Facilities Authority, RB, University of Southern California, Series B, 5.25%, 10/01/18(b)(j)

    5,308       5,384,901  

City & County of San Francisco California Public Utilities Commission, RB, Water Revenue, Series B, 5.00%, 11/01/19(b)

    19,080       19,979,304  

City of Los Angeles California Department of Airports, Refunding ARB, Los Angeles International Airport, Senior Series A, 5.00%, 05/15/40

    11,973       12,696,426  

Sacramento Area Flood Control Agency, Refunding, Consolidated Capital Assessment District No. 2 Bonds, 5.00%, 10/01/47

    6,494       7,370,385  

San Diego California Community College District, GO, Election of 2002, 5.25%, 08/01/19(b)

    2,154       2,245,257  
   

 

 

 
      61,213,146  
Colorado — 2.6%  

Colorado Health Facilities Authority, RB, Catholic Health, Series C-7 (AGM), 5.00%, 09/01/36(b)

    4,800       4,800,000  

Colorado Health Facilities Authority, Refunding RB, Catholic Health Initiatives, Series A, 5.50%, 07/01/34(j)

    4,299       4,434,977  
 

 

 

16    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (continued)

April 30, 2018

  

BlackRock MuniYield Fund, Inc. (MYD)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Colorado (continued)  

County of Adams Colorado, COP, Refunding, 4.00%, 12/01/45

  $ 7,820     $ 7,988,404  
   

 

 

 
      17,223,381  
Florida — 1.8%  

County of Miami-Dade Florida, RB, Water & Sewer System, 5.00%, 10/01/20(b)

    11,448       12,245,924  
   

 

 

 
Georgia — 1.0%  

Private Colleges & Universities Authority, Refunding RB, Emory University, Series C, 5.00%, 09/01/18(b)

    6,398       6,466,019  
   

 

 

 
Massachusetts — 1.4%  

Commonwealth of Massachusetts Transportation Fund Revenue, RB, Rail Enhancement Program, Series A, 4.00%, 06/01/45

    4,333       4,423,889  

Massachusetts School Building Authority, RB, Senior, Series B, 5.00%, 10/15/41

    4,607       4,958,670  
   

 

 

 
      9,382,559  
New Hampshire — 0.6%  

New Hampshire Health & Education Facilities Authority, RB, Dartmouth College, 5.25%, 06/01/19(b)(j)

    4,049       4,194,361  
   

 

 

 
New York — 9.2%  

City of New York New York Municipal Water Finance Authority, Refunding RB, Water & Sewer System, 2nd General Resolution, Series FF-2, 5.50%, 06/15/40

    3,195       3,323,173  

Hudson Yards Infrastructure Corp., RB, Fiscal 2012, Series A, 5.75%, 02/15/47(j)

    3,260       3,558,133  

Metropolitan Transportation Authority, Refunding RB, Series C-1, 5.25%, 11/15/56

    9,939       11,197,487  

New York Liberty Development Corp., ARB, 1 World Trade Center Port Authority Consolidated Bonds, 5.25%, 12/15/43

    21,629       23,564,847  

New York Liberty Development Corp., Refunding RB, 4 World Trade Center Project, 5.75%, 11/15/51(j)

    13,081       14,473,733  

Port Authority of New York & New Jersey, Refunding ARB, 194th Series, 5.25%, 10/15/55

    5,400       6,043,698  
   

 

 

 
      62,161,071  
North Carolina — 1.4%  

North Carolina Capital Facilities Finance Agency, Refunding RB:

   

Duke University Project, Series B, 5.00%, 10/01/55

    5,290       5,894,012  

Wake Forest University, 5.00%, 01/01/19(b)

    3,120       3,184,912  
   

 

 

 
      9,078,924  
Ohio — 4.2%  

State of Ohio, Refunding RB, Cleveland Clinic Health System Obligated Group, Series A, 5.50%, 01/01/19(b)

    27,896       28,560,188  
   

 

 

 
Pennsylvania — 0.8%  

Pennsylvania Turnpike Commission, RB, Sub-Series A, 5.50%, 12/01/42

    4,877       5,554,198  
   

 

 

 
Rhode Island — 0.5%  

Narragansett Bay Commission, Refunding RB, Wastewater System, Series A, 4.00%, 09/01/43

    3,272       3,305,049  
   

 

 

 
Texas — 4.4%  

City of San Antonio Texas Electric and Gas Systems, RB, Junior Lien, 5.00%, 02/01/43

    5,060       5,459,677  

County of Harris Texas Metropolitan Transit Authority, Refunding RB, Series A, 5.00%, 11/01/41

    6,920       7,469,448  

Lower Colorado River Authority, Refunding RB, LCRA Transmission Services Corporation Project, 4.00%, 05/15/43

    4,335       4,359,059  
Security   Par
(000)
    Value  
Texas (continued)  

San Antonio Public Facilities Corp., Refunding RB, Convention Center Refinancing And Expansion Project, 4.00%, 09/15/42

  $ 5,700     $ 5,747,329  

University of Texas, Refunding RB, Financing System, Series B, 5.00%, 08/15/43

    6,243       6,857,612  
   

 

 

 
      29,893,125  
Utah — 1.1%  

City of Riverton Utah, RB, IHC Health Services, Inc., 5.00%, 08/15/41

    7,303       7,573,963  
   

 

 

 
Virginia — 2.5%  

University of Virginia, Refunding RB, General, 5.00%, 06/01/18(b)

    10,618       10,645,360  

Virginia Small Business Financing Authority, Refunding RB, Sentara Healthcare, 5.00%, 11/01/40

    6,075       6,391,292  
   

 

 

 
      17,036,652  
Wisconsin — 1.8%  

Wisconsin Health & Educational Facilities Authority, Refunding RB, Froedtert & Community Health, Inc., Obligated Group, Series C, 5.25%, 04/01/19(b)(j)

    11,456       11,809,622  
   

 

 

 

Total Municipal Bonds Transferred to Tender Option Bond Trusts — 42.4%
(Cost — $277,356,388)

 

    285,698,182  
   

 

 

 

Total Long-Term Investments — 161.8%
(Cost — $1,035,850,327)

 

    1,090,738,905  
   

 

 

 
     Shares         

Short-Term Securities — 0.5%

 

BlackRock Liquidity Funds, MuniCash, Institutional Class, 1.48%(k)(l)

    3,484,552       3,484,552  
   

 

 

 

Total Short-Term Securities — 0.5%
(Cost — $3,484,552)

 

    3,484,552  
   

 

 

 

Total Investments — 162.3%
(Cost — $1,039,334,879)

 

    1,094,223,457  

Liabilities in Excess of Other Assets — (0.2)%

 

    (1,314,759

Liability for TOB Trust Certificates, Including Interest Expense and Fees Payable — (24.9)%

 

    (167,799,557

VRDP Shares at Liquidation Value, Net of Deferred Offering Costs — (37.2)%

 

    (251,032,378
   

 

 

 

Net Assets Applicable to Common Shares — 100.0%

 

  $ 674,076,763  
   

 

 

 

 

(a)  Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.
(b)  U.S. Government securities, held in escrow, are used to pay interest on this security, as well as to retire the bond in full at the date indicated, typically at a premium to par.
(c)  Zero-coupon bond.
(d)  Non-income producing security.
(e)  Issuer filed for bankruptcy and/or is in default.
(f)  Variable or floating rate security, which interest rate adjusts periodically based on changes in current interest rates and prepayments on the underlying pool of assets. Rate shown is the rate in effect as of period end.
(g)  Step-up bond that pays an initial coupon rate for the first period and then a higher coupon rate for the following periods. Rate as of period end.
(h)  When-issued security.
(i)  Represent bonds transferred to a TOB Trust in exchange of cash and residual certificates received by the Fund. These bonds serve as collateral in a secured borrowing. See Note 4 of the Notes to Financial Statements for details.
 

 

 

SCHEDULES OF INVESTMENTS      17  


Schedule of Investments  (continued)

April 30, 2018

  

BlackRock MuniYield Fund, Inc. (MYD)

 

(j)  All or a portion of security is subject to a recourse agreement. The aggregate maximum potential amount the Fund could ultimately be required to pay under the agreements, which expire between May 7, 2018 to April 1, 2025, is $28,449,394. See Note 4 of the Notes to Financial Statements for details.
(k)  Annualized 7-day yield as of period end.
(l)  During the year ended April 30, 2018, investments in issuers considered to be an affiliate of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliated    Shares
Held at
04/30/17
     Net
Activity
     Shares
Held at
04/30/18
     Value at
04/30/18
     Income      Net
Realized
Gain (Loss)
 (a)
     Change in
Unrealized
Appreciation
(Depreciation)
 

BlackRock Liquidity Funds, MuniCash, Institutional Class

     1,666,834        1,817,718        3,484,552      $ 3,484,552      $ 48,072      $ 3,127      $ (167
           

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a)  Includes net capital gain distributions, if applicable.  

Derivative Financial Instruments Outstanding as of Period End

Futures Contracts

 

Description    Number of
Contracts
       Expiration
Date
       Notional
Amount (000)
       Value/
Unrealized
Appreciation
(Depreciation)
 

Short Contracts:

                 

10-Year U.S. Treasury Note

     67          06/20/18        $ 8,015        $ 41,564  

Long U.S. Treasury Bond

     136          06/20/18          19,563          (16,496

5-Year U.S. Treasury Note

     36          06/29/18          4,086          18,356  
                 

 

 

 
                  $ 43,424  
                 

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of year end, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

      Commodity
Contracts
     Credit
Contracts
     Equity
Contracts
     Foreign
Currency
Exchange
Contracts
     Interest
Rate
Contracts
     Other
Contracts
     Total  

Assets — Derivative Financial Instruments

                    

Futures contracts

                    

Net unrealized appreciation(a)

   $             —      $      $      $      $ 59,920      $      $ 59,920  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities — Derivative Financial Instruments

                    

Futures contracts

                    

Net unrealized depreciation(a)

   $             —      $      $      $      $ 16,496      $      $ 16,496  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a)  Includes cumulative appreciation (depreciation) on futures contracts, if any, as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statements of Assets and Liabilities.  

For the year ended April 30, 2018, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

      Commodity
Contracts
     Credit
Contracts
     Equity
Contracts
     Foreign
Currency
Exchange
Contracts
     Interest
Rate
Contracts
     Other
Contracts
     Total  

Net Realized Gain (Loss) from:

                    

Futures contracts

   $      $      $      $      $ 1,606,042      $      $ 1,606,042  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
Net Change in Unrealized Appreciation (Depreciation) on:                                                 

Futures contracts

   $      $      $      $      $ 718,564      $      $ 718,564  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

        

Average notional value of contracts — short

   $ 44,624,941  

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

 

 

18    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (continued)

April 30, 2018

  

BlackRock MuniYield Fund, Inc. (MYD)

 

Fair Value Hierarchy as of Period End

Various inputs are used in determining the fair value of investments and derivative financial instruments. For information about the Fund’s policy regarding valuation of investments and derivative financial instruments, refer to the Notes to Financial Statements.

The following tables summarize the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy:

 

      Level 1        Level 2        Level 3        Total  

Assets:

                 

Investments:

                 

Long-Term Investments(a)

   $        $ 1,090,738,905        $             —        $ 1,090,738,905  

Short-Term Securities

     3,484,552                            3,484,552  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 3,484,552        $ 1,090,738,905        $        $ 1,094,223,457  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative Financial Instruments(b)

                 

Assets:

                 

Interest rate contracts

   $ 59,920        $        $        $ 59,920  

Liabilities:

                 

Interest rate contracts

     (16,496                          (16,496
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 43,424        $        $        $ 43,424  
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a)  See above Schedule of Investments for values in each state or political subdivision.  
  (b)  Derivative financial instruments are futures contracts which valued at the unrealized appreciation (depreciation) on the instrument.  

The Fund may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of year end, such assets and/or liabilities are categorized within the disclosure hierarchy as follows:

 

      Level 1        Level 2        Level 3        Total  

Liabilities:

                 

TOB Trust Certificates

   $             —        $ (167,149,960      $             —        $ (167,149,960

VRDP Shares at Liquidation Value

              (251,400,000                 (251,400,000
  

 

 

      

 

 

      

 

 

      

 

 

 
   $        $ (418,549,960      $        $ (418,549,960
  

 

 

      

 

 

      

 

 

      

 

 

 

During the year ended April 30, 2018, there were no transfers between levels.

See notes to financial statements.

 

 

SCHEDULES OF INVESTMENTS      19  


Schedule of Investments

April 30, 2018

  

BlackRock MuniYield Quality Fund, Inc. (MQY)

(Percentages shown are based on Net Assets)

 

    
Security
  Par
(000)
    Value  

Municipal Bonds — 117.1%

 

Alabama — 0.6%  

County of Tuscaloosa Board of Education, RB, Special Tax School Warrants, 5.00%, 02/01/43

  $ 1,215     $ 1,359,014  

Homewood Educational Building Authority, Refunding RB, Educational Facilities, Samford University, Series A, 5.00%, 12/01/34

    1,145       1,271,946  
   

 

 

 
      2,630,960  
Alaska — 1.3%  

Alaska Industrial Development & Export Authority, RB, Providence Health Services, Series A, 5.50%, 10/01/41

    1,400       1,514,618  

Borough of Matanuska-Susitna Alaska, RB, Goose Creek Correctional Center (AGC), 6.00%, 09/01/19(a)

    4,425       4,662,711  
   

 

 

 
      6,177,329  
Arizona — 1.0%  

County of Maricopa Arizona IDA, Refunding RB, Banner Health Obligation Group, Series A, 4.00%, 01/01/41

    2,680       2,733,788  

State of Arizona, COP, Department of Administration, Series A (AGM):

   

5.00%, 10/01/27

    1,525       1,585,832  

5.25%, 10/01/28

    250       260,945  
   

 

 

 
      4,580,565  
California — 17.2%  

Cabrillo Community College District, GO, CAB, Election of 2004, Series B (NPFGC), 0.00%, 08/01/38(b)

    7,405       2,798,942  

California Health Facilities Financing Authority, RB:

   

St. Joseph Health System, Series A, 5.75%, 07/01/39

    775       809,348  

Sutter Health, Series A, 4.00%, 11/15/42

    315       319,744  

Sutter Health, Series B, 5.88%, 08/15/20(a)

    1,500       1,633,785  

California Health Facilities Financing Authority, Refunding RB, Kaiser Permanente, Sub-Series A-2, 5.00%, 11/01/47

    1,770       2,259,830  

California Statewide Communities Development Authority, RB, Kaiser Permanente, Series A, 5.00%, 04/01/42

    2,000       2,168,180  

Carlsbad California Unified School District, GO, Election of 2006, Series B, 0.00%, 05/01/34(c)

    5,000       5,593,650  

City & County of San Francisco California Airports Commission, Refunding ARB, Series A, AMT, 5.00%, 05/01/42

    220       246,182  

City of San Jose California, Refunding ARB, Norman Y Mineta San Jose International Airport SJC, AMT:

   

Series A, 5.00%, 03/01/36

    565       633,890  

Series A, 5.00%, 03/01/37

    620       694,592  

Series A-1, 5.75%, 03/01/34

    1,150       1,250,165  

Coast Community College District, GO, CAB, Election of 2002, Series C (AGM), 5.00%, 08/01/18(a)

    2,800       2,823,100  

County of San Diego California Water Authority, COP, Refunding, Series A (AGM), 5.00%, 05/01/18(a)

    3,000       3,000,000  

County of San Joaquin California Transportation Authority, Refunding RB, Limited Tax, Measure K, Series A, 6.00%, 03/01/21(a)

    900       1,000,143  

El Monte Union High School District, GO, Series C (AGM), 5.25%, 06/01/18(a)

    5,110       5,124,768  

Grossmont California Union High School District, GO, CAB, Election of 2004, 0.00%, 08/01/31(b)

    5,000       3,174,050  

Grossmont-Cuyamaca Community College District, GO, Refunding CAB, Election of 2002, Series C (AGC), 0.00%, 08/01/30(b)

    10,030       6,669,148  

Hartnell Community College District California, GO, CAB, Election of 2002, Series D, 0.00%, 08/01/34(c)

    4,125       4,261,785  

Mount San Antonio Community College District, GO, Refunding, CAB, Election of 2008, Series A, 0.00%, 08/01/43(c)

    1,945       1,554,074  

Poway Unified School District, GO, Refunding, CAB, School Facilities Improvement, Election of 2008, Series B, 0.00%, 08/01/36(b)

    5,000       2,475,500  
    
Security
  Par
(000)
    Value  
California (continued)  

Rio Hondo Community College District California, GO, CAB, Election of 2004, Series C, 0.00%, 08/01/37(b)

  $ 4,005     $ 1,915,151  

San Bernardino Community College District, GO, CAB, Election of 2008, Series B, 0.00%, 08/01/34(c)

    10,000       11,278,800  

San Diego California Unified School District, GO, Election of 2008(b):

   

CAB, Series C, 0.00%, 07/01/38

    2,200       1,009,690  

CAB, Series G, 0.00%, 07/01/34

    900       424,233  

CAB, Series G, 0.00%, 07/01/35

    950       421,021  

CAB, Series G, 0.00%, 07/01/36

    1,430       595,881  

CAB, Series G, 0.00%, 07/01/37

    950       372,334  

San Diego California Unified School District, GO, Refunding, CAB, Series R-1, 0.00%, 07/01/31(b)

    1,725       1,093,926  

San Marcos Unified School District, GO, Election of 2010, Series A(a):

   

5.00%, 08/01/21

    900       987,129  

5.00%, 08/01/21

    760       833,576  

State of California, GO, 5.50%, 04/01/28

    5       5,015  

State of California, GO, Refunding, Various Purposes:

   

5.00%, 09/01/41

    2,300       2,498,697  

5.00%, 10/01/41

    1,300       1,415,921  

State of California, GO, Various Purposes, 5.00%, 04/01/42

    1,500       1,631,370  

Yosemite Community College District, GO, CAB, Election of 2004, Series D, 0.00%, 08/01/36(b)

    15,000       7,628,550  
   

 

 

 
      80,602,170  
Colorado — 0.6%  

Regional Transportation District, COP, Refunding, Series A, 5.38%, 06/01/31

    1,885       2,000,871  

Regional Transportation District, COP, Series A, 5.00%, 06/01/39

    540       586,548  
   

 

 

 
      2,587,419  
Connecticut — 0.3%  

Connecticut Housing Finance Authority, Refunding RB, S/F Housing:

   

Sub-Series A-1, 3.85%, 11/15/43

    805       794,672  

Sub-Series B-1, 4.00%, 05/15/45

    730       732,745  
   

 

 

 
      1,527,417  
Florida — 12.5%  

Central Florida Expressway Authority, Refunding RB, Senior Lien, 4.00%, 07/01/41

    570       577,404  

County of Brevard Florida Health Facilities Authority, Refunding RB, Health First, Inc. Project, 5.00%, 04/01/39

    2,175       2,340,626  

County of Broward Florida Airport System, ARB, AMT, 5.00%, 10/01/47

    4,300       4,784,223  

County of Hillsborough Florida Aviation Authority, RB, Series A, AMT (AGC), 5.38%, 10/01/33

    2,700       2,736,639  

County of Highlands Florida Health Facilities Authority, RB, Adventist Health System/Sunbelt Obligated Group, 6.00%, 11/15/37

    1,250       1,331,938  

County of Lee Florida, Refunding ARB, Series A, AMT:

   

5.63%, 10/01/26

    1,280       1,396,070  

5.38%, 10/01/32

    1,700       1,835,881  

County of Miami-Dade Florida, GO, Building Better Communities Program, Series B, 6.38%, 07/01/18(a)

    3,300       3,324,849  

County of Miami-Dade Florida, RB, Seaport:

   

Department, Series A, 6.00%, 10/01/38

    2,755       3,153,263  

Department, Series B, AMT, 6.25%, 10/01/38

    560       647,881  

Department, Series B, AMT, 6.00%, 10/01/42

    895       1,023,415  

Series B, AMT, 6.00%, 10/01/30

    870       990,182  

County of Miami-Dade Florida, Refunding RB, 4.00%, 10/01/40

    1,220       1,247,999  
 

 

 

20    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (continued)

April 30, 2018

  

BlackRock MuniYield Quality Fund, Inc. (MQY)

(Percentages shown are based on Net Assets)

 

    
Security
  Par
(000)
    Value  
Florida (continued)  

County of Miami-Dade Florida Aviation, Refunding ARB:

   

AMT, 5.00%, 10/01/34

  $ 260     $ 287,412  

Series A, 5.50%, 10/01/36

    6,490       6,797,561  

Series A, AMT, 5.00%, 10/01/32

    3,550       3,844,437  

County of Miami-Dade Florida Aviation, Refunding RB, Series B, AMT, 5.00%, 10/01/40

    3,430       3,816,252  

County of Miami-Dade Florida Educational Facilities Authority, RB, University of Miami, Series A, 5.00%, 04/01/40

    3,600       3,952,152  

County of Miami-Dade Florida Water & Sewer System Revenue, Refunding RB, System-Series A, 4.00%, 10/01/44

    1,200       1,222,620  

County of Orange Florida Health Facilities Authority, Refunding RB, Presbyterian Retirement Communities Project:

   

5.00%, 08/01/41

    765       831,700  

5.00%, 08/01/47

    2,225       2,412,278  

County of Palm Beach Florida Solid Waste Authority, Refunding RB, Series B:

   

5.00%, 10/01/21(a)

    45       49,168  

5.00%, 10/01/31

    2,780       3,025,029  

County of Putnam Florida Development Authority, Refunding RB, Seminole Project, Series A, 5.00%, 03/15/42

    715       794,615  

County of Sarasota Florida Public Hospital District, RB, Sarasota Memorial Hospital Project, Series A, 5.63%, 07/01/39

    375       388,654  

Florida Ports Financing Commission, Refunding RB, State Transportation Trust Fund, Series B, AMT:

   

5.13%, 06/01/27

    1,395       1,510,227  

5.38%, 10/01/29

    1,900       2,084,167  

Reedy Creek Improvement District, GO, Series A, 5.25%, 06/01/33

    1,620       1,826,340  
   

 

 

 
      58,232,982  
Georgia — 0.8%  

County of Gainesville Georgia & Hall Hospital Authority, Refunding RB, Northeast Georgia Health System, Inc. Project, Series A, 5.50%, 08/15/54

    680       776,472  

County of LaGrange-Troup Hospital Authority, Refunding RB, Revenue Anticipation Certificates, 4.00%, 04/01/47

    1,730       1,675,159  

Private Colleges & Universities Authority, RB, Savannah College of Art & Design:

   

5.00%, 04/01/33

    190       206,900  

5.00%, 04/01/44

    855       918,689  
   

 

 

 
      3,577,220  
Illinois — 14.6%  

City of Chicago Illinois, Refunding GARB, Series B:

   

O’Hare International Airport, Senior Lien, 5.00%, 01/01/41

    3,800       4,164,040  

O’Hare International Airport, Passenger Facility Charge, AMT, 5.00%, 01/01/31

    2,500       2,647,200  

City of Chicago Illinois Midway International Airport, Refunding ARB, 2nd Lien, Series A, AMT, 5.00%, 01/01/34

    1,475       1,597,174  

City of Chicago Illinois O’Hare International Airport, ARB, Senior Lien, Series D, 5.25%, 01/01/42

    3,985       4,508,470  

City of Chicago Illinois O’Hare International Airport, GARB:

   

3rd Lien, Series A, 5.75%, 01/01/21(a)

    4,615       5,046,502  

3rd Lien, Series A, 5.75%, 01/01/39

    885       959,358  

Senior Lien, Series D, AMT, 5.00%, 01/01/42

    315       342,666  

City of Chicago Illinois O’Hare International Airport, Refunding GARB, Senior Lien, Series C, AMT, 5.38%, 01/01/39

    4,090       4,437,323  

City of Chicago Illinois Transit Authority, RB:

   

5.25%, 12/01/49

    710       778,515  

Sales Tax Receipts, 5.25%, 12/01/36

    840       898,968  

County of Cook Illinois Forest Preserve District, GO, Refunding, Limited Tax Project, Series B, 5.00%, 12/15/37

    280       293,997  

Illinois Finance Authority, RB, Carle Foundation, Series A, 5.75%, 08/15/34

    850       935,179  
    
Security
  Par
(000)
    Value  
Illinois (continued)  

Illinois Finance Authority, Refunding RB:

   

Silver Cross Hospital & Medical Centers, Series C, 4.13%, 08/15/37

  $ 1,690     $ 1,684,338  

Silver Cross Hospital & Medical Centers, Series C, 5.00%, 08/15/44

    470       494,868  

University of Chicago Medical Center, Series B, 4.00%, 08/15/41

    1,100       1,086,800  

Illinois Sports Facilities Authority, RB, State Tax Supported (AMBAC), 5.50%, 06/15/30

    17,800       17,830,438  

Metropolitan Pier & Exposition Authority, RB, (NPFGC)(b):

   

0.00%, 06/15/30(e)

    800       559,648  

0.00%, 06/15/30

    14,205       8,205,376  

Metropolitan Pier & Exposition Authority, Refunding RB, CAB, McCormick Place Expansion Project, Series B (AGM), 0.00%, 06/15/44(b)

    4,625       1,346,708  

Railsplitter Tobacco Settlement Authority, RB, 6.00%, 06/01/21(a)

    900       1,003,302  

Regional Transportation Authority, RB, Series B (NPFGC), 5.75%, 06/01/33

    3,200       3,994,528  

State of Illinois, GO:

   

5.25%, 02/01/33

    1,140       1,166,562  

5.50%, 07/01/33

    1,100       1,137,818  

5.25%, 02/01/34

    1,140       1,165,411  

5.50%, 07/01/38

    1,840       1,893,930  
   

 

 

 
      68,179,119  
Indiana — 2.2%  

Indiana Finance Authority, RB, Series A:

   

CWA Authority Project, 1st Lien, 5.25%, 10/01/38

    1,400       1,526,644  

Private Activity Bond, Ohio River Bridges East End Crossing Project, AMT, 5.00%, 07/01/44

    690       734,781  

Indiana Health & Educational Facilities Financing Authority, Refunding RB, Ascension Senior Credit Group, 5.00%, 11/15/46

    2,625       2,969,190  

Indianapolis Local Public Improvement Bond Bank, Refunding RB, Waterworks Project, Series A:

   

5.75%, 01/01/19(a)

    255       261,714  

5.75%, 01/01/38

    1,045       1,070,195  

(AGC), 5.25%, 01/01/19(a)

    460       470,598  

(AGC), 5.25%, 01/01/29

    1,890       1,931,901  

State of Indiana Finance Authority, RB, Private Activity Bond, Ohio River Bridges, Series A, AMT, 5.00%, 07/01/40

    1,190       1,270,123  
   

 

 

 
      10,235,146  
Iowa — 2.6%  

Iowa Finance Authority, RB, Iowa Health Care Facilities, Series A (AGC), 5.63%, 08/15/19(a)

    7,700       8,059,436  

Iowa Student Loan Liquidity Corp., RB, Senior Series A-2, AMT:

   

5.60%, 12/01/26

    1,050       1,097,722  

5.70%, 12/01/27

    1,050       1,092,620  

5.80%, 12/01/29

    710       738,194  

5.85%, 12/01/30

    960       998,717  
   

 

