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: 04/30/2019

Date of reporting period: 10/31/2018

 


Item 1 – Report to Stockholders

 


OCTOBER 31, 2018

 

SEMI-ANNUAL REPORT (UNAUDITED)

  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 October 31, 2018, ongoing strength in corporate profits drove the equity market higher, while rising interest rates constrained bond returns. Though the market’s appetite for risk remained healthy, risk-taking was tempered somewhat, as shorter-term, higher-quality securities led the bond market, and U.S. equities outperformed most international stock markets.

In international markets, the rising value of the U.S. dollar limited U.S. investors’ returns for the reporting period. When the U.S. dollar appreciates relative to foreign currencies, the value of international investments declines in U.S. dollar terms. Volatility rose in emerging market stocks, which are relatively sensitive to changes in the U.S. dollar. U.S.-China trade relations and debt concerns adversely affected the Chinese stock market, while Turkey and Argentina became embroiled in currency crises, largely due to hyperinflation in both countries. An economic slowdown in Europe led to negative performance for European equities.

In fixed income markets, short-term U.S. Treasury interest rates rose the fastest, while longer-term rates slightly increased. This led to a negative return for long-term U.S. Treasuries and a substantial flattening of the yield curve. Many investors are concerned with the flattening yield curve as a harbinger of recession. However, given the extraordinary monetary measures in the last decade, we believe a more accurate barometer for the economy is the returns along the risk spectrums in stock and bond markets. Although the fundamentals in credit markets remained relatively solid, investment-grade bonds declined slightly, and high-yield bonds posted modest returns.

In response to rising growth and inflation, the U.S. Federal Reserve (the “Fed”) increased short-term interest rates four times during the reporting period. The Fed also continued to reduce its balance sheet during the reporting period, gradually reversing the unprecedented stimulus measures it enacted after the financial crisis. We believe the Fed is likely to continue to raise interest rates in the coming year. By our estimation, the Fed’s neutral interest rate, or the theoretical rate that is neither stimulative nor restrictive to the economy, is approximately 3.0%. With that perspective, the Fed’s current policy is still mildly stimulative to the U.S. economy, which leaves room for further Fed rate hikes to arrive at monetary policy that is a neutral factor for economic growth.

The U.S. economy continued to gain momentum despite the Fed’s modest reduction of economic stimulus; unemployment declined to 3.7%, the lowest rate of unemployment in almost 50 years. The number of job openings reached a record high of more than 7 million, which exceeded the total number of unemployed workers. Strong economic performance has justified the Fed’s somewhat faster pace of rate hikes, as several inflation measures and investors’ expectations for inflation have already surpassed the Fed’s target of 2.0% per year.

While markets have recently focused on the risk of rising long-term interest rates, we continue to believe the primary risk to economic expansion is trade protectionism that could lead to slower global trade and unintended consequences for the globalized supply chain. So far, U.S. tariffs have only had a modest negative impact on economic growth, but the fear of an escalating trade war has stifled market optimism somewhat, leading to higher volatility in risk assets. The outcome of trade negotiations between the United States and China is likely to influence the global growth trajectory and set the tone for free trade in many other nations. Easing of tensions could lead to greater upside for markets, while additional tariffs could adversely affect investor sentiment.

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 October 31, 2018
     6-month   12-month

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

  3.40%   7.35%

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

  (1.37)   1.85

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

  (9.92)   (6.85)

Emerging market equities
(MSCI Emerging Markets Index)

  (16.53)   (12.52)

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

  0.99   1.68

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

  (0.60)   (4.37)

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

  (0.19)   (2.05)

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

  0.45   (0.31)

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

  1.14   0.98
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  

Semi-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

     38  

Statements of Operations

     39  

Statements of Changes in Net Assets

     40  

Statements of Cash Flows

     43  

Financial Highlights

     44  

Notes to Financial Statements

     47  

Disclosure of Investment Advisory Agreement

     56  

Director and Officer Information

     60  

Additional Information

     61  

Glossary of Terms Used in this Report

     63  

 

 

TABLE OF CONTENTS      3  


Municipal Market Overview  For the Reporting Period Ended October 31, 2018

 

Municipal Market Conditions

Municipal bonds experienced negative total returns during the period alongside fixed income broadly, as interest rates moved higher on the back of continued Fed policy normalization, fiscal stimulus, strong economic growth, and increased U.S. Treasury issuance. At the same time, demand for the asset class remained firm. Investors favored the tax-exempt income, diversification, quality, and value of municipal bonds, particularly given that tax reform ultimately lowered the top individual tax rate just 2.6% while eliminating deductions. During the 12 months ended October 31, 2018, municipal bond funds experienced net inflows of approximately $12.8 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 $366 billion (slightly above the $363 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 October 31, 2018

 

  6 months: 0.45%

 

12 months: (0.31)%

 

A Closer Look at Yields

 

LOGO

From October 31, 2017 to October 31, 2018, yields on AAA-rated 30-year municipal bonds increased by 55 basis points (“bps”) from 2.83% to 3.38%, while 10-year rates increased by 72 bps from 2.01% to 2.73% and 5-year rates increased by 88 bps from 1.42% to 2.30% (as measured by Thomson Municipal Market Data). The municipal yield curve bear flattened over the 12-month period with the spread between 2- and 30-year maturities flattening by 43 bps, however remained a significant 78 bps steeper than the corresponding U.S. Treasury curve.

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, incremental yield, and tax shelter 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 problems among a few issuers. Four of the five states with the largest amount of debt outstanding — California, New York, Texas and Florida — continue to exhibit improved credit fundamentals. However, several states with the largest unfunded pension liabilities are faced with elevated borrowing costs and difficult budgetary decisions. Across the country on the local level, property values support credit stability. Standard & Poor’s recent decision to remove its “negative” outlook on New Mexico underscores the improvement in state finances as it was the only remaining state with the designation. Revenue bonds continue to drive performance as investors continue to seek higher yield bonds in the tobacco sector. 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 October 31, 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 SEMI-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 October 31, 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 October 31, 2018 ($12.41)(a)

  5.90%

Tax Equivalent Yield(b)

  9.97%

Current Monthly Distribution per Common Share(c)

  $0.0610

Current Annualized Distribution per Common Share(c)

  $0.7320

Economic Leverage as of October 31, 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 monthly distribution per Common Share, declared on December 3, 2018, was decreased to $0.059 per share. The yield on closing market price, current monthly distribution per Common Share and current annualized distribution per Common Share do not reflect the new distribution rate. The new distribution rate is not constant and is subject to change in the future.

 
  (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 six months ended October 31, 2018 were as follows:

 

    Returns Based On  
     Market Price      NAV  

MYD(a)(b)

    (2.79 )%       0.21

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

    (3.47      (0.13

 

  (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 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 experienced lackluster returns in the past six months, with price weakness outweighing the contribution from income. After trading sideways through the summer months, tax-exempt issues fell sharply in September and October. During this time, investors reacted to commentary from Fed Chairman Jerome Powell indicating that future monetary policy tightening could be more aggressive than the markets had anticipated. Supply and demand factors also had an adverse effect on returns in the latter part of the period, with mutual fund outflows occurring at the same time as a wave of new issuance was hitting the market.

The Fund’s yield curve positioning made the largest contribution to performance. Positions in high-quality, short-dated, pre-refunded bonds performed relatively well and held their value better than long-dated holdings. The latter experienced larger price declines amid a steepening yield curve in which rates on intermediate- and long-term issues rose at a faster pace than those of short-term securities. (Prices and yields move in opposite directions.)

The use of leverage, while providing additional income, was a net detractor since it amplified the impact of falling prices.

Positions in lower-quality issues continued to benefit results, as investor risk appetites remained robust for much of the reporting period. Holdings in lower-rated investment-grade bonds and high-yield issues outperformed due to the combination of their higher income and stronger price performance. However, these bonds lagged late in the period once investor sentiment began to deteriorate.

At the sector level, positions in tobacco, state tax-backed issues contributed to results. Investments in project finance and corporate-related debt added value, as well. An allocation to the housing sector was a slight detractor.

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 by offsetting the weakness in prices.

 

 

6    2018 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Fund Summary  as of October 31, 2018 (continued)    BlackRock MuniYield Fund, Inc.

 

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

 

    

10/31/18

   

04/30/18

     Change      High      Low  

Market Price

  $ 12.41     $ 13.12        (5.41)    $ 13.99      $ 12.30  

Net Asset Value

    14.02       14.38        (2.50)        14.51        14.02  

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

 

LOGO

Overview of the Fund’s Total Investments*

 

SECTOR ALLOCATION

 

Sector   10/31/18     04/30/18  

Transportation

    24     25

Health

    21       21  

Utilities

    13       11  

County/City/Special District/School District

    12       10  

State

    9       10  

Tobacco

    8       8  

Corporate

    7       7  

Education

    5       7  

Housing

    1       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

    4

2019

    22  

2020

    12  

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   10/31/18     04/30/18  

AAA/Aaa

    3    
4

AA/Aa

    42       41  

A

    21       19  

BBB/Baa

    17       17  

BB/Ba

    4       5  

B

    4       3  

N/R(b)

    9       11  

 

  (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 October 31, 2018 and April 30, 2018, the market value of unrated securities deemed by the investment adviser to be investment grade represents 1% and 1%, respectively, of the Fund’s total investments.

 
 

 

 

FUND SUMMARY      7  


Fund Summary  as of October 31, 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 October 31, 2018 ($12.82)(a)

  5.24%

Tax Equivalent Yield(b)

  8.85%

Current Monthly Distribution per Common Share(c)

  $0.0560

Current Annualized Distribution per Common Share(c)

  $0.6720

Economic Leverage as of October 31, 2018(d)

  41%

 

 

  (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 six months ended October 31, 2018 were as follows:

 

    Returns Based On  
     Market Price      NAV  

MQY(a)(b)

    (4.89 )%       (0.29 )% 

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

    (3.47      (0.13

 

  (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 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 experienced lackluster returns in the past six months, with price weakness outweighing the contribution from income. After trading sideways through the summer, tax-exempt issues fell sharply in September and October. During this time, investors reacted to commentary from Fed Chairman Jerome Powell indicating that future monetary policy tightening could be more aggressive than the markets had anticipated. Supply and demand factors also had an adverse effect on returns in the latter part of the period, with mutual fund outflows occurring at the same time as a wave of new issuance was hitting the market.

The Fund’s quality focus detracted from performance given the underperformance of higher-rated debt.

The use of leverage, while providing additional income, was a net detractor since it amplified the impact of falling prices.

Holdings in longer-term bonds detracted as their weak price performance outweighed the benefit of added income. An allocation to low-coupon and zero-coupon bonds, which have a higher sensitivity to interest rates, also hurt performance.

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

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 by offsetting the weakness in prices.

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.

 

 

8    2018 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Fund Summary  as of October 31, 2018 (continued)    BlackRock MuniYield Quality Fund, Inc.

 

Market Price and Net Asset Value Per Share Summary

 

     10/31/18     04/30/18      Change      High      Low  

Market Price

  $ 12.82     $ 13.83        (7.30)    $ 14.05      $ 12.70  

Net Asset Value

    14.79       15.22        (2.83)        15.45        14.78  

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

 

LOGO

Overview of the Fund’s Total Investments*

 

SECTOR ALLOCATION

 

Sector   10/31/18     04/30/18  

Transportation

    26     25

State

    16       13  

County/City/Special District/School District

    15       17  

Utilities

    14       16  

Health

    14       14  

Education

    5       6  

Housing

    5       2  

Corporate

    3       5  

Tobacco

    2       2  

 

  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

    6

2019

    10  

2020

    4  

2021

    11  

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   10/31/18    

04/30/18

 

AAA/Aaa

    4     4

AA/Aa

    52       52  

A

    25       23  

BBB/Baa

    11       10  

BB/Ba

    4       3  

N/R(b)

    4       8  

 

  (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 October 31, 2018 and April 30, 2018, the market value of unrated securities deemed by the investment adviser to be investment grade each represents less than 1% of the Trust’s total investments.

 
 

 

 

FUND SUMMARY      9  


Fund Summary  as of October 31, 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 October 31, 2018 ($11.27)(a)

  5.11%

Tax Equivalent Yield(b)

  8.63%

Current Monthly Distribution per Common Share(c)

  $0.0480

Current Annualized Distribution per Common Share(c)

  $0.5760

Economic Leverage as of October 31, 2018(d)

  42%

 

  (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 six months ended October 31, 2018 were as follows:

 

    Returns Based On  
     Market Price      NAV  

MQT(a)(b)

    (3.52 )%       (0.28 )% 

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

    (3.47      (0.13

 

  (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 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 experienced lackluster returns in the past six months, with price weakness outweighing the contribution from income. After trading sideways through the summer, tax-exempt issues fell sharply in September and October. During this time, investors reacted to commentary from Fed Chairman Jerome Powell indicating that future monetary policy tightening could be more aggressive than the markets had anticipated. Supply and demand factors also had an adverse effect on returns in the latter part of the period, with mutual fund outflows occurring at the same time as a wave of new issuance was hitting the market.

The Fund’s high concentration in short-maturity, pre-refunded securities aided results due to the strong relative performance of short-term securities. On the other end of the spectrum, holdings in longer-term bonds detracted as their weak price performance outweighed the benefit of added income.

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 Trust’s positioning had a positive effect on returns by offsetting the weakness in prices.

The Fund’s quality focus detracted from performance given the underperformance of higher-rated debt.

The use of leverage, while providing additional income, was a net detractor since it amplified the impact of falling prices.

An allocation to low-coupon and zero-coupon bonds, which have a higher sensitivity to interest rates, also hurt performance.

Although yields rose during the period, reinvestment had an adverse effect on the Fund’s income since 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.

 

 

10    2018 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Fund Summary  as of October 31, 2018 (continued)    BlackRock MuniYield Quality Fund II, Inc.

 

Market Price and Net Asset Value Per Share Summary

 

    

10/31/18

   

04/30/18

     Change      High      Low  

Market Price

  $ 11.27     $ 11.98        (5.93)    $ 12.16      $ 11.14  

Net Asset Value

    13.00       13.37        (2.77)        13.56        12.98  

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

 

LOGO

Overview of the Fund’s Total Investments*

 

SECTOR ALLOCATION

 

Sector   10/31/18    

04/30/18

 

Transportation

    28     27

County/City/Special District/School District

    19       17  

Health

    17       16  

Utilities

    12       16  

State

    10       12  

Education

    6       6  

Housing

    5       2  

Corporate

    2       2  

Tobacco

    1       2  

 

  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

    4

2019

    13  

2020

    5  

2021

    9  

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   10/31/18    

04/30/18

 

AAA/Aaa

    3     4

AA/Aa

    53       47  

A

    23       26  

BBB/Baa

    12       14  

BB/Ba

    2       2  

N/R(b)

    7       7  

 

  (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 October 31, 2018 and April 30, 2018, the market value of unrated securities deemed by the investment adviser to be investment grade represents 1% and less than 1%, respectively, of the Fund’s total investments.

 
 

 

 

FUND SUMMARY      11  


Schedule of Investments  (unaudited)

October 31, 2018

  

BlackRock MuniYield Fund, Inc. (MYD)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Municipal Bonds — 119.3%  

Alabama — 2.1%

 

County of Jefferson Alabama Sewer, Refunding RB:

   

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

  $ 1,665     $ 1,779,868  

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

    3,175       3,424,809  

Sub-Lien, Series D, 6.00%, 10/01/42

    7,410       8,366,335  
   

 

 

 
      13,571,012  
Alaska — 0.0%  

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

    280       280,053  
   

 

 

 
Arizona — 2.7%  

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

    3,575       3,581,506  

Salt Verde Financial Corp., RB, Senior:

   

5.00%, 12/01/32

    7,365       8,347,491  

5.00%, 12/01/37

    5,000       5,669,900  
   

 

 

 
      17,598,897  
California — 10.0%  

California Health Facilities Financing Authority, RB:

   

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

    4,425       4,536,422  

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

    6,465       6,932,872  

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

   

Dignity Health, 6.00%, 07/01/19(b)

    3,155       3,244,318  

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

    2,560       2,794,010  

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

   

5.25%, 08/15/39

    305       328,253  

5.25%, 08/15/49

    770       824,570  

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

   

5.00%, 02/01/36

    670       728,404  

5.00%, 02/01/37

    505       547,157  

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

    6,900       7,104,171  

California Statewide Communities Development Authority, RB, Series A:

   

John Muir Health, 5.13%, 07/01/19(b)

    2,300       2,351,888  

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

    1,100       1,122,209  

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

    955       971,225  

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

    3,285       3,284,901  

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

    1,605       1,630,503  

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

   

6.25%, 10/01/38

    405       469,120  

6.25%, 10/01/40

    335       387,371  

Golden State Tobacco Securitization Corp., Refunding RB, Series A-1, 5.25%, 06/01/47

    2,095       2,106,439  

State of California, GO:

   

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

    10       10,025  

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

    7,625       7,778,339  

Various Purposes, 6.00%, 03/01/33

    5,085       5,358,166  

Various Purposes, 6.50%, 04/01/33

    6,450       6,568,874  
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     $ 1,749,819  

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

    2,385       2,494,543  

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

   

4.75%, 06/01/25

    855       857,120  

5.00%, 06/01/37

    1,775       1,779,402  
   

 

 

 
      65,960,121  
Colorado — 0.9%  

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

    1,250       1,236,350  

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

   

5.25%, 06/01/19

    2,250       2,293,020  

5.38%, 06/01/19

    1,250       1,274,787  

5.38%, 06/01/19

    830       846,459  
   

 

 

 
      5,650,616  
Connecticut — 0.8%  

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

    2,770       2,835,483  

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

    2,225       2,330,287  
   

 

 

 
      5,165,770  
Delaware — 2.1%  

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

    2,305       2,437,722  

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

    2,430       2,610,014  

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

    8,275       8,584,485  
   

 

 

 
      13,632,221  
District of Columbia — 4.5%  

District of Columbia, Refunding RB, Georgetown University:

   

5.00%, 04/01/35

    910       1,005,923  

Issue, 5.00%, 04/01/42

    1,050       1,143,135  

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

    4,440       4,684,955  

Metropolitan Washington Airports Authority, Refunding RB:

   

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

    8,350       4,887,923  

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

    15,000       8,344,050  

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

    2,425       2,481,939  

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

    13,410       7,099,656  
   

 

 

 
      29,647,581  
Florida — 5.0%  

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

    6,900       7,140,672  

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

    4,825       5,080,339  

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

    2,790       2,922,218  

County of Miami-Dade Florida Aviation, Refunding ARB, Miami International Airport, Series A-1, 5.38%, 10/01/20(b)

    7,530       7,981,348  
 

 

 

12    2018 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

October 31, 2018

  

BlackRock MuniYield Fund, Inc. (MYD)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Florida (continued)  

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

  $ 6,150     $ 6,978,836  

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

    3,430       2,537,958  
   

 

 

 
      32,641,371  
Georgia — 1.8%  

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

    1,980       2,171,763  

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

    6,660       6,512,081  

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

    1,075       1,199,808  

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

    1,700       1,748,212  
   

 

 

 
      11,631,864  
Hawaii — 0.4%  

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

    2,760       2,886,988  
   

 

 

 
Idaho — 1.5%  

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

    10,000       10,037,700  
   

 

 

 
Illinois — 16.6%  

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

    1,000       1,000,640  

Chicago Board of Education, GO, Series D:

   

Dedicated Revenues, Series H, 5.00%, 12/01/36

    460       463,657  

Project, Series C, 5.25%, 12/01/35

    3,095       3,151,236  

Chicago Board of Education, GO, Refunding, Dedicated Revenues, 5.00%, 12/01/25

    1,735       1,796,610  

Chicago Board of Education, GO, Refunding Dedicated Revenues:

   

5.00%, 12/01/31

    1,000       1,020,450  

Series F, 5.00%, 12/01/22

    1,305       1,353,637  

Series G, 5.00%, 12/01/34

    455       460,278  

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

    3,570       3,636,652  

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

    6,390       6,665,026  

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

   

5.63%, 01/01/21(b)

    3,390       3,636,182  

5.63%, 01/01/35

    810       856,283  

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

    2,940       3,161,206  

Series A, 5.75%, 01/01/39

    560       593,460  

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

    11,920       13,002,217  

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

    2,130       2,236,628  

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

    1,635       1,699,419  

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

   

5.00%, 02/15/47

    425       446,233  

5.00%, 02/15/50

    210       219,710  

Illinois Finance Authority, Refunding RB:

   

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

    1,970       2,096,474  

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

    3,235       3,344,278  

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

   

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

    27,225       6,642,900  

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

    12,435       12,753,336  

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

    5,085       5,087,085  
Security   Par
(000)
    Value  
Illinois (continued)  

Railsplitter Tobacco Settlement Authority, RB(b):

   

5.50%, 06/01/21

  $ 2,730     $ 2,947,608  

6.00%, 06/01/21

    2,335       2,550,217  

State of Illinois, GO:

   

5.50%, 07/01/38

    4,000       4,181,720  

5.00%, 02/01/39

    3,195       3,213,787  

Series A, 5.00%, 04/01/38

    2,510       2,541,601  

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

    1,275       1,300,589  

State of Illinois, GO, Refunding Series B:

   

5.00%, 10/01/28

    1,000       1,033,130  

5.00%, 10/01/29

    1,865       1,913,322  

State of Illinois Toll Highway Authority, RB, Series C:

   

Senior, 5.00%, 01/01/36

    5,435       5,905,236  

5.00%, 01/01/37

    5,815       6,301,309  

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

    2,045       2,176,350  
   

 

 

 
      109,388,466  
Indiana — 4.9%  

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

   

6.75%, 01/01/34

    1,635       1,867,350  

7.00%, 01/01/44

    3,950       4,533,336  

Indiana Finance Authority, RB, Series A:

   

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

    6,665       7,124,485  

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

    910       952,661  

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

    3,015       3,148,474  

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

    840       884,587  

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

    1,690       1,742,948  

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

   

5.75%, 05/01/19(b)

    5,490       5,592,718  

5.75%, 05/01/31

    1,155       1,176,899  

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

    2,230       2,245,164  

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

    2,580       2,803,479  
   

 

 

 
      32,072,101  
Iowa — 1.9%  

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

   

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

    5,720       6,074,182  

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

    15       15,029  

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

    940       993,063  

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

    835       877,451  

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

    1,540       1,584,860  

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

    2,695       2,702,627  
   

 

 

 
      12,247,212  
Kansas — 0.7%  

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

   

5.75%, 11/15/19

    95       98,425  

5.75%, 11/15/19

    4,285       4,448,473  
   

 

 

 
      4,546,898  
 

 

 

SCHEDULES OF INVESTMENTS      13  


Schedule of Investments  (unaudited) (continued)

October 31, 2018

  

BlackRock MuniYield Fund, Inc. (MYD)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Kentucky — 1.1%  

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

  $ 2,055     $ 2,160,565  

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

    2,625       2,835,604  

Kentucky Public Transportation Infrastructure Authority, RB, Downtown Crossing Project, Convertible CAB, 1st Tier, Series C, 6.75%, 07/01/43(g)

    2,485       2,274,272  
   

 

 

 
      7,270,441  
Louisiana — 2.0%  

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

    1,610       1,623,540  

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

    1,260       1,297,397  

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

   

5.50%, 05/15/30

    2,055       2,134,672  

5.25%, 05/15/31

    1,750       1,843,257  

5.25%, 05/15/32

    2,240       2,387,706  

5.25%, 05/15/33

    2,430       2,572,738  

5.25%, 05/15/35

    1,025       1,084,758  
   

 

 

 
      12,944,068  
Maine — 0.5%  

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

   

5.00%, 07/01/19(b)

    980       999,335  

5.00%, 07/01/39

    2,160       2,194,409  
   

 

 

 
      3,193,744  
Maryland — 0.7%  

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

    1,347       1,351,715  

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

    880       929,940  

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

    1,545       1,595,212  

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

    880       965,457  
   

 

 

 
      4,842,324  
Massachusetts — 0.8%  

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

    3,250       3,926,227  

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

    1,640       1,673,456  
   

 

 

 
      5,599,683  
Michigan — 3.1%  

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

    8,995       9,521,927  

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

   

5.50%, 05/15/20(b)

    1,545       1,620,859  

5.50%, 05/15/36

    1,250       1,299,425  

Michigan Finance Authority, Refunding RB, Detroit Water & Sewage Department Project, Senior Lien, Series C-1, 5.00%, 07/01/44

    1,830       1,934,511  

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

    6,085       6,313,979  
   

 

 

 
      20,690,701  
Security   Par
(000)
    Value  
Minnesota — 1.0%  

Duluth Economic Development Authority, Refunding RB, Essentia Health Obligated Group, Series A(h):

   

4.25%, 02/15/48

  $ 2,160     $ 2,062,325  

5.25%, 02/15/53

    4,315       4,601,990  
   

 

 

 
      6,664,315  
Mississippi — 0.0%  

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

    280       287,902  
   

 

 

 
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       552,687  

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

   

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

    5,470       5,928,769  

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

    510       536,061  
   

 

 

 
      7,017,517  
Nebraska — 0.4%  

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

   

5.25%, 09/01/37

    1,670       1,809,345  

5.00%, 09/01/42

    925       993,866  
   

 

 

 
      2,803,211  
New Hampshire — 0.7%  

New Hampshire Business Finance Authority, Refunding RB, Resource Recovery, Covanta Project(a):

   

Series B, 4.63%, 11/01/42

    3,205       3,103,402  

Series C, AMT, 4.88%, 11/01/42

    1,665       1,624,740  
   

 

 

 
      4,728,142  
New Jersey — 7.3%  

Casino Reinvestment Development Authority, Refunding RB:

   

5.25%, 11/01/39

    3,490       3,680,624  

5.25%, 11/01/44

    3,180       3,345,074  

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

    2,250       2,256,930  

New Jersey EDA, RB, AMT:

   

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

    460       467,930  

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

    975       1,044,790  

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

    2,500       2,773,825  

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

    3,040       3,150,474  

New Jersey State Turnpike Authority, RB:

   

Series A, 5.00%, 07/01/22(b)

    1,150       1,262,297  

Series A, 5.00%, 01/01/43

    685       732,909  

Series E, 5.00%, 01/01/45

    5,425       5,838,114  

New Jersey Transportation Trust Fund Authority, RB:

   

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

    7,395       3,283,084  

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

    1,360       1,399,481  

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

    2,515       2,581,572  

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

    3,630       3,788,776  

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

    4,990       5,195,139  

Tobacco Settlement Financing Corp., Refunding RB:

   

Series A, 5.25%, 06/01/46

    5,120       5,411,891  

Sub-Series B, 5.00%, 06/01/46

    1,585       1,605,415  
   

 

 

 
      47,818,325  
 

 

 

14    2018 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

October 31, 2018

  

BlackRock MuniYield Fund, Inc. (MYD)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
New York — 8.0%  

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

  $ 4,235     $ 4,481,562  

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

    3,700       3,807,226  

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

    449       467,710  

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

    4,070       3,914,729  

Metropolitan Transportation Authority, RB, Series B:

   

5.25%, 11/15/38

    4,960       5,456,198  

5.25%, 11/15/39

    1,765       1,940,635  

Metropolitan Transportation Authority, Refunding RB:

   

Dedicated Tax Fund, Series B, 5.00%, 11/15/19(b)

    4,910       5,066,433  

Series C-1, 5.25%, 11/15/56

    7,545       8,241,781  

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       2,576,819  

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

    8,145       8,340,724  

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

    705       726,721  

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

    1,760       1,812,448  

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

    1,525       1,604,880  

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       2,813,948  

6.00%, 12/01/42

    1,485       1,590,004  
   

 

 

 
      52,841,818  
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       1,174,759  

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

    2,000       2,036,060  

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

   

Aldersgate, 6.25%, 07/01/35

    2,970       3,258,179  

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

    1,210       1,356,700  
   

 

 

 
      7,825,698  
North Dakota — 0.3%  

County of Cass North Dakota, Refunding RB, Essentia Health Obligated Group, Series B, 5.25%, 02/15/58(h)

    2,000       2,104,940  
   

 

 

 
Ohio — 3.1%  

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

    9,385       9,112,741  

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

    4,160       3,978,333  

County of Franklin Ohio, RB:

   

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

    1,380       1,476,986  

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

    840       901,110  
Security   Par
(000)
    Value  
Ohio (continued)  

County of Montgomery Ohio, Refunding RB, Catholic Health:

   

5.00%, 05/01/19(b)

  $ 990     $ 1,004,622  

Series A, 5.00%, 05/01/39

    1,850       1,863,931  

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

    1,685       1,760,539  
   

 

 

 
      20,098,262  
Oklahoma — 1.7%  

City of Oklahoma Turnpike Authority, RB, Series A, 4.00%, 01/01/48

    4,320       4,253,947  

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

    2,460       2,632,692  

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

    4,115       4,102,491  
   

 

 

 
      10,989,130  
Pennsylvania — 3.6%  

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

    5,250       5,351,062  

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

    945       1,008,580  

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

    1,325       1,392,098  

Commonwealth Financing Authority, RB, Tobacco Master Settlement Payment:

   

5.00%, 06/01/33

    215       236,094  

5.00%, 06/01/34

    285       312,001  

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

   

4.00%, 09/01/49

    1,185       1,128,428  

5.00%, 09/01/43

    2,610       2,820,288  

Pennsylvania Economic Development Financing Authority, RB:

   

AMT, 5.00%, 06/30/42

    1,765       1,843,648  

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

    3,805       3,905,604  

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

    3,210       3,317,439  

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

    2,305       2,469,346  
   

 

 

 
      23,784,588  
Puerto Rico — 1.2%  

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

   

5.50%, 05/15/39

    3,870       3,924,954  

5.63%, 05/15/43

    3,690       3,740,221  
   

 

 

 
      7,665,175  
Rhode Island — 2.9%  

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       8,101,880  

5.00%, 06/01/50

    9,875       10,124,936  
   

 

 

 
      18,974,716  
South Carolina — 4.3%  

State of South Carolina Ports Authority, ARB:

   

5.25%, 07/01/20(b)

    6,695       7,033,365  

AMT, 5.25%, 07/01/55

    2,690       2,901,165  
 

 

 

SCHEDULES OF INVESTMENTS      15  


Schedule of Investments  (unaudited) (continued)

October 31, 2018

  

BlackRock MuniYield Fund, Inc. (MYD)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
South Carolina (continued)  

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

  $ 8,090     $ 8,570,951  

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

    9,550       10,104,377  
   

 

 

 
      28,609,858  
Tennessee — 0.7%  

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

    2,855       3,001,662  

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

    1,440       1,537,099  
   

 

 

 
      4,538,761  
Texas — 8.9%  

Central Texas Regional Mobility Authority, Refunding RB:

   

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

    4,365       4,724,850  

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

    725       767,630  

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

    3,600       3,835,764  

City of Houston Texas Airport System, Refunding ARB, United Airlines, Inc. Terminal E Project, AMT, 5.00%, 07/01/29

    2,200       2,337,896  

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

    1,525       1,661,396  

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       570,777  

6.38%, 01/01/33

    460       506,120  

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

    4,320       4,517,251  

County of Tarrant Texas Cultural Education Facilities Finance Corp., RB, Christus Health, Series B, 5.00%, 07/01/48