 

 
      11,986,689  
Louisiana — 2.7%  

City of New Orleans Louisiana Aviation Board, ARB, Series B, AMT, 5.00%, 01/01/40

    2,260       2,441,704  

Jefferson Sales Tax District, RB, Series B (AGM):

   

5.00%, 12/01/34

    330       374,590  

5.00%, 12/01/35

    440       498,679  

5.00%, 12/01/36

    395       446,642  

5.00%, 12/01/37

    495       559,716  

Louisiana Local Government Environmental Facilities & Community Development Authority, RB, East Baton Rouge Sewerage Commission Projects, Series A, 5.00%, 02/01/44

    4,015       4,380,445  
 

 

 

SCHEDULES OF INVESTMENTS      21  


Schedule of Investments  (continued)

April 30, 2018

  

BlackRock MuniYield Quality Fund, Inc. (MQY)

(Percentages shown are based on Net Assets)

 

    
Security
  Par
(000)
    Value  
Louisiana (continued)  

Louisiana Public Facilities Authority, Refunding RB, Christus Health, Series B (AGC), 6.50%, 07/01/30

  $ 1,800     $ 1,851,264  

State of Louisiana Gasoline & Fuels Tax Revenue, Refunding RB, First Lien, Series A, 4.00%, 05/01/41

    2,085       2,121,967  
   

 

 

 
      12,675,007  
Maine — 0.2%  

Maine State Housing Authority, RB, Series D-1, 3.65%, 11/15/42

    890       863,273  
   

 

 

 
Maryland — 0.4%  

State of Maryland Stadium Authority Revenue, RB, Construction & Revitalization, 5.00%, 05/01/36

    1,690       1,929,862  
   

 

 

 
Massachusetts — 2.1%  

Massachusetts Development Finance Agency, RB, Emerson College Issue, Series A, 5.00%, 01/01/47

    2,855       3,077,348  

Massachusetts Development Finance Agency, Refunding RB, Partners Health Care System, 4.00%, 07/01/41

    1,265       1,279,117  

Massachusetts HFA, Refunding RB, AMT:

   

Series A, 4.45%, 12/01/42

    1,090       1,126,319  

Series C, 5.00%, 12/01/30

    1,190       1,209,504  

Series C, 5.35%, 12/01/42

    610       621,029  

Massachusetts Port Authority, Refunding ARB, Series A, AMT, 5.00%, 07/01/47

    475       528,062  

Massachusetts School Building Authority, RB, Dedicated Sales Tax, Senior Series A, 5.00%, 05/15/43

    1,720       1,890,641  
   

 

 

 
      9,732,020  
Michigan — 5.6%  

City of Detroit Michigan Sewage Disposal System, Refunding RB, 2nd Lien, Series E (BHAC), 5.75%, 07/01/18(a)

    8,300       8,353,369  

City of Detroit Michigan Water Supply System Revenue, RB, Senior Lien, Series A, 5.25%, 07/01/41

    1,000       1,073,650  

City of Lansing Michigan, RB, Board of Water & Light Utilities System, Series A, 5.50%, 07/01/41

    2,500       2,736,275  

Michigan Finance Authority, Refunding RB:

   

Henry Ford Health System, 3.25%, 11/15/42

    615       528,599  

Trinity Health Credit Group, 5.00%, 12/01/21(a)

    25       27,406  

Michigan State Hospital Finance Authority, Refunding RB, Ascension Senior Credit Group, 4.00%, 11/15/47

    820       824,116  

Royal Oak Hospital Finance Authority Michigan, Refunding RB:

   

Beaumont Health Credit Group, Series D, 5.00%, 09/01/39

    1,470       1,592,569  

William Beaumont Hospital, Series V, 8.25%, 09/01/18(a)

    3,510       3,584,342  

State of Michigan Building Authority, Refunding RB, Facilities Program:

   

Series I-A, 5.38%, 10/15/36

    1,200       1,321,788  

Series I-A, 5.38%, 10/15/41

    1,000       1,095,570  

Series II-A (AGM), 5.25%, 10/15/36

    4,270       4,685,770  

Western Michigan University, Refunding RB, General, University and College Improvements (AGM), 5.00%, 11/15/39

    520       576,035  
   

 

 

 
      26,399,489  
Minnesota — 0.6%  

City of Minneapolis Minnesota, Refunding RB, Fairview Health Services, Series B (AGC):

   

6.50%, 11/15/18(a)

    415       425,425  

6.50%, 11/15/38

    2,285       2,341,896  
   

 

 

 
      2,767,321  
Mississippi — 0.1%  

Mississippi State University Educational Building Corp., Refunding RB, Mississippi State University Faciliities Refinancing, Series A, 4.00%, 08/01/43

    550       562,364  
   

 

 

 
    
Security
  Par
(000)
    Value  
Nebraska — 0.2%  

Central Plains Nebraska Energy Project, RB, Gas Project No. 3, 5.25%, 09/01/37

  $ 1,000     $ 1,098,800  
   

 

 

 
Nevada — 0.6%  

City of Las Vegas Nevada, GO, Limited Tax, Performing Arts Center, 6.00%, 04/01/19(a)

    1,150       1,193,136  

County of Clark Nevada, ARB, Las Vegas-McCarran International Airport, Series A, 5.25%, 07/01/42

    1,500       1,575,060  
   

 

 

 
      2,768,196  
New Hampshire — 0.5%  

New Hampshire Housing Finance Authority, RB, Cimarron, Whittier Falls & Marshall (FHA), 4.00%, 07/01/52

    2,200       2,191,772  
   

 

 

 
New Jersey — 7.6%  

New Jersey EDA, RB:

   

Goethals Bridge Replacement Project, AMT, Private Activity Bond, 5.38%, 01/01/43

    1,220       1,329,349  

Goethals Bridge Replacement Project, AMT, Private Activity Bond, 5.13%, 01/01/34

    935       1,017,420  

Series WW, 5.25%, 06/15/33

    215       231,359  

Series WW, 5.00%, 06/15/34

    280       295,235  

Series WW, 5.00%, 06/15/36

    1,280       1,348,032  

Series WW, 5.25%, 06/15/40

    490       522,595  

New Jersey EDA, Refunding RB, Sub-Series A, 4.00%, 07/01/32

    785       779,097  

New Jersey Higher Education Student Assistance Authority, Refunding RB, Series 1, AMT:

   

5.50%, 12/01/25

    480       513,864  

5.75%, 12/01/27

    225       241,499  

5.75%, 12/01/28

    245       262,625  

5.88%, 12/01/33

    1,980       2,136,202  

New Jersey Housing & Mortgage Finance Agency, Refunding RB, M/F Housing, Series 2, AMT, 4.35%, 11/01/33

    1,225       1,260,782  

New Jersey Transportation Trust Fund Authority, RB:

   

Transportation Program, Series AA, 5.25%, 06/15/33

    2,035       2,157,405  

Transportation Program, Series AA, 5.00%, 06/15/38

    2,440       2,550,971  

Transportation System, CAB, Series A, 0.00%, 12/15/29(b)

    7,530       4,484,717  

Transportation System, Series A, 5.50%, 06/15/41

    1,605       1,674,384  

Transportation System, Series A (NPFGC), 5.75%, 06/15/25

    2,000       2,326,480  

Transportation System, Series AA, 5.50%, 06/15/39

    3,565       3,808,454  

Transportation System, Series B, 5.50%, 06/15/31

    2,750       2,912,745  

Transportation System, Series B, 5.00%, 06/15/42

    725       745,605  

Transportation System, Series D, 5.00%, 06/15/32

    875       928,541  

South Jersey Port Corp., ARB, Marine Terminal, Series B, AMT, 5.00%, 01/01/42

    540       577,093  

Tobacco Settlement Financing Corp., Refunding RB, Series A:

   

5.00%, 06/01/46

    2,540       2,742,362  

5.25%, 06/01/46

    560       621,953  
   

 

 

 
      35,468,769  
New Mexico — 0.1%  

New Mexico Hospital Equipment Loan Council, Refunding RB, Presbyterian Healthcare Services, 5.00%, 08/01/44

    500       551,655  
   

 

 

 
New York — 4.3%  

City of New York New York Transitional Finance Authority, RB, Series S-3, 4.00%, 07/15/46

    1,550       1,581,217  

City of New York New York Transitional Finance Authority, Refunding RB, Future Tax Secured, Series B, 5.00%, 11/01/32

    5,520       6,096,122  

Hudson Yards Infrastructure Corp., RB, Senior, Fiscal 2012:

   

5.75%, 02/15/21(a)

    615       676,998  

5.75%, 02/15/47

    385       416,293  
 

 

 

22    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (continued)

April 30, 2018

  

BlackRock MuniYield Quality Fund, Inc. (MQY)

(Percentages shown are based on Net Assets)

 

    
Security
  Par
(000)
    Value  
New York (continued)  

Metropolitan Transportation Authority, Refunding RB, Series B, 5.00%, 11/15/37

  $ 1,900     $ 2,137,063  

New York Transportation Development Corp., ARB, LaGuardia Airport Terminal B Redevelopment Project, Series A, AMT, 5.25%, 01/01/50

    2,855       3,086,940  

State of New York Dormitory Authority, RB, Education, Series B, 5.75%, 03/15/19(a)

    2,000       2,068,500  

State of New York HFA, RB, M/F Housing, Series B:

   

Affordable Housing, AMT, 5.30%, 11/01/37

    3,350       3,353,618  

Green Bond, 3.88%, 11/01/48

    810       806,404  
   

 

 

 
      20,223,155  
Ohio — 1.3%  

County of Allen Ohio Hospital Facilities Revenue, Refunding RB, Series A, 4.00%, 08/01/38

    2,165       2,166,624  

County of Butler Ohio, Refunding RB, UC Health, 4.00%, 11/15/37

    635       639,001  

County of Lucas Ohio, Refunding RB, Promedica Healthcare, Series A, 6.50%, 11/15/21(a)

    725       829,697  

State of Ohio Turnpike Commission, RB, Junior Lien, Infrastructure Projects, Series A-1:

   

5.25%, 02/15/32

    950       1,051,745  

5.25%, 02/15/33

    1,325       1,463,780  
   

 

 

 
      6,150,847  
Oregon — 1.5%  

Counties of Washington & Multnomah Oregon School District No. 48J Beaverton, GO, Convertible CAB, Series D, 0.00%, 06/15/36(c)

    1,145       1,292,350  

County of Clackamas Community College District, GO, Convertible Deferred Interest Bonds, Series A, 0.00%, 06/15/39(c)

    605       617,015  

County of Clackamas Oregon School District No. 12 North Clackamas, GO, CAB, Series A, 0.00%, 06/15/38(b)

    1,360       587,262  

State of Oregon, GO, Refunding, Veteran’s Welfare Series 100th, 3.65%, 06/01/42

    850       831,292  

State of Oregon Housing & Community Services Department, RB, Series D, 3.45%, 01/01/38

    3,885       3,760,602  
   

 

 

 
      7,088,521  
Pennsylvania — 10.2%  

Commonwealth Financing Authority, RB, Tobacco Master Settlement Payment:

   

5.00%, 06/01/33

    305       341,097  

5.00%, 06/01/34

    540       600,043  

5.00%, 06/01/35

    1,025       1,136,243  

(AGM), 4.00%, 06/01/39

    1,445       1,449,725  

County of Berks IDA, Refunding RB, Tower Health Project, 4.00%, 11/01/39

    430       430,000  

County of Montgomery Higher Education & Health Authority, Refunding RB, Thomas Jefferson University, Series A, 4.00%, 09/01/49

    885       870,964  

Pennsylvania Economic Development Financing Authority, RB:

   

AMT, 5.00%, 06/30/42

    1,420       1,520,010  

Pennsylvania Bridge Finco LP, AMT, 5.00%, 12/31/34

    3,420       3,712,991  

Pennsylvania Bridge Finco LP, 5.00%, 12/31/38

    11,890       12,804,698  

Pennsylvania Economic Development Financing Authority, Refunding RB, Series A, 4.00%, 11/15/42

    795       802,537  

Pennsylvania Higher Educational Facilities Authority, Refunding RB, Thomas Jefferson University, Series A, 5.25%, 09/01/50

    4,575       5,051,623  

Pennsylvania Turnpike Commission, RB:

   

Series A, 5.00%, 12/01/38

    860       940,496  

Series A-1, 5.00%, 12/01/41

    1,125       1,239,525  

Series B, 5.00%, 12/01/40

    440       484,832  
    
Security
  Par
(000)
    Value  
Pennsylvania (continued)  

Series C, 5.50%, 12/01/23(a)

  $ 760     $ 882,352  

Sub-Series B-1, 5.00%, 06/01/42

    1,965       2,144,601  

Subordinate, Special Motor License Fund, 5.50%, 12/01/20(a)

    6,700       7,272,716  

Subordinate, Special Motor License Fund, 6.00%, 12/01/20(a)

    775       850,927  

Pennsylvania Turnpike Commission, Refunding RB:

   

Motor Licenced Fund Enhancement, Third Series, 4.00%, 12/01/38

    2,845       2,876,579  

Series A-1, 5.00%, 12/01/40

    1,040       1,143,220  

Philadelphia School District, GO, Refunding, Series F, 5.00%, 09/01/38

    425       466,833  

State Public School Building Authority, RB, The School District of Philadelphia Project, 5.00%, 04/01/32

    500       525,700  
   

 

 

 
      47,547,712  
Rhode Island — 1.5%  

Tobacco Settlement Financing Corp., Refunding RB, Series B, 4.50%, 06/01/45

    7,180       7,253,523  
   

 

 

 
South Carolina — 5.6%  

County of Charleston South Carolina Airport District, ARB, Series A, AMT:

   

5.50%, 07/01/38

    1,500       1,657,680  

5.50%, 07/01/41

    2,725       3,007,364  

South Carolina Jobs EDA, Refunding RB, Palmetto Health, Series A (AGM), 6.50%, 08/01/21(a)

    320       361,914  

South Carolina Transportation Infrastructure Bank, RB, Series A, 5.25%, 10/01/19(a)

    2,500       2,614,450  

State of South Carolina Ports Authority, RB, AMT, 5.25%, 07/01/50

    3,160       3,490,726  

State of South Carolina Public Service Authority, RB, Santee Cooper:

   

Series A, 5.50%, 12/01/54

    9,985       10,898,528  

Series E, 5.50%, 12/01/53

    985       1,074,142  

State of South Carolina Public Service Authority, Refunding RB, Santee Cooper, Series B, 5.00%, 12/01/38

    2,850       3,036,675  
   

 

 

 
      26,141,479  
South Dakota — 0.4%  

South Dakota Health & Educational Facilities Authority, Refunding RB, Avera Health Issue, 4.00%, 07/01/37

    1,690       1,709,351  
   

 

 

 
Texas — 13.0%  

Bell County Health Facility Development Corp., RB, Lutheran General Health Care System, 6.50%, 07/01/19(e)

    530       545,656  

City of Arlington Texas, Special Tax Bonds, Series A (AGM), 5.00%, 02/15/43

    1,000       1,122,460  

City of Houston Texas Combined Utility System Revenue, Refunding RB, Combined 1st Lien, Series A (AGC):

   

6.00%, 05/15/19(a)

    2,700       2,813,022  

6.00%, 11/15/35

    150       156,437  

City of San Antonio Texas Electric & Gas Revenue, Refunding RB, 5.00%, 02/01/42

    2,650       2,998,342  

City of San Antonio Texas Electric & Gas Revenue, RB, Junior Lien, 5.00%, 02/01/38

    760       825,352  

County of Midland Texas Fresh Water Supply District No. 1, RB, CAB, City of Midland Project, Series A, 0.00%, 09/15/36(b)

    2,870       1,334,005  

County of Tarrant Texas Cultural Education Facilities Finance Corp., Refunding RB, Cook Children’s Medical Center, 5.25%, 12/01/39

    1,100       1,214,378  

Dallas Texas Area Rapid Transit, Refunding RB, Series A, 5.00%, 12/01/48

    4,340       4,824,995  

Dallas-Fort Worth International Airport, ARB, Joint Improvement, Series D, AMT:

   

5.00%, 11/01/38

    8,550       9,128,407  

5.00%, 11/01/42

    1,500       1,598,385  
 

 

 

SCHEDULES OF INVESTMENTS      23  


Schedule of Investments  (continued)

April 30, 2018

  

BlackRock MuniYield Quality Fund, Inc. (MQY)

(Percentages shown are based on Net Assets)

 

    
Security
  Par
(000)
    Value  
Texas (continued)  

Dallas-Fort Worth International Airport, Refunding ARB, Series F, 5.25%, 11/01/33

  $ 1,325     $ 1,492,215  

Grand Parkway Transportation Corp., RB, Convertible CAB, Series B, 0.00%, 10/01/46(c)

    2,870       2,622,348  

Leander ISD, GO, Refunding, CAB, Series D (PSF-GTD), 0.00%, 08/15/38(b)

    4,665       1,910,084  

Lone Star College System, GO, 5.00%,
08/15/18(a)

    4,800       4,844,976  

North Texas Tollway Authority, Refunding RB:

   

1st Tier System, Series A, 6.00%, 01/01/19(a)

    2,745       2,819,911  

1st Tier System, Series A, 6.00%, 01/01/28

    635       651,262  

1st Tier-Series A, 5.00%, 01/01/43

    2,780       3,129,001  

Series B, 5.00%, 01/01/40

    1,375       1,485,715  

San Antonio Public Facilities Corp., Refunding RB, Convention Center Refinancing & Expansion Project, CAB(b):

   

0.00%, 09/15/35

    3,180       1,447,822  

0.00%, 09/15/36

    6,015       2,580,615  

0.00%, 09/15/37

    4,305       1,737,283  

San Antonio Water System, Refunding RB, Junior Lien, Series A, 5.00%, 05/15/48(d)

    1,865       2,120,319  

Texas Municipal Gas Acquisition & Supply Corp. III, RB, Natural Gas Utility Improvements:

   

5.00%, 12/15/31

    1,600       1,732,720  

5.00%, 12/15/32

    1,060       1,145,553  

Texas Private Activity Bond Surface Transportation Corp., RB, Senior Lien, AMT, Blueridge Transportation Group, 5.00%, 12/31/45

    1,745       1,884,216  

Texas Transportation Commission, Refunding RB, Central Texas Turnpike System, 1st Tier, Series A, 5.00%, 08/15/41

    2,330       2,505,333  
   

 

 

 
      60,670,812  
Utah — 0.4%  

Salt Lake City Corp. Airport Revenue, ARB, Series A, AMT, 5.00%, 07/01/42

    1,700       1,894,123  
   

 

 

 
Virginia — 0.1%  

County of Fairfax Virginia IDA, Refunding RB, Health Care-Inova Health(a):

   

5.50%, 05/15/19

    155       160,696  

5.50%, 05/15/19

    295       305,998  
   

 

 

 
      466,694  
Washington — 2.9%  

Port of Seattle Washington, RB, Intermediate Lien, Series C, AMT, 5.00%, 04/01/40

    1,380       1,488,095  

Washington Health Care Facilities Authority, RB:

   

MultiCare Health System, Remarketing, Series B, 5.00%, 08/15/44

    4,000       4,364,760  

Providence Health & Services, Series A, 5.00%, 10/01/39

    1,525       1,592,283  

Providence Health & Services, Series A, 5.25%, 10/01/39

    850       893,563  

Seattle Children’s Hospital, Series A, 5.00%, 10/01/45

    2,285       2,526,296  

Washington Health Care Facilities Authority, Refunding RB, Multicare Health System, Series B, 4.00%, 08/15/41

    2,535       2,573,912  
   

 

 

 
      13,438,909  
Wisconsin — 1.5%  

State of Wisconsin Health & Educational Facilities Authority, RB:

   

Ascension Health Senior Credit Group, Series E, 5.00%, 11/15/33

    1,850       1,929,513  

Marshfield Clinic Health System, Inc. Series C, 4.00%, 02/15/42

    2,275       2,247,359  

State of Wisconsin Health & Educational Facilities Authority, Refunding RB, Froedtert Health, Inc. Obligated Group, 4.00%, 04/01/39

    3,025       3,016,409  
   

 

 

 
      7,193,281  
   

 

 

 

Total Municipal Bonds — 117.1%
(Cost — $516,300,973)

 

    547,103,951  
   

 

 

 
    
Security
  Par
(000)
    Value  

Municipal Bonds Transferred to Tender Option Bond Trusts(f)

 

California — 3.5%  

Bay Area Toll Authority, Refunding RB, San Francisco Bay Area Toll Bridge Subordinate, 4.00%, 04/01/47(g)

  $ 5,282     $ 5,437,801  

County of San Diego California Water Authority Financing Corp., COP, Refunding Series A (AGM)(a):

   

5.00%, 05/01/18

    858       857,703  

5.00%, 05/01/18

    4,312       4,312,297  

Los Angeles California Unified School District, GO, Election of 2008, Series B-1, 5.25%, 07/01/42(g)

    2,158       2,560,596  

Los Angeles Community College District California, GO, Refunding, Go, Refunding, Election of 2008, Series A, 6.00%, 08/01/19(a)

    2,639       2,776,425  

San Diego California Community College District, GO, Election of 2002, 5.25%, 08/01/19(a)

    509       530,130  
   

 

 

 
      16,474,952  
Colorado — 0.3%  

Colorado Health Facilities Authority, Refunding RB, Catholic Health Initiatives, Series A, 5.50%, 07/01/34(g)

    1,220       1,258,296  
   

 

 

 
Connecticut — 0.4%  

State of Connecticut Health & Educational Facility Authority, Refunding RB, Trinity Health Credit Group, 5.00%, 12/01/45

    1,891       2,101,514  
   

 

 

 
District of Columbia — 1.1%  

District of Columbia, RB, Series A, 5.50%, 12/01/30(g)

    1,319       1,392,097  

Metropolitan Washington Airports Authority, Refunding ARB, Series A, AMT, 5.00%, 10/01/30

    3,400       3,700,832  
   

 

 

 
      5,092,929  
Florida — 8.3%  

County of Miami-Dade Florida Transit System, Refunding RB, Sales Tax, 5.00%, 07/01/42

    2,390       2,578,942  

County of Miami-Dade Florida Water & Sewer System, RB, (AGM), 5.00%, 10/01/20(a)

    12,728       13,621,489  

County of Miami-Dade School Board, COP, Refunding, Series B, 5.25%, 05/01/27

    11,350       11,350,000  

County of Orange Florida School Board, COP, Series A (AGC), 5.50%, 08/01/19(a)

    3,544       3,701,767  

County of Seminole Florida, Refunding RB, Series B (NPFGC), 5.25%, 10/01/31

    6,300       7,780,185  
   

 

 

 
      39,032,383  
Illinois — 7.2%  

City of Chicago Illionis Waterworks Revenue, Refunding RB, Water Revenue Project (AGM), 2nd Lien:

   

2017, 5.25%, 11/01/18(a)

    9,492       9,640,653  

2017, 5.25%, 11/01/33

    2,845       2,889,731  

5.25%, 11/01/18(a)

    2,090       2,122,835  

State of Illinois, RB, Build Illinois, Series B, 5.25%, 06/15/19(a)(g)

    6,198       6,427,286  

State of Illinois Toll Highway Authority, RB:

   

Series A, 5.00%, 01/01/38

    2,878       3,133,997  

Series A, 5.00%, 01/01/40

    3,721       4,098,546  

Series B, 5.00%, 01/01/40

    1,409       1,563,275  

Series C, 5.00%, 01/01/38

    3,243       3,555,066  
   

 

 

 
      33,431,389  
Kansas — 1.6%  

County of Wyandotte Kansas Unified School District, GO, Series A, 5.50%, 09/01/47

    6,444       7,607,719  
   

 

 

 
Maryland — 1.3%  

City of Baltimore Maryland Water Utility Fund, RB, Series A:

   

Sub-Water Projects, 5.00%, 07/01/41

    3,845       4,311,540  
 

 

 

24    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (continued)

April 30, 2018

  

BlackRock MuniYield Quality Fund, Inc. (MQY)

(Percentages shown are based on Net Assets)

 

    
Security
  Par
(000)
    Value  
Maryland (continued)  

Wastewater Project, 5.00%, 07/01/46

  $ 1,485     $ 1,661,778  
   

 

 

 
      5,973,318  
Massachusetts — 0.5%  

Commonwealth of Massachusetts, GO, Series A, 5.00%, 03/01/46

    2,022       2,228,504  
   

 

 

 
Michigan — 3.0%  

Michigan Finance Authority, RB, Beaumont Health Credit Group, Series A, 5.00%, 11/01/44

    2,701       2,947,053  

Michigan Finance Authority, Refunding RB, Hospital, Trinity Health Credit Group, 5.00%, 12/01/39

    9,075       9,818,152  

Michigan State Building Authority, Refunding RB, Facilities Program, Series I, 5.00%, 10/15/45

    1,180       1,309,528  
   

 

 

 
      14,074,733  
Nevada — 3.8%  

City of Las Vegas Nevada, GO, Limited Tax, Performing Arts Center, 6.00%, 04/01/19(a)(g)

    5,007       5,191,175  

County of Clark Nevada, GOL, Stadium Improvement, Series A, 5.00%, 06/01/38

    4,202       4,807,680  

County of Clark Nevada Water Reclamation District, GO, Series B, 5.75%, 07/01/19(a)

    2,429       2,535,030  

Las Vegas Valley Water District Nevada, GO, Refunding, Water Improvement, Series A, 5.00%, 06/01/46

    4,720       5,292,052  
   

 

 

 
      17,825,937  
New Jersey — 2.2%  

County of Hudson New Jersey Improvement Authority, RB, Hudson County Vocational-Technical Schools Project, 5.25%, 05/01/51

    1,120       1,262,349  

New Jersey State Turnpike Authority, Refunding RB:

   

Series B, 4.00%, 01/01/37

    3,193       3,314,733  

Series G, 4.00%, 01/01/43

    2,957       3,035,378  

New Jersey Transportation Trust Fund Authority, RB, Transportation System, Series B, 5.25%, 06/15/36(g)

    2,580       2,683,415  
   

 

 

 
      10,295,875  
New York — 10.6%  

City of New York New York Municipal Water Finance Authority, RB, Water & Sewer System, Fiscal 2009, Series A:

   

5.75%, 06/15/18(a)

    807       809,962  

5.75%, 06/15/40

    2,701       2,708,551  

City of New York New York Transitional Finance Authority, RB, Future Tax, Sub-Series A-3, 5.00%, 08/01/40(g)

    4,228       4,814,544  

City of New York New York Water & Sewer System, Refunding RB:

   

2nd General Resolution, Fiscal 2013, Series CC, 5.00%, 06/15/47

    7,640       8,384,883  

2nd General Resolution, Series FF, 5.00%, 06/15/39

    4,050       4,524,201  

Series DD, 5.00%, 06/15/35

    2,280       2,543,720  

Metropolitan Transportation Authority, RB, Transportation, Sub-Series D-1, 5.25%, 11/15/44

    4,750       5,354,366  

Metropolitan Transportation Authority, Refunding RB, Series C-1, 5.25%, 11/15/56

    2,060       2,320,606  

Port Authority of New York & New Jersey, RB, 169th Series, AMT, 5.00%, 10/15/34

    10,830       11,592,649  

Port Authority of New York & New Jersey, Refunding ARB, Consolidated, 198th Series, 5.25%, 11/15/56