    9,585       10,197,194  

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

    1,000       1,032,480  

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

    4,110       1,720,323  

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

    1,910       2,058,732  

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

    5,260       5,809,617  

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

   

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

    6,000       6,387,780  

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

    6,255       6,538,664  

University of Texas System, Refunding RB, Series B, 4.00%, 07/01/41(i)

    5,500       5,554,065  
   

 

 

 
      58,220,539  
Utah — 0.6%  

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

    1,920       2,057,856  

Salt Lake City Corp. Airport Revenue, ARB, Series A, AMT, 5.00%, 07/01/48

    1,845       1,993,117  
   

 

 

 
      4,050,973  
Virginia — 2.6%  

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

   

5.50%, 05/15/19

    2,195       2,237,056  

5.50%, 05/15/19

    4,075       4,153,077  
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     $ 2,684,626  

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

   

5.25%, 01/01/32

    3,270       3,469,634  

6.00%, 01/01/37

    3,900       4,243,512  
   

 

 

 
      16,787,905  
Washington — 1.5%  

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

    3,120       3,356,839  

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

    1,565       1,675,567  

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

    4,745       5,132,145  
   

 

 

 
      10,164,551  
Wisconsin — 3.0%  

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

    14,300       14,592,435  

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

    4,970       5,096,238  
   

 

 

 
      19,688,673  
Wyoming — 1.1%  

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

    6,195       6,340,335  

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

    595       597,981  
   

 

 

 
      6,938,316  
   

 

 

 

Total Municipal Bonds — 119.3%
(Cost — $752,409,622)

 

    784,103,147  
 

 

 

 

Municipal Bonds Transferred to Tender Option Bond Trusts(i)

 

California — 8.3%

 

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

   

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

    6,496       6,546,636  

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

    6,582       6,689,442  

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

    19,080       19,687,190  

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

    11,973       12,400,316  

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

    6,494       7,142,324  

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

    2,154       2,209,538  
   

 

 

 
      54,675,446  
Colorado — 2.7%  

City & County of Denver Colorado Airport System Revenue, Refunding ARB, Subordinate System, Series A, AMT, 5.25%, 12/01/48(j)

    4,775       5,303,835  

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

    4,299       4,393,632  

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

    7,820       7,730,461  
   

 

 

 
      17,427,928  
 

 

 

16    2018 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

October 31, 2018

  

BlackRock MuniYield Fund, Inc. (MYD)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
District of Columbia — 1.5%  

District of Columbia Housing Finance Agency, RB, M/F Housing, Series B-2, 4.10%, 09/01/39

  $ 10,265     $ 10,067,013  
   

 

 

 
Florida — 1.8%  

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

    11,448       12,065,529  
   

 

 

 
Illinois — 0.4%  

Illinois Finance Authority, Refunding RB, Presence Health Network, Series C, 4.00%, 02/15/41

    3,000       2,884,130  
   

 

 

 
Massachusetts — 1.4%  

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

    4,333       4,343,027  

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

    4,607       4,883,271  
   

 

 

 
      9,226,298  
New Hampshire — 0.6%  

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

    4,049       4,126,024  
   

 

 

 
New York — 7.7%  

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

    3,195       3,256,440  

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

   

5.75%, 02/15/21(b)(j)

    2,018       2,170,875  

5.75%, 02/15/47

    1,242       1,335,457  

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

    21,629       23,314,660  

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

    13,081       14,237,377  

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

    5,400       5,964,156  
   

 

 

 
      50,278,965  
North Carolina — 1.4%  

North Carolina Capital Facilities Finance Agency, Refunding RB:

   

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

    5,290       5,820,296  

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

    3,120       3,136,006  
   

 

 

 
      8,956,302  
Ohio — 4.3%  

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

    27,896       28,055,849  
   

 

 

 
Pennsylvania — 0.8%  

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

    4,877       5,459,867  
   

 

 

 
Rhode Island — 0.5%  

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

    3,272       3,276,276  
   

 

 

 
Texas — 4.5%  

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

    5,060       5,424,358  

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

    6,920       7,339,110  

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

    4,335       4,294,771  
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     $ 5,713,984  

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

    6,243       6,734,164  
   

 

 

 
      29,506,387  
Utah — 1.1%  

City of Riverton Utah, RB, IHC Health Services, Inc., 5.00%, 08/15/19(b)

    7,303       7,476,855  
   

 

 

 
Virginia — 1.0%  

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

    6,075       6,307,165  
   

 

 

 
Wisconsin — 2.6%  

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

   

Froedtert & Community Health, Inc., Obligated Group, Series C, 5.25%, 04/01/19(b)(j)

    11,456       11,612,166  

The Medical College of Wisconsin, Inc., 4.00%, 12/01/46

    5,950       5,707,173  
   

 

 

 
      17,319,339  
   

 

 

 

Total Municipal Bonds Transferred to Tender Option Bond Trusts — 40.6%
(Cost — $262,649,730)

      267,109,373  
 

 

 

 

Total Long-Term Investments — 159.9%
(Cost — $1,015,059,352)

      1,051,212,520  
   

 

 

 
     Shares         
Short-Term Securities — 2.0%  

BlackRock Liquidity Funds, MuniCash, Institutional Class,
1.45%(k)(l)

    13,159,789       13,161,105  
   

 

 

 

Total Short-Term Securities — 2.0%
(Cost — $13,161,105)

 

    13,161,105  
   

 

 

 

Total Investments — 161.9%
(Cost — $1,028,220,457)

 

    1,064,373,625  

Other Assets Less Liabilities — 0.7%

 

    4,232,433  

Liability for TOB Trust Certificates, Including Interest Expense and Fees Payable — (24.4)%

 

    (160,169,172

VRDP Shares, at Liquidation Value, Net of Deferred Offering
Costs — (38.2)%

 

    (251,040,373
   

 

 

 

Net Assets Applicable to Common Shares — 100.0%

 

  $ 657,396,513  
   

 

 

 

 

(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) 

Issuer filed for bankruptcy and/or is in default.

(e) 

Non-income producing security.

(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  (unaudited) (continued)

October 31, 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 agreement(s), which expire between December 1, 2018 to April 1, 2039, is $28,068,994. See Note 4 of the Notes to Financial Statements for details.

(k) 

Annualized 7-day yield as of period end.

 
(l) 

During the six months ended October 31, 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:

 

Affiliate    Shares
Held at

04/30/18
     Net
Activity
     Shares
Held at
10/31/18
     Value at
10/31/18
     Income      Net
Realized
Gain (Loss)
 (a)
     Change in
Unrealized
Appreciation
(Depreciation)
 

BlackRock Liquidity Funds, MuniCash, Institutional Class

     3,484,552        9,675,237        13,159,789      $ 13,161,105      $ 63,445      $ 566      $  
           

 

 

    

 

 

    

 

 

    

 

 

 

 

  (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

     17          12/19/18        $ 2,013        $ 15,320  

Long U.S. Treasury Bond

     135          12/19/18          18,647          425,153  

5-Year U.S. Treasury Note

     33          12/31/18          3,709          9,020  
                 

 

 

 
                  $ 449,493  
                 

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of period 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)

   $      $      $      $      $ 449,493      $      $ 449,493  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (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 period ended October 31, 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

   $      $      $      $      $ 601,483      $      $ 601,483  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
Net Change in Unrealized Appreciation (Depreciation) on:                                                 

Futures contracts

   $      $      $      $      $ 406,069      $      $ 406,069  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

        

Average notional value of contracts — short

   $ 35,291,340  

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

 

 

18    2018 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

October 31, 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)

   $        $ 1,051,212,520        $        $ 1,051,212,520  

Short-Term Securities

     13,161,105                            13,161,105  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 13,161,105        $ 1,051,212,520        $        $ 1,064,373,625  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative Financial Instruments(b)

 

Assets:

 

Interest rate contracts

   $ 449,493        $        $             —        $ 449,493  
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (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 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

   $             —        $ (159,477,195      $             —        $ (159,477,195

VRDP Shares at Liquidation Value

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

 

 

      

 

 

      

 

 

      

 

 

 
   $        $ (410,877,195      $        $ (410,877,195
  

 

 

      

 

 

      

 

 

      

 

 

 

During the period ended October 31, 2018, there were no transfers between levels.

See notes to financial statements.

 

 

SCHEDULES OF INVESTMENTS      19  


Schedule of Investments  (unaudited)

October 31, 2018

  

BlackRock MuniYield Quality Fund, Inc. (MQY)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Municipal Bonds — 117.7%  

Alabama — 0.3%

 

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

  $ 1,145     $ 1,246,516  
   

 

 

 
Alaska — 1.3%  

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

    1,400       1,496,110  

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

    4,425       4,570,671  
   

 

 

 
      6,066,781  
Arizona — 0.5%  

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

    380       374,486  

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

   

5.00%, 10/01/27

    1,525       1,563,674  

5.25%, 10/01/28

    250       256,833  
   

 

 

 
      2,194,993  
California — 16.7%  

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

    7,405       2,873,140  

California Health Facilities Financing Authority, RB:

   

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

    775       794,515  

Sutter Health, Series A, 5.00%, 11/15/41

    1,290       1,404,707  

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

    2,260       2,222,235  

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

    1,500       1,605,270  

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

    1,770       2,130,726  

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

    2,000       2,116,820  

California Statewide Communities Development Authority, Refunding RB, John Muir Health, Series A, 4.00%, 12/01/53

    1,325       1,288,404  

Carlsbad California Unified School District, GO, Election of 2006, Series B, 6.00%, 05/01/34(c)

    5,000       5,757,550  

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

   

Series A, 5.00%, 03/01/36

    565       621,042  

Series A, 5.00%, 03/01/37

    620       680,097  

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

    1,150       1,230,282  

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

    900       983,268  

Golden State Tobacco Securitization Corp., Refunding RB, Series A-1, 3.50%, 06/01/36

    2,320       2,273,414  

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

    5,000       3,133,350  

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

    10,030       6,573,060  

Hartnell Community College District California, GO, CAB, Election of 2002, Series D, 7.00%, 08/01/34(c)

    4,125       4,252,875  

Mount San Antonio Community College District, GO, Refunding, CAB, Election of 2008, Series A, 6.25%, 08/01/43(c)

    1,945       1,541,782  

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

    5,000       2,424,650  

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

    4,005       1,854,275  
Security   Par
(000)
    Value  
California (continued)  

San Bernardino Community College District, GO, CAB, Election of 2008, Series B, 6.38%, 08/01/34(c)

  $ 10,000     $ 11,611,200  

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

   

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

    2,200       984,720  

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

    900       436,365  

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

    950       433,343  

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

    1,430       613,713  

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

    950       383,724  

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

    1,725       1,082,955  

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

   

5.00%, 08/01/21

    900       974,061  

5.00%, 08/01/21

    760       822,540  

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       2,465,232  

5.00%, 10/01/41

    1,300       1,395,693  

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

    1,500       1,607,700  

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

    15,000       7,388,700  
   

 

 

 
      75,966,423  
Colorado — 1.0%  

City & County of Denver Colorado, COP, Colorado Convention Center Expansion Project, Series A, 4.00%, 06/01/48

    1,815       1,799,391  

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

    1,885       1,969,033  

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

    540       580,381  
   

 

 

 
      4,348,805  
Connecticut — 0.8%  

Connecticut Housing Finance Authority, Refunding RB:

   

M/F Housing, Sub-Series E-1 (Ginnie Mae, Fannie Mae & Freddie Mac), 4.00%, 05/15/36(d)

    1,060       1,053,386  

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

    635       612,216  

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

    965       940,315  

State of Connecticut, GO, Series C, 5.00%, 06/15/32

    840       917,717  
   

 

 

 
      3,523,634  
District of Columbia — 0.3%  

District of Columbia Housing Finance Agency, RB, M/F Housing, Series B-2 (FHA), 4.10%, 09/01/39

    1,415       1,387,705  
   

 

 

 
Florida — 11.9%  

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

    290       287,219  

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

    2,175       2,302,651  

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

    1,250       1,299,300  

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

   

5.63%, 10/01/26

    1,280       1,374,067  

5.38%, 10/01/32

    1,700       1,809,412  

County of Miami-Dade Florida, RB, Seaport:

   

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

    2,755       3,095,105  

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

    560       631,378  

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

    895       1,001,174  

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

    870       980,351  
 

 

 

20    2018 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

October 31, 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, Refunding RB, 4.00%, 10/01/40

  $ 1,220     $ 1,220,781  

County of Miami-Dade Florida Aviation, Refunding ARB:

   

AMT, 5.00%, 10/01/34

    260       280,951  

Series A, 5.50%, 10/01/19(a)

    6,490       6,696,966  

County of Miami-Dade Florida Aviation Revenue, Refunding ARB, Series A, AMT, 5.00%, 10/01/32

    3,550       3,788,595  

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

    3,600       3,884,112  

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

   

5.00%, 08/01/41

    765       811,298  

5.00%, 08/01/47

    2,225       2,350,579  

County of Orange HFA, RB, S/F Housing, Multi-County Program, Series A (Ginnie Mae, Fannie Mae & Freddie Mac), 3.75%, 09/01/47

    765       706,523  

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

   

5.00%, 10/01/21(a)

    45       48,431  

5.00%, 10/01/31

    2,780       2,978,937  

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

    715       774,559  

County of Sarasota Florida Public Hospital District, RB, Sarasota Memorial Hospital Project, Series A, 5.63%, 07/01/19(a)

    375       383,936  

Florida Housing Finance Corp., RB, S/F Housing, Series 1 (Ginnie Mae, Fannie Mae & Freddie Mac), 3.75%, 07/01/42

    1,760       1,674,886  

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

   

5.13%, 06/01/27

    1,395       1,487,377  

5.38%, 10/01/29

    1,900       2,050,879  

Greater Orlando Aviation Authority, RB, Priority Subordinated, AMT:

   

Series A, 5.00%, 10/01/47

    4,785       5,129,520  

Sub-Series A, 5.00%, 10/01/52

    2,050       2,189,687  

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

    1,620       1,802,736  

State of Florida, GO, Department of Transportation, Right-of-Way Acquisition and Bridge Construction Bonds, 4.00%, 07/01/39

    2,840       2,887,769  
   

 

 

 
      53,929,179  
Georgia — 0.8%  

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

    680       758,948  

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

    1,730       1,637,134  

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

   

5.00%, 04/01/33

    190       203,262  

5.00%, 04/01/44

    855       900,477  
   

 

 

 
      3,499,821  
Illinois — 15.2%  

City of Chicago Illinois, Refunding ARB, Senior Lien, Series B, 5.00%, 01/01/41

    3,800       4,068,698  

City of Chicago Illinois, Refunding GARB, O’Hare International Airport, Passenger Facility Charge, Series B, AMT, 5.00%, 01/01/31

    2,500       2,638,900  

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

    1,475       1,570,019  
Security   Par
(000)
    Value  
Illinois (continued)  

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

   

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

  $ 4,615     $ 4,962,233  

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

    885       937,879  

Senior Lien, Series D, 5.25%, 01/01/42

    3,985       4,372,461  

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

    4,090       4,399,327  

City of Chicago Illinois Transit Authority, RB:

   

5.25%, 12/01/49

    710       771,827  

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

    840       883,050  

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

    280       289,050  

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

    850       912,934  

Illinois Finance Authority, Refunding RB:

   

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

    1,690       1,624,631  

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

    470       491,408  

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

    1,100       1,072,610  

Illinois Housing Development Authority, RB, S/F Housing, 4.13%, 10/01/38

    1,875       1,884,394  

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

    17,800       17,842,186  

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

   

0.00%, 06/15/30(e)

    800       546,920  

0.00%, 06/15/30

    14,205       8,242,167  

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

    4,625       1,318,171  

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

    900       982,953  

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

    3,200       3,875,872  

State of Illinois, GO:

   

5.25%, 02/01/33

    1,140       1,174,109  

5.50%, 07/01/33

    1,100       1,159,928  

5.25%, 02/01/34

    1,140       1,171,977  

5.50%, 07/01/38

    1,840       1,923,591  
   

 

 

 
      69,117,295  
Indiana — 1.6%  

Indiana Finance Authority, RB, Series A:

   

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

    1,400       1,496,516  

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

    690       722,347  

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

   

5.75%, 01/01/19(a)

    255       256,632  

5.75%, 01/01/38

    1,045       1,051,427  

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

    460       462,571  

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

    1,890       1,900,074  

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

    1,190       1,249,405  
   

 

 

 
      7,138,972  
Iowa — 2.4%  

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

    7,700       7,915,754  

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

   

5.60%, 12/01/26

    855       879,949  

5.70%, 12/01/27

    855       879,487  
 

 

 

SCHEDULES OF INVESTMENTS      21  


Schedule of Investments  (unaudited) (continued)

October 31, 2018

  

BlackRock MuniYield Quality Fund, Inc. (MQY)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Iowa (continued)  

5.80%, 12/01/29

  $ 580     $ 595,590  

5.85%, 12/01/30

    785       805,897  
   

 

 

 
      11,076,677  
Louisiana — 2.3%  

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

    2,260       2,393,656  

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

   

5.00%, 12/01/34

    330       369,577  

5.00%, 12/01/35

    440       490,952  

5.00%, 12/01/36

    395       439,118  

5.00%, 12/01/37

    495       550,286  

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

    4,015       4,341,179  

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

    1,800       1,813,608  
   

 

 

 
      10,398,376  
Maine — 1.0%  

Maine State Housing Authority, RB:

   

M/F Housing, Series E, 4.15%, 11/15/38(d)

    1,930       1,937,199  

M/F Housing, Series E, 4.25%, 11/15/43(d)

    1,725       1,728,829  

Series D-1, 3.65%, 11/15/42

    890       820,162  
   

 

 

 
      4,486,190  
Maryland — 0.3%  

Maryland Community Development Administration, Refunding RB, S/F Housing, Series A, 4.10%, 09/01/38(d)

    1,580       1,569,319  
   

 

 

 
Massachusetts — 2.9%  

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

    2,855       2,991,212  

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

    4,450       4,384,540  

Massachusetts HFA, Refunding RB, AMT:

   

Series A, 4.45%, 12/01/42

    1,090       1,106,110  

Series C, 5.00%, 12/01/30

    965       968,744  

Series C, 5.35%, 12/01/42

    495       497,124  

Massachusetts Housing Finance Agency, RB, M/F Housing, Series A:

   

3.80%, 12/01/43

    350       331,531  

3.85%, 06/01/46

    100       93,846  

Massachusetts School Building Authority, RB:

   

Dedicated Sales Tax, Senior Series A, 5.00%, 05/15/43

    1,720       1,866,372  

Sub-Series B, 4.00%, 02/15/43

    1,025       1,015,508  
   

 

 

 
      13,254,987  
Michigan — 4.2%  

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

    1,000       1,059,000  

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

    2,500       2,690,025  

Eastern Michigan University, RB, Series A (AGM), 4.00%, 03/01/44

    840       813,918  

Michigan Finance Authority, Refunding RB:

   

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

    425       348,538  

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

    25       27,011  

Trinity Health Credit Group, Series A, 4.00%, 12/01/40

    3,005       2,961,548  

Royal Oak Hospital Finance Authority Michigan, Refunding RB, Beaumont Health Credit Group, Series D, 5.00%, 09/01/39

    1,470       1,567,476  
Security   Par
(000)
    Value  
Michigan (continued)  

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

   

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

  $ 1,200     $ 1,293,336  

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

    1,000       1,074,530  

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

    4,270       4,604,725  

State of Michigan Housing Development Authority, RB, S/F Housing, Series C, 4.13%, 12/01/38(d)

    2,010       2,012,211  

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

    520       569,286  
   

 

 

 
      19,021,604  
Minnesota — 0.6%  

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

   

6.50%, 11/15/18(a)

    415       415,697  

6.50%, 11/15/38

    2,285       2,288,839  
   

 

 

 
      2,704,536  
Mississippi — 0.1%  

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

    550       549,973  
   

 

 

 
Nebraska — 0.2%  

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

    1,000       1,083,440  
   

 

 

 
Nevada — 0.6%  

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

    1,150       1,169,366  

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

    1,500       1,547,670  
   

 

 

 
      2,717,036  
New Hampshire — 0.5%  

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

    2,200       2,079,330  
   

 

 

 
New Jersey — 7.6%  

New Jersey EDA, RB:

   

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

    1,220       1,305,132  

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

    935       994,803  

Series WW, 5.25%, 06/15/33

    215       228,556  

Series WW, 5.00%, 06/15/34

    280       292,981  

Series WW, 5.00%, 06/15/36

    1,280       1,331,827  

Series WW, 5.25%, 06/15/40

    490       515,970  

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

    785       758,451  

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

   

5.50%, 12/01/25

    400       420,172  

5.75%, 12/01/27

    190       200,273  

5.75%, 12/01/28

    205       215,719  

5.88%, 12/01/33

    1,980       2,081,831  

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

    1,225       1,245,225  

New Jersey Transportation Trust Fund Authority, RB:

   

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

    2,035       2,158,850  

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

    2,440       2,523,106  

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

    7,530       4,595,860  

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

    1,605       1,675,203  
 

 

 

22    2018 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

October 31, 2018

  

BlackRock MuniYield Quality Fund, Inc. (MQY)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
New Jersey (continued)  

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

  $ 2,000     $ 2,295,560  

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

    3,565       3,782,180  

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

    2,750       2,893,440  

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

    725       744,829  

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

    875       922,040  

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

   

5.00%, 06/01/46

    2,540       2,621,889  

5.25%, 06/01/46

    560       591,926  
   

 

 

 
      34,395,823  
New Mexico — 0.1%  

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

    500       539,710  
   

 

 

 
New York — 5.0%  

City of New York Housing Development Corp., Refunding RB, Sustainable Neighborhood Bonds, Series A, 4.15%, 11/01/38(d)

    2,985       2,945,240  

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

    1,550       1,524,394  

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

    5,520       5,989,310  

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

   

5.75%, 02/15/21(a)

    615       665,116  

5.75%, 02/15/47

    385       411,996  

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

    1,900       2,078,619  

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

    2,855       3,004,545  

Port Authority of New York & New Jersey, Refunding ARB, Series 207, AMT, 4.00%, 09/15/43

    630       617,318  

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

    2,000       2,028,960  

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

   

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

    3,350       3,352,848  

Green Bond (SONYMA), 3.88%, 11/01/48

    230       224,609  
   

 

 

 
      22,842,955  
Ohio — 1.0%  

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

    635       612,800  

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

    725       814,023  

Ohio Housing Finance Agency, RB, S/F Housing, Series A (Ginnie Mae, Fannie Mae & Freddie Mac), 4.00%, 09/01/48

    450       438,489  

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

   

5.25%, 02/15/32

    950       1,043,756  

5.25%, 02/15/33

    1,325       1,454,638  
   

 

 

 
      4,363,706  
Oklahoma — 0.2%  

City of Oklahoma Turnpike Authority, RB, Series A, 4.00%, 01/01/48

    760       748,380  
   

 

 

 
Oregon — 1.3%  

County of Clackamas Community College District, GO, Convertible Deferred Interest Bonds, Series A, 5.00%, 06/15/39(c)

    605       613,621  

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

    1,360       591,641  
Security   Par
(000)
    Value  
Oregon (continued)  

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

  $ 765     $ 729,978  

State of Oregon Housing & Community Services Department, RB:

   

S/F Housing, Mortgage Program, Series C, 3.95%, 07/01/43

    580       568,319  

Series D, 3.45%, 01/01/38

    3,805       3,490,897  
   

 

 

 
      5,994,456  
Pennsylvania — 10.7%  

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

    2,210       2,358,689  

Commonwealth Financing Authority, RB, Tobacco Master Settlement Payment (AGM), 4.00%, 06/01/39

    1,445       1,417,126  

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

    1,310       1,247,461  

Pennsylvania Economic Development Financing Authority, RB:

   

AMT, 5.00%, 06/30/42

    1,420       1,483,275  

PA Bridges Finco LP, AMT, 5.00%, 12/31/34

    3,420       3,634,297  

Pennsylvania Rapid Bridge Replacement, 5.00%, 12/31/38

    11,890       12,475,226  

S/F Housing, Series 127-B, 3.88%, 10/01/38

    1,210       1,179,593  

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

    795       772,247  

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

    4,575       4,985,195  

Pennsylvania Turnpike Commission, RB:

   

Series A, 5.00%, 12/01/38

    860       926,177  

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

    1,125       1,214,696  

Series B, 5.00%, 12/01/40

    440       474,764  

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

    760       873,217  

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

    2,725       2,874,303  

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

    6,700       7,151,312  

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

    775       835,047  

Pennsylvania Turnpike Commission, Refunding RB:

   

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

    2,845       2,790,973  

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

    1,040       1,117,043  

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

    425       454,487  

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

    500       520,815  
   

 

 

 
      48,785,943  
Rhode Island — 1.7%  

Rhode Island Turnpike & Bridge Authority, Refunding RB, Series A, 5.00%, 10/01/40

    640       692,205  

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

    7,180       7,081,131  
   

 

 

 
      7,773,336  
South Carolina — 6.8%  

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

   

5.50%, 07/01/38

    1,500       1,646,265  

5.50%, 07/01/41

    2,725       2,986,982  

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

    320       356,291  

South Carolina Jobs-EDA, RB, McLeod Health Obligated Group, 5.00%, 11/01/48

    3,090       3,347,397  
 

 

 

SCHEDULES OF INVESTMENTS      23  


Schedule of Investments  (unaudited) (continued)

October 31, 2018

  

BlackRock MuniYield Quality Fund, Inc. (MQY)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
South Carolina (continued)  

South Carolina Ports Authority, ARB, AMT, 5.00%, 07/01/55

  $ 1,970     $ 2,097,242  

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

    2,500       2,571,775  

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

    3,160       3,413,843  

State of South Carolina Public Service Authority, RB:

   

Santee Cooper, Series A, 5.50%, 12/01/54

    9,985       10,578,608  

Series E, 5.50%, 12/01/53

    985       1,038,850  

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

    2,850       2,963,829  
   

 

 

 
      31,001,082  
South Dakota — 0.4%  

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

    1,690       1,661,540  
   

 

 

 
Texas — 11.4%  

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

    275       283,261  

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

    1,000       1,097,200  

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

   

6.00%, 05/15/19

    2,700       2,758,455  

6.00%, 05/15/19

    150       153,288  

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

    760       817,957  

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       1,338,683  

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

    1,100       1,201,695  

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

    4,340       4,759,287  

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

   

5.00%, 11/01/38

    8,550       8,919,360  

5.00%, 11/01/42

    1,500       1,562,190  

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

    1,325       1,457,235  

Grand Parkway Transportation Corp., RB, Subordinate Tier Toll Revenue Bonds, TELA Supported, Series A, 5.00%, 10/01/48

    2,465       2,711,525  

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

    4,665       1,974,834  

North Texas Tollway Authority, Refunding RB:

   

4.25%, 01/01/49(d)

    1,675       1,644,180  

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

    2,745       2,762,897  

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

    635       638,842  

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

    570       622,486  

Series B, 5.00%, 01/01/40

    1,375       1,470,164  

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

   

0.00%, 09/15/35

    3,180       1,468,397  

0.00%, 09/15/36

    6,015       2,615,502  

0.00%, 09/15/37

    4,305       1,760,400  

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

    1,865       2,059,874  

Texas Department of Housing & Community Affairs, RB, S/F Housing Mortgage, Series A (Ginnie Mae), 4.25%, 09/01/43

    535       537,322  
Security   Par
(000)
    Value  
Texas (continued)  

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

   

5.00%, 12/15/31

  $ 1,600     $ 1,700,096  

5.00%, 12/15/32

    1,060       1,124,639  

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

    1,745       1,823,909  

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

    2,330       2,457,894  
   

 

 

 
      51,721,572  
Utah — 0.7%  

Salt Lake City Corp. Airport Revenue, ARB, Series A, AMT:

   

5.00%, 07/01/48

    610       658,971  

5.00%, 07/01/42

    1,700       1,828,503  

Utah Housing Corp., RB, S/F Housing, Class III , Series D-2 (FHA), 4.00%, 01/01/36

    940       943,008  
   

 

 

 
      3,430,482  
Virginia — 0.1%  

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

   

5.50%, 05/15/19

    155       157,970  

5.50%, 05/15/19

    295       300,652  
   

 

 

 
      458,622  
Washington — 3.8%  

Port of Seattle Washington, RB, AMT:

   

Intermediate Lien, Series C, 5.00%, 04/01/40

    1,380       1,477,497  

Series A, 5.00%, 05/01/43

    2,690       2,884,164  

State of Washington Convention Center Public Facilities District, RB, 5.00%, 07/01/43

    840       917,297  

Washington Health Care Facilities Authority, RB:

   

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

    4,000       4,316,880  

Providence Health & Services, 4.00%, 10/01/45

    965       940,113  

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

    1,525       1,568,798  

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

    850       880,090  

Seattle Childrens Hospital, Series A, 5.00%, 10/01/45

    1,785       1,925,872  

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

    2,535       2,479,179  
   

 

 

 
      17,389,890  
West Virginia — 0.8%  

West Virginia Hospital Finance Authority, RB, Improvement West Virginia University Health System Obligated Group, Series A, 4.00%, 06/01/51

    4,010       3,643,406  
   

 

 

 
Wisconsin — 0.6%  

State of Wisconsin Health & Educational Facilities Authority, RB:

   

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

    1,850       1,896,990  

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

    690       657,742  
   

 

 

 
      2,554,732  
   

 

 

 

Total Municipal Bonds — 117.7%
(Cost — $513,115,407)

 

    534,667,227  
   

 

 

 
 

 

 

24    2018 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

October 31, 2018

  

BlackRock MuniYield Quality Fund, Inc. (MQY)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Municipal Bonds Transferred to Tender Option Bond Trusts(f)  

Arizona — 0.5%

 

County of Maricopa Industrial Development Authority, RB, Banner Health, Series A, 4.00%, 01/01/41

  $ 2,310     $ 2,276,474  
   

 

 

 
California — 2.4%  

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

    5,282       5,296,966  

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

    2,158       2,477,645  

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

    2,639       2,722,582  

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

    509       521,696  
   

 

 

 
      11,018,889  
Colorado — 1.1%  

City & County of Denver Colorado Airport System Revenue, Refunding ARB, Subordinate System, Series A, AMT, 5.25%, 12/01/48(g)

    3,193       3,547,154  

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

    1,220       1,246,566  
   

 

 

 
      4,793,720  
Connecticut — 0.5%  

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

    1,891       2,049,325  
   

 

 

 
District of Columbia — 0.3%  

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

    1,319       1,365,530  
   

 

 

 
Florida — 6.0%  

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

    2,390       2,550,680  

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

    12,729       13,414,902  

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

    3,544       3,636,702  

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

    6,300       7,555,401  
   

 

 

 
      27,157,685  
Illinois — 7.2%  

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

   

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

    9,492       9,495,992  

2017, 5.25%, 11/01/33

    2,845       2,846,357  

5.25%, 11/01/18(a)

    2,090       2,090,980  

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

    6,198       6,321,235  

State of Illinois Toll Highway Authority, RB:

   

Series A, 5.00%, 01/01/38

    2,878       3,074,187  

Series A, 5.00%, 01/01/40

    3,721       4,041,072  

Series B, 5.00%, 01/01/40

    1,409       1,519,217  

Series C, 5.00%, 01/01/38

    3,243       3,510,138  
   

 

 

 
      32,899,178  
Kansas — 1.6%  

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

    6,444       7,404,359  
   

 