    3,081       3,509,922  

State of New York Dormitory Authority, ERB, Series B, 5.75%, 03/15/19(a)

    1,534       1,585,091  

Triborough Bridge & Tunnel Authority, RB, General, Series A-2, 5.25%, 11/15/34(g)

    1,500       1,528,102  
   

 

 

 
      49,676,597  
    
Security
  Par
(000)
    Value  
Ohio — 1.1%  

Northeast Ohio Regional Sewer District, Refunding RB, 4.00%, 11/15/43

  $ 4,007     $ 4,137,657  

State of Ohio, RB, Cleveland Clinic Health Obligated Group, Series B, 5.50%, 01/01/34

    780       798,767  
   

 

 

 
      4,936,424  
Pennsylvania — 0.3%  

County of Westmoreland Pennsylvania Municipal Authority, Refunding RB, (BAM), 5.00%, 08/15/42

    1,220       1,350,790  
   

 

 

 
South Carolina — 1.0%  

South Carolina Public Service Authority, Refunding RB, Series A(a)(g):

   

5.50%, 01/01/19

    374       382,900  

5.50%, 01/01/19

    4,327       4,427,403  
   

 

 

 
      4,810,303  
Texas — 3.8%  

City of Houston Texas Community College, GOL, 4.00%, 02/15/43

    2,010       2,040,552  

County of Harris Texas Toll Road Authority, Refunding RB, Senior Lien, Series A, 5.00%, 08/15/43

    1,679       1,913,500  

County of Tarrant Texas Cultural Education Facilities Finance Corp., RB, Baylor Health Care System Project, Series A, 5.00%, 11/15/38

    879       958,041  

County of Tarrant Texas Cultural Education Facilities Finance Corp., Refunding RB, Texas Health Resources System, Series A, 5.00%, 02/15/41

    4,720       5,264,735  

Dallas Fort Worth International Airport, ARB, Series H, AMT, 5.00%, 11/01/37(g)

    4,501       4,802,529  

San Antonio Public Facilities Corp., Refunding RB, Convention Center Refinancing And Expansion Project, 4.00%, 09/15/42

    2,564       2,584,864  
   

 

 

 
      17,564,221  
Washington — 1.7%  

Hampton Roads Transportation Accountability Commission, RB, Transportation Fund, Senior Lien, Series A, 5.50%, 07/01/57

    3,079       3,649,839  

Washington Health Care Facilities Authority, Refunding RB, Seattle Children’s Hospital, Series B, 5.00%, 10/01/38

    3,930       4,537,486  
   

 

 

 
      8,187,325  
Wisconsin — 0.6%  

Wisconsin Health & Educational Facilities Authority, Refunding RB, Froedtert & Community Health, Inc., Obligated Group:

   

Series A, 5.00%, 04/01/42

    640       679,520  

Series C, 5.25%, 04/01/19(a)

    2,000       2,062,030  
   

 

 

 
      2,741,550  
   

 

 

 

Total Municipal Bonds Transferred to Tender Option Bond Trusts — 52.3%
(Cost — $239,090,753)

 

    244,664,759  
   

 

 

 

Total Long-Term Investments — 169.4%
(Cost — $755,391,726)

 

    791,768,710  
   

 

 

 

Liabilities in Excess of Other Assets — (1.8)%

 

    (8,380,482

Liability for TOB Trust Certificates, Including Interest Expense and Fees Payable — (29.9)%

 

    (139,689,988

VRDP Shares, at Liquidation Value Net of Deferred Offering Costs — (37.7)%

 

    (176,364,352
   

 

 

 

Net Assets Applicable to Common Shares — 100.0%

 

  $ 467,333,888  
   

 

 

 
 

 

 

SCHEDULES OF INVESTMENTS      25  


Schedule of Investments  (continued)

April 30, 2018

  

BlackRock MuniYield Quality Fund, Inc. (MQY)

 

 

(a)  U.S. Government securities, held in escrow, are used to pay interest on this security, as well as to retire the bond in full at the date indicated, typically at a premium to par.
(b)  Zero-coupon bond.
(c)  Step-up bond that pays an initial coupon rate for the first period and then a higher coupon rate for the following periods. Rate as of period end.
(d)  When-issued security.
(e)  Security is collateralized by municipal bonds or U.S. Treasury obligations.
(f)  Represent bonds transferred to a TOB Trust in exchange of cash and residual certificates received by the Fund. These bonds serve as collateral in a secured borrowing. See Note 4 of the Notes to Financial Statements for details.
(g)  All or a portion of security is subject to a recourse agreement. The aggregate maximum potential amount the Fund could ultimately be required to pay under the agreements, which expire between June 15, 2018 to January 1, 2026, is $25,562,423. See Note 4 of the Notes to Financial Statements for details.
 

During the year ended April 30, 2018, investments in issuers considered to be an affiliate of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliated    Shares
Held at
04/30/17
     Net
Activity
     Shares
Held at
04/30/18
     Value at
04/30/18
     Income      Net
Realized
Gain (Loss)
 (a)
     Change in
Unrealized
Appreciation
(Depreciation)
 

BlackRock Liquidity Funds, MuniCash, Institutional Class

     1,043,150        (1,043,150           $      $ 39,782      $ 472      $ (207
           

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a)  Includes net capital gain distributions, if applicable.  

Derivative Financial Instruments Outstanding as of Period End

Futures Contracts

 

Description    Number of
Contracts
       Expiration
Date
       Notional
Amount (000)
       Value/
Unrealized
Appreciation
(Depreciation)
 

Short Contracts:

                 

10-Year U.S. Treasury Note

     87          06/20/18        $ 10,407        $ 56,348  

Long U.S. Treasury Bond

     151          06/20/18          21,720          8,654  

5-Year U.S. Treasury Note

     25          06/29/18          2,838          8,535  
                 

 

 

 
                  $ 73,537  
                 

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of year end the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

      Commodity
Contracts
     Credit
Contracts
     Equity
Contracts
     Foreign
Currency
Exchange
Contracts
     Interest
Rate
Contracts
     Other
Contracts
     Total  

Assets — Derivative Financial Instruments

                    

Futures contracts

                    

Net unrealized appreciation(a)

   $      $      $      $      $ 73,537      $      $ 73,537  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a)  Includes cumulative appreciation (depreciation) on futures contracts, if any, as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statements of Assets and Liabilities.  

For the year ended April 30, 2018, the effect of derivative financial instruments in the Statements of Operation was as follows:

 

      Commodity
Contracts
     Credit
Contracts
     Equity
Contracts
     Foreign
Currency
Exchange
Contracts
     Interest
Rate
Contracts
     Other
Contracts
     Total  

Net Realized Gain (Loss) from:

                    

Futures contracts

   $      $      $      $      $ 1,799,752      $      $ 1,799,752  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
Net Change in Unrealized Appreciation (Depreciation) on:                                                 

Futures contracts

   $      $      $      $      $ 723,140      $      $ 723,140  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

        

Average notional value of contracts — short

   $ 38,117,439  

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

 

 

26    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (continued)

April 30, 2018

  

BlackRock MuniYield Quality Fund, Inc. (MQY)

 

Fair Value Hierarchy as of Period End

Various inputs are used in determining the fair value of investments and derivative financial instruments. For information about the Fund’s policy regarding valuation of investments and derivative financial instruments, refer to the Notes to Financial Statements.

The following tables summarize the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy:

 

      Level 1        Level 2        Level 3        Total  

Assets:

                 

Investments:

                 

Long-Term Investments(a)

   $        $ 791,768,710        $             —        $ 791,768,710  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative Financial Instruments(b)

 

Assets:

                 

Interest rate contracts

   $     73,537        $        $        $ 73,537  
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a)  See above Schedule of Investments for values in each state or political subdivision.  
  (b)  Derivative financial instruments are futures contracts which are valued at the unrealized appreciation (depreciation) on the instrument.  

The Fund may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of period end, such assets and/or liabilities are categorized within the disclosure hierarchy as follows:

 

      Level 1        Level 2        Level 3        Total  

Liabilities:

                 

TOB Trust Certificates

   $             —        $ (139,143,848      $             —        $ (139,143,848

VRDP Shares at Liquidation Value

              (176,600,000                 (176,600,000
  

 

 

      

 

 

      

 

 

      

 

 

 
   $        $ (315,743,848      $        $ (315,743,848
  

 

 

      

 

 

      

 

 

      

 

 

 

During the year ended April 30, 2018, there were no transfers between levels.

See notes to financial statements.

 

 

SCHEDULES OF INVESTMENTS      27  


Schedule of Investments

April 30, 2018

  

BlackRock MuniYield Quality Fund II, Inc. (MQT)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  

Municipal Bonds — 116.9%

 

Alabama — 1.2%  

City of Birmingham Alabama, GO, Convertible CAB, Series A1, 0.00%, 03/01/45(a)

  $ 915     $ 964,090  

City of Birmingham Alabama Special Care Facilities Financing Authority, RB, Children’s Hospital (AGC), 6.00%, 06/01/19(b)

    650       678,645  

County of Tuscaloosa Board of Education, RB, Special Tax School Warrants, 5.00%, 02/01/43

    780       872,453  

Homewood Educational Building Authority, Refunding RB, Educational Facilities, Samford University, Series A:

   

5.00%, 12/01/34

    240       266,609  

5.00%, 12/01/47

    655       716,446  
   

 

 

 
      3,498,243  
Alaska — 0.3%  

Alaska Industrial Development & Export Authority, RB, Providence Health Services, Series A, 5.50%, 10/01/41

    850       919,590  
   

 

 

 
Arizona — 1.4%  

City of Phoenix Arizona Civic Improvement Corp., Refunding RB, Senior Lien, AMT, 5.00%, 07/01/34

    1,000       1,092,480  

County of Maricopa Arizona IDA, Refunding RB, Banner Health Obligation Group, Series A, 4.00%, 01/01/41

    975       994,568  

State of Arizona, COP, Department of Administration, Series A (AGM):

   

5.00%, 10/01/27

    1,075       1,117,882  

5.00%, 10/01/29

    925       961,769  
   

 

 

 
      4,166,699  
California — 11.2%  

Cabrillo Community College District, GO, CAB, Election of 2004, Series B (NPFGC), 0.00%, 08/01/38(c)

    4,800       1,814,304  

California Health Facilities Financing Authority, RB:

   

St. Joseph Health System, Series A, 5.75%, 07/01/39

    500       522,160  

Sutter Health, Series A, 4.00%, 11/15/42

    205       208,087  

Sutter Health, Series B, 5.88%, 08/15/20(b)

    1,000       1,089,190  

California Health Facilities Financing Authority, Refunding RB:

   

Kaiser Permanente, Sub-Series A-2, 5.00%, 11/01/47

    1,140       1,455,484  

St. Joseph Health System, Series A, 5.00%, 07/01/37

    945       1,048,118  

California State University, RB, Systemwide, Series A(b):

   

5.50%, 05/01/19

    1,000       1,037,620  

(AGC), 5.25%, 05/01/19

    3,000       3,105,480  

California Statewide Communities Development Authority, RB, Kaiser Permanente, Series A, 5.00%, 04/01/42

    1,290       1,398,476  

City & County of San Francisco California Airports Commission, Refunding ARB, Series A, AMT, 5.00%, 05/01/42

    135       151,066  

City of San Jose California, Refunding ARB, Norman Y Mineta San Jose International Airport SJC, AMT:

   

Series A, 5.00%, 03/01/36

    365       409,504  

Series A, 5.00%, 03/01/37

    400       448,124  

Series A-1, 5.75%, 03/01/34

    700       760,970  

Coast Community College District, GO, CAB, Election of 2002, Series C (AGM), 5.00%, 08/01/18(b)

    1,800       1,814,850  

County of San Diego California Water Authority, COP, Refunding, Series A (AGM), 5.00%, 05/01/18(b)

    2,015       2,015,000  

County of San Joaquin California Transportation Authority, Refunding RB, Limited Tax, Measure K, Series A, 6.00%, 03/01/21(b)

    575       638,980  

El Monte Union High School District, GO, Series C (AGM), 5.25%, 06/01/18(b)

    2,000       2,005,780  

Mount San Antonio Community College District, GO, Refunding, CAB, Election of 2008, Series A, 0.00%, 08/01/43(a)

    5,000       3,995,050  
Security   Par
(000)
    Value  
California (continued)  

San Diego California Community College District, GO, CAB, Election of 2006(c):

   

0.00%, 08/01/31

  $ 1,855     $ 1,037,539  

0.00%, 08/01/32

    2,320       1,218,000  

San Diego California Unified School District, GO, Election of 2008(c):

   

CAB, Series C, 0.00%, 07/01/38

    1,400       642,530  

CAB, Series G, 0.00%, 07/01/34

    580       273,395  

CAB, Series G, 0.00%, 07/01/35

    615       272,556  

CAB, Series G, 0.00%, 07/01/36

    920       383,364  

CAB, Series G, 0.00%, 07/01/37

    615       241,037  

San Diego California Unified School District, GO, Refunding, CAB, Series R-1, 0.00%, 07/01/31(c)

    1,110       703,918  

San Marcos Unified School District, GO, Election of 2010, Series A(b):

   

5.00%, 08/01/21

    600       658,086  

5.00%, 08/01/21

    490       537,437  

State of California, GO, Various Purposes, 5.00%, 04/01/42

    1,500       1,631,370  

Yosemite Community College District, GO, CAB, Election of 2004, Series D(c):

   

0.00%, 08/01/36

    2,000       1,017,140  

0.00%, 08/01/37

    2,790       1,362,162  
   

 

 

 
      33,896,777  
Colorado — 2.1%  

E-470 Public Highway Authority, Refunding RB, CAB, Series B (NPFGC), 0.00%, 09/01/32(c)

    5,500       2,614,590  

Regional Transportation District, COP, Refunding, Series A, 5.38%, 06/01/31

    1,000       1,061,470  

Regional Transportation District, COP, Series A, 5.00%, 06/01/39

    2,500       2,715,500  
   

 

 

 
      6,391,560  
Connecticut — 0.3%  

Connecticut Housing Finance Authority, Refunding RB, S/F Housing:

   

Sub-Series A-1, 3.85%, 11/15/43

    510       503,457  

Sub-Series B-1, 4.00%, 05/15/45(d)

    470       471,767  
   

 

 

 
      975,224  
Florida — 10.8%  

Central Florida Expressway Authority, Refunding RB, Senior Lien, 4.00%, 07/01/41

    370       374,806  

Country of Broward Florida Airport System, ARB, AMT, 5.00%, 10/01/47

    1,500       1,668,915  

Country of Miami-Dade FL Water & Sewer System Revenue, Refunding RB, System-Series A, 4.00%, 10/01/44

    800       815,080  

County of Brevard Florida Health Facilities Authority, Refunding RB, Health First, Inc. Project, 5.00%, 04/01/39

    1,420       1,528,133  

County of Highlands Florida Health Facilities Authority, RB, Adventist Health System/Sunbelt Obligated Group, 6.00%, 11/15/37

    550       586,052  

County of Hillsborough Florida Aviation Authority, RB, Series A, AMT (AGC), 5.38%, 10/01/33

    3,250       3,294,102  

County of Lee Florida, Refunding ARB, Series A, AMT:

   

5.63%, 10/01/26

    825       899,811  

5.38%, 10/01/32

    1,100       1,187,923  

County of Miami-Dade Florida, RB:

   

Jackson Health System (AGC), 5.63%, 06/01/19(b)

    900       936,558  

Seaport Department, Series A, 6.00%, 10/01/38

    1,780       2,037,317  

Seaport Department, Series B, AMT, 6.25%, 10/01/38

    360       416,495  

Seaport Department, Series B, AMT, 6.00%, 10/01/42

    580       663,218  

Seaport, Series B, AMT, 6.00%, 10/01/30

    570       648,740  

County of Miami-Dade Florida, Refunding RB, 4.00%, 10/01/40

    785       803,016  
 

 

 

28    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (continued)

April 30, 2018

  

BlackRock MuniYield Quality Fund II, Inc. (MQT)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Florida (continued)  

County of Miami-Dade Florida Aviation, Refunding ARB, AMT:

   

5.00%, 10/01/34

  $ 160     $ 176,869  

Series A, 5.00%, 10/01/32

    1,730       1,873,486  

County of Miami-Dade Florida Aviation, Refunding RB, Series B, AMT, 5.00%, 10/01/40

    2,210       2,458,868  

County of Miami-Dade Florida Educational Facilities Authority, RB, University of Miami, Series A, 5.00%, 04/01/40

    2,635       2,892,756  

County of Miami-Dade Florida Health Facilities Authority, Refunding RB, Nicklaus Children’s Hospital Project, 5.00%, 08/01/42

    535       591,223  

County of Orange Florida Health Facilities Authority, Refunding RB, Presbyterian Retirement Communities Project:

   

5.00%, 08/01/41

    495       538,159  

5.00%, 08/01/47

    1,435       1,555,784  

County of Palm Beach Florida Solid Waste Authority, Refunding RB, Series B:

   

5.00%, 10/01/21(b)

    30       32,779  

5.00%, 10/01/31

    1,870       2,034,822  

County of Putnam Florida Development Authority, Refunding RB, Seminole Project, Series A, 5.00%, 03/15/42

    465       516,778  

County of Sarasota Florida Public Hospital District, RB, Sarasota Memorial Hospital Project, Series A, 5.63%, 07/01/39

    250       259,102  

Florida Ports Financing Commission, Refunding RB, State Transportation Trust Fund, Series B, AMT, 5.38%, 10/01/29

    2,400       2,632,632  

Reedy Creek Improvement District, GO, Series A, 5.25%, 06/01/33

    1,040       1,172,465  
   

 

 

 
      32,595,889  
Georgia — 0.8%  

County of Gainesville Georgia & Hall Hospital Authority, Refunding RB, Northeast Georgia Health System, Inc. Project, Series A, 5.50%, 08/15/54

    440       502,423  

County of LaGrange-Troup Hospital Authority, Refunding RB, Revenue Anticipation Certificates, 4.00%, 04/01/47

    1,110       1,074,813  

Private Colleges & Universities Authority, RB, Savannah College of Art & Design:

   

5.00%, 04/01/33

    120       130,674  

5.00%, 04/01/44

    550       590,969  
   

 

 

 
      2,298,879  
Illinois — 12.5%  

City of Chicago Illinois Midway International Airport, Refunding ARB, 2nd Lien, Series A, AMT, 5.00%, 01/01/34

    505       546,829  

City of Chicago Illinois O’Hare International Airport, ARB, Senior Lien, Series D, 5.25%, 01/01/42

    2,585       2,924,566  

City of Chicago Illinois O’Hare International Airport, GARB:

   

3rd Lien, Series A, 5.75%, 01/01/21(b)

    1,680       1,837,080  

3rd Lien, Series A, 5.75%, 01/01/39

    320       346,886  

Senior Lien, Series D, AMT, 5.00%, 01/01/42

    205       223,005  

City of Chicago Illinois O’Hare International Airport, Refunding GARB, Senior Lien, Series C, AMT, 5.38%, 01/01/39

    3,235       3,509,716  

City of Chicago Illinois Transit Authority, RB, Sales Tax Receipts, 5.25%, 12/01/36

    515       551,153  

Illinois Finance Authority, RB, Carle Foundation, Series A,
5.75%, 08/15/34

    400       440,084  

Illinois Finance Authority, Refunding RB:

   

Central Dupage Health, Series B, 5.50%, 11/01/19(b)

    2,070       2,177,599  

Silver Cross Hospital & Medical Centers, Series C,
4.13%, 08/15/37

    665       662,772  

Silver Cross Hospital & Medical Centers, Series C,
5.00%, 08/15/44

    305       321,138  

Illinois Sports Facilities Authority, RB, State Tax Supported (AMBAC), 5.50%, 06/15/30

    10,865       10,883,579  
Security   Par
(000)
    Value  
Illinois (continued)  

Illinois State Toll Highway Authority, RB, Series B,
5.00%, 01/01/37

  $ 2,465     $ 2,751,926  

Metropolitan Pier & Exposition Authority, RB, CAB, McCormick Place Expansion Project (NPFGC), 0.00%, 12/15/36(c)

    10,000       4,045,500  

Metropolitan Pier & Exposition Authority, Refunding RB, CAB, McCormick Place Expansion Project, Series B (AGM),
0.00%, 06/15/44(c)

    2,980       867,716  

Railsplitter Tobacco Settlement Authority, RB, 6.00%, 06/01/21(b)

    575       640,999  

Regional Transportation Authority, RB, Series B (NPFGC),
5.75%, 06/01/33

    2,000       2,496,580  

State of Illinois, GO:

   

5.25%, 02/01/33

    735       752,125  

5.50%, 07/01/33

    710       734,410  

5.25%, 02/01/34

    735       751,383  

5.50%, 07/01/38

    380       391,138  
   

 

 

 
      37,856,184  
Indiana — 2.6%  

Indiana Finance Authority, RB, Series A:

   

CWA Authority Project, 1st Lien, 5.25%, 10/01/38

    1,000       1,090,460  

Private Activity Bond, Ohio River Bridges East End Crossing Project, AMT, 5.00%, 07/01/44

    445       473,880  

Indiana Health & Educational Facilities Financing Authority, Refunding RB, Ascension Senior Credit Group, 5.00%, 11/15/46

    1,675       1,894,626  

Indianapolis Local Public Improvement Bond Bank, Refunding RB, Waterworks Project, Series A:

   

5.75%, 01/01/19(b)

    390       400,269  

5.75%, 01/01/38

    1,610       1,648,817  

(AGC), 5.50%, 01/01/19(b)

    310       317,654  

(AGC), 5.50%, 01/01/38

    1,265       1,293,425  

State of Indiana Finance Authority, RB, Private Activity Bond, Ohio River Bridges, Series A, AMT, 5.00%, 07/01/40

    770       821,844  
   

 

 

 
      7,940,975  
Iowa — 2.5%  

Iowa Finance Authority, RB, Iowa Health Care Facilities, Series A (AGC), 5.63%, 08/15/19(b)

    4,925       5,154,899  

Iowa Student Loan Liquidity Corp., RB, Senior Series A-2, AMT:

   

5.60%, 12/01/26

    635       663,861  

5.70%, 12/01/27

    635       660,775  

5.80%, 12/01/29

    435       452,274  

5.85%, 12/01/30

    450       468,148  
   

 

 

 
      7,399,957  
Kentucky — 0.7%  

State of Kentucky Property & Building Commission, Refunding RB, Project No. 93 (AGC):

   

5.25%, 02/01/19(b)

    1,775       1,820,191  

5.25%, 02/01/29

    225       230,594  
   

 

 

 
      2,050,785  
Louisiana — 1.8%  

City of New Orleans Louisiana Aviation Board, ARB, Series B, AMT, 5.00%, 01/01/40

    2,620       2,830,648  

Louisiana Public Facilities Authority, Refunding RB, Christus Health, Series B (AGC), 6.50%, 07/01/30

    1,150       1,182,752  

State of Louisiana Gasoline & Fuels Tax Revenue, Refunding RB, First Lien, Series A, 4.00%, 05/01/41

    1,345       1,368,847  
   

 

 

 
      5,382,247  
Maine — 0.2%  

Maine State Housing Authority, RB, Series D-1, 3.65%, 11/15/42

    570       552,883  
   

 

 

 
 

 

 

SCHEDULES OF INVESTMENTS      29  


Schedule of Investments  (continued)

April 30, 2018

  

BlackRock MuniYield Quality Fund II, Inc. (MQT)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Maryland — 0.4%  

State of Maryland Stadium Authority Revenue, RB, Construction & Revitalization, 5.00%, 05/01/36

  $ 1,095     $ 1,250,413  
   

 

 

 
Massachusetts — 2.5%  

Massachusetts Development Finance Agency, RB, Emerson College Issue, Series A, 5.00%, 01/01/47

    1,855       1,999,468  

Massachusetts Development Finance Agency, Refunding RB, Partners Health Care System, 4.00%, 07/01/41

    815       824,095  

Massachusetts HFA, Refunding RB, AMT:

   

Series A, 4.45%, 12/01/42

    700       723,324  

Series C, 5.00%, 12/01/30

    1,990       2,022,616  

Series C, 5.35%, 12/01/42

    390       397,051  

Massachusetts Port Authority, Refunding ARB, Series A, AMT, 5.00%, 07/01/47

    305       339,072  

Massachusetts School Building Authority, RB, Dedicated Sales Tax, Senior Series A, 5.00%, 05/15/43

    1,110       1,220,123  
   

 

 

 
      7,525,749  
Michigan — 5.5%  

City of Detroit Michigan Sewage Disposal System, Refunding RB (BHAC)(b):

   

2nd Lien, Series E, 5.75%, 07/01/18

    2,200       2,214,146  

Series A, 5.50%, 07/01/18

    4,500       4,527,135  

City of Detroit Michigan Water Supply System Revenue, RB:

   

2nd Lien, Series B (AGM), 6.25%, 07/01/19(b)

    350       367,349  

Senior Lien, Series A, 5.25%, 07/01/41

    1,600       1,717,840  

City of Lansing Michigan, RB, Board of Water & Light Utilities System, Series A, 5.50%, 07/01/41

    1,700       1,860,667  

Michigan Finance Authority, Refunding RB:

   

Henry Ford Health System, 3.25%, 11/15/42

    405       348,101  

Trinity Health Credit Group, 5.00%, 12/01/21(b)

    15       16,444  

Michigan State Hospital Finance Authority, Refunding RB, Ascension Senior Credit Group, 4.00%, 11/15/47

    530       532,661  

Royal Oak Hospital Finance Authority Michigan, Refunding RB, Beaumont Health Credit Group, Series D, 5.00%, 09/01/39

    720       780,034  

State of Michigan Building Authority, Refunding RB, Facilities Program:

   

Series I-A, 5.38%, 10/15/41

    600       657,342  

Series II-A, 5.38%, 10/15/36

    1,000       1,101,490  

Series II-A (AGM), 5.25%, 10/15/36

    1,900       2,085,003  

Western Michigan University, Refunding RB, General, University and College Improvements (AGM), 5.00%, 11/15/39

    340       376,638  
   

 

 

 
      16,584,850  
Minnesota — 0.6%  

City of Minneapolis Minnesota, Refunding RB, Fairview Health Services, Series B (AGC):

   

6.50%, 11/15/18(b)

    275       281,908  

6.50%, 11/15/38

    1,525       1,562,973  
   

 

 

 
      1,844,881  
Mississippi — 0.1%  

Mississippi State University Educational Building Corp., Refunding RB, Mississippi State University Faciliities Refinancing, Series A, 4.00%, 08/01/43

    350       357,868  
   

 

 

 
Nebraska — 1.0%  

Central Plains Nebraska Energy Project, RB, Gas Project No. 3, 5.25%, 09/01/37

    2,650       2,911,820  
   

 

 

 
Nevada — 0.9%  

County of Clark Nevada, ARB, Las Vegas-McCarran International Airport, Series A:

   

5.25%, 07/01/42

    1,000       1,050,040  

(AGM), 5.25%, 07/01/39

    1,700       1,785,918  
   

 

 

 
      2,835,958  
Security   Par
(000)
    Value  
New Jersey — 8.5%  

New Jersey EDA, RB:

   

Goethals Bridge Replacement Project, AMT, Private Activity Bond, 5.38%, 01/01/43

  $ 790     $ 860,808  

Goethals Bridge Replacement Project, AMT, Private Activity Bond, 5.13%, 01/01/34

    610       663,772  

Series WW, 5.25%, 06/15/33

    135       145,272  

Series WW, 5.00%, 06/15/34

    180       189,794  

Series WW, 5.00%, 06/15/36

    800       842,520  

Series WW, 5.25%, 06/15/40

    320       341,286  

New Jersey EDA, Refunding RB, Sub-Series A, 4.00%, 07/01/32

    500       496,240  

New Jersey Higher Education Student Assistance Authority, Refunding RB, Series 1, AMT:

   

5.50%, 12/01/25

    305       326,518  

5.50%, 12/01/26

    215       228,231  

5.75%, 12/01/28

    115       123,273  

New Jersey Housing & Mortgage Finance Agency, Refunding RB, M/F Housing, Series 2, AMT, 4.35%, 11/01/33

    840       864,536  

New Jersey Transportation Trust Fund Authority, RB:

   

Transportation Program, Series AA, 5.25%, 06/15/33

    1,315       1,394,097  

Transportation Program, Series AA, 5.00%, 06/15/38

    1,180       1,233,666  

Transportation System, CAB, Series A, 0.00%, 12/15/29(c)

    225       134,006  

Transportation System, Series A, 5.50%, 06/15/41

    4,265       4,449,376  

Transportation System, Series A (NPFGC), 5.75%, 06/15/25

    1,400       1,628,536  

Transportation System, Series AA, 5.50%, 06/15/39

    4,650       4,967,548  

Transportation System, Series B, 5.00%, 06/15/42

    3,680       3,784,586  

Transportation System, Series D, 5.00%, 06/15/32

    525       557,125  

South Jersey Port Corp., ARB, Marine Terminal, Series B, AMT, 5.00%, 01/01/42

    345       368,698  

Tobacco Settlement Financing Corp., Refunding RB, Series A:

   

5.00%, 06/01/46

    1,640       1,770,659  

5.25%, 06/01/46

    360       399,827  
   

 

 

 
      25,770,374  
New Mexico — 0.1%  

New Mexico Hospital Equipment Loan Council, Refunding RB, Presbyterian Healthcare Services, 5.00%, 08/01/44

    325       358,576  
   

 

 

 
New York — 7.7%  

City of New York New York Municipal Water Finance Authority, Refunding RB, Second General Resolution, Fiscal 2012, Series BB, 5.25%, 06/15/44

    1,250       1,375,950  

City of New York New York Transitional Finance Authority, BARB, Fiscal 2009, Series S-4, 5.50%, 01/15/33

    3,035       3,113,637  

City of New York New York Transitional Finance Authority, RB, Series S-3, 4.00%, 07/15/46

    1,000       1,020,140  

City of New York New York Transitional Finance Authority, Refunding RB, Future Tax Secured, Series B, 5.00%, 11/01/32

    2,200       2,429,614  

Hudson Yards Infrastructure Corp., RB, Senior, Fiscal 2012:

   

5.75%, 02/15/21(b)

    375       412,803  

5.75%, 02/15/47

    235       254,101  

Metropolitan Transportation Authority, Refunding RB, Series B, 5.00%, 11/15/37

    1,230       1,383,467  

New York City Water & Sewer System, RB, Series DD-1, 4.00%, 06/15/48

    5,000       5,112,200  

New York Transportation Development Corp., ARB, LaGuardia Airport Terminal B Redevelopment Project, Series A, AMT, 5.25%, 01/01/50

    4,950       5,352,138  

State of New York HFA, RB, Affordable Housing, M/F Housing, Series B, AMT, 5.30%, 11/01/37

    2,835       2,838,062  
   

 

 

 
      23,292,112  
 

 

 

30    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (continued)

April 30, 2018

  

BlackRock MuniYield Quality Fund II, Inc. (MQT)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Ohio — 1.3%  

County of Allen Ohio Hospital Facilities Revenue, Refunding RB, Series A, 4.00%, 08/01/38

  $ 1,390     $ 1,391,042  

County of Butler Ohio, Refunding RB, UC Health, 4.00%, 11/15/37

    405       407,552  

County of Lucas Ohio, Refunding RB, Promedica Healthcare, Series A, 6.50%, 11/15/21(b)

    460       526,429  

State of Ohio Turnpike Commission, RB, Junior Lien, Infrastructure Projects, Series A-1:

   

5.25%, 02/15/32

    610       675,331  

5.25%, 02/15/33

    850       939,029  
   

 

 

 
      3,939,383  
Oregon — 1.5%  

Counties of Washington & Multnomah Oregon School District No. 48J Beaverton, GO, Convertible CAB, Series D, 0.00%, 06/15/36(a)

    735       829,587  

County of Clackamas Oregon Community College District, GO, Convertible Deferred Interest Bonds, Series A, 0.00%, 06/15/40(a)

    390       397,110  

County of Clackamas Oregon School District No. 12 North Clackamas, GO, CAB, Series A, 0.00%, 06/15/38(c)

    875       377,834  

State of Oregon, GO, Refunding, Veteran’s Welfare Series 100th, 3.65%, 06/01/42

    540       528,114  

State of Oregon Housing & Community Services Department, RB, Series D, 3.45%, 01/01/38

    2,490       2,410,270  
   

 

 

 
      4,542,915  
Pennsylvania — 9.1%  

Commonwealth Financing Authority, RB:

   

Series B, 5.00%, 06/01/42

    2,110       2,253,311  

Tobacco Master Settlement Payment, 5.00%, 06/01/33

    195       218,078  

Tobacco Master Settlement Payment, 5.00%, 06/01/34

    345       383,361  

Tobacco Master Settlement Payment, 5.00%, 06/01/35

    660       731,630  

Tobacco Master Settlement Payment (AGM), 4.00%, 06/01/39

    935       938,057  

County of Berks IDA, Refunding RB, Tower Health Project, 4.00%, 11/01/39

    295       295,000  

County of Montgomery Higher Education & Health Authority, Refunding RB, Thomas Jefferson University, Series A, 4.00%, 09/01/49

    570       560,960  

Pennsylvania Economic Development Financing Authority, RB:

   

AMT, 5.00%, 06/30/42

    3,300       3,532,419  

PA Bridges Finco LP, 5.00%, 12/31/38

    1,155       1,243,854  

PA Bridges Finco LP, AMT, 5.00%, 12/31/34

    2,220       2,410,187  

Pennsylvania Economic Development Financing Authority, Refunding RB, Series A, 4.00%, 11/15/42

    505       509,787  

Pennsylvania Higher Educational Facilities Authority, Refunding RB, Thomas Jefferson University, Series A, 5.25%, 09/01/50

    3,175       3,505,772  

Pennsylvania Turnpike Commission, RB:

   

Series A, 5.00%, 12/01/38

    550       601,480  

Series A-1, 5.00%, 12/01/41

    730       804,314  

Series B, 5.00%, 12/01/40

    285       314,039  

Series C, 5.50%, 12/01/23(b)

    490       568,885  

Sub-Series B-1, 5.00%, 06/01/42

    1,265       1,380,621  

Subordinate, Special Motor License Fund, 5.50%, 12/01/20(b)

    2,245       2,436,903  

Subordinate, Special Motor License Fund, 6.00%, 12/01/20(b)

    500       548,985  

Pennsylvania Turnpike Commission, Refunding RB:

   

Motor Licenced Fund Enhancement, Third Series, 4.00%, 12/01/38

    1,835       1,855,369  

Series A-1, 5.00%, 12/01/40

    680       747,490  

Philadelphia School District, GO, Refunding, Series F, 5.00%, 09/01/38

    270       296,576  
Security   Par
(000)
    Value  
Pennsylvania (continued)  

Philadelphia School District, GO, Series E(b):

   

6.00%, 09/01/18

  $ 1,285     $ 1,302,874  

6.00%, 09/01/18

    15       15,206  
   

 

 

 
      27,455,158  
Rhode Island — 1.1%  

Tobacco Settlement Financing Corp., Refunding RB, Series B:

   

4.50%, 06/01/45

    945       954,677  

5.00%, 06/01/50

    2,340       2,397,353  
   

 

 

 
      3,352,030  
South Carolina — 5.6%  

County of Charleston South Carolina Airport District, ARB, Series A, AMT, 5.50%, 07/01/41

    1,360       1,500,923  

South Carolina Jobs EDA, Refunding RB, Palmetto Health, Series A (AGM), 6.50%, 08/01/21(b)

    100       113,098  

South Carolina Transportation Infrastructure Bank, RB, Series A, 5.25%, 10/01/19(b)

    3,420       3,576,568  

State of South Carolina Ports Authority, RB, AMT, 5.25%, 07/01/50

    2,040       2,253,506  

State of South Carolina Public Service Authority, RB, Santee Cooper:

   

Series A, 5.50%, 12/01/54

    3,935       4,295,013  

Series E, 5.50%, 12/01/53

    2,820       3,075,210  

State of South Carolina Public Service Authority, Refunding RB, Santee Cooper, Series B, 5.00%, 12/01/38

    1,840       1,960,520  
   

 

 

 
      16,774,838  
South Dakota — 0.4%  

South Dakota Health & Educational Facilities Authority, Refunding RB, Avera Health Issue, 4.00%, 07/01/37

    1,085       1,097,423  
   

 

 

 
Texas — 17.0%  

City of San Antonio Texas Electric & Gas Revenue, RB, Junior Lien, 5.00%, 02/01/38

    500       542,995  

County of Midland Texas Fresh Water Supply District No. 1, RB, CAB, City of Midland Project, Series A, 0.00%, 09/15/36(c)

    1,850       859,898  

County of Tarrant Texas Cultural Education Facilities Finance Corp., Refunding RB, Cook Children’s Medical Center, 5.25%, 12/01/39

    750       827,985  

Dallas-Fort Worth International Airport, ARB, Joint Improvement, AMT:

   

Series D, 5.00%, 11/01/38

    1,800       1,921,770  

Series D, 5.00%, 11/01/42

    1,140       1,214,773  

Series H, 5.00%, 11/01/32

    2,715       2,917,349  

Dallas-Fort Worth International Airport, Refunding ARB, Series F, 5.25%, 11/01/33

    865       974,163  

Grand Parkway Transportation Corp., RB, Convertible CAB, Series B, 0.00%, 10/01/46(a)

    1,855       1,694,932  

Leander ISD, GO, Refunding, CAB, Series D (PSF-GTD), 0.00%, 08/15/38(c)

    3,020       1,236,539  

Lone Star College System, GO, 5.00%, 08/15/18(b)

    3,000       3,028,110  

North Texas Tollway Authority, RB, Convertible CAB, Series C, 0.00%, 09/01/31(a)(b)

    10,000       11,801,600  

North Texas Tollway Authority, Refunding RB:

   

1st Tier System, Series A, 6.00%, 01/01/19(b)

    1,965       2,018,625  

1st Tier System, Series A, 6.00%, 01/01/28

    450       461,525  

1st Tier, Series K-1 (AGC), 5.75%, 01/01/19(b)

    3,400       3,488,366  

1st Tier-Series A, 5.00%, 01/01/43

    1,790       2,014,717  

Series B, 5.00%, 01/01/40

    530       572,676  

San Antonio Public Facilities Corp., Refunding RB, Convention Center Refinancing & Expansion Project, CAB(c):

   

0.00%, 09/15/35

    1,150       523,584  

0.00%, 09/15/36

    3,875       1,662,491  

0.00%, 09/15/37

    17,775       7,173,101  
 

 

 

SCHEDULES OF INVESTMENTS      31  


Schedule of Investments  (continued)

April 30, 2018

  

BlackRock MuniYield Quality Fund II, Inc. (MQT)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Texas (continued)  

San Antonio Water System, Refunding RB, Junior Lien, Series A, 5.00%, 05/15/48(d)

  $ 1,205     $ 1,369,964  

Texas Municipal Gas Acquisition & Supply Corp. III, RB, Natural Gas Utility Improvements:

   

5.00%, 12/15/31

    1,030       1,115,438  

5.00%, 12/15/32

    1,765       1,907,453  

Texas Private Activity Bond Surface Transportation Corp., RB, Senior Lien, AMT, Blueridge Transportation Group, 5.00%, 12/31/45

    1,135       1,225,550  

Texas Transportation Commission, Refunding RB, Central Texas Turnpike System, 1st Tier, Series A, 5.00%, 08/15/41

    605       650,526  
   

 

 

 
      51,204,130  
Utah — 2.1%  

County of Utah Utah, RB, IHC Health Services, Inc., Series B, 4.00%, 05/15/47

    4,960       5,031,722  

Salt Lake City Corp. Airport Revenue, ARB, Series A, AMT, 5.00%, 07/01/42

    1,095       1,220,038  
   

 

 

 
      6,251,760  
Virginia — 0.1%  

County of Fairfax Virginia IDA, Refunding RB, Health Care-Inova Health(b):

   

5.50%, 05/15/19

    105       108,859  

5.50%, 05/15/19

    195       202,269  
   

 

 

 
      311,128  
Washington — 2.5%  

Port of Seattle Washington, RB, Intermediate Lien, Series C, AMT, 5.00%, 04/01/40

    900       970,497  

Washington Health Care Facilities Authority, RB:

   

MultiCare Health System, Remarketing, Series B, 5.00%, 08/15/44

    3,000       3,273,570  

Providence Health & Services, Series A, 5.00%, 10/01/39

    1,000       1,044,120  

Providence Health & Services, Series A, 5.25%, 10/01/39

    550       578,188  

Washington Health Care Facilities Authority, Refunding RB, Multicare Health System, Series B, 4.00%, 08/15/41

    1,630       1,655,020  
   

 

 

 
      7,521,395  
Wisconsin — 0.5%  

State of Wisconsin Health & Educational Facilities Authority, RB, Ascension Health Senior Credit Group, Series E, 5.00%, 11/15/33

    1,200       1,251,576  

State of Wisconsin Health & Educational Facilities Authority, Refunding RB, Froedtert Health, Inc. Obligated Group, 4.00%, 04/01/39

    270       269,233  
   

 

 

 
      1,520,809  
   

 

 

 

Total Municipal Bonds — 116.9%
(Cost — $334,280,571)

 

    352,629,462  
   

 

 

 

Municipal Bonds Transferred to Tender Option Bond Trusts(e)

 

Arizona — 0.3%  

City of Phoenix Civic Improvement Corp., Refunding RB, Water System, Junior Lien, Series A, 5.00%, 07/01/19(b)

    1,000       1,035,855  
   

 

 

 
California — 3.4%  

Bay Area Toll Authority, Refunding RB, San Francisco Bay Area Toll Bridge Subordinate, 4.00%, 04/01/47(f)

    3,391       3,491,316  

County of San Diego California Water Authority Financing Corp., COP, Refunding Series A (AGM)(b):

   

5.00%, 05/01/18

    503       502,677  

5.00%, 05/01/18

    2,527       2,527,323  

Los Angeles California Unified School District, GO, Election of 2008, Series B-1, 5.25%, 07/01/42(f)

    1,391       1,650,600  
Security   Par
(000)
    Value  
California (continued)  

Los Angeles Community College District California, GO, Refunding, Go, Refunding, Election of 2008, Series A, 6.00%, 08/01/19(b)

  $ 1,699     $ 1,787,849  

San Diego California Community College District, GO, Election of 2002, 5.25%, 08/01/19(b)

    359       374,210  
   

 

 

 
      10,333,975  
Colorado — 1.3%  

Colorado Health Facilities Authority, Refunding RB, Catholic Health Initiatives, Series A:

   

5.50%, 07/01/34(f)

    780       804,484  

5.00%, 02/01/41

    3,000       3,120,645  
   

 

 

 
      3,925,129  
Connecticut — 0.5%  

State of Connecticut Health & Educational Facility Authority, Refunding RB, Trinity Health Credit Group, 5.00%, 12/01/45

    1,231       1,367,652  
   

 

 

 
District of Columbia — 1.6%  

District of Columbia, RB, Series A, 5.50%, 12/01/30(f)

    855       901,699  

District of Columbia Water & Sewer Authority, Refunding RB, Series A, 6.00%, 10/01/18(b)(f)

    1,579       1,605,898  

Metropolitan Washington Airports Authority, Refunding ARB, Series A, AMT, 5.00%, 10/01/30

    2,190       2,383,771  
   

 

 

 
      4,891,368  
Florida — 8.5%  

City of Miami Beach Florida, RB, 5.00%, 09/01/45

    2,740       3,015,836  

County of Miami-Dade Florida Expressway Authority, Refunding RB, Series A (AGM), 5.00%, 07/01/35

    2,100       2,218,881  

County of Miami-Dade Florida Transit System, Refunding RB, Sales Tax, 5.00%, 07/01/42

    1,540       1,661,745  

County of Miami-Dade Florida Water & Sewer System, RB, (AGM), 5.00%, 10/01/20(b)

    6,901       7,382,060  

County of Orange Florida School Board, COP, Series A (AGC), 5.50%, 08/01/19(b)

    3,394       3,544,913  

County of Seminole Florida, Refunding RB, Series B (NPFGC), 5.25%, 10/01/31

    4,200       5,186,790  

South Miami Health Facilities Authority, Refunding RB, Baptist Health South Florida, 5.00%, 08/15/47

    2,340       2,600,426  
   

 

 

 
      25,610,651  
Illinois — 6.3%  

City of Chicago Illionis Waterworks Revenue, Refunding RB, Water Revenue Project (AGM), 2nd Lien:

   

2017, 5.25%, 11/01/18(b)

    1,688       1,714,031  

2017, 5.25%, 11/01/33

    490       497,432  

5.25%, 11/01/18(b)

    370       375,558  

Regional Transportation Authority, RB, (NPFGC), 6.50%, 07/01/26

    10,000       12,280,270  

State of Illinois, RB, Build Illinois, Series B, 5.25%, 06/15/19(b)(f)

    1,130       1,171,425  

State of Illinois Toll Highway Authority, RB:

   

Series A, 5.00%, 01/01/38

    1,859       2,024,040  

Series B, 5.00%, 01/01/40

    930       1,031,096  
   

 

 

 
      19,093,852  
Maryland — 1.3%  

City of Baltimore Maryland Water Utility Fund, RB, Series A:

   

Sub-Water Projects, 5.00%, 07/01/41

    2,478       2,778,922  

Wastewater Project, 5.00%, 07/01/46

    939       1,051,329  
   

 

 

 
      3,830,251  
Massachusetts — 0.5%  

Commonwealth of Massachusetts, GO, Series A, 5.00%, 03/01/46

    1,321       1,456,250  
   

 

 

 
 

 

 

32    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (continued)

April 30, 2018

  

BlackRock MuniYield Quality Fund II, Inc. (MQT)

(Percentages shown are based on Net Assets)

 

Security

  Par
(000)
    Value  
Michigan — 2.6%  

Michigan Finance Authority, RB, Beaumont Health Credit Group, Series A, 5.00%, 11/01/44

  $ 1,750     $ 1,910,127  

Michigan Finance Authority, Refunding RB, Hospital, Trinity Health Credit Group, 5.00%, 12/01/39

    4,685       5,068,655  

Michigan State Building Authority, Refunding RB, Facilities Program, Series I, 5.00%, 10/15/45

    760       843,425  
   

 

 

 
      7,822,207  
Nevada — 3.8%  

City of Las Vegas Nevada, GO, Limited Tax, Performing Arts Center, 6.00%, 04/01/19(b)(f)

    3,298       3,419,337  

County of Clark Nevada, GOL, Stadium Improvement, Series A, 5.00%, 06/01/38(d)

    2,716       3,107,821  

County of Clark Nevada Water Reclamation District, GO, Series B, 5.75%, 07/01/19(b)

    1,574       1,643,075  

Las Vegas Valley Water District Nevada, GO, Refunding, Water Improvement, Series A, 5.00%, 06/01/46

    3,080       3,453,288  
   

 

 

 
      11,623,521  
New Jersey — 2.2%  

County of Hudson New Jersey Improvement Authority, RB, Hudson County Vocational-Technical Schools Project, 5.25%, 05/01/51

    720       811,510  

New Jersey State Turnpike Authority, Refunding RB:

   

Series B, 4.00%, 01/01/37

    2,054       2,132,011  

Series G, 4.00%, 01/01/43

    1,906       1,956,817  

New Jersey Transportation Trust Fund Authority, RB, Transportation System, Series B, 5.25%, 06/15/36(f)

    1,580       1,643,332  
   

 

 

 
      6,543,670  
New York — 7.8%  

City of New York New York Municipal Water Finance Authority, RB, Water & Sewer System, Fiscal 2009, Series A:

   

5.75%, 06/15/18(b)

    242       242,296  

5.75%, 06/15/40

    808       810,250  

City of New York New York Transitional Finance Authority, RB, Future Tax, Sub-Series A-3, 5.00%, 08/01/40(f)

    2,714       3,090,186  

City of New York New York Water & Sewer System, Refunding RB:

   

2nd General Resolution, Fiscal 2013, Series CC, 5.00%, 06/15/47

    4,920       5,399,689  

2nd General Resolution, Series FF, 5.00%, 06/15/39

    2,595       2,898,840  

Series DD, 5.00%, 06/15/35

    1,470       1,640,030  

Metropolitan Transportation Authority, RB, Transportation, Sub-Series D-1, 5.25%, 11/15/44

    3,080       3,471,884  

Metropolitan Transportation Authority, Refunding RB, Series C-1, 5.25%, 11/15/56

    1,340       1,509,521  

Port Authority of New York & New Jersey, Refunding ARB, Consolidated, 198th Series, 5.25%, 11/15/56

    2,001       2,279,170  

State of New York Dormitory Authority, ERB, Series B, 5.75%, 03/15/19(b)

    996       1,029,280  

Triborough Bridge & Tunnel Authority, RB, General, Series A-2, 5.25%, 11/15/34(f)

    1,200       1,222,482  
   

 

 

 
      23,593,628  
Ohio — 1.1%  

Northeast Ohio Regional Sewer District, Refunding RB, 4.00%, 11/15/43

    2,581       2,665,457  

State of Ohio, RB, Cleveland Clinic Health Obligated Group, Series B, 5.50%, 01/01/34

    500       512,030  
   

 

 

 
      3,177,487  
Pennsylvania — 0.3%  

County of Westmoreland Pennsylvania Municipal Authority, Refunding RB (BAM), 5.00%, 08/15/42

    800       885,764  
   

 

 

 
Security   Par
(000)
    Value  
South Carolina — 0.4%  

South Carolina Public Service Authority, Refunding RB, Series A(b)(f):

   

5.50%, 01/01/19

  $ 90     $ 91,749  

5.50%, 01/01/19

    1,037       1,060,880  
   

 

 

 
      1,152,629  
Texas — 4.6%  

City of Houston Texas Community College, GOL, 4.00%, 02/15/43

    1,305       1,324,836  

County of Harris Texas Cultural Education Facilities Finance Corp., RB, Texas Children’s Hospital Project, 5.50%, 10/01/39

    4,000       4,187,440  

County of Harris Texas Toll Road Authority, Refunding RB, Senior Lien, Series A, 5.00%, 08/15/43

    1,094       1,247,192  

County of Tarrant Texas Cultural Education Facilities Finance Corp., Refunding RB, Texas Health Resources System, Series A, 5.00%, 02/15/41

    3,080       3,435,463  

Dallas Fort Worth International Airport, ARB, Series H, AMT, 5.00%, 11/01/37(f)

    1,996       2,129,121  

San Antonio Public Facilities Corp., Refunding RB, Convention Center Refinancing And Expansion Project, 4.00%, 09/15/42

    1,649       1,662,778  
   

 

 

 
      13,986,830  
Washington — 1.7%  

Hampton Roads Transportation Accountability Commission, RB, Transportation Fund, Senior Lien, Series A, 5.50%, 07/01/57

    1,962       2,325,878  

Washington Health Care Facilities Authority, Refunding RB, Seattle Children’s Hospital, Series B, 5.00%, 10/01/38

    2,565       2,961,489  
   

 

 

 
      5,287,367  
Wisconsin — 1.8%  

Wisconsin Health & Educational Facilities Authority, Refunding RB, Froedtert & Community Health, Inc., Obligated Group:

   

Series A, 5.00%, 04/01/42

    1,920       2,038,560  

Series C, 5.25%, 04/01/19(b)(f)

    3,250       3,350,165  
   

 

 

 
      5,388,725  
   

 

 

 

Total Municipal Bonds Transferred to Tender Option Bond Trusts — 50.0%
(Cost — $146,460,799)

 

    151,006,811  
   

 

 

 

Total Long-Term Investments — 166.9%
(Cost — $480,741,370)

 

    503,636,273  
   

 

 

 

Other Assets Less Liabilities — 0.8%

 

    2,375,443  

Liability for TOB Trust Certificates, Including Interest Expense and Fees Payable — (29.1)%

 

    (87,814,758

VMTP Shares, at Liquidation Value — (38.6)%

 

    (116,500,000
   

 

 

 

Net Assets Applicable to Common Shares — 100.0%

 

  $ 301,696,958  
   

 

 

 

 

(a)  Step-up bond that pays an initial coupon rate for the first period and then a higher coupon rate for the following periods. Rate as of period end.
(b)  U.S. Government securities, held in escrow, are used to pay interest on this security, as well as to retire the bond in full at the date indicated, typically at a premium to par.
(c)  Zero-coupon bond.
(d)  When-issued security.
(e)  Represent bonds transferred to a TOB Trust in exchange of cash and residual certificates received by the Fund. These bonds serve as collateral in a secured borrowing. See Note 4 of the Notes to Financial Statements for details.
(f)  All or a portion of security is subject to a recourse agreement. The aggregate maximum potential amount the Fund could ultimately be required to pay under the agreements, which expire between June 15, 2018 to January 1, 2026, is $14,990,849. See Note 4 of the Notes to Financial Statements for details.
 

 

 

SCHEDULES OF INVESTMENTS      33  


Schedule of Investments  (continued)

April 30, 2018

  

BlackRock MuniYield Quality Fund II, Inc. (MQT)

 

 

During the year ended April 30, 2018, investments in issuers considered to be an affiliate of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliated    Shares
Held at
04/30/17
     Net
Activity
     Shares
Held at
04/30/18
     Value at
04/30/18
     Income      Net
Realized
Gain (Loss)
 (a)
     Change in
Unrealized
Appreciation
(Depreciation)
 

BlackRock Liquidity Funds, MuniCash, Institutional Class

     4,846,895        (4,846,895           $      $ 28,819      $ 156      $ (310
           

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a)  Includes net capital gain distributions, if applicable.  

Derivative Financial Instruments Outstanding as of Period End

Futures Contracts

 

Description    Number of
Contracts
       Expiration
Date
       Notional
Amount (000)
       Value/
Unrealized
Appreciation
(Depreciation)
 

Short Contracts:

                 

10-Year U.S. Treasury Note

     52          06/20/18        $ 6,221        $ 31,868  

5-Year U.S. Treasury Note

     20          06/29/18          2,270          6,715  

Long U.S. Treasury Bond

     99          06/20/18          14,241          10,331  
                 

 

 

 
     $ 48,914  
                 

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of year end, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

      Commodity
Contracts
     Credit
Contracts
     Equity
Contracts
     Foreign
Currency
Exchange
Contracts
    

Interest

Rate

Contracts

    

Other

Contracts

     Total  

Assets — Derivative Financial Instruments

                    

Futures contracts

                    

Net unrealized appreciation(a)

   $      $      $      $      $ 48,914      $      $ 48,914  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a)  Includes cumulative appreciation (depreciation) on futures contracts, if any, as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statements of Assets and Liabilities.  