 

 
Louisiana — 0.5%  

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

    2,085       2,093,298  
   

 

 

 
Security   Par
(000)
    Value  
Maryland — 1.3%  

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

   

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

  $ 3,845     $ 4,222,337  

Wastewater Project, 5.00%, 07/01/46

    1,485       1,627,395  
   

 

 

 
      5,849,732  
Massachusetts — 0.5%  

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

    2,022       2,194,558  
   

 

 

 
Michigan — 3.0%  

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

    2,701       2,875,840  

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

    9,075       9,563,144  

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

    1,180       1,291,953  
   

 

 

 
      13,730,937  
Nevada — 3.8%  

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

    5,007       5,089,639  

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

    4,202       4,707,221  

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

    2,429       2,490,650  

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

    4,720       5,145,048  
   

 

 

 
      17,432,558  
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       1,231,216  

New Jersey State Turnpike Authority, Refunding RB:

   

Series B, 4.00%, 01/01/37

    3,193       3,226,977  

Series G, 4.00%, 01/01/43

    2,957       2,933,933  

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

    2,580       2,686,678  
   

 

 

 
      10,078,804  
New York — 10.5%  

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

   

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

    4,050       4,431,065  

Series DD, 5.00%, 06/15/35

    2,280       2,511,716  

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

    4,228       4,675,123  

City of New York Transitional Finance Authority, BARB, Series S-1, 4.00%, 07/15/42(g)

    2,280       2,255,764  

City of New York Water & Sewer System, Refunding RB, 2nd General Resolution, Fiscal 2013, Series CC, 5.00%, 06/15/47

    7,641       8,363,758  

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

    4,750       5,247,016  

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

    2,057       2,247,469  

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

    10,830       11,505,413  

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

    3,081       3,410,245  

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

    1,534       1,555,566  

Triborough Bridge & Tunnel Authority, RB, General, Series A-2:

   

5.25%, 11/15/18(a)(g)

    561       562,018  

5.25%, 11/15/34

    939       939,902  
   

 

 

 
      47,705,055  
 

 

 

SCHEDULES OF INVESTMENTS      25  


Schedule of Investments  (unaudited) (continued)

October 31, 2018

  

BlackRock MuniYield Quality Fund, Inc. (MQY)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Ohio — 1.8%  

Northeast Ohio Regional Sewer District, Refunding RB:

   

4.00%, 11/15/49(g)

  $ 3,210     $ 3,159,421  

4.00%, 11/15/43

    4,007       4,016,520  

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

    780       784,477  
   

 

 

 
      7,960,418  
Pennsylvania — 1.6%  

Commonwealth of Pennsylvania, GO, 1st Series, 4.00%, 03/01/36(g)

    4,273       4,262,075  

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

    1,220       1,312,070  

Philadelphia Authority for Industrial Development, RB, Childrens Hospital of Philadelphia Project, Series A, 4.00%, 07/01/44

    1,678       1,679,066  
   

 

 

 
      7,253,211  
Rhode Island — 0.4%  

Rhode Island Housing & Mortgage Finance Corp., Refunding RB, S/F Housing, Home Ownership Opportunity Bonds, Series 69-B (Ginnie Mae, Fannie Mae & Freddie Mac), 3.95%, 10/01/43

    1,960       1,935,431  
   

 

 

 
South Carolina — 1.0%  

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

   

5.50%, 01/01/19(g)

    374       376,359  

5.50%, 01/01/19

    4,327       4,351,766  
   

 

 

 
      4,728,125  
Texas — 4.4%  

City of Houston Texas Community College, GO, Limited Tax, 4.00%, 02/15/43

    2,010       1,994,456  

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

    1,679       1,858,389  

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

    879       938,047  

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

    4,720       5,118,262  

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

    4,501       4,699,689  

Howe Independent School District, GO, School Building (PSF-GTD), 4.00%, 08/15/43

    2,985       2,943,250  

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

    2,564       2,569,859  
   

 

 

 
      20,121,952  
Virginia — 0.8%  

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

    3,079       3,547,674  
   

 

 

 
Washington — 1.8%  

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

    3,400       3,646,704  

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

    3,930       4,402,019  
   

 

 

 
      8,048,723  
Wisconsin — 0.6%  

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

    2,000       2,027,530  
Security   Par
(000)
    Value  
Wisconsin (continued)  

Wisconsin Health & Educational Facilities Authority, Refunding RB, Froedtert & Community Health, Inc., Obligated Group, Series A, 5.00%, 04/01/42

  $ 640     $ 674,154  
   

 

 

 
      2,701,684  
   

 

 

 

Total Municipal Bonds Transferred to Tender Option
Bond Trusts — 53.8%
(Cost — $243,165,174)

 

    244,347,320  
 

 

 

 

Total Long-Term Investments — 171.5%
(Cost — $756,280,581)

 

    779,014,547  
   

 

 

 
     Shares         
Short-Term Securities — 0.3%  

BlackRock Liquidity Funds, MuniCash, Institutional Class,
1.45%(h)(i)

    1,412,462       1,412,603  
   

 

 

 

Total Short-Term Securities — 0.3%
(Cost — $1,412,603)

 

    1,412,603  
   

 

 

 

Total Investments — 171.8%
(Cost — $757,693,184)

 

    780,427,150  

Liabilities in Excess of Other Assets — (1.1)%

 

    (5,009,822

Liability for TOB Trust Certificates, Including Interest Expense and Fees Payable — (31.9)%

 

    (144,818,281

VRDP Shares, at Liquidation Value, Net of Deferred Offering
Costs — (38.8)%

 

    (176,369,429
   

 

 

 

Net Assets Applicable to Common Shares — 100.0%

 

  $ 454,229,618  
   

 

 

 

 

(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 agreement, which expire between December 1, 2018 to January 1, 2038, is $34,482,043. See Note 4 of the Notes to Financial Statements for details.

(h) 

Annualized 7-day yield as of period end.

 

 

 

26    2018 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

October 31, 2018

  

BlackRock MuniYield Quality Fund, Inc. (MQY)

 

 

(i) 

During the period ended October 31, 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:

 

Affiliate    Shares
Held at
04/30/18
     Net
Activity
     Shares
Held at
10/31/18
     Value at
10/31/18
     Income      Net
Realized
Gain (Loss) 
(a)
     Change in
Unrealized

Appreciation
(Depreciation)
 

BlackRock Liquidity Funds, MuniCash, Institutional Class

            1,412,462        1,412,462      $ 1,412,603      $ 12,849      $ 1,235      $  
           

 

 

    

 

 

    

 

 

    

 

 

 

 

  (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

     28          12/19/18        $ 3,316        $ 22,211  

Long U.S. Treasury Bond

     134          12/19/18          18,509          434,764  

5-Year U.S. Treasury Note

     33          12/31/18          3,709          18,642  
                 

 

 

 
                  $ 475,617  
                 

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of period 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)

   $      $      $      $      $ 475,617      $      $ 475,617  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (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 period end October 31, 2018, the effect of derivative financial instruments in the Statements of Operations were 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

   $      $      $      $      $ 596,050      $      $ 596,050  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
Net Change in Unrealized Appreciation (Depreciation) on:                                                 

Futures contracts

   $      $      $      $      $ 402,080      $      $ 402,080  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

 

Average notional value of contracts — short

   $ 32,662,340  
  

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

 

 

SCHEDULES OF INVESTMENTS      27  


Schedule of Investments  (unaudited) (continued)

October 31, 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)

   $        $ 779,014,547        $        $ 779,014,547  

Short-Term Securities

     1,412,603                            1,412,603  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 1,412,603        $ 779,014,547        $        $ 780,427,150  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative Financial Instruments(b)

 

Assets:

 

Interest rate contracts

   $ 475,617        $        $        $ 475,617  
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (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

   $        $ (144,197,953      $        $ (144,197,953

VRDP Shares at Liquidation Value

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

 

 

      

 

 

      

 

 

      

 

 

 
   $        $ (320,797,953      $        $ (320,797,953
  

 

 

      

 

 

      

 

 

      

 

 

 

During the period ended October 31, 2018, there were no transfers between levels.

See notes to financial statements.

 

 

28    2018 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited)

October 31, 2018

  

BlackRock MuniYield Quality Fund II, Inc. (MQT)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Municipal Bonds — 118.6%  

Alabama — 0.9%

 

City of Birmingham Alabama, GO, Convertible CAB, Series A1, 5.00%, 03/01/45(a)

  $ 915     $ 964,447  

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

    650       665,035  

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

   

5.00%, 12/01/34

    240       261,278  

5.00%, 12/01/47

    655       698,721  
   

 

 

 
      2,589,481  
Alaska — 0.3%  

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

    850       908,352  
   

 

 

 
Arizona — 1.4%  

City of Phoenix Arizona Civic Improvement Corp., Refunding RB, Senior Lien, AMT, 5.00%, 07/01/32

    1,000       1,083,680  

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

    975       960,853  

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

   

5.00%, 10/01/27

    1,075       1,102,262  

5.00%, 10/01/29

    925       947,949  
   

 

 

 
      4,094,744  
California — 10.4%  

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

    4,800       1,862,400  

California Health Facilities Financing Authority, RB:

   

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

    500       512,590  

Sutter Health, Series A, 5.00%, 11/15/41

    840       914,693  

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

    1,000       1,070,180  

California Health Facilities Financing Authority, Refunding RB:

   

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

    1,140       1,372,332  

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

    945       1,026,223  

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

   

5.50%, 05/01/19

    1,000       1,019,240  

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

    3,000       3,054,000  

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

    1,290       1,365,349  

California Statewide Communities Development Authority, Refunding RB, John Muir Health, Series A, 4.00%, 12/01/53

    865       841,109  

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

   

Series A, 5.00%, 03/01/36

    365       401,204  

Series A, 5.00%, 03/01/37

    400       438,772  

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

    700       748,867  

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

    575       628,199  

Golden State Tobacco Securitization Corp., Refunding RB, Series A-1, 3.50%, 06/01/36

    1,515       1,484,579  

Mount San Antonio Community College District, GO, Refunding, CAB, Election of 2008, Series A, 6.25%, 08/01/43(a)

    5,000       3,963,450  

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

   

0.00%, 08/01/31

    1,855       1,044,625  

0.00%, 08/01/32

    2,320       1,226,375  
Security   Par
(000)
    Value  
California (continued)  

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

   

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

  $ 1,400     $ 626,640  

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

    580       281,213  

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

    615       280,532  

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

    920       394,836  

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

    615       248,411  

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

    1,110       696,858  

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

   

5.00%, 08/01/21

    600       649,374  

5.00%, 08/01/21

    490       530,322  

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

    1,500       1,607,700  

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

   

0.00%, 08/01/36

    2,000       985,160  

0.00%, 08/01/37

    2,790       1,303,655  
   

 

 

 
      30,578,888  
Colorado — 2.6%  

City & County of Denver Colorado, COP, Colorado Convention Center Expansion Project, Series A, 4.00%, 06/01/48

    1,225       1,214,465  

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

    5,500       2,629,055  

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

    1,000       1,044,580  

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

    2,500       2,686,950  
   

 

 

 
      7,575,050  
Connecticut — 1.0%  

Connecticut Housing Finance Authority, Refunding RB:

   

M/F Housing, Sub-Series E-1 (Ginnie Mae, Fannie Mae & Freddie Mac), 4.00%, 05/15/36(d)

    685       680,726  

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

    440       424,213  

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

    1,290       1,257,002  

State of Connecticut, GO, Series C, 5.00%, 06/15/32

    545       595,423  
   

 

 

 
      2,957,364  
District of Columbia — 0.3%  

District of Columbia Housing Finance Agency, RB, M/F Housing, Series B-2 (FHA), 4.10%, 09/01/39

    920       902,253  
   

 

 

 
Florida — 10.2%  

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

    210       207,986  

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

    1,420       1,503,340  

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

    550       571,692  

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

   

5.63%, 10/01/26

    825       885,629  

5.38%, 10/01/32

    1,100       1,170,796  

County of Miami-Dade Florida, RB:

   

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

    900       919,143  

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

    1,780       1,999,741  

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

    360       405,886  

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

    580       648,805  

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

    570       642,299  
 

 

 

SCHEDULES OF INVESTMENTS      29  


Schedule of Investments  (unaudited) (continued)

October 31, 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, Refunding RB, 4.00%, 10/01/40

  $ 785     $ 785,502  

County of Miami-Dade Florida Aviation, Refunding ARB, AMT, 5.00%, 10/01/34

    160       172,893  

County of Miami-Dade Florida Aviation Revenue, Refunding ARB, Series A, AMT, 5.00%, 10/01/32

    1,730       1,846,273  

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

    2,635       2,842,954  

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

   

5.00%, 08/01/41

    495       524,957  

5.00%, 08/01/47

    1,435       1,515,992  

County of Orange HFA, RB, S/F Housing, Multi-County Program, Series A (Ginnie Mae, Fannie Mae & Freddie Mac), 3.75%, 09/01/47

    500       461,780  

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

   

5.00%, 10/01/21(b)

    30       32,287  

5.00%, 10/01/31

    1,870       2,003,817  

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

    465       503,735  

County of Sarasota Florida Public Hospital District, RB, Sarasota Memorial Hospital Project, Series A, 5.63%, 07/01/19(b)

    250       255,958  

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

    2,400       2,590,584  

Greater Orlando Aviation Authority, ARB, Priority Sub-Series A, AMT, 5.00%, 10/01/37

    660       715,750  

Greater Orlando Aviation Authority, RB, Priority Subordinated, AMT:

   

Series A, 5.00%, 10/01/47

    2,170       2,326,240  

Sub-Series A, 5.00%, 10/01/52

    1,330       1,420,626  

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

    1,040       1,157,312  

State of Florida, GO, Department of Transportation, Right-of-Way Acquisition and Bridge Construction Bonds, 4.00%, 07/01/39

    1,840       1,870,949  
   

 

 

 
      29,982,926  
Georgia — 0.8%  

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

    440       491,084  

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

    1,110       1,050,415  

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

   

5.00%, 04/01/33

    120       128,376  

5.00%, 04/01/44

    550       579,255  
   

 

 

 
      2,249,130  
Illinois — 13.1%  

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

    505       537,532  

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

   

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

    1,680       1,806,403  

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

    320       339,120  

Senior Lien, Series D, 5.25%, 01/01/42

    2,585       2,836,339  

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

    3,235       3,479,663  
Security   Par
(000)
    Value  
Illinois (continued)  

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

  $ 515     $ 541,394  

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

    400       429,616  

Illinois Finance Authority, Refunding RB:

   

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

    2,070       2,139,924  

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

    665       639,278  

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

    305       318,893  

Illinois Housing Development Authority, RB, S/F Housing, 4.13%, 10/01/38

    1,220       1,226,112  

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

    10,865       10,890,750  

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

    2,465       2,660,105  

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

    10,000       4,015,200  

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

    2,980       849,330  

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

    575       627,998  

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

    2,000       2,422,420  

State of Illinois, GO:

   

5.25%, 02/01/33

    735       756,991  

5.50%, 07/01/33

    710       748,681  

5.25%, 02/01/34

    735       755,617  

5.50%, 07/01/38

    390       407,718  
   

 

 

 
      38,429,084  
Indiana — 2.0%  

Indiana Finance Authority, RB, Series A:

   

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

    1,000       1,068,940  

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

    445       465,862  

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

   

5.75%, 01/01/19(b)

    390       392,496  

5.75%, 01/01/38

    1,610       1,619,901  

(AGC), 5.50%, 01/01/19(b)

    310       311,857  

(AGC), 5.50%, 01/01/38

    1,265       1,272,261  

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

    770       808,438  
   

 

 

 
      5,939,755  
Iowa — 2.3%  

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

    4,925       5,062,999  

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

   

5.60%, 12/01/26

    515       530,028  

5.70%, 12/01/27

    520       534,893  

5.80%, 12/01/29

    355       364,542  

5.85%, 12/01/30

    365       374,716  
   

 

 

 
      6,867,178  
Kentucky — 0.7%  

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

   

5.25%, 02/01/19(b)

    1,775       1,789,697  

5.25%, 02/01/29

    225       226,766  
   

 

 

 
      2,016,463  
 

 

 

30    2018 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

October 31, 2018

  

BlackRock MuniYield Quality Fund II, Inc. (MQT)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Louisiana — 1.3%  

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

  $ 2,620     $ 2,774,947  

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

    1,150       1,158,694  
   

 

 

 
      3,933,641  
Maine — 1.0%  

Maine State Housing Authority, RB:

   

M/F Housing, Series E, 4.15%, 11/15/38(d)

    1,255       1,259,681  

M/F Housing, Series E, 4.25%, 11/15/43(d)

    1,120       1,122,487  

Series D-1, 3.65%, 11/15/42

    570       525,272  
   

 

 

 
      2,907,440  
Maryland — 0.3%  

Maryland Community Development Administration, Refunding RB, S/F Housing, Series A, 4.10%, 09/01/38(d)

    1,030       1,023,037  
   

 

 

 
Massachusetts — 2.6%  

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

    1,855       1,943,502  

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

    815       803,011  

Massachusetts HFA, Refunding RB, AMT:

   

Series A, 4.45%, 12/01/42

    700       710,346  

Series C, 5.00%, 12/01/30

    1,620       1,626,286  

Series C, 5.35%, 12/01/42

    315       316,351  

Massachusetts Housing Finance Agency, RB, M/F Housing, Series A:

   

3.80%, 12/01/43

    230       217,863  

3.85%, 06/01/46

    70       65,692  

Massachusetts School Building Authority, RB:

   

Dedicated Sales Tax, Senior Series A, 5.00%, 05/15/43

    1,110       1,204,461  

Sub-Series B, 4.00%, 02/15/43

    670       663,796  
   

 

 

 
      7,551,308  
Michigan — 4.4%  

City of Detroit Michigan Water Supply System Revenue, RB:

   

2nd Lien, Series B (AGM), 6.25%, 07/01/19(b)

    350       359,891  

Senior Lien, Series A, 5.25%, 07/01/41

    1,600       1,694,400  

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

    1,700       1,829,217  

Eastern Michigan University, RB, Series A (AGM), 4.00%, 03/01/44

    545       528,078  

Michigan Finance Authority, Refunding RB:

   

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

    280       229,625  

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

    15       16,207  

Trinity Health Credit Group, Series A, 4.00%, 12/01/40

    1,945       1,916,875  

Royal Oak Hospital Finance Authority Michigan, Refunding RB, Beaumont Health Credit Group, Series D, 5.00%, 09/01/39

    720       767,743  

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

   

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

    600       644,718  

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

    1,000       1,077,780  

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

    1,900       2,048,941  

State of Michigan Housing Development Authority, RB, S/F Housing, Series C, 4.13%, 12/01/38(d)

    1,305       1,306,436  

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

    340       372,225  
   

 

 

 
      12,792,136  
Minnesota — 0.6%  

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

   

6.50%, 11/15/18(b)

    275       275,462  

6.50%, 11/15/38

    1,525       1,527,562  
   

 

 

 
      1,803,024  
Security   Par
(000)
    Value  
Mississippi — 0.1%  

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

  $ 350     $ 349,983  
   

 

 

 
Nebraska — 1.0%  

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

    2,650       2,871,116  
   

 

 

 
Nevada — 1.0%  

County of Clark Nevada, ARB, Las Vegas-McCarran International Airport, Series A:

   

5.25%, 07/01/42

    1,000       1,031,780  

(AGM), 5.25%, 07/01/39

    1,700       1,754,621  
   

 

 

 
      2,786,401  
New Jersey — 8.5%  

New Jersey EDA, RB:

   

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

    790       845,126  

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

    610       649,016  

Series WW, 5.25%, 06/15/33

    135       143,512  

Series WW, 5.00%, 06/15/34

    180       188,345  

Series WW, 5.00%, 06/15/36

    800       832,392  

Series WW, 5.25%, 06/15/40

    320       336,960  

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

    500       483,090  

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

   

5.50%, 12/01/25

    255       267,860  

5.50%, 12/01/26

    180       188,703  

5.75%, 12/01/28

    95       99,967  

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

    840       853,868  

New Jersey Transportation Trust Fund Authority, RB:

   

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

    1,315       1,395,031  

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

    1,180       1,220,191  

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

    225       137,326  

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

    4,265       4,451,551  

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

    1,400       1,606,892  

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

    4,650       4,933,278  

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

    3,680       3,780,648  

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

    525       553,224  

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

   

5.00%, 06/01/46

    1,640       1,692,873  

5.25%, 06/01/46

    360       380,524  
   

 

 

 
      25,040,377  
New Mexico — 0.1%  

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

    325       350,812  
   

 

 

 
New York — 8.6%  

City of New York Transitional Finance Authority, BARB, Fiscal 2009, Series S-4, 5.50%, 01/15/33

    3,035       3,057,702  

City of New York Housing Development Corp., Refunding RB, Sustainable Neighborhood Bonds, Series A, 4.15%, 11/01/38(d)

    1,940       1,914,159  

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       1,350,937  

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

    1,000       983,480  
 

 

 

SCHEDULES OF INVESTMENTS      31  


Schedule of Investments  (unaudited) (continued)

October 31, 2018

  

BlackRock MuniYield Quality Fund II, Inc. (MQT)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
New York (continued)  

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

  $ 2,200     $ 2,387,044  

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

   

5.75%, 02/15/21(b)

    375       405,559  

5.75%, 02/15/47

    235       251,478  

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

    1,230       1,345,632  

New York City Water & Sewer System, RB, Series DD-1, 4.00%, 06/15/48

    5,000       4,931,400  

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

    4,950       5,209,281  

Port Authority of New York & New Jersey, Refunding ARB, Series 207, AMT, 4.00%, 09/15/43

    410       401,747  

State of New York HFA, RB, Affordable Housing, M/F Housing, Series B, AMT, 5.30%, 11/01/37

    2,835       2,837,410  
   

 

 

 
      25,075,829  
Ohio — 1.0%  

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

    405       390,841  

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

    460       516,483  

Ohio Housing Finance Agency, RB, S/F Housing, Series A (Ginnie Mae, Fannie Mae & Freddie Mac), 4.00%, 09/01/48

    290       282,582  

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

   

5.25%, 02/15/32

    610       670,201  

5.25%, 02/15/33

    850       933,164  
   

 

 

 
      2,793,271  
Oklahoma — 0.2%  

City of Oklahoma Turnpike Authority, RB, Series A, 4.00%, 01/01/48

    495       487,431  
   

 

 

 
Oregon — 1.3%  

County of Clackamas Oregon Community College District, GO, Convertible Deferred Interest Bonds, Series A, 5.00%, 06/15/40(a)

    390       394,664  

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

    875       380,651  

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

    485       462,797  

State of Oregon Housing & Community Services Department, RB:

   

S/F Housing, Mortgage Program, Series C, 3.95%, 07/01/43

    380       372,347  

Series D, 3.45%, 01/01/38

    2,440       2,238,578  
   

 

 

 
      3,849,037  
Pennsylvania — 10.0%  

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

    765       816,469  

Commonwealth Financing Authority, RB:

   

Series B, 5.00%, 06/01/42

    2,110       2,233,815  

Tobacco Master Settlement Payment (AGM), 4.00%, 06/01/39

    935       916,964  

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

    840       799,898  

Pennsylvania Economic Development Financing Authority, RB:

   

UPMC, Series B, 4.00%, 03/15/40

    3,000       2,928,210  

AMT, 5.00%, 06/30/42

    3,300       3,447,048  
Security   Par
(000)
    Value  
Pennsylvania (continued)  

PA Bridges Finco LP, AMT, 5.00%, 12/31/34

  $ 2,220     $ 2,359,105  

Pennsylvania Rapid Bridge Replacement, 5.00%, 12/31/38

    1,155       1,211,849  

S/F Housing, Series 127-B, 3.88%, 10/01/38

    790       770,147  

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

    505       490,547  

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

    3,175       3,459,671  

Pennsylvania Turnpike Commission, RB:

   

Series A, 5.00%, 12/01/38

    550       592,323  

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

    730       788,203  

Series B, 5.00%, 12/01/40

    285       307,518  

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

    490       562,995  

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

    1,755       1,851,157  

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

    2,245       2,396,223  

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

    500       538,740  

Pennsylvania Turnpike Commission, Refunding RB:

   

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

    1,835       1,800,153  

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

    680       730,374  

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

    270       288,733  
   

 

 

 
      29,290,142  
Rhode Island — 1.5%  

Rhode Island Health & Educational Building Corp., RB, Series A, 4.00%, 09/15/42

    715       696,710  

Rhode Island Turnpike & Bridge Authority, Refunding RB, Series A, 5.00%, 10/01/40

    415       448,852  

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

   

4.50%, 06/01/45

    945       931,987  

5.00%, 06/01/50

    2,340       2,399,226  
   

 

 

 
      4,476,775  
South Carolina — 6.5%  

County of Charleston South Carolina Airport District, ARB, Series A, AMT, 5.50%, 07/01/41

    1,360       1,490,750  

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

    100       111,341  

South Carolina Jobs-EDA, RB, McLeod Health Obligated Group, 5.00%, 11/01/48

    2,010       2,177,433  

South Carolina Ports Authority, ARB, AMT, 5.00%, 07/01/48

    470       504,221  

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

    3,420       3,518,188  

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

    2,040       2,203,873  

State of South Carolina Public Service Authority, RB:

   

Santee Cooper, Series A, 5.50%, 12/01/54

    3,935       4,168,936  

Series E, 5.50%, 12/01/53

    2,820       2,974,169  

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

    1,840       1,913,490  
   

 

 

 
      19,062,401  
South Dakota — 0.4%  

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

    1,085       1,066,729  
   

 

 

 
Texas — 16.8%  

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

    500       538,130  
 

 

 

32    2018 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

October 31, 2018

  

BlackRock MuniYield Quality Fund II, Inc. (MQT)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Texas (continued)  

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     $ 862,914  

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

    750       819,338  

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

   

Series D, 5.00%, 11/01/38

    1,800       1,877,760  

Series D, 5.00%, 11/01/42

    1,140       1,187,264  

Series H, 5.00%, 11/01/32

    2,715       2,852,026  

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

    865       951,327  

Grand Parkway Transportation Corp., RB, Subordinate Tier Toll Revenue Bonds, TELA Supported, Series A, 5.00%, 10/01/48

    1,605       1,765,516  

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

    3,020       1,278,457  

North Texas Tollway Authority, RB, Convertible CAB, Series C, 6.75%, 09/01/31(a)(b)

    10,000       11,713,900  

North Texas Tollway Authority, Refunding RB:

   

4.25%, 01/01/49(d)

    1,090       1,069,944  

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

    1,965       1,977,812  

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

    450       452,723  

1st Tier, Series K-1 (AGC), 5.75%, 01/01/19(b)

    3,400       3,420,774  

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

    1,790       1,954,823  

Series B, 5.00%, 01/01/40

    530       566,681  

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

   

0.00%, 09/15/35

    1,150       531,024  

0.00%, 09/15/36

    3,875       1,684,966  

0.00%, 09/15/37

    17,775       7,268,553  

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

    1,205       1,330,910  

Texas Department of Housing & Community Affairs, RB, S/F Housing Mortgage, Series A (Ginnie Mae), 4.25%, 09/01/43

    350       351,519  

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

   

5.00%, 12/15/31

    1,030       1,094,437  

5.00%, 12/15/32

    1,765       1,872,630  

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

    1,135       1,186,325  

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

    605       638,208  
   

 

 

 
      49,247,961  
Utah — 0.5%  

Salt Lake City Corp. Airport Revenue, ARB, Series A, AMT:

   

5.00%, 07/01/48

    395       426,711  

5.00%, 07/01/42

    1,095       1,177,771  
   

 

 

 
      1,604,482  
Virginia — 0.1%  

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

   

5.50%, 05/15/19

    105       107,012  

5.50%, 05/15/19

    195       198,736  
   

 

 

 
      305,748  
Security   Par
(000)
    Value  
Washington — 3.6%  

Port of Seattle Washington, RB, AMT:

   

Intermediate Lien, Series C, 5.00%, 04/01/40

  $ 900     $ 963,585  

Series A, 5.00%, 05/01/43

    1,730       1,854,872  

State of Washington Convention Center Public Facilities District, RB, 5.00%, 07/01/43

    545       595,151  

Washington Health Care Facilities Authority, RB:

   

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

    3,000       3,237,660  

Providence Health & Services, 4.00%, 10/01/45

    630       613,752  

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

    1,000       1,028,720  

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

    550       569,470  

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

    1,630       1,594,107  
   

 

 

 
      10,457,317  
West Virginia — 0.8%  

West Virginia Hospital Finance Authority, RB, Improvement West Virginia University Health System Obligated Group, Series A, 4.00%, 06/01/51

    2,625       2,385,022  
   

 

 

 
Wisconsin — 0.4%  

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

    1,200       1,230,480  
   

 

 

 

Total Municipal Bonds — 118.6%
(Cost — $335,557,786)

 

    347,832,568  
 

 

 

 

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       1,020,020  
   

 

 

 
California — 2.4%  

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

    3,391       3,400,893  

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

    1,391       1,597,130  

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

    1,699       1,753,178  

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

    359       368,256  
   

 

 

 
      7,119,457  
Colorado — 2.1%  

City & County of Denver Colorado Airport System Revenue, Refunding ARB, Subordinate System, Series A, AMT, 5.25%, 12/01/48(f)

    2,084       2,314,809  

Colorado Health Facilities Authority, Refunding RB, Catholic Health Initiatives, Series A:

   

5.50%, 07/01/34(f)

    780       796,985  

5.00%, 02/01/41

    3,000       3,070,815  
   

 

 

 
      6,182,609  
Connecticut — 0.4%  

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

    1,231       1,333,688  
   

 

 

 

District of Columbia — 0.3%

 

County/City/Special District/School District — 0.3%

 

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

    855       884,491  
   

 

 

 
 

 

 

SCHEDULES OF INVESTMENTS      33  


Schedule of Investments  (unaudited) (continued)

October 31, 2018

  

BlackRock MuniYield Quality Fund II, Inc. (MQT)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Florida — 8.6%  

City of Miami Beach Florida, RB, 5.00%, 09/01/45

  $ 2,740     $ 2,985,579  

County of Miami-Dade Florida Expressway Authority, Refunding RB, Series A (AGM), 5.00%, 07/01/35

    2,100       2,186,373  

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

    1,540       1,643,534  

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

    6,901       7,272,971  

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

    3,394       3,482,605  

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

    4,200       5,036,934  

South Miami Health Facilities Authority, Refunding RB, Baptist Health South Florida, 5.00%, 08/15/47

    2,340       2,547,956  
   

 

 

 
      25,155,952  
Illinois — 6.4%  

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

   

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

    1,688       1,688,925  

2017, 5.25%, 11/01/33

    490       490,146  

5.25%, 11/01/18(b)

    370       370,057  

Regional Transportation Authority, RB, (NPFGC), 6.50%, 07/01/26

    10,000       12,130,429  

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

    1,130       1,152,096  

State of Illinois Toll Highway Authority, RB:

   

Series A, 5.00%, 01/01/38

    1,859       1,985,412  

Series B, 5.00%, 01/01/40

    930       1,002,037  
   

 

 

 
      18,819,102  
Louisiana — 0.5%  

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

    1,350       1,355,373  
   

 

 

 
Maryland — 1.3%  

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

   