For the year ended April 30, 2018, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

      Commodity
Contracts
     Credit
Contracts
     Equity
Contracts
     Foreign
Currency
Exchange
Contracts
    

Interest

Rate

Contracts

    

Other

Contracts

     Total  

Net Realized Gain (Loss) from:

                    

Futures contracts

   $             —      $      $      $      $ 1,158,796      $      $ 1,158,796  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

                    

Futures contracts

   $             —      $      $      $      $ 464,204      $      $ 464,204  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

        

Average notional value of contracts — short

   $ 24,207,357  

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

 

 

34    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (continued)

April 30, 2018

  

BlackRock MuniYield Quality Fund II, Inc. (MQT)

 

Fair Value Hierarchy as of Period End

Various inputs are used in determining the fair value of investments and derivative financial instruments. For information about the Fund’s policy regarding valuation of investments and derivative financial instruments, refer to the Notes to Financial Statements.

The following tables summarize the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy:

 

      Level 1        Level 2        Level 3        Total  

Assets:

                 

Investments:

                 

Long-Term Investments(a)

   $        $ 503,636,273        $             —        $ 503,636,273  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative Financial Instruments(b)

                 

Assets:

                 

Interest rate contracts

   $ 48,914        $        $        $ 48,914  
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a)  See above Schedule of Investments for values in each state or political subdivision.  
  (b)  Derivative financial instruments are futures contracts which are valued at the unrealized appreciation (depreciation) on the instrument.  

The Fund may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of period end, such assets and/or liabilities are categorized within the disclosure hierarchy as follows:

 

      Level 1        Level 2        Level 3        Total  

Liabilities:

                 

TOB Trust Certificates

   $             —        $ (87,513,411      $             —        $ (87,513,411

VMTP Shares at Liquidation Value

              (116,500,000                 (116,500,000
  

 

 

      

 

 

      

 

 

      

 

 

 
   $        $ (204,013,411      $        $ (204,013,411
  

 

 

      

 

 

      

 

 

      

 

 

 

During the year ended April 30, 2018, there were no transfers between levels.

See Notes to Financial Statements.

 

 

SCHEDULES OF INVESTMENTS      35  


 

Statements of Assets and Liabilities

April 30, 2018

 

     MYD     MQY     MQT  

ASSETS

     

Investments at value — unaffiliated(a)

  $ 1,090,738,905     $ 791,768,710     $ 503,636,273  

Investments at value — affiliated(b)

    3,484,552              

Cash

    22,553              

Cash pledged for futures contracts

    376,850       421,650       274,550  

Receivables:

     

Interest — unaffiliated

    17,054,651       9,850,099       6,280,009  

TOB Trust

    6,690,000       4,515,000       2,915,000  

Investments sold

    877,610       1,851,653       2,088,964  

Dividends — affiliated

    2,659       2,665       317  

Capital gain distributions — affiliated

    1,688       2,881       2,101  

Prepaid expenses

    35,053       27,318       23,016  
 

 

 

   

 

 

   

 

 

 

Total assets

    1,119,284,521       808,439,976       515,220,230  
 

 

 

   

 

 

   

 

 

 

ACCRUED LIABILITIES

     

Bank overdraft

          604,352       412,127  

Payables:

     

Investments purchased

    16,388,816       21,615,880       7,124,827  

TOB Trust

    5,964,999              

Income dividend distributions — Common Shares

    2,860,342       1,934,872       1,218,133  

Interest expense and fees

    649,597       546,140       301,347  

Investment advisory fees

    450,153       319,714       206,449  

Directors’ and Officer’s fees

    357,388       252,762       2,751  

Variation margin on futures contracts

    91,375       102,094       66,531  

Other accrued expenses

    262,750       222,074       177,696  
 

 

 

   

 

 

   

 

 

 

Total accrued liabilities

    27,025,420       25,597,888       9,509,861  
 

 

 

   

 

 

   

 

 

 

OTHER LIABILITIES

     

TOB Trust Certificates

    167,149,960       139,143,848       87,513,411  

VRDP Shares, at liquidation value of $100,000 per share, net of deferred offering costs(c)(d)

    251,032,378       176,364,352        

VMTP Shares, at liquidation value of $100,000 per share(c)(d)

                116,500,000  
 

 

 

   

 

 

   

 

 

 

Total other liabilities

    418,182,338       315,508,200       204,013,411  
 

 

 

   

 

 

   

 

 

 

Total liabilities

    445,207,758       341,106,088       213,523,272  
 

 

 

   

 

 

   

 

 

 

NET ASSETS

  $ 674,076,763     $ 467,333,888     $ 301,696,958  
 

 

 

   

 

 

   

 

 

 

NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS CONSIST OF

     

Paid-in capital(e)(f)(g)

  $ 626,605,512     $ 430,584,293     $ 280,879,428  

Undistributed net investment income

    1,718,990       2,286,868       2,617,106  

Accumulated net realized loss

    (9,179,741     (1,987,794     (4,743,393

Net unrealized appreciation (depreciation)

    54,932,002       36,450,521       22,943,817  
 

 

 

   

 

 

   

 

 

 

NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS

  $ 674,076,763     $ 467,333,888     $ 301,696,958  
 

 

 

   

 

 

   

 

 

 

Net asset value per Common Share

  $ 14.38     $ 15.22     $ 13.37  
 

 

 

   

 

 

   

 

 

 

(a) Investments at cost — unaffiliated

  $ 1,035,850,327     $ 755,391,726     $ 480,741,370  

(b) Investments at cost — affiliated

  $ 3,484,552     $     $  

(c)  Preferred Shares outstanding, par value $0.10 per share

    2,514       1,766       1,165  

(d) Preferred Shares authorized

    16,234       11,766       7,565  

(e) Par value per Common Share

  $ 0.10     $ 0.10     $ 0.10  

(f)  Common Shares outstanding

    46,890,851       30,712,248       22,558,009  

(g) Common Shares authorized

    199,983,766       199,988,234       199,992,435  

See notes to financial statements.

 

 

36    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Statements of Operations

Year Ended April 30, 2018

 

     MYD     MQY     MQT  

INVESTMENT INCOME

     

Interest — unaffiliated

  $ 50,701,072     $ 33,540,712     $ 21,308,747  

Dividends — affiliated

    48,072       39,782       28,819  
 

 

 

   

 

 

   

 

 

 

Total investment income

    50,749,144       33,580,494       21,337,566  
 

 

 

   

 

 

   

 

 

 

EXPENSES

     

Investment advisory

    5,554,826       3,919,463       2,519,300  

Accounting services

    134,599       103,996       73,582  

Professional

    128,623       104,425       85,505  

Directors and Officer

    85,383       59,717       30,938  

Transfer agent

    53,150       43,814       29,227  

Custodian

    41,144       32,461       23,230  

Liquidity fees

    25,605              

Remarketing fees on Preferred Shares

    25,141              

Registration

    18,572       11,937       9,416  

Printing

    14,135       12,642       11,544  

Rating agency

    41,208       41,081       40,980  

Miscellaneous

    49,847       50,175       49,989  
 

 

 

   

 

 

   

 

 

 

Total expenses excluding interest expense, fees and amortization of offering costs

    6,172,233       4,379,711       2,873,711  

Interest expense, fees and amortization of offering costs(a)

    7,666,086       5,527,707       3,666,587  
 

 

 

   

 

 

   

 

 

 

Total expenses

    13,838,319       9,907,418       6,540,298  

Less fees waived by the Manager

    (5,855     (4,262     (3,146
 

 

 

   

 

 

   

 

 

 

Total expenses after fees waived

    13,832,464       9,903,156       6,537,152  
 

 

 

   

 

 

   

 

 

 

Net investment income

    36,916,680       23,677,338       14,800,414  
 

 

 

   

 

 

   

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

     

Net realized gain (loss) from:

     

Investments — unaffiliated

    (329,624     (136,213     (50,179

Investments — affiliated

    1,439       (2,409     (1,945

Futures contracts

    1,606,042       1,799,752       1,158,796  

Capital gain distributions from investment companies — affiliated

    1,688       2,881       2,101  
 

 

 

   

 

 

   

 

 

 
    1,279,545       1,664,011       1,108,773  
 

 

 

   

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation) on:

     

Investments — unaffiliated

    (16,275,490     (11,410,679     (7,824,901

Investments — affiliated

    (167     (207     (310

Futures contracts

    718,564       723,140       464,204  
 

 

 

   

 

 

   

 

 

 
    (15,557,093     (10,687,746     (7,361,007
 

 

 

   

 

 

   

 

 

 

Net realized and unrealized loss

    (14,277,548     (9,023,735     (6,252,234
 

 

 

   

 

 

   

 

 

 

NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS RESULTING FROM OPERATIONS

  $ 22,639,132     $ 14,653,603     $ 8,548,180  
 

 

 

   

 

 

   

 

 

 

 

(a)  Related to TOB Trusts, VRDP Shares and/or VMTP Shares.

See notes to financial statements.

 

 

FINANCIAL STATEMENTS      37  


 

Statements of Changes in Net Assets

 

    MYD           MQY  
    Year Ended April 30,           Year Ended April 30,  
     2018     2017            2018     2017  

INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS

         

OPERATIONS

         

Net investment income

  $ 36,916,680     $ 39,272,161       $ 23,677,338     $ 26,071,237  

Net realized gain

    1,279,545       4,690,615         1,664,011       2,985,824  

Net change in unrealized appreciation (depreciation)

    (15,557,093     (45,613,357       (10,687,746     (30,204,529
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets applicable to Common Shareholders resulting from operations

    22,639,132       (1,650,581       14,653,603       (1,147,468
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

DISTRIBUTIONS TO COMMON SHAREHOLDERS(a)

         

From net investment income

    (38,299,513     (40,693,560       (25,268,200     (26,849,853
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

         

Reinvestment of common distributions

    1,868,058       1,591,944         190,750       388,165  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS

         

Total decrease in net assets applicable to Common Shareholders

    (13,792,323     (40,752,197       (10,423,847     (27,609,156

Beginning of year

    687,869,086       728,621,283         477,757,735       505,366,891  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of year

  $ 674,076,763     $ 687,869,086       $ 467,333,888     $ 477,757,735  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Undistributed net investment income, end of year

  $ 1,718,990     $ 4,082,795       $ 2,286,868     $ 3,885,496  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See notes to financial statements.

 

 

38    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Statements of Changes in Net Assets  (continued)

 

    MQT  
    Year Ended April 30,  
     2018     2017  

INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS

   

OPERATIONS

   

Net investment income

  $ 14,800,414     $ 16,378,558  

Net realized gain

    1,108,773       1,577,674  

Net change in unrealized appreciation (depreciation)

    (7,361,007     (18,399,552
 

 

 

   

 

 

 

Net increase (decrease) in net assets applicable to Common Shareholders resulting from operations

    8,548,180       (443,320
 

 

 

   

 

 

 

DISTRIBUTIONS TO COMMON SHAREHOLDERS(a)

   

From net investment income

    (15,558,100     (16,921,597
 

 

 

   

 

 

 

NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS

   

Total decrease in net assets applicable to Common Shareholders

    (7,009,920     (17,364,917

Beginning of year

    308,706,878       326,071,795  
 

 

 

   

 

 

 

End of year

  $ 301,696,958     $ 308,706,878  
 

 

 

   

 

 

 

Undistributed net investment income, end of year

  $ 2,617,106     $ 3,369,798  
 

 

 

   

 

 

 

 

(a)  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See Notes to Financial Statements.

 

 

FINANCIAL STATEMENTS      39  


Statements of Cash Flows

Year Ended April 30, 2018

 

     MYD     MQY     MQT  

CASH PROVIDED BY OPERATING ACTIVITIES

     

Net increase in net assets resulting from operations

  $ 22,639,132     $ 14,653,603     $ 8,548,180  

Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities:

     

Proceeds from sales of long-term investments

    101,976,294       153,377,640       103,254,324  

Purchases of long-term investments

    (103,175,476     (171,756,630     (121,362,744

Net proceeds from sales (purchases) of short-term securities

    (1,817,552     1,043,151       4,847,554  

Amortization of premium and accretion of discount on investments and other fees

    1,574,853       (575,018     (204,098

Net realized loss on investments

    328,185       138,622       52,124  

Net unrealized depreciation on investments

    16,275,657       11,410,886       7,825,211  
(Increase) Decrease in Assets:                  

Cash pledged for futures contracts

    1,087,000       780,000       505,000  

Receivables:

     

Interest — unaffiliated

    82,918       159,801       (76,912

Dividends — affiliated

    225       1,914       3,011  

Capital gain distributions — affiliated

    (1,688     (2,881     (2,101

Prepaid expenses

    (3,987     (5,404     (6,208
Increase (Decrease) in Liabilities:                  

Payables:

     

Investment advisory fees

    (6,246     1,588       2,108  

Interest expense and fees

    242,159       258,056       147,094  

Directors’ and Officer’s

    15,609       10,745       (362

Variation margin on futures contracts

    6,283       34,580       22,282  

Other accrued expenses

    (43,940     (17,556     (10,671
 

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

    39,179,426       9,513,097       3,543,792  
 

 

 

   

 

 

   

 

 

 

CASH USED FOR FINANCING ACTIVITIES

     

Proceeds from TOB Trust Certificates

    9,940,947       23,066,304       15,585,432  

Repayments of TOB Trust Certificates

    (11,832,455     (7,581,818     (3,620,919

Proceeds from Loan for TOB Trust Certificates

          2,998,556       1,127,024  

Repayments of Loan for TOB Trust Certificates

          (2,998,556     (1,127,024

Cash dividends paid to Common Shareholders

    (36,938,217     (25,368,345     (15,738,564

Increase (decrease) in bank overdraft

    (343,006     360,692       230,259  

Amortization of deferred offering costs

    15,858       10,070        
 

 

 

   

 

 

   

 

 

 

Net cash used for financing activities

    (39,156,873     (9,513,097     (3,543,792
 

 

 

   

 

 

   

 

 

 

CASH

     

Net increase in cash

    22,553              

Cash at beginning of year

                 
 

 

 

   

 

 

   

 

 

 

Cash at end of year

  $ 22,553     $     $  
 

 

 

   

 

 

   

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

     

Cash paid during the year for interest expense

  $ 7,408,069     $ 5,259,581     $ 3,519,493  
 

 

 

   

 

 

   

 

 

 

NON-CASH FINANCING ACTIVITIES

     

Capital shares issued in reinvestment of distributions paid to Common Shareholders

    1,868,058       190,750        
 

 

 

   

 

 

   

 

 

 

See notes to financial statements.

 

 

40    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Financial Highlights

(For a share outstanding throughout each period)

 

    MYD  
    Year Ended April 30,  
    2018      2017      2016      2015      2014  

Net asset value, beginning of year

  $ 14.71      $ 15.61      $ 15.29      $ 14.71      $ 16.01  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income(a)

    0.79        0.84        0.90        0.91        0.94  

Net realized and unrealized gain (loss)

    (0.30      (0.87      0.35        0.62        (1.25
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) from investment operations

    0.49        (0.03      1.25        1.53        (0.31
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Distributions to Common Shareholders from net investment income(b)

    (0.82      (0.87      (0.93      (0.95      (0.99
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net asset value, end of year

  $ 14.38      $ 14.71      $ 15.61      $ 15.29      $ 14.71  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Market price, end of year

  $ 13.12      $ 14.75      $ 15.73      $ 14.91      $ 14.14  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Return Applicable to Common Shareholders(c)

             

Based on net asset value

    3.47      (0.16 )%       8.81      10.91      (1.21 )% 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Based on market price

    (5.85 )%       (0.65 )%       12.36      12.51      (6.38 )% 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Ratios to Average Net Assets Applicable to Common Shareholders

             

Total expenses

    2.00      1.75      1.39      1.37      1.49
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses after fees waived and paid indirectly

    2.00      1.75      1.39      1.36      1.49
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses after fees waived and paid indirectly and excluding interest expense, fees and amortization of offering costs(d)(e)

    0.89      0.89      0.88      0.89      1.20
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income to Common Shareholders

    5.33      5.52      5.91      5.94      6.70
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Supplemental Data

             

Net assets applicable to Common Shareholders, end of year (000)

  $ 674,077      $ 687,869      $ 728,621      $ 713,237      $ 686,213  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

VRDP Shares outstanding at $100,000 liquidation value, end of year (000)

  $ 251,400      $ 251,400      $ 251,400      $ 251,400      $ 251,400  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Asset coverage per VRDP Shares at $100,000 liquidation value, end of year

  $ 368,129      $ 373,615      $ 389,825      $ 383,706      $ 372,956  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Borrowings outstanding, end of year (000)

  $ 167,150      $ 168,316      $ 173,776      $ 163,621      $ 169,241  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Portfolio turnover rate

    9      10      9      11      17
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(a)  Based on average Common Shares outstanding.
(b)  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.
(c)  Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions at actual reinvestment prices.
(d)  Interest expense, fees and amortization of offering costs related to TOB Trusts and/or VRDP Shares. See Note 4 and Note 10 of the Notes to Financial Statements for details.
(e)  The total expense ratio after fees waived and paid indirectly and excluding interest expense, fees, amortization of offering costs, liquidity and remarketing fees as follows:

 

    Year Ended April 30,  
    2018           2017           2016           2015           2014        
    0.88             0.89             0.88             0.88             0.92        
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

See notes to financial statements.

 

 

FINANCIAL HIGHLIGHTS      41  


Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    MQY  
    Year Ended April 30,  
Per Share Operating Performance   2018      2017      2016      2015      2014  

Net asset value, beginning of year

  $ 15.56      $ 16.47      $ 16.12      $ 15.73      $ 16.83  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income(a)

    0.77        0.85        0.90        0.92        0.95  

Net realized and unrealized gain (loss)

    (0.29      (0.89      0.40        0.43        (1.07
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
    0.48        (0.04      1.30        1.35        (0.12
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
Distributions to Common Shareholders(b)                                  

From net investment income

    (0.82      (0.87      (0.95      (0.96      (0.96

From net realized gain

                                (0.02
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total distributions

    (0.82      (0.87      (0.95      (0.96      (0.98
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net asset value, end of year

  $ 15.22      $ 15.56      $ 16.47      $ 16.12      $ 15.73  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Market price, end of year

  $ 13.83      $ 15.14      $ 16.56      $ 15.52      $ 14.84  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Return Applicable to Common Shareholders(c)

             

Based on net asset value

    3.28      (0.12 )%       8.61      9.09      0.04
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Based on market price

    (3.55 )%       (3.34 )%       13.35      11.32      (6.23 )% 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Ratios to Average Net Assets Applicable to Common Shareholders

             

Total expenses

    2.05      1.74      1.47      1.46      1.58
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses after fees waived and paid indirectly

    2.05      1.74      1.47      1.46      1.58
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses after fees waived and paid indirectly and excluding interest expense, fees and amortization of offering costs(d)(e)

    0.91      0.89      1.09      1.25      1.32
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income to Common Shareholders

    4.91      5.28      5.62      5.65      6.28
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Supplemental Data

             

Net assets applicable to Common Shareholders, end of year (000)

  $ 467,334      $ 477,758      $ 505,367      $ 494,475      $ 482,666  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

VRDP Shares outstanding at $100,000 liquidation value, end of year (000)

  $ 176,600      $ 176,600      $ 176,600      $ 176,600      $ 176,600  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Asset coverage per VRDP Shares at $100,000 liquidation value, end of year

  $ 364,628      $ 370,531      $ 386,165      $ 379,997      $ 373,310  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Borrowings outstanding, end of year (000)

  $ 139,144      $ 119,144      $ 112,111      $ 114,962      $ 121,321  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Portfolio turnover rate

    20      13      10      14      12
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(a)  Based on average Common Shares outstanding.
(b)  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.
(c)  Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions at actual reinvestment prices.
(d)  Interest expense, fees and amortization of offering costs related to TOB Trusts and/or VRDP Shares. See Note 4 and Note 10 of the Notes to Financial Statements for details.
(e)  The total expense ratio after fees waived and paid indirectly and excluding interest expense, fees, amortization of offering costs, liquidity and remarketing fees as follows:

 

    Year Ended April 30,  
    2018           2017           2016           2015           2014        
    0.91             0.89             0.92             0.89             0.93        
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

See notes to financial statements.

 

 

42    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    MQT  
    Year Ended April 30,  
    2018      2017      2016      2015      2014  

Net asset value, beginning of year

  $ 13.69      $ 14.45      $ 14.18      $ 13.78      $ 14.68  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income(a)

    0.66        0.73        0.79        0.80        0.83  

Net realized and unrealized gain (loss)

    (0.29      (0.74      0.30        0.45        (0.88
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) from investment operations

    0.37        (0.01      1.09        1.25        (0.05
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Distributions to Common Shareholders from net investment income(b)

    (0.69      (0.75      (0.82      (0.85      (0.85
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net asset value, end of year

  $ 13.37      $ 13.69      $ 14.45      $ 14.18      $ 13.78  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Market price, end of year

  $ 11.98      $ 12.94      $ 14.33      $ 13.44      $ 12.91  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Return Applicable to Common Shareholders(c)

             

Based on net asset value

    3.01      0.12      8.48      9.70      0.55
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Based on market price

    (2.35 )%       (4.57 )%       13.42      10.98      (4.04 )% 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Ratios to Average Net Assets Applicable to Common Shareholders

             

Total expenses

    2.10      1.79      1.48      1.47      1.56
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses after fees waived and paid indirectly

    2.10      1.79      1.48      1.47      1.56
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses after fees waived and paid indirectly and excluding interest expense, fees and amortization of offering costs(d)

    0.92      0.90      0.91      0.92      0.95
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income to Common Shareholders

    4.75      5.13      5.60      5.65      6.32
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Supplemental Data

             

Net assets applicable to Common Shareholders, end of year (000)

  $ 301,697      $ 308,707      $ 326,072      $ 319,848      $ 310,886  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

VMTP Shares outstanding at $100,000 liquidation value, end of year (000)

  $ 116,500      $ 116,500      $ 116,500      $ 116,500      $ 116,500  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Asset coverage per VMTP Shares at $100,000 liquidation value, end of year

  $ 358,967      $ 364,984      $ 379,890      $ 374,548      $ 366,855  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Borrowings outstanding, end of year (000)

  $ 87,513      $ 72,634      $ 75,273      $ 78,851      $ 75,189  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Portfolio turnover rate

    21      13      10      13      16
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(a)  Based on average Common Shares outstanding.
(b)  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.
(c)  Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions at actual reinvestment prices.
(d)  Interest expense, fees and amortization of offering costs related to TOB Trusts and/or VMTP Shares. See Note 4 and Note 10 of the Notes to Financial Statements for details.

See notes to financial statements.

 

 

FINANCIAL HIGHLIGHTS      43  


Notes to Financial Statements

 

1. ORGANIZATION

The following are registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as closed-end management investment companies and are referred to herein collectively as the “Funds”, or individually as a “Fund”:

 

Fund Name   Herein Referred To As      Organized      Diversification
Classification
 

BlackRock MuniYield Fund, Inc.

    MYD        Maryland        Diversified  

BlackRock MuniYield Quality Fund, Inc.

    MQY        Maryland        Diversified  

BlackRock MuniYield Quality Fund II, Inc.

    MQT        Maryland        Diversified  

The Boards of Directors of the Funds are collectively referred to throughout this report as the “Board of Directors” or the “Board,” and the directors thereof are collectively referred to throughout this report as “Directors”. The Funds determine and make available for publication the NAVs of their Common Shares on a daily basis.

The Funds, together with certain other registered investment companies advised by BlackRock Advisors, LLC (the “Manager”) or its affiliates, are included in a complex of closed-end funds referred to as the Closed-End Complex.

 

2. SIGNIFICANT ACCOUNTING POLICIES

The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. Each Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. Below is a summary of significant accounting policies:

Investment Transactions and Income Recognition: For financial reporting purposes, investment transactions are recorded on the dates the transactions are entered into (the “trade dates”). Dividend income is recorded on the ex-dividend date. Realized gains and losses on investment transactions are determined on the identified cost basis. Interest income, including amortization and accretion of premiums and discounts on debt securities, is recognized on an accrual basis.

Segregation and Collateralization: In cases where a Fund enters into certain investments (e.g. futures contracts) or certain borrowings (e.g. TOB Trust transactions) that would be treated as “senior securities” for 1940 Act purposes, a Fund may segregate or designate on its books and records cash or liquid assets having a market value at least equal to the amount of its future obligations under such investments or borrowings. Doing so allows the investment or borrowing to be excluded from treatment as a “senior security.” Furthermore, if required by an exchange or counterparty agreement, the Funds may be required to deliver/deposit cash and/or securities to/with an exchange, or broker-dealer or custodian as collateral for certain investments or obligations.

Distributions: Distributions from net investment income are declared monthly and paid monthly. Distributions of capital gains are recorded on the ex-dividend date and made at least annually. The character and timing of distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP.

Distributions to Preferred Shareholders are accrued and determined as described in Note 10.

Deferred Compensation Plan: Under the Deferred Compensation Plan (the “Plan”) approved by each Fund’s Board, the independent Directors (“Independent Directors”) may defer a portion of their annual complex-wide compensation. Deferred amounts earn an approximate return as though equivalent dollar amounts had been invested in common shares of certain other BlackRock Closed-End Funds selected by the Independent Directors. This has the same economic effect for the Independent Directors as if the Independent Directors had invested the deferred amounts directly in certain other BlackRock Closed-End Funds.

The Plan is not funded and obligations thereunder represent general unsecured claims against the general assets of each Fund, if applicable. Deferred compensation liabilities are included in the Directors’ and Officer’s fees payable in the Statements of Assets and Liabilities and will remain as a liability of the Funds until such amounts are distributed in accordance with the Plan.

Recent Accounting Standards: In November 2016, the Financial Accounting Standards Board issued Accounting Standards Update “Restricted Cash” which will require entities to include the total of cash, cash equivalents, restricted cash, and restricted cash equivalents in the beginning and ending cash balances in the Statements of Cash Flows. The guidance will be applied retrospectively and is effective for fiscal years beginning after December 15, 2017, and interim periods within those years. Management is evaluating the impact, if any, of this guidance on the Funds’ presentation in the Statements of Cash Flows.

In March 2017, the Financial Accounting Standards Board issued Accounting Standards Update “Premium Amortization of Purchased Callable Debt Securities” which amends the amortization period for certain purchased callable debt securities. Under the new guidance, the premium amortization of purchased callable debt securities that have explicit, non-contingent call features and are callable at fixed prices will be amortized to the earliest call date. The guidance will be applied on a modified retrospective basis and is effective for fiscal years, and their interim periods, beginning after December 15, 2018. Management is currently evaluating the impact of this guidance to the Funds.

Indemnifications: In the normal course of business, a Fund enters into contracts that contain a variety of representations that provide general indemnification. A Fund’s maximum exposure under these arrangements is unknown because it involves future potential claims against a Fund, which cannot be predicted with any certainty.