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

    2,478       2,721,428  

Wastewater Project, 5.00%, 07/01/46

    939       1,029,576  
   

 

 

 
      3,751,004  
Massachusetts — 0.5%  

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

    1,321       1,434,068  
   

 

 

 
Michigan — 2.6%  

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

    1,750       1,863,971  

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

    4,685       4,937,006  

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

    760       832,105  
   

 

 

 
      7,633,082  
Nevada — 3.9%  

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

    3,298       3,352,457  

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

    2,716       3,042,882  

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

    1,574       1,614,310  

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

    3,080       3,357,362  
   

 

 

 
      11,367,011  
New Jersey — 2.2%  

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

    720       791,496  
Security   Par
(000)
    Value  
New Jersey (continued)  

New Jersey State Turnpike Authority, Refunding RB:

   

Series B, 4.00%, 01/01/37

  $ 2,054     $ 2,075,567  

Series G, 4.00%, 01/01/43

    1,906       1,891,419  

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

    1,580       1,645,330  
   

 

 

 
      6,403,812  
New York — 8.0%  

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

   

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

    2,595       2,839,163  

Series DD, 5.00%, 06/15/35

    1,470       1,619,396  

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

    2,714       3,000,699  

City of New York Transitional Finance Authority, BARB, Series S-1, 4.00%, 07/15/42(f)

    1,500       1,484,055  

City of New York Water & Sewer System, Refunding RB, 2nd General Resolution, Fiscal 2013, Series CC, 5.00%, 06/15/47

    4,920       5,386,085  

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

    3,080       3,402,276  

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

    1,338       1,461,946  

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

    2,001       2,214,445  

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

    996       1,010,108  

Triborough Bridge & Tunnel Authority, RB, General, Series A-2:

   

5.25%, 11/15/18(f)

    449       449,615  

5.25%, 11/15/34(f)

    751       751,921  
   

 

 

 
      23,619,709  
Ohio — 1.7%  

Northeast Ohio Regional Sewer District, Refunding RB:

   

4.00%, 11/15/49(f)

    1,875       1,845,456  

4.00%, 11/15/43

    2,581       2,587,421  

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

    500       502,870  
   

 

 

 
      4,935,747  
Pennsylvania — 0.7%  

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

    800       860,374  

Philadelphia Authority for Industrial Development, RB, Childrens Hospital of Philadelphia Project, Series A, 4.00%, 07/01/44

    1,094       1,094,391  
   

 

 

 
      1,954,765  
Rhode Island — 0.4%  

Rhode Island Housing & Mortgage Finance Corp., Refunding RB, S/F Housing, Home Ownership Opportunity Bonds, Series 69-B (Ginnie Mae, Fannie Mae & Freddie Mac), 3.95%, 10/01/43

    1,300       1,283,704  
   

 

 

 
South Carolina — 0.4%  

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

   

5.50%, 01/01/19(f)

    90       90,182  

5.50%, 01/01/19

    1,037       1,042,755  
   

 

 

 
      1,132,937  
Texas — 4.7%  

City of Houston Texas Community College, GO, Limited Tax, 4.00%, 02/15/43

    1,305       1,294,908  

County of Harris Texas Cultural Education Facilities Finance Corp., RB, Texas Children’s Hospital Project, 5.50%, 10/01/39

    4,000       4,104,300  
 

 

 

34    2018 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

October 31, 2018

  

BlackRock MuniYield Quality Fund II, Inc. (MQT)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Texas (continued)  

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

  $ 1,094     $ 1,211,271  

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

    3,080       3,339,883  

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

    1,996       2,083,529  

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

    1,649       1,653,126  
   

 

 

 
      13,687,017  
Utah — 1.7%  

County of Utah Utah, RB, IHC Health Services, Inc., Series B, 4.00%, 05/15/47

    5,135       5,049,020  
   

 

 

 
Virginia — 0.8%  

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

    1,962       2,260,773  
   

 

 

 
Washington — 1.8%  

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

    2,190       2,348,906  

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

    2,565       2,873,074  
   

 

 

 
      5,221,980  
Wisconsin — 1.8%  

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

    3,250       3,294,126  

Wisconsin Health & Educational Facilities Authority, Refunding RB, Froedtert & Community Health, Inc., Obligated Group, Series A, 5.00%, 04/01/42

    1,920       2,022,461  
   

 

 

 
      5,316,587  
   

 

 

 

Total Municipal Bonds Transferred to Tender Option
Bond Trusts — 53.5%
(Cost — $155,194,596)

 

    156,921,908  
 

 

 

 

Total Long-Term Investments — 172.1%
(Cost — $490,752,382)

 

    504,754,476  
 

 

 

 
Security       
Shares
    Value  
Short-Term Securities — 0.9%  

BlackRock Liquidity Funds, MuniCash, Institutional Class,
1.45%(g)(h)

    2,443,850     $ 2,444,095  
   

 

 

 

Total Short-Term Securities — 0.9%
(Cost — $2,444,095)

 

    2,444,095  
 

 

 

 

Total Investments — 173.0%
(Cost — $493,196,477)

 

    507,198,571  

Liabilities in Excess of Other Assets — (1.3)%

 

    (3,610,740

Liability for TOB Trust Certificates, Including Interest Expense and Fees Payable — (32.0)%

 

    (93,838,471

VMTP Shares, at Liquidation Value — (39.7)%

 

    (116,500,000
 

 

 

 

Net Assets Applicable to Common Shares — 100.0%

 

  $ 293,249,360  
 

 

 

 

 

(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 December 1, 2018 to April 1, 2039, is $17,522,772. See Note 4 of the Notes to Financial Statements for details.

(g) 

Annualized 7-day yield as of period end.

 
(h) 

During the six months ended October 31, 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:

 

Affiliate    Shares
Held at
04/30/18
     Net
Activity
     Shares
Held at
10/31/18
     Value at
10/31/18
     Income      Net
Realized
Gain (Loss)
 (a)
     Change in
Unrealized
Appreciation
(Depreciation)
 

BlackRock Liquidity Funds, MuniCash, Institutional Class

            2,443,850        2,443,850      $ 2,444,095      $ 11,299      $ 307      $  
           

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Includes net capital gain distributions, if applicable.

 

 

 

SCHEDULES OF INVESTMENTS      35  


Schedule of Investments  (unaudited) (continued)

October 31, 2018

  

BlackRock MuniYield Quality Fund II, Inc. (MQT)

 

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

     13          12/19/18        $ 1,540        $ 13,232  

5-Year U.S. Treasury Note

     25          12/31/18          2,810          7,625  

Long U.S. Treasury Bond

     85          12/19/18          11,741          277,319  
                 

 

 

 
                  $ 298,176  
                 

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of period 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)

   $             —      $             —      $             —      $             —      $ 298,176      $             —      $ 298,176  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (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 period end October 31, 2018, the effect of derivative financial instruments in the Statements of Operations were 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

   $             —      $             —      $             —      $             —      $ 397,657      $             —      $ 397,657  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
Net Change in Unrealized Appreciation (Depreciation) on:                                                 

Futures contracts

   $      $      $      $      $ 249,262      $      $ 249,262  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

        

Average notional value of contracts — short

   $ 21,158,598  

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

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)

   $        $ 504,754,476        $        $ 504,754,476  

Short-Term Securities

     2,444,095                            2,444,095  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 2,444,095        $ 504,754,476        $        $ 507,198,571  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative Financial Instruments(b)

                 

Assets:

                 

Interest rate contracts

   $ 298,176        $        $        $ 298,176  
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (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.

 

 

 

36    2018 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

October 31, 2018

  

BlackRock MuniYield Quality Fund II, Inc. (MQT)

 

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

   $             —        $ (93,456,561      $             —        $ (93,456,561

VMTP Shares at Liquidation Value

              (116,500,000                 (116,500,000
  

 

 

      

 

 

      

 

 

      

 

 

 
   $        $ (209,956,561      $        $ (209,956,561
  

 

 

      

 

 

      

 

 

      

 

 

 

During the period ended October 31, 2018, there were no transfers between levels.

See notes to financial statements.

 

 

SCHEDULES OF INVESTMENTS      37  


 

Statements of Assets and Liabilities

October 31, 2018 (unaudited)

 

     MYD      MQY      MQT  

ASSETS

 

Investments at value — unaffiliated(a)

  $ 1,051,212,520      $ 779,014,547      $ 504,754,476  

Investments at value — affiliated(b)

    13,161,105        1,412,603        2,444,095  

Cash

    65,336        66,789        41,961  

Cash pledged for futures contracts

    354,850        363,650        228,550  

Receivables:

 

Interest — unaffiliated

    16,357,532        9,598,110        6,381,415  

Variation margin on futures contracts

    118,541        121,531        76,341  

Investments sold

    23,355        1,005,087         

Dividends — affiliated

    19,290        2,258        2,800  

Prepaid expenses

    19,898        18,325        17,542  
 

 

 

    

 

 

    

 

 

 

Total assets

    1,081,332,427        791,602,900        513,947,180  
 

 

 

    

 

 

    

 

 

 

ACCRUED LIABILITIES

 

Payables:

 

Investments purchased

    8,782,856        13,655,516        8,876,398  

Income dividend distributions — Common Shares

    2,860,342        1,719,886        1,082,785  

Interest expense and fees

    691,977        620,328        381,910  

Investment advisory fees

    454,603        330,071        214,397  

Directors’ and Officer’s fees

    347,491        245,632        2,816  

Other accrued expenses

    281,077        234,467        182,953  
 

 

 

    

 

 

    

 

 

 

Total accrued liabilities

    13,418,346        16,805,900        10,741,259  
 

 

 

    

 

 

    

 

 

 

OTHER LIABILITIES

 

TOB Trust Certificates

    159,477,195        144,197,953        93,456,561  

VRDP Shares, at liquidation value of $100,000 per share, net of deferred offering costs(c)(d)

    251,040,373        176,369,429         

VMTP Shares, at liquidation value of $100,000 per share(c)(d)

                  116,500,000  
 

 

 

    

 

 

    

 

 

 

Total other liabilities

    410,517,568        320,567,382        209,956,561  
 

 

 

    

 

 

    

 

 

 

Total liabilities

    423,935,914        337,373,282        220,697,820  
 

 

 

    

 

 

    

 

 

 

NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS

  $ 657,396,513      $ 454,229,618      $ 293,249,360  
 

 

 

    

 

 

    

 

 

 

NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS CONSIST OF

 

Paid-in capital(e)(f)(g)

  $ 626,605,512      $ 430,584,293      $ 280,879,428  

Accumulated earnings

    30,791,001        23,645,325        12,369,932  
 

 

 

    

 

 

    

 

 

 

NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS

    657,396,513        454,229,618        293,249,360  
 

 

 

    

 

 

    

 

 

 

Net asset value per Common share

  $ 14.02      $ 14.79      $ 13.00  
 

 

 

    

 

 

    

 

 

 

(a) Investments at cost — unaffiliated

  $ 1,015,059,352      $ 756,280,581      $ 490,752,382  

(b) Investments at cost — affiliated

  $ 13,161,105      $ 1,412,603      $ 2,444,095  

(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.

 

 

38    2018 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Statements of Operations  (unaudited)

Six Months Ended October 31, 2018

 

     MYD     MQY     MQT  

INVESTMENT INCOME

 

Interest — unaffiliated

  $ 24,867,267     $ 16,609,765     $ 10,713,131  

Dividends — affiliated

    63,445       12,849       11,299  
 

 

 

   

 

 

   

 

 

 

Total investment income

    24,930,712       16,622,614       10,724,430  
 

 

 

   

 

 

   

 

 

 

EXPENSES

 

Investment advisory

    2,733,419       1,972,400       1,284,325  

Professional

    70,599       52,109       42,495  

Accounting services

    66,017       52,040       38,463  

Transfer agent

    27,604       22,292       15,489  

Liquidity fees

    13,050              

Remarketing fees on Preferred Shares

    12,674              

Directors and Officer

    11,882       8,005       14,362  

Registration

    9,436       6,046       4,785  

Custodian

    8,779       12,713       9,788  

Printing

    6,852       6,110       5,490  

Rating agency

    21,624       21,614       21,604  

Miscellaneous

    13,766       13,281       9,869  
 

 

 

   

 

 

   

 

 

 

Total expenses excluding interest expense, fees and amortization of offering costs

    2,995,702       2,166,610       1,446,670  

Interest expense, fees and amortization of offering costs(a)

    4,519,202       3,470,981       2,345,531  
 

 

 

   

 

 

   

 

 

 

Total expenses

    7,514,904       5,637,591       3,792,201  

Less fees waived by the Manager

    (4,246     (902     (795
 

 

 

   

 

 

   

 

 

 

Total expenses after fees waived

    7,510,658       5,636,689       3,791,406  
 

 

 

   

 

 

   

 

 

 

Net investment income

    17,420,054       10,985,925       6,933,024  
 

 

 

   

 

 

   

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

 

Net realized gain (loss) from:

 

Investments — unaffiliated

    789,039       (697,255     (367,636

Investments — affiliated

    566       1,235       307  

Futures contracts

    601,483       596,050       397,657  
 

 

 

   

 

 

   

 

 

 
    1,391,088       (99,970     30,328  
 

 

 

   

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation) on:

 

Investments — unaffiliated

    (18,735,410     (13,643,018     (8,892,809

Futures contracts

    406,069       402,080       249,262  
 

 

 

   

 

 

   

 

 

 
    (18,329,341     (13,240,938     (8,643,547
 

 

 

   

 

 

   

 

 

 

Net realized and unrealized loss

    (16,938,253     (13,340,908     (8,613,219
 

 

 

   

 

 

   

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS RESULTING FROM OPERATIONS

  $ 481,801     $ (2,354,983   $ (1,680,195
 

 

 

   

 

 

   

 

 

 

 

(a) 

Related to TOB Trusts, VRDP Shares and/or VMTP Shares.

See notes to financial statements.

 

 

FINANCIAL STATEMENTS      39  


 

Statements of Changes in Net Assets

 

    MYD  
     Six Months Ended
October 31,2018
(unaudited)
    Year Ended
April 30, 2018
 

INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS

   

OPERATIONS

 

Net investment income

  $ 17,420,054     $ 36,916,680  

Net realized gain

    1,391,088       1,279,545  

Net change in unrealized appreciation (depreciation)

    (18,329,341     (15,557,093
 

 

 

   

 

 

 

Net increase in net assets applicable to Common Shareholders resulting from operations

    481,801       22,639,132  
 

 

 

   

 

 

 

DISTRIBUTIONS TO COMMON SHAREHOLDERS(a)(b)

 

Decrease in net assets resulting from distributions to Common Shareholders

    (17,162,051     (38,299,513
 

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

 

Net increase in net assets derived from capital share transactions

          1,868,058  
 

 

 

   

 

 

 

NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS(b)

 

Total decrease in net assets applicable to Common Shareholders

    (16,680,250     (13,792,323

Beginning of period

    674,076,763       687,869,086  
 

 

 

   

 

 

 

End of period

  $ 657,396,513     $ 674,076,763  
 

 

 

   

 

 

 

 

(a) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(b) 

Prior year distribution character information and undistributed net investment income has been modified or removed to conform with current year Regulation S-X presentation changes. Refer to Note 11 for this prior year information.

See notes to financial statements.