Other: Expenses directly related to a Fund are charged to that Fund. Other operating expenses shared by several funds, including other funds managed by the Manager, are prorated among those funds on the basis of relative net assets or other appropriate methods.

 

 

44    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Notes to Financial Statements  (continued)

 

 

3. INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS

Investment Valuation Policies: The Funds’ investments are valued at fair value (also referred to as “market value” within the financial statements) as of the close of trading on the New York Stock Exchange (“NYSE”) (generally 4:00 p.m., Eastern time). U.S. GAAP defines fair value as the price the Funds would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Funds determine the fair values of their financial instruments using various independent dealers or pricing services under policies approved by the Board of Directors of each Fund (the “Board”). The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to oversee the pricing function for all financial instruments.

Fair Value Inputs and Methodologies: The following methods and inputs are used to establish the fair value of each Fund’s assets and liabilities:

 

    Municipal investments (including commitments to purchase such investments on a “when-issued” basis) are valued on the basis of prices provided by dealers or pricing services. In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from dealers, pricing matrixes, market transactions in comparable investments and information with respect to various relationships between investments.

 

    Investments in open-end U.S. mutual funds are valued at NAV each business day.

 

    Futures contracts traded on exchanges are valued at their last sale price.

If events (e.g., a company announcement, market volatility or a natural disaster) occur that are expected to materially affect the value of such investments, or in the event that the application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued by the Global Valuation Committee, or its delegate, in accordance with a policy approved by the Board as reflecting fair value (“Fair Valued Investments”). The fair valuation approaches that may be used by the Global Valuation Committee will include market approach, income approach and cost approach. Valuation techniques such as discounted cash flow, use of market comparables and matrix pricing are types of valuation approaches and are typically used in determining fair value. When determining the price for Fair Valued Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that each Fund might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant and consistent with the principles of fair value measurement. The pricing of all Fair Valued Investments is subsequently reported to the Board or a committee thereof on a quarterly basis.

Fair Value Hierarchy: Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a fair value hierarchy consisting of three broad levels for financial statement purposes as follows:

 

    Level 1 — Unadjusted price quotations in active markets/exchanges for identical assets or liabilities that each Fund has the ability to access

 

    Level 2 — Other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market–corroborated inputs)

 

    Level 3 — Unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including each Fund’s own assumptions used in determining the fair value of investments and derivative financial instruments)

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Investments classified within Level 3 have significant unobservable inputs used by the Global Valuation Committee in determining the price for Fair Valued Investments. Level 3 investments include equity or debt issued by privately held companies or funds. There may not be a secondary market, and/or there are a limited number of investors. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the Global Valuation Committee in the absence of market information.

Changes in valuation techniques may result in transfers into or out of an assigned level within the hierarchy. In accordance with each Fund’s policy, transfers between different levels of the fair value hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investments and derivative financial instruments and is not necessarily an indication of the risks associated with investing in those securities.

 

4. SECURITIES AND OTHER INVESTMENTS

Zero-Coupon Bonds: Zero-coupon bonds are normally issued at a significant discount from face value and do not provide for periodic interest payments. These bonds may experience greater volatility in market value than other debt obligations of similar maturity which provide for regular interest payments.

Forward Commitments and When-Issued Delayed Delivery Securities: Certain funds may purchase securities on a when-issued basis and may purchase or sell securities on a forward commitment basis. Settlement of such transactions normally occurs within a month or more after the purchase or sale commitment is made. A fund may purchase securities under such conditions with the intention of actually acquiring them, but may enter into a separate agreement to sell the securities before the settlement date. Since the value of securities purchased may fluctuate prior to settlement, a fund may be required to pay more at settlement than the security is worth. In addition, a fund is not entitled to any of the interest earned prior to settlement. When purchasing a security on a delayed delivery basis, a fund assumes the rights and risks

 

 

NOTES TO FINANCIAL STATEMENTS      45  


Notes to Financial Statements  (continued)

 

of ownership of the security, including the risk of price and yield fluctuations. In the event of default by the counterparty, a fund’s maximum amount of loss is the unrealized appreciation of unsettled when-issued transactions.

Municipal Bonds Transferred to TOB Trusts: Certain funds leverage their assets through the use of “TOB Trust” transactions. The funds transfer municipal bonds into a special purpose trust (a “TOB Trust”). A TOB Trust issues two classes of beneficial interests: short-term floating rate interests (“TOB Trust Certificates”), which are sold to third party investors, and residual inverse floating rate interests (“TOB Residuals”), which are issued to the participating funds that contributed the municipal bonds to the TOB Trust. The TOB Trust Certificates have interest rates that reset weekly and their holders have the option to tender such certificates to the TOB Trust for redemption at par and any accrued interest at each reset date. The TOB Residuals held by a fund provide the fund with the right to cause the holders of a proportional share of the TOB Trust Certificates to tender their certificates to the TOB Trust at par plus accrued interest. The funds may withdraw a corresponding share of the municipal bonds from the TOB Trust. Other funds managed by the investment adviser may also contribute municipal bonds to a TOB Trust into which a fund has contributed bonds. If multiple BlackRock advised funds participate in the same TOB Trust, the economic rights and obligations under the TOB Residuals will be shared among the funds ratably in proportion to their participation in the TOB Trust.

TOB Trusts are supported by a liquidity facility provided by a third party bank or other financial institution (the “Liquidity Provider”) that allows the holders of the TOB Trust Certificates to tender their certificates in exchange for payment of par plus accrued interest on any business day. The tendered TOB Trust Certificates are remarketed by a Remarketing Agent. In the event of a failed remarketing, the TOB Trust may draw upon a loan from the Liquidity Provider to purchase the tendered TOB Trust Certificates. Any loans made by the Liquidity Provider will be secured by the purchased TOB Trust Certificates held by the TOB Trust and will be subject to an increased interest rate based on number of days the loan is outstanding.

The TOB Trust may be collapsed without the consent of a fund, upon the occurrence of a termination event, as defined in the TOB Trust agreement. Upon the occurrence of a termination event, a TOB Trust would be liquidated with the proceeds applied first to any accrued fees owed to the trustee of the TOB Trust, the Remarketing Agent and the Liquidity Provider. Upon certain termination events, TOB Trust Certificates holders will be paid before the TOB Residuals holders (i.e., the Funds) whereas in other termination events, TOB Trust Certificates holders and TOB Residuals holders will be paid pro rata.

While a fund’s investment policies and restrictions expressly permit investments in inverse floating rate securities, such as TOB Residuals, they restrict the ability of a fund to borrow money for purposes of making investments. The funds’ management believes that a fund’s restrictions on borrowings do not apply to the funds’ TOB Trust transactions. Each fund’s transfer of the municipal bonds to a TOB Trust is considered a secured borrowing for financial reporting purposes. The cash received by the TOB Trust from the sale of the TOB Trust Certificates, less certain transaction expenses, is paid to a fund. A fund typically invests the cash received in additional municipal bonds.

Accounting for TOB Trusts: The municipal bonds deposited into a TOB Trust are presented in a fund’s Schedule of Investments and the TOB Trust Certificates are shown in Other Liabilities in the Statements of Assets and Liabilities. Any loans drawn by the TOB Trust pursuant to the liquidity facility to purchase tendered TOB Trust Certificates are shown as Loan for TOB Trust Certificates. The carrying amount of a fund’s payable to the holder of the TOB Trust Certificates, as reported in the Statements of Assets and Liabilities as TOB Trust Certificates, approximates its fair value.

Interest income, including amortization and accretion of premiums and discounts, from the underlying municipal bonds is recorded by a fund on an accrual basis. Interest expense incurred on the TOB Trust transaction and other expenses related to remarketing, administration, trustee, liquidity and other services to a TOB Trust are shown as interest expense, fees and amortization of offering costs in the Statements of Operations. Fees paid upon creation of the TOB Trust are recorded as debt issuance costs and are amortized to interest expense, fees and amortization of offering costs in the Statements of Operations to the expected maturity of the TOB Trust. In connection with the restructurings of the TOB Trusts to non-bank sponsored TOB Trusts, a fund incurred non-recurring, legal and restructuring fees, which are recorded as interest expense, fees and amortization of deferred offering costs in the Statements of Operations. Amounts recorded within interest expense, fees and amortization of offering costs in the Statements of Operations are:

 

     Interest Expense      Liquidity Fees      Other Expenses      Total  

MYD

  $ 1,804,882      $ 752,430      $ 276,249      $ 2,833,561  

MQY

    1,395,209        514,779        188,681        2,098,669  

MQT

    848,751        326,664        117,527        1,292,942  

For the year ended April 30, 2018, the following table is a summary of each Fund’s TOB Trusts:

 

     Underlying
Municipal 
Bonds
Transferred to
TOB Trusts
 (a)
     Liability for
TOB Trust
Certificates  (b)
     Range of
Interest Rates
on TOB Trust
Certificates at
Period End
     Average
TOB Trust
Certificates
Outstanding
     Daily Weighted
Average Rate
of Interest and
Other Expenses
on TOB Trusts
 

MYD

  $ 285,698,182      $ 167,149,960        1.76% — 2.39%      $ 166,702,678        1.70

MQY

    244,664,759        139,143,848        1.75% — 2.39%        124,869,100        1.68  

MQT

    151,006,811        87,513,411        1.75% — 2.39%        76,191,345        1.70  

 

  (a)  The municipal bonds transferred to a TOB Trust are generally high grade municipal bonds. In certain cases, when municipal bonds transferred are lower grade municipal bonds, the TOB Trust transaction may include a credit enhancement feature that provides for the timely payment of principal and interest on the bonds to the TOB Trust by a credit enhancement provider in the event of default of the municipal bond. The TOB Trust would be responsible for the payment of the credit enhancement fee and the Funds, as TOB Residuals holders, would be responsible for reimbursement of any payments of principal and interest made by the credit enhancement provider. The maximum potential amounts owed by the fund[s], for such reimbursements, as applicable, are included in the maximum potential amounts disclosed for recourse TOB Trusts.  

 

 

46    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Notes to Financial Statements  (continued)

 

  (b)  TOB Trusts may be structured on a non-recourse or recourse basis. When a Fund invests in TOB Trusts on a non-recourse basis, the Liquidity Provider may be required to make a payment under the liquidity facility to allow the TOB Trust to repurchase TOB Trust Certificates. The Liquidity Provider will be reimbursed from the liquidation of bonds held in the TOB Trust. If a fund invests in a TOB Trust on a recourse basis, a fund enters into a reimbursement agreement with the Liquidity Provider where a fund is required to reimburse the Liquidity Provider for any shortfall between the amount paid by the Liquidity Provider and proceeds received from liquidation of municipal bonds held in the TOB Trust (the “Liquidation Shortfall”). As a result, if a fund invests in a recourse TOB Trust, a fund will bear the risk of loss with respect to any Liquidation Shortfall. If multiple funds participate in any such TOB Trust, these losses will be shared ratably, including the maximum potential amounts owed by a fund at April 30, 2018, in proportion to their participation in the TOB Trust. The recourse TOB Trusts are identified in the Schedules of Investments including the maximum potential amounts owed by a fund at April 30, 2018.  

For the year ended April 30, 2018, the following table is a summary of each Fund’s Loan for TOB Trust Certificates:

 

     Loans
Outstanding
at Period End
     Range of
Interest Rates
on Loans at
Period End
     Average
Loans

Outstanding
     Daily Weighted
Average Rate
of 
Interest and
Other Expenses
on  Loans
 

MQY

  $             36,308        0.78

MQT

                  14,584        0.78  

 

5. DERIVATIVE FINANCIAL INSTRUMENTS

The Funds engage in various portfolio investment strategies using derivative contracts both to increase the returns of the Funds and/or to manage their exposure to certain risks such as credit risk, equity risk, interest rate risk, foreign currency exchange rate risk, commodity price risk or other risks (e.g., inflation risk). Derivative financial instruments categorized by risk exposure are included in the Schedules of Investments. These contracts may be transacted on an exchange or over-the-counter (“OTC”).

Futures Contracts: Futures contracts are purchased or sold to gain exposure to, or manage exposure to, changes in interest rates (interest rate risk), changes in the value of equity securities (equity risk) or foreign currencies (foreign currency exchange rate risk).

Futures contracts are agreements between the Funds and a counterparty to buy or sell a specific quantity of an underlying instrument at a specified price and on a specified date. Depending on the terms of a contract, it is settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash amount on the settlement date. Upon entering into a futures contract, the Funds are required to deposit initial margin with the broker in the form of cash or securities in an amount that varies depending on a contract’s size and risk profile. The initial margin deposit must then be maintained at an established level over the life of the contract.

Securities deposited as initial margin are designated in the Schedules of Investments and cash deposited, if any, is shown as cash pledged for futures contracts in the Statements of Assets and Liabilities. Pursuant to the contract, the Funds agree to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”). Variation margin is recorded as unrealized appreciation (depreciation) and, if any, shown as variation margin receivable (or payable) on futures contracts in the Statements of Assets and Liabilities. When the contract is closed, a realized gain or loss is recorded in the Statements of Operations equal to the difference between the notional amount of the contract at the time it was opened and the notional amount at the time it was closed. The use of futures contracts involves the risk of an imperfect correlation in the movements in the price of futures contracts and interest, foreign currency exchange rates or underlying assets.

 

6. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES

The PNC Financial Services Group, Inc. is the largest stockholder and an affiliate of BlackRock, Inc. (“BlackRock”) for 1940 Act purposes.

Investment Advisory: Each Fund entered into an Investment Advisory Agreement with the Manager, the Funds’ investment adviser, an indirect, wholly-owned subsidiary of BlackRock, to provide investment advisory and administrative services. The Manager is responsible for the management of each Fund’s portfolio and provides the personnel, facilities, equipment and certain other services necessary to the operations of each Fund.

For such services, each Fund pays the Manager a monthly fee at an annual rate equal to 0.50% of the average daily value of each Fund’s net assets.

For purposes of calculating these fees, “net assets” mean the total assets of the Fund minus the sum of its accrued liabilities (which does not include liabilities represented by TOB Trusts and the liquidation preference of any outstanding preferred shares). It is understood that the liquidation preference of any outstanding preferred shares (other than accumulated dividends) and TOB Trusts is not considered a liability in determining a Fund’s net asset value.

Waivers: With respect to each Fund, the Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees each Fund pays to the Manager indirectly through its investment in affiliated money market funds (the “affiliated money market fund waiver”). These amounts are shown as fees waived by the Manager in the Statements of Operations. For the year ended April 30, 2018, the amounts waived were as follows:

 

     MYD      MQY      MQT  

Amounts waived

  $ 5,855      $ 4,262      $ 3,146  

The Manager contractually agreed to waive its investment advisory fee with respect to any portion of each Fund’s assets invested in affiliated equity and fixed-income mutual funds and affiliated exchange-traded funds that have a contractual management fee through June 30, 2019. The agreement can be renewed for annual periods

 

 

NOTES TO FINANCIAL STATEMENTS      47  


Notes to Financial Statements  (continued)

 

thereafter, and may be terminated on 90 days’ notice, each subject to approval by a majority of the Funds’ Independent Directors. For the year ended April 30, 2018, there were no fees waived by the Manager.

Directors and Officers: Certain Directors and/or officers of the Funds are directors and/or officers of BlackRock or its affiliates. The Funds reimburse the Manager for a portion of the compensation paid to the Funds’ Chief Compliance Officer, which is included in Directors and Officer in the Statements of Operations.

 

7. PURCHASES AND SALES

For the year ended April 30, 2018, purchases and sales of investments, excluding short-term securities, were as follows:

 

     MYD      MQY      MQT  

Purchases

  $ 119,561,459      $ 188,430,885      $ 125,308,907  

Sales

  $ 102,853,904      $ 155,208,943      $ 105,343,288  

 

8. INCOME TAX INFORMATION

It is each Fund’s policy to comply with the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies, and to distribute substantially all of its taxable income to its shareholders. Therefore, no U.S. federal income tax provision is required.

Each Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on each Fund’s U.S. federal tax returns generally remains open for each of the four years ended April 30, 2018. The statutes of limitations on each Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

Management has analyzed tax laws and regulations and their application to the Funds as of April 30, 2018, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Funds’ financial statements.

U.S. GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or net asset values per share. As of period end, the following permanent differences attributable to amortization methods on fixed income securities, expenses characterized as distributions, non-deductible expenses, the expiration of capital loss carryforwards, and the sale of bonds received from tender option bond trusts were reclassified to the following accounts:

 

     MYD     MQY     MQT  

Paid-in capital

  $ (1,212,309   $ (10,070   $  

Undistributed net investment income

    (980,972     (7,766     4,994  

Accumulated net realized loss

    2,193,281       17,836       (4,994

The tax character of distributions was as follows:

 

             MYD      MQY      MQT  

Tax-exempt income(a)

    4/30/2018      $ 43,101,937      $ 28,676,092      $ 17,888,903  
    4/30/2017        44,348,446        29,485,924        18,761,524  

Ordinary income(b)

    4/30/2018        14,241        11,076        42,842  
    4/30/2017        80,031        21,878        30,285  
    

 

 

    

 

 

    

 

 

 

Total

    4/30/2018      $ 43,116,178      $ 28,687,168      $ 17,931,745  
    

 

 

    

 

 

    

 

 

 
    4/30/2017      $ 44,428,477      $ 29,507,802      $ 18,791,809  
    

 

 

    

 

 

    

 

 

 

 

  (a)  The Funds designate these amounts paid during the fiscal year ended April 30, 2018, as exempt-interest dividends.  
  (b)  Ordinary income consists primarily of taxable income recognized from market discount. Additionally, all ordinary income distributions are comprised of interest related dividends for non-U.S. residents and are eligible for exemption from U.S. withholding tax for nonresident aliens and foreign corporations.  

As of period end, the tax components of accumulated net earnings (losses) were as follows:

 

     MYD     MQY      MQT  

Undistributed tax-exempt income

  $ 3,739     $ 694,760      $ 278,572  

Undistributed ordinary income

    11,779       8,621        12,351  

Undistributed long-term capital gains

          365,090         

Capital loss carryforwards

    (6,716,198            (1,402,772

Net unrealized gains(a)

    54,171,931       35,681,124        21,929,379  
 

 

 

   

 

 

    

 

 

 

Total

  $ 47,471,251     $ 36,749,595      $ 20,817,530  
 

 

 

   

 

 

    

 

 

 

 

  (a)  The differences between book-basis and tax-basis net unrealized gains were attributable primarily to the tax deferral of losses on wash sales and straddles, amortization and accretion methods of premiums and discounts on fixed income securities, the realization for tax purposes of unrealized losses on certain futures contracts, the accrual of income on securities in default, the deferral of compensation to directors and the treatment of residual interests in tender option bond trusts.  

 

 

48    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Notes to Financial Statements  (continued)

 

As of April 30, 2018, the Funds had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates as follows:

 

Expires April 30,   MYD      MQT  

No expiration date(a)

  $ 6,236,511      $  

2019

    479,687        1,402,772  
 

 

 

    

 

 

 
  $ 6,716,198      $ 1,402,772  
 

 

 

    

 

 

 

 

  (a)  Must be utilized prior to losses subject to expiration.  

During the year ended April 30, 2018, the funds listed below utilized the following amounts of their respective capital loss carryforward:

 

     MYD      MQY      MQT  
    $ 2,058,073      $ 2,118,488      $ 1,612,885  

As of April 30, 2018, gross unrealized appreciation and depreciation for investments and derivatives based on cost for U.S. federal income tax purposes were as follows:

 

     MYD     MQY     MQT  

Tax cost

  $ 872,221,173     $ 616,694,633     $ 394,193,482  
 

 

 

   

 

 

   

 

 

 

Gross unrealized appreciation

  $ 61,260,679     $ 38,985,293     $ 24,445,768  

Gross unrealized depreciation

    (6,408,356     (3,055,064     (2,516,389
 

 

 

   

 

 

   

 

 

 

Net unrealized appreciation

  $ 54,852,323     $ 35,930,229     $ 21,929,379  
 

 

 

   

 

 

   

 

 

 

The Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017. Certain provisions of the Act were effective upon enactment with the remainder becoming effective for tax years beginning after December 31, 2017. Although the Act does not amend any provisions directly related to the qualification or taxation of regulated investment companies (“RICs”), the Act does change the taxation of entities in which some RICs invest, the tax treatment of income derived from those entities and the taxation of RIC shareholders. While management does not anticipate significant impact to the Funds or to their shareholders, there is uncertainty in the application of certain provisions in the Act. Specifically, provisions in the Act may increase the amount of or accelerate the recognition of taxable income and may limit the deductibility of certain expenses by RICs. Until full clarity around these provisions is obtained, the impact on the Funds’ financial statements, if any, cannot be fully determined.

 

9. PRINCIPAL RISKS

Many municipalities insure repayment of their bonds, which may reduce the potential for loss due to credit risk. The market value of these bonds may fluctuate for other reasons, including market perception of the value of such insurance, and there is no guarantee that the insurer will meet its obligation.

Inventories of municipal bonds held by brokers and dealers may decrease, which would lessen their ability to make a market in these securities. Such a reduction in market making capacity could potentially decrease a Fund’s ability to buy or sell bonds. As a result, a Fund may sell a security at a lower price, sell other securities to raise cash, or give up an investment opportunity, any of which could have a negative impact on performance. If a Fund needed to sell large blocks of bonds, those sales could further reduce the bonds’ prices and impact performance.

In the normal course of business, certain Funds invest in securities or other instruments and may enter into certain transactions, and such activities subject each Fund to various risks, including among others, fluctuations in the market (market risk) or failure of an issuer to meet all of its obligations. The value of securities or other instruments may also be affected by various factors, including, without limitation: (i) the general economy; (ii) the overall market as well as local, regional or global political and/or social instability; (iii) regulation, taxation or international tax treaties between various countries; or (iv) currency, interest rate and price fluctuations.

Each Fund may be exposed to prepayment risk, which is the risk that borrowers may exercise their option to prepay principal earlier than scheduled during periods of declining interest rates, which would force each Fund to reinvest in lower yielding securities. Each Fund may also be exposed to reinvestment risk, which is the risk that income from each Fund’s portfolio will decline if each Fund invests the proceeds from matured, traded or called fixed-income securities at market interest rates that are below each Fund portfolio’s current earnings rate.

The Funds may hold a significant amount of bonds subject to calls by the issuers at defined dates and prices. When bonds are called by issuers and the Funds reinvest the proceeds received, such investments may be in securities with lower yields than the bonds originally held, and correspondingly, could adversely impact the yield and total return performance of a Fund.

A Fund structures and “sponsors” the TOB Trusts in which it holds TOB Residuals and has certain duties and responsibilities, which may give rise to certain additional risks including, but not limited to, compliance, securities law and operational risks.

Should short-term interest rates rise, the Funds’ investments in the TOB Trusts may adversely affect the Funds’ net investment income and dividends to Common Shareholders. Also, fluctuations in the market value of municipal bonds deposited into the TOB Trust may adversely affect the Funds’ NAVs per share.

The SEC and various federal banking and housing agencies have adopted credit risk retention rules for securitizations (the “Risk Retention Rules”). The Risk Retention Rules would require the sponsor of a TOB Trust to retain at least 5% of the credit risk of the underlying assets supporting the TOB Trust’s municipal bonds. The Risk Retention Rules may adversely affect the Funds’ ability to engage in TOB Trust transactions or increase the costs of such transactions in certain circumstances.

 

 

NOTES TO FINANCIAL STATEMENTS      49  


Notes to Financial Statements  (continued)

 

TOB Trusts constitute an important component of the municipal bond market. Any modifications or changes to rules governing TOB Trusts may adversely impact the municipal market and the Funds, including through reduced demand for and liquidity of municipal bonds and increased financing costs for municipal issuers. The ultimate impact of any potential modifications on the TOB Trust market and the overall municipal market is not yet certain.

Counterparty Credit Risk: The Funds may be exposed to counterparty credit risk, or the risk that an entity may fail to or be unable to perform on its commitments related to unsettled or open transactions. The Funds manage counterparty credit risk by entering into transactions only with counterparties that the Manager believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Funds’ exposure to market, issuer and counterparty credit risks with respect to these financial assets is approximately their value recorded in the Statements of Assets and Liabilities, less any collateral held by the Funds.

A derivative contract may suffer a mark-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.

With exchange-traded futures, there is less counterparty credit risk to the Funds since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, a Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency). Additionally, credit risk exists in exchange-traded futures with respect to initial and variation margin that is held in a clearing broker’s customer accounts. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be allocated on a pro rata basis across all the clearing broker’s customers, potentially resulting in losses to the Funds.

Concentration Risk: As of period end, the Funds invested a significant portion of their assets in securities in the transportation sector. Changes in economic conditions affecting such sector would have a greater impact on the Funds and could affect the value, income and/or liquidity of positions in such securities.

The Funds invest a significant portion of their assets in fixed-income securities and/or use derivatives tied to the fixed-income markets. Changes in market interest rates or economic conditions may affect the value and/or liquidity of such investments. Interest rate risk is the risk that prices of bonds and other fixed-income securities will increase as interest rates fall and decrease as interest rates rise.

 

10. CAPITAL SHARE TRANSACTIONS

Each Fund is authorized to issue 200 million shares, all of which were initially classified as Common Shares. The par value for each Fund’s Common Shares is $0.10. The par value for each Fund’s Preferred Shares outstanding is $0.10. The Board is authorized, however, to reclassify any unissued Common Shares to Preferred Shares without the approval of Common Shareholders.

Common Shares

For the years shown, shares issued and outstanding increased by the following amounts as a result of dividend reinvestment:

 

Year Ended April 30,   MYD      MQY  

2018

    125,519        12,019  

2017

    101,379        23,341  

For the years ended April 30, 2018 and 2017, shares issued and outstanding remained constant for MQT.

Preferred Shares

Each Fund’s Preferred Shares rank prior to the Fund’s Common Shares as to the payment of dividends by the Fund and distribution of assets upon dissolution or liquidation of a Fund. The 1940 Act prohibits the declaration of any dividend on a Fund’s Common Shares or the repurchase of a Fund’s Common Shares if a Fund fails to maintain asset coverage of at least 200% of the liquidation preference of the Fund’s outstanding Preferred Shares. In addition, pursuant to the Preferred Shares’ governing instruments, a Fund is restricted from declaring and paying dividends on classes of shares ranking junior to or on parity with the Fund’s Preferred Shares or repurchasing such shares if a Fund fails to declare and pay dividends on the Preferred Shares, redeem any Preferred Shares required to be redeemed under the Preferred Shares’ governing instruments or comply with the basic maintenance amount requirement of the ratings agencies rating the Preferred Shares.

The holders of Preferred Shares have voting rights equal to the voting rights of the holders of Common Shares (one vote per share) and will vote together with holders of Common Shares (one vote per share) as a single class on certain matters. However, the holders of Preferred Shares, voting as a separate class, are also entitled to elect two Directors to the Board of each Fund. The holders of Preferred Shares are also entitled to elect the full Board of Directors if dividends on the Preferred Shares are not paid for a period of two years. The holders of Preferred Shares are also generally entitled to a separate class vote to amend the Preferred Share governing documents. In addition, the 1940 Act requires the approval of the holders of a majority of any outstanding Preferred Shares, voting as a separate class, to (a) adopt any plan of reorganization that would adversely affect the Preferred Shares, (b) change a Fund’s sub-classification as a closed-end investment company or change its fundamental investment restrictions or (c) change its business so as to cease to be an investment company.

 

 

50    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Notes to Financial Statements  (continued)

 

VRDP Shares

MYD and MQY (collectively, the “VRDP Funds”), have issued Series W-7 VRDP Shares, $100,000 liquidation preference per share, in privately negotiated offerings. The VRDP Shares were offered to qualified institutional buyers as defined pursuant to Rule 144A under the Securities Act of 1933, as amended, (the “Securities Act”). The VRDP Shares include a liquidity feature and VRDP Shares of certain Funds are currently in a special rate period, each as described below.

As of period end, the VRDP Shares outstanding of each Fund were as follows:

 

    

Issue

Date

    

Shares

Issued

     Aggregate
Principal
    

Maturity

Date

 

MYD

    6/30/11        2,514      $ 251,400,000        07/01/41  

MQY

    9/15/11        1,766        176,600,000        10/01/41  

Redemption Terms: Each VRDP Fund is required to redeem its VRDP Shares on the maturity date, unless earlier redeemed or repurchased. Six months prior to the maturity date, each VRDP Fund is required to begin to segregate liquid assets with the Fund’s custodian to fund the redemption. In addition, VRDP Funds are required to redeem certain of its outstanding VRDP Shares if they fail to comply with certain asset coverage, basic maintenance amount or leverage requirements.

Subject to certain conditions, the VRDP Shares may also be redeemed, in whole or in part, at any time at the option of VRDP Funds. The redemption price per VRDP Share is equal to the liquidation preference per share plus any outstanding unpaid dividends.

Liquidity Feature: Each VRDP Fund entered into a fee agreement with its liquidity provider that requires an upfront commitment and a per annum liquidity fee payable to the liquidity provider. These fees, if applicable, are shown as liquidity fees in the Statements of Operations.

The fee agreement between MYD and the liquidity provider is scheduled to expire on April 15, 2020 unless renewed or terminated in advance. The fee agreement between MQY and the liquidity provider is scheduled to expire on October 21, 2019 unless renewed or terminated in advance.

In the event the a Fund’s agreement is not renewed or is terminated in advance, and the VRDP Funds do not enter into a fee agreement with an alternate liquidity provider, the VRDP Shares of that fund will be subject to mandatory purchase by the liquidity provider prior to the termination of the fee agreement. In the event of such mandatory purchase, VRDP Funds are required to redeem the VRDP Shares six months after the purchase date. Immediately after such mandatory purchase, VRDP Funds are required to begin to segregate liquid assets with its custodian to fund the redemption. There is no assurance VRDP Funds will replace such redeemed VRDP Shares with any other preferred shares or other form of leverage.

Remarketing: The VRDP Funds may incur remarketing fees of 0.10% on the aggregate principal amount of all the VRDP Fund’s Shares, which, if any, are included in remarketing fees on Preferred Shares in the Statements of Operations. During any special rate period (as described below), MQY incurs no remarketing fees and MYD incurs nominal remarketing fee.

Dividends: Dividends on the VRDP Shares are payable monthly at a variable rate set weekly by the remarketing agent. Such dividend rates are generally based upon a spread over a base rate and cannot exceed a maximum rate. In the event of a failed remarketing, the dividend rate of the VRDP Shares will be reset to a maximum rate. The maximum rate is determined based on, among other things, the long-term preferred share rating assigned to the VRDP Shares and the length of time that the VRDP Shares fail to be remarketed. At the date of issuance, the VRDP Shares were assigned long-term ratings of Aaa from Moody’s and AAA from Fitch. Subsequent to the issuance of the VRDP Shares, Moody’s completed a review of its methodology for rating securities issued by registered closed-end funds. As of period end, the VRDP Shares were assigned a long-term rating of Aa1 from Moody’s under its new ratings methodology. The VRDP Shares continue to be assigned a long-term rating of AAA from Fitch.

For the year ended April 30, 2018, the annualized dividend rates for the VRDP Shares were as follows:

 

     MYD      MQY  

Rate

    1.92      1.94

Special Rate Period: On April 7, 2014, MYD commenced an approximate three-year term ending April 9, 2017 (the “special rate period”) with respect to its VRDP Shares, during which the VRDP Shares will not be subject to any remarketing and the dividend rate will be based on a predetermined methodology. The implementation of the special rate period resulted in a mandatory tender of the VRDP Shares prior to the commencement of the special rate period. The mandatory tender event was not the result of a failed remarketing. The short-term ratings on the VRDP Shares for MYD were withdrawn by Moody’s, Fitch and/or S&P at the commencement of the special rate period. The special rate period has been extended and is currently set to expire on April 15, 2020. Prior to April 15, 2020, the holder of the VRDP Shares and MYD may mutually agree to extend the special rate period. If the special rate period is not extended, the VRDP Shares will revert to remarketable securities upon the termination of the special rate period and will be remarketed and available for purchase by qualified institutional investors.

On October 22, 2015, MQY commenced an approximate three-year term ending April 18, 2018 with respect to its VRDP Shares, during which the VRDP Shares will not be subject to any remarketing and the dividend rate will be based on a predetermined methodology. The implementation of the special rate period resulted in a mandatory tender of the VRDP Shares prior to the commencement of the special rate period. The mandatory tender event was not the result of a failed remarketing. The short-term ratings on the VRDP Shares of MQY were withdrawn by Moody’s, Fitch and/or S&P at the commencement of the special rate period. The special rate period for MQY has been extended for an additional one-year term and is currently scheduled to expire on April 17, 2019. Prior to April 17, 2019, the holder of the VRDP Shares and MQY may mutually agree to extend the special rate period. If the special rate period is not extended, the VRDP Shares will revert to remarketable securities upon the termination of the special rate period and will be remarketed and available for purchase by qualified institutional investors.

 

 

NOTES TO FINANCIAL STATEMENTS      51  


Notes to Financial Statements  (continued)

 

During the special rate period, the liquidity and fee agreements remain in effect and the VRDP Shares remain subject to mandatory redemption by the VRDP Funds on the maturity date. The VRDP Shares will not be remarketed or subject to optional or mandatory tender events during the special rate period. During the special rate period, the VRDP Funds are required to comply with the same asset coverage, basic maintenance amount and leverage requirements for the VRDP Shares as is required when the VRDP Shares are not in a special rate period. MYD pays a nominal fee at the annual rate of 0.01% to the liquidity provider and remarketing agent during the special rate period. MQY does not pay any fees to the liquidity provider and remarketing agent during the special rate period. The VRDP Funds will also pay dividends monthly based on the sum of the Securities Industry and Financial Markets Association (“SIFMA”) Municipal Swap Index rate and a percentage per annum based on the long-term ratings assigned to the VRDP Shares.

If the VRDP Fund redeems the VRDP Shares prior to end of the special rate period and the VRDP Shares have long-term ratings above A1/A+ and its equivalent by all ratings agencies then rating the VRDP Shares, then such redemption may be subject to a redemption premium payable to the holder of the VRDP Shares based on the time remaining in the special rate period, subject to certain exceptions for redemptions that are required to comply with minimum asset coverage requirements.

For the year ended April 30, 2018, VRDP Shares issued and outstanding of each Fund remained constant.

VMTP Shares

MQT has issued Series W-7 VMTP Shares, $100,000 liquidation preference per share, in a privately negotiated offering and sale of VMTP Shares exempt from registration under the Securities Act. The VMTP Shares are subject to certain restrictions on transfer, and MQT may also be required to register the VMTP Shares for sale under the Securities Act under certain circumstances. In addition, amendments to the VMTP governing documents generally require the consent of the holders of VMTP Shares.

As of period end, the VMTP Shares outstanding were as follows:

 

    

Issue

Date

    

Shares

Issued

     Aggregate
Principal
    

Term

Redemption

Date

 

MQT

    12/16/11        1,165      $ 116,500,000        01/02/19  

Redemption Terms: MQT is required to redeem its VMTP Shares on the term redemption date, unless earlier redeemed or repurchased or unless extended. In June, 2015, the term redemption date for VMTP Shares was extended until January 2, 2019. There is no assurance that the term of MQT’s VMTP Shares will be extended further or that a Fund’s VMTP Shares will be replaced with any other preferred shares or other form of leverage upon the redemption or repurchase of the VMTP Shares. Six months prior to the term redemption date, MQT is required to begin to segregate liquid assets with the Fund’s custodian to fund the redemption. In addition, MQT is required to redeem certain of its outstanding VMTP Shares if it fails to comply with certain asset coverage, basic maintenance amount or leverage requirements.

Subject to certain conditions, MQT’s VMTP Shares may be redeemed, in whole or in part, at any time at the option of MQT. The redemption price per VMTP Share is equal to the liquidation preference per share plus any outstanding unpaid dividends and applicable redemption premium. If MQT redeems the VMTP Shares prior to the term redemption date and the VMTP Shares have long-term ratings above A1/A+ or its equivalent by the ratings agencies then rating the VMTP Shares, then such redemption may be subject to a prescribed redemption premium (up to 3% of the liquidation preference) payable to the holder of the VMTP Shares based on the time remaining until the term redemption date, subject to certain exceptions for redemptions that are required to comply with minimum asset coverage requirements.

Dividends: Dividends on the VMTP Shares are declared daily and payable monthly at a variable rate set weekly at a fixed rate spread to the Securities Industry and Financial Markets Association (“SIFMA”) Municipal Swap Index. The fixed spread is determined based on the long-term preferred share rating assigned to the VMTP Shares by the ratings agencies then rating the VMTP Shares. At the date of issuance, the VMTP Shares were assigned long-term ratings of Aaa from Moody’s and AAA from Fitch. Subsequent to the issuance of the VMTP Shares, Moody’s completed a review of its methodology for rating securities issued by registered closed-end funds. As of period end, the VMTP Shares were assigned a long-term rating of Aa1 from Moody’s under its new rating methodology.

The VMTP Shares continue to be assigned a long-term rating of AAA from Fitch. The dividend rate on the VMTP Shares is subject to a step-up spread if the Fund fails to comply with certain provisions, including, among other things, the timely payment of dividends, redemptions or gross-up payments, and complying with certain asset coverage and leverage requirements.

For the year ended April 30, 2018, the average annualized dividend rate for the VMTP Shares was 2.04%

For the year ended April 30, 2018, VMTP Shares issued and outstanding of MQT remained constant.

Offering Costs: The Funds incurred costs in connection with the issuance of VRDP and VMTP Shares, which were recorded as a direct deduction from the carrying value of the related debt liability and will be amortized over the life of the VRDP and VMTP Shares with the exception of upfront fees paid to the liquidity provider which were amortized over the life of the liquidity agreement. Amortization of these costs is included in interest expense, fees and amortization of offering costs in the Statements of Operations.

Financial Reporting: The VRDP and VMTP Shares are considered debt of the issuer; therefore, the liquidation preference, which approximates fair value of the VRDP and VMTP Shares, is recorded as a liability in the Statements of Assets and Liabilities net of deferred offering costs. Unpaid dividends are included in interest expense and fees payable in the Statements of Assets and Liabilities, and the dividends accrued and paid on the VRDP and VMTP Shares are included as a component of interest expense, fees and amortization of offering costs in the Statements of Operations. The VRDP and VMTP Shares are treated as equity for tax purposes. Dividends paid to

 

 

52    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Notes to Financial Statements  (continued)

 

holders of the VRDP and VMTP Shares are generally classified as tax-exempt income for tax-reporting purposes. Dividends and amortization of deferred offering costs on VRDP and VMTP Shares are included in interest expense, fees and amortization of offering costs in the Statements of Operations:

 

     Dividends
Accrued
     Deferred Offering
Costs Amortization
 

MYD

  $ 4,816,667      $ 15,858  

MQY

    3,418,968        10,070  

MQT

    2,373,645         

 

11. SUBSEQUENT EVENTS

Management’s evaluation of the impact of all subsequent events on the Funds’ financial statements was completed through the date the financial statements were issued and the following items were noted:

 

     Common Dividend
Per Share
           Preferred Shares (c)  
     Paid (a)      Declared (b)            Shares      Series      Declared  

MYD

  $ 0.0610      $ 0.0610         VRDP        W-7      $ 494,122  

MQY

    0.0630        0.0630         VRDP        W-7        350,103  

MQT

    0.0540        0.0540               VMTP        W-7        240,852  

 

  (a)  Net investment income dividend paid on June 1, 2018 to Common Shareholders of record on May 15, 2018.  
  (b) Net investment income dividend declared on June 1, 2018, payable to Common Shareholders of record on June 15, 2018.  
  (c)  Dividends declared for period May 1, 2018 to May 31, 2018.  

 

 

NOTES TO FINANCIAL STATEMENTS      53  


Report of Independent Registered Public Accounting Firm

 

To the Shareholders and Board of Directors of BlackRock MuniYield Fund, Inc., BlackRock MuniYield Quality Fund, Inc., and BlackRock MuniYield Quality Fund II, Inc.:

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statements of assets and liabilities of BlackRock MuniYield Fund, Inc., BlackRock MuniYield Quality Fund, Inc., and BlackRock MuniYield Quality Fund II, Inc. (the “Funds”), including the schedules of investments, as of April 30, 2018, the related statements of operations and cash flows for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Funds as of April 30, 2018, and the results of their operations and cash flows for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of April 30, 2018, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

Deloitte & Touche LLP

Boston, Massachusetts

June 20, 2018

We have served as the auditor of one or more BlackRock investment companies since 1992.

 

 

54    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Automatic Dividend Reinvestment Plan

 

Pursuant to each Fund’s Dividend Reinvestment Plan (the “Reinvestment Plan”), Common Shareholders are automatically enrolled to have all distributions of dividends and capital gains and other distributions reinvested by Computershare Trust Company, N.A. (the “Reinvestment Plan Agent”) in the respective Fund’s Common Shares pursuant to the Reinvestment Plan. Shareholders who do not participate in the Reinvestment Plan will receive all distributions in cash paid by check and mailed directly to the shareholders of record (or if the shares are held in street name or other nominee name, then to the nominee) by the Reinvestment Plan Agent, which serves as agent for the shareholders in administering the Reinvestment Plan.

After MYD, MQY and MQT declare a dividend or determine to make a capital gain or other distribution, the Reinvestment Plan Agent will acquire shares for the participants’ accounts, depending upon the following circumstances, either (i) through receipt of unissued but authorized shares from the Funds (“newly issued shares”) or (ii) by purchase of outstanding shares on the open market or on the Fund’s primary exchange (“open-market purchases”). If, on the dividend payment date, the net asset value per share (“NAV”) is equal to or less than the market price per share plus estimated brokerage commissions (such condition often referred to as a “market premium”), the Reinvestment Plan Agent will invest the dividend amount in newly issued shares acquired on behalf of the participants. The number of newly issued shares to be credited to each participant’s account will be determined by dividing the dollar amount of the dividend by the NAV on the date the shares are issued. However, if the NAV is less than 95% of the market price on the dividend payment date, the dollar amount of the dividend will be divided by 95% of the market price on the dividend payment date. If, on the dividend payment date, the NAV is greater than the market price per share plus estimated brokerage commissions (such condition often referred to as a “market discount”), the Reinvestment Plan Agent will invest the dividend amount in shares acquired on behalf of the participants in open-market purchases. If the Reinvestment Plan Agent is unable to invest the full dividend amount in open-market purchases, or if the market discount shifts to a market premium during the purchase period, the Reinvestment Plan Agent will invest any un-invested portion in newly issued shares. Investments in newly issued shares made in this manner would be made pursuant to the same process described above and the date of issue for such newly issued shares will substitute for the dividend payment date.

You may elect not to participate in the Reinvestment Plan and to receive all dividends in cash by contacting the Reinvestment Plan Agent, at the address set forth below.

Participation in the Reinvestment Plan is completely voluntary and may be terminated or resumed at any time without penalty by notice if received and processed by the Reinvestment Plan Agent prior to the dividend record date. Additionally, the Reinvestment Plan Agent seeks to process notices received after the record date but prior to the payable date and such notices often will become effective by the payable date. Where late notices are not processed by the applicable payable date, such termination or resumption will be effective with respect to any subsequently declared dividend or other distribution.

The Reinvestment Plan Agent’s fees for the handling of the reinvestment of distributions will be paid by each Fund. However, each participant will pay a pro rata share of brokerage commissions incurred with respect to the Reinvestment Plan Agent’s open market purchases in connection with the reinvestment of all distributions. The automatic reinvestment of all distributions will not relieve participants of any U.S. federal, state or local income tax that may be payable on such dividends or distributions.

Each Fund reserves the right to amend or terminate the Reinvestment Plan. There is no direct service charge to participants in the Reinvestment Plan; however, each Fund reserves the right to amend the Reinvestment Plan to include a service charge payable by the participants. Participants in MQY that request a sale of shares are subject to a $2.50 sales fee and a $0.15 per share fee. Per share fees include any applicable brokerage commissions the Reinvestment Plan Agent is required to pay. Participants in MYD and MQT that request a sale of shares are subject to a $0.02 per share sold brokerage commission. All correspondence concerning the Reinvestment Plan should be directed to Computershare Trust Company, N.A. through the internet at http://www.computershare.com/blackrock, or in writing to Computershare, P.O. Box 505000, Louisville, KY 40233, Telephone: (800) 699-1236. Overnight correspondence should be directed to the Reinvestment Plan Agent at Computershare, 462 South 4th Street, Suite 1600, Louisville, KY 40202.

 

 

AUTOMATIC DIVIDEND REINVESTMENT PLAN      55  


Director and Officer Information

 

Independent Directors (a)
         

Name

Year of Birth (b)

  

Position(s) Held

(Length of Service) (c)

  Principal Occupation(s) During Past Five Years  

Number of BlackRock-Advised

Registered Investment Companies

(“RICs”) Consisting of Investment
Portfolios (“Portfolios”) Overseen
 (d)

   Public Company and
Other Investment Company
Directorships Held
During Past Five Years

Richard E. Cavanagh

1946

   Chair of the Board and Director
(Since 2007)
  Director, The Guardian Life Insurance Company of America since 1998; Board Chair, Volunteers of America (a not-for-profit organization) since 2015 (board member since 2009); Director, Arch Chemical (chemical and allied products) from 1999 to 2011; Trustee, Educational Testing Service from 1997 to 2009 and Chairman thereof from 2005 to 2009; Senior Advisor, The Fremont Group since 2008 and Director thereof since 1996; Faculty Member/Adjunct Lecturer, Harvard University since 2007; President and Chief Executive Officer, The Conference Board, Inc. (global business research organization) from 1995 to 2007.   75 RICs consisting of 75 Portfolios    None

Karen P. Robards

1950

   Vice Chair of the Board and Director
(Since 2007)
  Principal of Robards & Company, LLC (consulting and private investing) since 1987; Co-founder and Director of the Cooke Center for Learning and Development (a not-for-profit organization) since 1987; Investment Banker at Morgan Stanley from 1976 to 1987.   75 RICs consisting of 75 Portfolios    Greenhill & Co., Inc.; AtriCure, Inc. (medical devices) from 2000 until 2017

Michael J. Castellano

1946

   Director
(Since 2011)
  Chief Financial Officer of Lazard Group LLC from 2001 to 2011; Chief Financial Officer of Lazard Ltd from 2004 to 2011; Director, Support Our Aging Religious (non-profit) from 2009 to June 2015 and since 2017; Director, National Advisory Board of Church Management at Villanova University since 2010; Trustee, Domestic Church Media Foundation since 2012; Director, CircleBlack Inc. (financial technology company) since 2015.   75 RICs consisting of 75 Portfolios    None

Cynthia L. Egan

1955

   Director
(Since 2016)
  Advisor, U.S. Department of the Treasury from 2014 to 2015; President, Retirement Plan Services for T. Rowe Price Group, Inc. from 2007 to 2012; executive positions within Fidelity Investments from 1989 to 2007.   75 RICs consisting of 75 Portfolios    Unum (insurance); The Hanover Insurance Group (insurance); Envestnet (investment platform) from 2013 until 2016

Frank J. Fabozzi

1948

   Director
(Since 2007)
  Editor of and Consultant for The Journal of Portfolio Management since 2006; Professor of Finance, EDHEC Business School since 2011; Visiting Professor, Princeton University from 2013 to 2014 and since 2016; Professor in the Practice of Finance and Becton Fellow, Yale University School of Management from 2006 to 2011.   75 RICs consisting of 75 Portfolios    None

R. Glenn Hubbard

1958

   Director
(Since 2007)
  Dean, Columbia Business School since 2004; Faculty member, Columbia Business School since 1988.   75 RICs consisting of 75 Portfolios    ADP (data and information services); Metropolitan Life Insurance Company (insurance)

W. Carl Kester

1951

   Director
(Since 2007)
  George Fisher Baker Jr. Professor of Business Administration, Harvard Business School since 2008, Deputy Dean for Academic Affairs from 2006 to 2010, Chairman of the Finance Unit, from 2005 to 2006, Senior Associate Dean and Chairman of the MBA Program from 1999 to 2005; Member of the faculty of Harvard Business School since 1981.   75 RICs consisting of 75 Portfolios    None

Catherine A. Lynch

1961

   Director
(Since 2016)
  Chief Executive Officer, Chief Investment Officer and various other positions, National Railroad Retirement Investment Trust from 2003 to 2016; Associate Vice President for Treasury Management, The George Washington University from 1999 to 2003; Assistant Treasurer, Episcopal Church of America from 1995 to 1999.   75 RICs consisting of 75 Portfolios    None

 

 

56    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Director and Officer Information  (continued)

 

Interested Directors (a)(e)
         

Name

Year of Birth (b)

  

Position(s) Held

(Length of Service) (c)

  Principal Occupation(s) During Past Five Years  

Number of BlackRock-Advised

Registered Investment Companies

(“RICs”) Consisting of Investment
Portfolios (“Portfolios”) Overseen
 (d)

   Public Company and
Other Investment Company
Directorships Held
During Past Five Years

Robert Fairbairn

1965

   Director
(Since 2018)
  Senior Managing Director of BlackRock, Inc. since 2010; oversees BlackRock’s Strategic Partner Program and Strategic Product Management Group; Member of BlackRock’s Global Executive and Global Operating Committees; Co-Chair of BlackRock’s Human Capital Committee; Global Head of BlackRock’s Retail and iShares® businesses from 2012 to 2016; Head of BlackRock’s Global Client Group from 2009 to 2012; Chairman of BlackRock’s international businesses from 2007 to 2010.   128 RICs consisting of 311 Portfolios    None

John M. Perlowski

1964

   Director
(Since 2014);
President and Chief Executive Officer
(Since 2011)
  Managing Director of BlackRock, Inc. since 2009; Head of BlackRock Global Accounting and Product Services since 2009; Managing Director and Chief Operating Officer of the Global Product Group at Goldman Sachs Asset Management, L.P. from 2003 to 2009; Treasurer of Goldman Sachs Mutual Funds from 2003 to 2009 and Senior Vice President thereof from 2007 to 2009; Director of Goldman Sachs Offshore Funds from 2002 to 2009; Advisory Director of Family Resource Network (charitable foundation) since 2009.   128 RICs consisting of 311 Portfolios    None

(a) The address of each Director is c/o BlackRock, Inc., 55 East 52nd Street, New York, NY 10055.

(b) Each Independent Director will serve until his or her successor is elected and qualifies, or until his or her earlier death, resignation, retirement or removal, or until December 31 of the year in which he or she turns 75. The maximum age limitation may be waived as to any Director by action of a majority of the Directors upon finding of good cause therefor.

(c) Following the combination of Merrill Lynch Investment Managers, L.P. (“MLIM”) and BlackRock, Inc. (“BlackRock”) in September 2006, the various legacy MLIM and legacy BlackRock fund boards were realigned and consolidated into three new fund boards in 2007. As a result, although the chart shows certain Independent Directors as joining the Board in 2007, each Director first became a member of the boards of other legacy MLIM or legacy BlackRock funds as follows: Richard E. Cavanagh, 1994; Frank J. Fabozzi, 1988; R. Glenn Hubbard, 2004; W. Carl Kester, 1995 and Karen P. Robards, 1998.

(d) For purposes of this chart, “RICs” refers to investment companies registered under the 1940 Act and “Portfolios” refers to the investment programs of the BlackRock-advised funds. The Closed-End Complex is comprised of 75 RICs consisting of 75 portfolios. Mr. Fairbairn and Mr. Perlowski are also board members of the BlackRock Equity-Bond Complex and the BlackRock Equity-Liquidity Complex.

(e) Mr. Fairbairn and Mr. Perlowski are both “interested persons,” as defined in the 1940 Act, of the Funds based on their positions with BlackRock and its affiliates. Mr. Fairbairn and Mr. Perlowski are also board members of the BlackRock Equity-Bond Complex and the BlackRock Equity-Liquidity Complex. Interested Directors serve until their resignation, removal or death, or until December 31 of the year in which they turn 72. The maximum age limitation may be waived as to any Director by action of a majority of the Directors upon a finding of good cause therefor.

 

 

DIRECTOR AND OFFICER INFORMATION      57  


Director and Officer Information  (continued)

 

 

Officers Who Are Not Directors (a)
     

Name

Year of Birth (b)

  

Position(s) Held

(Length of Service)

   Principal Occupation(s) During Past Five Years

Jonathan Diorio

1980

   Vice President
(Since 2015)
   Managing Director of BlackRock, Inc. since 2015; Director of BlackRock, Inc. from 2011 to 2015; Director of Deutsche Asset & Wealth Management from 2009 to 2011.

Neal J. Andrews

1966

   Chief Financial Officer
(Since 2007)
   Managing Director of BlackRock, Inc. since 2006; Senior Vice President and Line of Business Head of Fund Accounting and Administration at PNC Global Investment Servicing (U.S.) Inc. from 1992 to 2006.

Jay M. Fife

1970

   Treasurer
(Since 2007)
   Managing Director of BlackRock, Inc. since 2007; Director of BlackRock, Inc. in 2006; Assistant Treasurer of the MLIM and Fund Asset Management, L.P. advised funds from 2005 to 2006; Director of MLIM Fund Services Group from 2001 to 2006.

Charles Park

1967

   Chief Compliance Officer
(Since 2014)
   Anti-Money Laundering Compliance Officer for the BlackRock-advised Funds in the Equity-Bond Complex, the Equity-Liquidity Complex and the Closed-End Complex from 2014 to 2015; Chief Compliance Officer of BlackRock Advisors, LLC and the BlackRock-advised Funds in the Equity-Bond Complex, the Equity-Liquidity Complex and the Closed-End Complex since 2014; Principal of and Chief Compliance Officer for iShares® Delaware Trust Sponsor LLC since 2012 and BlackRock Fund Advisors (“BFA”) since 2006; Chief Compliance Officer for the BFA-advised iShares® exchange traded funds since 2006; Chief Compliance Officer for BlackRock Asset Management International Inc. since 2012.

Janey Ahn

1975

   Secretary
(Since 2012)
   Managing Director of BlackRock, Inc. since 2018; Director of BlackRock, Inc. from 2009 to 2017; Assistant Secretary of the funds in the Closed-End Complex from 2008 to 2012.

(a) The address of each Officer is c/o BlackRock, Inc., 55 East 52nd Street, New York, NY 10055.

(b) Officers of the Fund serve at the pleasure of the Board.

 

Effective December 31, 2017, Jerrold B. Harris retired as a Director of the Funds.

Effective February 16, 2018, Barbara G. Novick resigned and Robert Fairbairn was appointed, as an interested Director of the Funds.

 

Investment Adviser

BlackRock Advisors, LLC

Wilmington, DE 19809

VRDP Tender and Paying Agent and VMTP Redemption and Paying Agent

The Bank of New York Mellon

New York, NY 10289

Transfer Agent

Computershare Trust Company, N.A.

Canton, MA 02021

VRDP Liquidity Providers

Bank of America, N.A.(a)

New York, NY 10036

Barclays Bank PLC(b)

New York, NY 10019

VRDP Remarketing Agents

BofAML Securities, Inc.(a)

New York, NY 10036

Barclays Capital Inc.(b)

New York, NY 10019

Independent Registered Public Accounting Firm

Deloitte & Touche LLP

Boston, MA 02116

Accounting Agent and Custodian

State Street Bank and Trust Company

Boston, MA 02111

Legal Counsel

Skadden, Arps, Slate, Meagher & Flom LLP

Boston, MA 02116

Address of the Funds

100 Bellevue Parkway

Wilmington, DE 19809

 

 

(a)  For MYD.
(b)  For MQY.

 

 

58    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Additional Information

 

Fund Certification

The Funds are listed for trading on the NYSE and have filed with the NYSE their annual chief executive officer certification regarding compliance with the NYSE’s listing standards. The Funds filed with the SEC the certification of its chief executive officer and chief financial officer required by section 302 of the Sarbanes-Oxley Act.

Dividend Policy

Each 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 stable level of distributions, the Funds 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 particular month pay out such accumulated but undistributed income in addition to net investment income earned in that month. As a result, the distributions paid by the Funds for any particular month may be more or less than the amount of net investment income earned by the Funds during such month. The Funds’ current accumulated but undistributed net investment income, if any, is disclosed in the Statements of Assets and Liabilities, which comprises part of the financial information included in this report.

General Information

The Funds do not make available copies of their Statements of Additional Information because the Funds’ shares are not continuously offered, which means that the Statement of Additional Information of each Fund has not been updated after completion of the respective Fund’s offerings and the information contained in each Fund’s Statement of Additional Information may have become outdated.

During the period, there were no material changes in the Funds’ investment objectives or policies or to the Funds’ charters or by-laws that would delay or prevent a change of control of the Funds that were not approved by the shareholders or in the principal risk factors associated with investment in the Funds. There have been no changes in the persons who are primarily responsible for the day-to-day management of the Funds’ portfolios.

Quarterly performance, semi-annual and annual reports, current net asset value and other information regarding the Funds may be found on BlackRock’s website, which can be accessed at http://www.blackrock.com. Any reference to BlackRock’s website in this report is intended to allow investors public access to information regarding the Funds and does not, and is not intended to, incorporate BlackRock’s website in this report.

Electronic Delivery

Shareholders can sign up for e-mail notifications of quarterly statements, annual and semi-annual shareholder reports by enrolling in the electronic delivery program. Electronic copies of shareholder reports are available on BlackRock’s website.

To enroll in electronic delivery:

Shareholders Who Hold Accounts with Investment Advisers, Banks or Brokerages:

Please contact your financial advisor. Please note that not all investment advisers, banks or brokerages may offer this service.

Householding

The Funds will mail only one copy of shareholder documents, annual and semi-annual reports and proxy statements, to shareholders with multiple accounts at the same address. This practice is commonly called “householding” and is intended to reduce expenses and eliminate duplicate mailings of shareholder documents. Mailings of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please call the Funds at (800) 882-0052.

Availability of Quarterly Schedule of Investments

The Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the SEC’s website at http://www.sec.gov and may also be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room or how to access documents on the SEC’s website without charge may be obtained by calling (800) SEC-0330. The Funds’ Forms N-Q may also be obtained upon request and without charge by calling (800) 882-0052.

Availability of Proxy Voting Policies and Procedures

A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available upon request and without charge (1) by calling (800) 882-0052; (2) at http://www.blackrock.com; and (3) on the SEC’s website at http://www.sec.gov.

Availability of Proxy Voting Record

Information about how the Funds voted proxies relating to securities held in the Funds’ portfolios during the most recent 12-month period ended June 30 is available upon request and without charge (1) at http://www.blackrock.com; or by calling (800) 882-0052; and (2) on the SEC’s website at http://www.sec.gov.

 

 

ADDITIONAL INFORMATION      59  


Additional Information  (continued)

 

Availability of Fund Updates

BlackRock will update performance and certain other data for the Funds on a monthly basis on its website in the “Closed-end Funds” section of http://www.blackrock.com as well as certain other material information as necessary from time to time. Investors and others are advised to check the website for updated performance information and the release of other material information about the Funds. This reference to BlackRock’s website is intended to allow investors public access to information regarding the Funds and does not, and is not intended to, incorporate BlackRock’s website in this report.

BlackRock Privacy Principles

BlackRock is committed to maintaining the privacy of its current and former fund investors and individual clients (collectively, “Clients”) and to safeguarding their non-public personal information. The following information is provided to help you understand what personal information BlackRock collects, how we protect that information and why in certain cases we share such information with select parties.

If you are located in a jurisdiction where specific laws, rules or regulations require BlackRock to provide you with additional or different privacy-related rights beyond what is set forth below, then BlackRock will comply with those specific laws, rules or regulations.

BlackRock obtains or verifies personal non-public information from and about you from different sources, including the following: (i) information we receive from you or, if applicable, your financial intermediary, on applications, forms or other documents; (ii) information about your transactions with us, our affiliates, or others; (iii) information we receive from a consumer reporting agency; and (iv) from visits to our websites.

BlackRock does not sell or disclose to non-affiliated third parties any non public personal information about its Clients, except as permitted by law or as is necessary to respond to regulatory requests or to service Client accounts. These non-affiliated third parties are required to protect the confidentiality and security of this information and to use it only for its intended purpose.

We may share information with our affiliates to service your account or to provide you with information about other BlackRock products or services that may be of interest to you. In addition, BlackRock restricts access to non-public personal information about its Clients to those BlackRock employees with a legitimate business need for the information. BlackRock maintains physical, electronic and procedural safeguards that are designed to protect the non-public personal information of its Clients, including procedures relating to the proper storage and disposal of such information.

 

 

60    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Glossary of Terms Used in this Report

 

Portfolio Abbreviations
AGC    Assured Guarantee Corp.
AGM    Assured Guaranty Municipal Corp.
AMBAC    American Municipal Bond Assurance Corp.
AMT    Alternative Minimum Tax (subject to)
ARB    Airport Revenue Bonds
BAM    Build America Mutual Assurance Co.
BARB    Building Aid Revenue Bonds
BHAC    Berkshire Hathaway Assurance Corp.
CAB    Capital Appreciation Bonds
COP    Certificates of Participation
EDA    Economic Development Authority
EDC    Economic Development Corp.
ERB    Education Revenue Bonds
FHA    Federal Housing Administration
GARB    General Airport Revenue Bonds
GO    General Obligation Bonds
HFA    Housing Finance Agency
IDA    Industrial Development Authority
ISD    Independent School District
LRB    Lease Revenue Bonds
M/F    Multi-Family
NPFGC    National Public Finance Guarantee Corp.
PSF-GTD    Guaranteed Permanent School Fund
RB    Revenue Bonds
S/F    Single-Family
 

 

 

GLOSSARY OF TERMS USED IN THIS REPORT      61  


This report is intended for current holders. It is not a prospectus. Past performance results shown in this report should not be considered a representation of future performance. The Funds have leveraged their Common Shares, which creates risks for Common Shareholders, including the likelihood of greater volatility of net asset value and market price of the Common Shares, and the risk that fluctuations in short-term interest rates may reduce the Common Shares’ yield. Statements and other information herein are as dated and are subject to change.

 

LOGO

 

 

MYQII-4/18-AR    LOGO


Item 2 – Code of Ethics – The registrant (or the “Fund”) has adopted a code of ethics, as of the end of the period covered by this report, applicable to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. During the period covered by this report, the code of ethics was amended to clarify an inconsistency as to whom persons covered by the code should report suspected violations of the code. The amendment clarifies that such reporting should be made to BlackRock Advisors, LLC’s (“Investment Adviser” or “BlackRock”) General Counsel, and retains the alternative option of anonymous reporting following “whistleblower” policies. Other non-material changes were also made in connection with this amendment. During the period covered by this report, there have been no waivers granted under the code of ethics. The registrant undertakes to provide a copy of the code of ethics to any person upon request, without charge, who calls 1-800-882-0052, option 4.

 

Item 3 – Audit Committee Financial Expert – The registrant’s board of directors (the “board of directors”), has determined that (i) the registrant has the following audit committee financial experts serving on its audit committee and (ii) each audit committee financial expert is independent:

Michael Castellano

Frank J. Fabozzi

W. Carl Kester

Catherine A. Lynch

Karen P. Robards

The registrant’s board of directors has determined that W. Carl Kester and Karen P. Robards qualify as financial experts pursuant to Item 3(c)(4) of Form N-CSR.

Prof. Kester has a thorough understanding of generally accepted accounting principles, financial statements and internal control over financial reporting as well as audit committee functions. Prof. Kester has been involved in providing valuation and other financial consulting services to corporate clients since 1978. Prof. Kester’s financial consulting services present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the registrant’s financial statements.

Ms. Robards has a thorough understanding of generally accepted accounting principles, financial statements and internal control over financial reporting as well as audit committee functions. Ms. Robards has been a principal of Robards & Company, a financial advisory firm, since 1987. Ms. Robards was formerly an investment banker for more than 10 years where she was responsible for evaluating and assessing the performance of companies based on their financial results. Ms. Robards has over 30 years of experience analyzing financial statements. She also is a member of the audit committee of one publicly held company and a non-profit organization.

Under applicable securities laws, a person determined to be an audit committee financial expert will not be deemed an “expert” for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and board of directors in the absence of such designation or identification. The designation or identification of a person as an

 

2


audit committee financial expert does not affect the duties, obligations, or liability of any other member of the audit committee or board of directors.

 

Item 4 – Principal Accountant Fees and Services

The following table presents fees billed by Deloitte & Touche LLP (“D&T”) in each of the last two fiscal years for the services rendered to the Fund:

 

         
      (a) Audit Fees    (b) Audit-Related Fees1    (c) Tax Fees2    (d) All Other Fees
Entity Name   

Current

Fiscal Year

End

  

Previous

Fiscal Year

End

  

Current

Fiscal Year

End

  

Previous

Fiscal Year

End

  

Current

Fiscal Year

End

  

Previous

Fiscal Year

End

  

Current

Fiscal Year

End

  

Previous

Fiscal Year

End

BlackRock MuniYield Quality Fund II, Inc.    $37,400    $38,110    $0    $0    $13,400    $13,362    $0    $0

The following table presents fees billed by D&T that were required to be approved by the registrant’s audit committee (the “Committee”) for services that relate directly to the operations or financial reporting of the Fund and that are rendered on behalf of BlackRock and entities controlling, controlled by, or under common control with BlackRock (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) that provide ongoing services to the Fund (“Affiliated Service Providers”):

 

      Current Fiscal Year End    Previous Fiscal Year End

(b) Audit-Related Fees1

   $0    $0

(c) Tax Fees2

   $0    $0

(d) All Other Fees3

   $2,274,000    $2,129,000

1 The nature of the services includes assurance and related services reasonably related to the performance of the audit or review of financial statements not included in Audit Fees, including accounting consultations, agreed-upon procedure reports, attestation reports, comfort letters, out-of-pocket expenses and internal control reviews not required by regulators.

2 The nature of the services includes tax compliance and/or tax preparation, including services relating to the filing or amendment of federal, state or local income tax returns, regulated investment company qualification reviews, taxable income and tax distribution calculations.

3 Non-audit fees of $2,274,000 and $2,129,000 for the current fiscal year and previous fiscal year, respectively, were paid to the Fund’s principal accountant in their entirety by BlackRock, in connection with services provided to the Affiliated Service Providers of the Fund and of certain other funds sponsored and advised by BlackRock or its affiliates for a service organization review and an accounting research tool subscription. These amounts represent aggregate fees paid by BlackRock and were not allocated on a per fund basis.

(e)(1) Audit Committee Pre-Approval Policies and Procedures:

The Committee has adopted policies and procedures with regard to the pre-approval of services. Audit, audit-related and tax compliance services provided to the registrant on an annual basis require specific pre-approval by the Committee. The Committee also must approve other non-audit services provided to the registrant and those non-audit services provided to the Investment Adviser and Affiliated Service Providers that relate directly to the operations and the financial reporting of the registrant. Certain of these non-audit services that the Committee believes are (a) consistent with the SEC’s auditor independence rules and (b) routine and recurring services that will not impair the independence of the independent accountants may be approved by the Committee without consideration on a specific case-by-case basis (“general pre-approval”). The term of any general pre-approval is 12 months from the date of the pre-approval, unless the Committee provides for a different period. Tax or other non-audit services provided to the registrant which have a direct impact on the operations or financial reporting of the registrant will only be deemed pre-approved provided that any individual project does not exceed $10,000 attributable to the registrant or

 

3


$50,000 per project. For this purpose, multiple projects will be aggregated to determine if they exceed the previously mentioned cost levels.

Any proposed services exceeding the pre-approved cost levels will require specific pre-approval by the Committee, as will any other services not subject to general pre-approval (e.g., unanticipated but permissible services). The Committee is informed of each service approved subject to general pre-approval at the next regularly scheduled in-person board meeting. At this meeting, an analysis of such services is presented to the Committee for ratification. The Committee may delegate to the Committee Chairman the authority to approve the provision of and fees for any specific engagement of permitted non-audit services, including services exceeding pre-approved cost levels.

(e)(2) None of the services described in each of Items 4(b) through (d) were approved by the Committee pursuant to the de minimis exception in paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

(f) Not Applicable

(g) The aggregate non-audit fees, defined as the sum of the fees shown under “Audit-Related Fees,” “Tax Fees” and “All Other Fees,” paid to the accountant for services rendered by the accountant to the registrant, the Investment Adviser and the Affiliated Service Providers were:

 

     Entity Name   

Current Fiscal

Year End

  

Previous Fiscal

Year End

   BlackRock MuniYield Quality Fund II, Inc.    $13,400    $13,362

Additionally, the amounts billed by D&T in connection with services provided to the Affiliated Service Providers of the Fund and of other funds sponsored or advised by BlackRock or its affiliates during the current and previous fiscal years for a service organization review and an accounting research tool subscription were:

 

     Current Fiscal    
Year End    
   Previous Fiscal    
Year End    
   $2,274,000        $2,129,000    

These amounts represent aggregate fees paid by BlackRock and were not allocated on a per fund basis.

(h) The Committee has considered and determined that the provision of non-audit services that were rendered to the Investment Adviser, and the Affiliated Service Providers that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.

 

Item 5 – Audit Committee of Listed Registrants

 

  (a)

The following individuals are members of the registrant’s separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of

 

4


1934 (15 U.S.C. 78c(a)(58)(A)):

Michael Castellano

Frank J. Fabozzi

W. Carl Kester

Catherine A. Lynch

Karen P. Robards

(b) Not Applicable

 

Item 6 – Investments

(a) The registrant’s Schedule of Investments is included as part of the Report to Stockholders filed under Item 1 of this Form.

(b) Not Applicable due to no such divestments during the semi-annual period covered since the previous Form N-CSR filing.

 

Item 7 – Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies – The board of directors has delegated the voting of proxies for the Fund’s portfolio securities to the Investment Adviser pursuant to the Investment Adviser’s proxy voting guidelines. Under these guidelines, the Investment Adviser will vote proxies related to Fund securities in the best interests of the Fund and its stockholders. From time to time, a vote may present a conflict between the interests of the Fund’s stockholders, on the one hand, and those of the Investment Adviser, or any affiliated person of the Fund or the Investment Adviser, on the other. In such event, provided that the Investment Adviser’s Equity Investment Policy Oversight Committee, or a sub-committee thereof (the “Oversight Committee”) is aware of the real or potential conflict or material non-routine matter and if the Oversight Committee does not reasonably believe it is able to follow its general voting guidelines (or if the particular proxy matter is not addressed in the guidelines) and vote impartially, the Oversight Committee may retain an independent fiduciary to advise the Oversight Committee on how to vote or to cast votes on behalf of the Investment Adviser’s clients. If the Investment Adviser determines not to retain an independent fiduciary, or does not desire to follow the advice of such independent fiduciary, the Oversight Committee shall determine how to vote the proxy after consulting with the Investment Adviser’s Portfolio Management Group and/or the Investment Adviser’s Legal and Compliance Department and concluding that the vote cast is in its client’s best interest notwithstanding the conflict. A copy of the Fund’s Proxy Voting Policy and Procedures are attached as Exhibit 99.PROXYPOL. Information on how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge, (i) at www.blackrock.com and (ii) on the SEC’s website at http://www.sec.gov.

 

Item 8 – Portfolio Managers of Closed-End Management Investment Companies

(a)(1) As of the date of filing this Report:

The registrant is managed by a team of investment professionals comprised of Michael Kalinoski, Director at BlackRock, and Christian Romaglino, Director at BlackRock. Each is a member of BlackRock’s municipal tax-exempt management group. Each is jointly responsible for the day-to-day management of the registrant’s portfolio, which includes

 

5


setting the registrant’s overall investment strategy, overseeing the management of the registrant and the selection of its investments. Messrs. Kalinoski and Romaglino have been members of the registrant’s portfolio management team since 2000 and 2017, respectively.

 

  Portfolio Manager    Biography
  Michael Kalinoski    Director of BlackRock since 2006; Director of Merrill Lynch Investment Managers, L.P. (“MLIM”) from 1999 to 2006.
  Christian Romaglino    Director of BlackRock since 2017; Portfolio Manager for the Municipal Mutual Fund Desk within BlackRock’s Global Fixed Income Group since 2017; Portfolio Manager of Brown Brothers Harriman from 2007 to 2017.

 

  (a)(2) As of April 30, 2018:

 

     

(ii) Number of Other Accounts Managed

and Assets by Account Type

  

(iii) Number of Other Accounts and

Assets for Which Advisory Fee is

Performance-Based

(i) Name of

Portfolio Manager

  

Other

Registered

Investment

Companies

  

Other Pooled

Investment

Vehicles

  

Other

Accounts

  

Other

Registered

Investment

Companies

  

Other Pooled

Investment

Vehicles

  

Other

Accounts

Michael Kalinoski    20    0    0    0    0    0
    

 

$25.19 Billion

 

  

$0

 

  

$0

 

  

$0

 

  

$0

 

  

$0

 

Christian Romaglino    10    10    0    0    0    0
    

 

$4.34 Billion

 

  

$0

 

  

$0

 

  

$0

 

  

$0

 

  

$0

 

 

  (iv) Potential Material Conflicts of Interest

BlackRock has built a professional working environment, firm-wide compliance culture and compliance procedures and systems designed to protect against potential incentives that may favor one account over another. BlackRock has adopted policies and procedures that address the allocation of investment opportunities, execution of portfolio transactions, personal trading by employees and other potential conflicts of interest that are designed to ensure that all client accounts are treated equitably over time. Nevertheless, BlackRock furnishes investment management and advisory services to numerous clients in addition to the Fund, and BlackRock may, consistent with applicable law, make investment recommendations to other clients or accounts (including accounts which are hedge funds or have performance or higher fees paid to BlackRock, or in which portfolio managers have a personal interest in the receipt of such fees), which may be the same as or different from those made to the Fund. In addition, BlackRock, Inc., its affiliates and significant shareholders and any officer, director, shareholder or employee may or may not have an interest in the securities whose purchase and sale BlackRock recommends to the Fund. BlackRock, Inc. or any of its affiliates or significant shareholders, or any officer, director, shareholder, employee or any member of their families may take different actions than those recommended to the Fund by BlackRock with respect to the same securities. Moreover, BlackRock may refrain from rendering any advice or services concerning securities of companies of which any of BlackRock, Inc.’s (or its affiliates’ or significant shareholders’) officers, directors or employees are directors or officers, or companies as to which BlackRock, Inc. or any of its affiliates or significant shareholders or the officers, directors

 

6


and employees of any of them has any substantial economic interest or possesses material non-public information. Certain portfolio managers also may manage accounts whose investment strategies may at times be opposed to the strategy utilized for a fund. It should also be noted that a portfolio manager may be managing certain hedge fund and/or long only accounts, or may be part of a team managing certain hedge fund and/or long only accounts, subject to incentive fees. Such portfolio managers may therefore be entitled to receive a portion of any incentive fees earned on such accounts. Currently, the portfolio managers of this fund are not entitled to receive a portion of incentive fees of other accounts.

As a fiduciary, BlackRock owes a duty of loyalty to its clients and must treat each client fairly. When BlackRock purchases or sells securities for more than one account, the trades must be allocated in a manner consistent with its fiduciary duties. BlackRock attempts to allocate investments in a fair and equitable manner among client accounts, with no account receiving preferential treatment. To this end, BlackRock, Inc. has adopted policies that are intended to ensure reasonable efficiency in client transactions and provide BlackRock with sufficient flexibility to allocate investments in a manner that is consistent with the particular investment discipline and client base, as appropriate.

(a)(3) As of April 30, 2018:

Portfolio Manager Compensation Overview

The discussion below describes the portfolio managers’ compensation as of April 30, 2018.

BlackRock’s financial arrangements with its portfolio managers, its competitive compensation and its career path emphasis at all levels reflect the value senior management places on key resources. Compensation may include a variety of components and may vary from year to year based on a number of factors. The principal components of compensation include a base salary, a performance-based discretionary bonus, participation in various benefits programs and one or more of the incentive compensation programs established by BlackRock.

Base Compensation. Generally, portfolio managers receive base compensation based on their position with the firm.

Discretionary Incentive Compensation

Discretionary incentive compensation is a function of several components: the performance of BlackRock, Inc., the performance of the portfolio manager’s group within BlackRock, the investment performance, including risk-adjusted returns, of the firm’s assets under management or supervision by that portfolio manager relative to predetermined benchmarks, and the individual’s performance and contribution to the overall performance of these portfolios and BlackRock. In most cases, these benchmarks are the same as the benchmark or benchmarks against which the performance of the Fund or other accounts managed by the portfolio managers are measured. Among other things, BlackRock’s Chief Investment Officers make a subjective determination with respect to each portfolio manager’s compensation based on the performance of the Fund and other accounts managed by each portfolio manager relative to the various benchmarks. Performance of fixed income funds is measured on a pre-tax and/or after-tax basis over various time periods

 

7


including 1-, 3- and 5- year periods, as applicable. With respect to these portfolio managers, such benchmarks for the Fund and other accounts are: a combination of market-based indices (e.g., Standard & Poor’s Municipal Bond Index), certain customized indices and certain fund industry peer groups.

Distribution of Discretionary Incentive Compensation.

Discretionary incentive compensation is distributed to portfolio managers in a combination of cash, deferred BlackRock, Inc. stock awards, and/or deferred cash awards that notionally track the return of certain BlackRock investment products.

Portfolio managers receive their annual discretionary incentive compensation in the form of cash. Portfolio managers whose total compensation is above a specified threshold also receive deferred BlackRock, Inc. stock awards annually as part of their discretionary incentive compensation. Paying a portion of discretionary incentive compensation in the form of deferred BlackRock, Inc. stock puts compensation earned by a portfolio manager for a given year “at risk” based on BlackRock’s ability to sustain and improve its performance over future periods. In some cases, additional deferred BlackRock, Inc. stock may be granted to certain key employees as part of a long-term incentive award to aid in retention, align interests with long-term shareholders and motivate performance. Deferred BlackRock, Inc. stock awards are generally granted in the form of BlackRock, Inc. restricted stock units that vest pursuant to the terms of the applicable plan and, once vested, settle in BlackRock, Inc. common stock. The portfolio managers of this Fund have deferred BlackRock, Inc. stock awards.

For certain portfolio managers, a portion of the discretionary incentive compensation is also distributed in the form of deferred cash awards that notionally track the returns of select BlackRock investment products they manage, which provides direct alignment of portfolio manager discretionary incentive compensation with investment product results. Deferred cash awards vest ratably over a number of years and, once vested, settle in the form of cash. Only portfolio managers who manage specified products and whose total compensation is above a specified threshold are eligible to participate in the deferred cash award program.

Other Compensation Benefits. In addition to base salary and discretionary incentive compensation, portfolio managers may be eligible to receive or participate in one or more of the following:

Incentive Savings Plans — BlackRock, Inc. has created a variety of incentive savings plans in which BlackRock, Inc. employees are eligible to participate, including a 401(k) plan, the BlackRock Retirement Savings Plan (RSP), and the BlackRock Employee Stock Purchase Plan (ESPP). The employer contribution components of the RSP include a company match equal to 50% of the first 8% of eligible pay contributed to the plan capped at $5,000 per year, and a company retirement contribution equal to 3-5% of eligible compensation up to the Internal Revenue Service limit ($275,000 for 2018). The RSP offers a range of investment options, including registered investment companies and collective investment funds managed by the firm. BlackRock, Inc. contributions follow the investment direction set by participants for their own contributions or, absent participant investment direction, are invested into a target date fund that corresponds to, or is closest to, the year in which the participant attains age 65. The ESPP allows for investment in BlackRock, Inc. common stock at a 5% discount on the fair market value of the stock on the

 

8


purchase date. Annual participation in the ESPP is limited to the purchase of 1,000 shares of common stock or a dollar value of $25,000 based on its fair market value on the purchase date. All of the eligible portfolio managers are eligible to participate in these plans.

(a)(4) Beneficial Ownership of Securities – As of April 30, 2018:

 

Portfolio Manager   

Dollar Range of Equity Securities

of the Fund Beneficially Owned

Michael Kalinoski

   $10,001 - $50,000

Christian Romaglino

   None

(b) Not Applicable

 

Item 9 – Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers – Not Applicable due to no such purchases during the period covered by this report.

 

Item 10 – Submission of Matters to a Vote of Security Holders – There have been no material changes to these procedures.

 

Item 11 – Controls and Procedures

(a) – The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing of this report based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended.

(b) – There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

Item 12 – Disclosure of Securities Lending Activities for Closed-End Management Investment Companies – Not Applicable

 

Item 13 – Exhibits attached hereto

(a)(1) – Code of Ethics – See Item 2

(a)(2) – Certifications – Attached hereto

(a)(3) – Not Applicable

(a)(4) – Not Applicable

(b) – Certifications – Attached hereto

 

9


Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

   BlackRock MuniYield Quality Fund II, Inc.
                By:   

/s/ John M. Perlowski

  
      John M. Perlowski   
      Chief Executive Officer (principal executive officer) of
      BlackRock MuniYield Quality Fund II, Inc.
   Date: July 5, 2018   

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

   By:   

/s/ John M. Perlowski

  
                   John M. Perlowski   
      Chief Executive Officer (principal executive officer) of
      BlackRock MuniYield Quality Fund II, Inc.
   Date: July 5, 2018   
   By:   

/s/ Neal J. Andrews

  
      Neal J. Andrews   
      Chief Financial Officer (principal financial officer) of
      BlackRock MuniYield Quality Fund II, Inc.
   Date: July 5, 2018   

 

10