 

 

40    2018 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Statements of Changes in Net Assets  (continued)

 

    MQY  
     Six Months Ended
10/31/18
(unaudited)
    Year Ended
April 30, 2018
 

INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS

   

OPERATIONS

 

Net investment income

  $ 10,985,925     $ 23,677,338  

Net realized gain (loss)

    (99,970     1,664,011  

Net change in unrealized appreciation (depreciation)

    (13,240,938     (10,687,746
 

 

 

   

 

 

 

Net increase (decrease) in net assets applicable to Common Shareholders resulting from operations

    (2,354,983     14,653,603  
 

 

 

   

 

 

 

DISTRIBUTIONS TO COMMON SHAREHOLDERS(a)(b)

 

Decrease in net assets resulting from distributions to Common Shareholders

    (10,749,287     (25,268,200
 

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

 

Net increase in net assets derived from capital share transactions

          190,750  
 

 

 

   

 

 

 

NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS(b)

 

Total decrease in net assets applicable to Common Shareholders

    (13,104,270     (10,423,847

Beginning of period

    467,333,888       477,757,735  
 

 

 

   

 

 

 

End of period

  $ 454,229,618     $ 467,333,888  
 

 

 

   

 

 

 

 

(a) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(b) 

Prior year distribution character information and undistributed net investment income has been modified or removed to conform with current year Regulation S-X presentation changes. Refer to Note 11 for this prior year information.

See notes to financial statements.

 

 

FINANCIAL STATEMENTS      41  


 

Statements of Changes in Net Assets  (continued)

 

    MQT  
     Six Months Ended
10/31/18
(unaudited)
    Year Ended
April 30, 2018
 

INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS

 

OPERATIONS

 

Net investment income

  $ 6,933,024     $ 14,800,414  

Net realized gain

    30,328       1,108,773  

Net change in unrealized appreciation (depreciation)

    (8,643,547     (7,361,007
 

 

 

   

 

 

 

Net increase (decrease) in net assets applicable to Common Shareholders resulting from operations

    (1,680,195     8,548,180  
 

 

 

   

 

 

 

DISTRIBUTIONS TO COMMON SHAREHOLDERS(a)(b)

 

Decrease in net assets resulting from distributions to Common Shareholders

    (6,767,403     (15,558,100
 

 

 

   

 

 

 

NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS(b)

 

Total decrease in net assets applicable to Common Shareholders

    (8,447,598     (7,009,920

Beginning of period

    301,696,958       308,706,878  
 

 

 

   

 

 

 

End of period

  $ 293,249,360     $ 301,696,958  
 

 

 

   

 

 

 

 

(a) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(b) 

Prior year distribution character information and undistributed net investment income has been modified or removed to conform with current year Regulation S-X presentation changes. Refer to Note 11 for this prior year information.

See notes to financial statements.

 

 

42    2018 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Statements of Cash Flows (unaudited)

Six Months Ended October 31, 2018

 

     MYD     MQY     MQT  

CASH PROVIDED BY OPERATING ACTIVITIES

     

Net increase (decrease) in net assets resulting from operations

  $ 481,801     $ (2,354,983   $ (1,680,195

Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used for) operating activities:

     

Proceeds from sales of long-term investments and principal paydowns

    84,184,220       108,656,306       56,151,004  

Purchases of long-term investments

    (70,190,171     (117,190,009     (62,835,772

Net proceeds from purchases of short-term securities

    (9,675,987     (1,411,368     (2,443,788

Amortization of premium and accretion of discount on investments and other fees

    834,259       (166,206     146,655  

Net realized (gain) loss on investments

    (789,605     696,020       367,329  

Net unrealized depreciation on investments

    18,735,410       13,643,018       8,892,809  
(Increase) decrease in assets:                  

Receivables:

     

Interest — unaffiliated

    697,119       251,989       (101,406

Dividends — affiliated

    (16,631     407       (2,483

Variation margin on futures contracts

    (118,541     (121,531     (76,341

Prepaid expenses

    15,155       8,993       5,474  

Other assets

    1,688       2,881       2,101  
Increase (decrease) in liabilities:                  

Payables:

     

Investment advisory fees

    4,450       10,357       7,948  

Interest expense and fees

    42,380       74,188       80,563  

Directors’ and Officer’s

    (9,897     (7,130     65  

Variation margin on futures contracts

    (91,375     (102,094     (66,531

Other accrued expenses

    18,327       12,393       5,257  
 

 

 

   

 

 

   

 

 

 

Net cash provided by (used for) operating activities

    24,122,602       2,003,231       (1,547,311
 

 

 

   

 

 

   

 

 

 

CASH PROVIDED BY FINANCING ACTIVITIES

     

Proceeds from TOB Trust Certificates

    22,685,003       20,169,708       12,257,941  

Repayments of TOB Trust Certificates

    (29,632,766     (10,600,602     (3,399,791

Cash dividends paid to Common Shareholders

    (17,162,051     (10,964,273     (6,902,751

Increase (decrease) in bank overdraft

          (604,352     (412,127

Amortization of deferred offering costs

    7,995       5,077        
 

 

 

   

 

 

   

 

 

 

Net cash (provided by) used for financing activities

    (24,101,819     (1,994,442     1,543,272  
 

 

 

   

 

 

   

 

 

 

CASH

     

Net increase (decrease) in restricted and unrestricted cash and foreign currency

    20,783       8,789       (4,039

Restricted and unrestricted cash and foreign currency at beginning of period

    399,403       421,650       274,550  
 

 

 

   

 

 

   

 

 

 

Restricted and unrestricted cash and foreign currency at end of period

  $ 420,186     $ 430,439     $ 270,511  
 

 

 

   

 

 

   

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

     

Cash paid during the period for interest expense

  $ 4,468,827     $ 3,391,716     $ 2,264,968  
 

 

 

   

 

 

   

 

 

 

RECONCILIATION OF RESTRICTED AND UNRESTRICTED CASH AT THE END OF PERIOD TO THE STATEMENTS OF ASSETS AND LIABILITIES

     

Cash

    65,336       66,789       41,961  

Cash pledged:

     

Futures contracts

    354,850       363,650       228,550  
 

 

 

   

 

 

   

 

 

 
  $ 420,186     $ 430,439     $ 270,511  
 

 

 

   

 

 

   

 

 

 

RECONCILIATION OF RESTRICTED AND UNRESTRICTED CASH AT THE BEGINNING OF PERIOD TO THE STATEMENTS OF ASSETS AND LIABILITIES

     

Cash

    22,553              

Cash pledged:

     

Futures contracts

    376,850       421,650       274,550  
 

 

 

   

 

 

   

 

 

 
  $ 399,403     $ 421,650     $ 274,550  
 

 

 

   

 

 

   

 

 

 

See notes to financial statements.

 

 

FINANCIAL STATEMENTS      43  


Financial Highlights

(For a share outstanding throughout each period)

 

    MYD  
    Six Months Ended
10/31/18
(Unaudited)
          Year Ended April 30,  
          2018      2017      2016      2015      2014  

Net asset value, beginning of period

  $ 14.38             $ 14.71      $ 15.61      $ 15.29      $ 14.71      $ 16.01  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income(a)

    0.37         0.79        0.84        0.90        0.91        0.94  

Net realized and unrealized gain (loss)

    (0.36       (0.30      (0.87      0.35        0.62        (1.25
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) from investment operations

    0.01         0.49        (0.03      1.25        1.53        (0.31
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Distributions to Common Shareholders from net investment income(b)

    (0.37       (0.82      (0.87      (0.93      (0.95      (0.99
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net asset value, end of period

  $ 14.02       $ 14.38      $ 14.71      $ 15.61      $ 15.29      $ 14.71  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Market price, end of period

  $ 12.41       $ 13.12      $ 14.75      $ 15.73      $ 14.91      $ 14.14  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Return Applicable to Common Shareholders(c)

                 

Based on net asset value

    0.21 %(d)        3.47      (0.16 )%       8.81      10.91      (1.21 )% 
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Based on market price

    (2.79 )%(d)        (5.85 )%       (0.65 )%       12.36      12.51      (6.38 )% 
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Ratios to Average Net Assets Applicable to Common Shareholders

                 

Total expenses

    2.21 %(e)        2.00      1.75      1.39      1.37      1.49
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses after fees waived and paid indirectly

    2.21 %(e)        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(f)(g)

    0.88 %(e)        0.89      0.89      0.88      0.89      1.20
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income to Common Shareholders

    5.13 %(e)        5.33      5.52      5.91      5.94      6.70
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Supplemental Data

                 

Net assets applicable to Common Shareholders, end of period (000)

  $ 657,397       $ 674,077      $ 687,869      $ 728,621      $ 713,237      $ 686,213  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

VRDP Shares outstanding at $100,000 liquidation value, end of period (000)

  $ 251,400       $ 251,400      $ 251,400      $ 251,400      $ 251,400      $ 251,400  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Asset coverage per VRDP Shares at $100,000 liquidation value, end of period

  $ 361,494       $ 368,129      $ 373,615      $ 389,825      $ 383,706      $ 372,956  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Borrowings outstanding, end of period (000)

  $ 159,477       $ 167,150      $ 168,316      $ 173,776      $ 163,621      $ 169,241  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Portfolio turnover rate

    6       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) 

Aggregate total return.

(e) 

Annualized.

(f) 

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.

(g) 

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:

 

    Six Months Ended
10/31/18
(Unaudited)
          Year Ended April 30,    

 

 
        2018           2017           2016           2015           2014        

Expense ratios

            0.87             0.88             0.89             0.88             0.88             0.92        
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

See notes to financial statements.

 

 

44    2018 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    MQY  
    Six Months Ended
10/31/18
(Unaudited)
          Year Ended April 30,  
          2018      2017      2016      2015      2014  

Net asset value, beginning of period

  $ 15.22             $ 15.56      $ 16.47      $ 16.12      $ 15.73      $ 16.83  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income(a)

    0.36         0.77        0.85        0.90        0.92        0.95  

Net realized and unrealized gain (loss)

    (0.44       (0.29      (0.89      0.40        0.43        (1.07
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) from investment operations

    (0.08       0.48        (0.04      1.30        1.35        (0.12
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
Distributions to Common Shareholders(b)  

From net investment income

    (0.35       (0.82      (0.87      (0.95      (0.96      (0.96

From net realized gain

                                        (0.02
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total distributions

    (0.35       (0.82      (0.87      (0.95      (0.96      (0.98
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net asset value, end of period

  $ 14.79       $ 15.22      $ 15.56      $ 16.47      $ 16.12      $ 15.73  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Market price, end of period

  $ 12.82       $ 13.83      $ 15.14      $ 16.56      $ 15.52      $ 14.84  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Return Applicable to Common Shareholders(c)

 

Based on net asset value

    (0.29 )%(d)        3.28      (0.12 )%       8.61      9.09      0.04
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Based on market price

    (4.89 )%(d)        (3.55 )%       (3.34 )%       13.35      11.32      (6.23 )% 
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Ratios to Average Net Assets Applicable to Common Shareholders

 

Total expenses

    2.39 %(e)        2.05      1.74      1.47      1.46      1.58
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses after fees waived and paid indirectly

    2.39 %(e)        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(f)(g)

    0.92 %(e)        0.91      0.89      1.09      1.25      1.32
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income to Common Shareholders

    4.66 %(e)        4.91      5.28      5.62      5.65      6.28
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Supplemental Data

 

Net assets applicable to Common Shareholders, end of period (000)

  $ 454,230       $ 467,334      $ 477,758      $ 505,367      $ 494,475      $ 482,666  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

VRDP Shares outstanding at $100,000 liquidation value, end of period (000)

  $ 176,600       $ 176,600      $ 176,600      $ 176,600      $ 176,600      $ 176,600  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Asset coverage per VRDP Shares at $100,000 liquidation value, end of period

  $ 357,208       $ 364,628      $ 370,531      $ 386,165      $ 379,997      $ 373,310  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Borrowings outstanding, end of period (000)

  $ 144,198       $ 139,144      $ 119,144      $ 112,111      $ 114,962      $ 121,321  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Portfolio turnover rate

    14       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) 

Aggregate total return.

(e) 

Annualized.

(f) 

Interest expense, fees and amortization of offering costs related to TOBs and/or VRDP Shares. See Note 4 and Note 10 of the Notes to Financial Statements for details.

(g) 

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:

 

    Six Months Ended
10/31/18
(Unaudited)
          Year Ended April 30,    

 

 
        2018           2017           2016           2015           2014        

Expense ratios

            0.92             0.91             0.89             0.92             0.89             0.93        
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

See notes to financial statements.

 

 

FINANCIAL HIGHLIGHTS      45  


Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    MQT  
    Six Months Ended
10/31/18
(unaudited)
          Year Ended April 30,  
          2018      2017      2016      2015      2014  

Net asset value, beginning of period

  $ 13.37             $ 13.69      $ 14.45      $ 14.18      $ 13.78      $ 14.68  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income(a)

    0.31         0.66        0.73        0.79        0.80        0.83  

Net realized and unrealized gain (loss)

    (0.38       (0.29      (0.74      0.30        0.45        (0.88
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) from investment operations

    (0.07       0.37        (0.01      1.09        1.25        (0.05
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Distributions to Common Shareholders from net investment income(b)

    (0.30       (0.69      (0.75      (0.82      (0.85      (0.85
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net asset value, end of period

  $ 13.00       $ 13.37      $ 13.69      $ 14.45      $ 14.18      $ 13.78  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Market price, end of period

  $ 11.27       $ 11.98      $ 12.94      $ 14.33      $ 13.44      $ 12.91  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Return Applicable to Common Shareholders(c)

 

Based on net asset value

    (0.28 )%(d)        3.01      0.12      8.48      9.70      0.55
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Based on market price

    (3.52 )%(d)        (2.35 )%       (4.57 )%       13.42      10.98      (4.04 )% 
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Ratios to Average Net Assets Applicable to Common Shareholders

 

Total expenses

    2.49 %(e)        2.10      1.79      1.48      1.47      1.56
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses after fees waived and paid indirectly

    2.49 %(e)        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(f)

    0.95 %(e)        0.92      0.90      0.91      0.92      0.95
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income to Common Shareholders

    4.56 %(e)        4.75      5.13      5.60      5.65      6.32
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Supplemental Data

 

Net assets applicable to Common Shareholders, end of period (000)

  $ 293,249       $ 301,697      $ 308,707      $ 326,072      $ 319,848      $ 310,886  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

VMTP Shares outstanding at $100,000 liquidation value, end of period (000)

  $ 116,500       $ 116,500      $ 116,500      $ 116,500      $ 116,500      $ 116,500  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Asset coverage per VMTP Shares at $100,000 liquidation value, end of period

  $ 351,716       $ 358,967      $ 364,984      $ 379,890      $ 374,548      $ 366,855  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Borrowings outstanding, end of period (000)

  $ 93,457       $ 87,513      $ 72,634      $ 75,273      $ 78,851      $ 75,189  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Portfolio turnover rate

    11       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) 

Aggregate total return.

(e) 

Annualized.

(f) 

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.

 

 

46    2018 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Notes to Financial Statements  (unaudited)

 

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”). 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 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.

In August 2018, the Financial Accounting Standards Board issued Accounting Standards Update 2018-13 “Changes to the Disclosure Requirements for Fair Value Measurement” which modifies disclosure requirements for fair value measurements. The guidance is effective for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years. 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.

 

 

NOTES TO FINANCIAL STATEMENTS      47  


Notes to Financial Statements  (unaudited) (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 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.

 

 

48    2018 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Notes to Financial Statements  (unaudited) (continued)

 

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

  $ 1,148,592      $ 351,429      $ 135,887      $ 1,635,908  

MQY

    1,017,683        298,646        108,522        1,424,851  

MQT

    671,708        198,528        70,286        940,522  

For the six months ended October 31, 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

  $ 267,109,373      $ 159,477,195        1.56% — 2.24%      $ 159,040,817        2.04

MQY

    244,347,320        144,197,953        1.56 — 2.24           138,288,830        2.04  

MQT

    156,921,909        93,456,561        1.56 — 2.24           91,423,538        2.04  

 

  (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 a 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 funds, for such reimbursements, as applicable, are included in the maximum potential amounts disclosed for recourse TOB Trusts.

 
  (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 the fund invests in a TOB Trust on a recourse basis, the fund enters into a reimbursement agreement with the Liquidity Provider where the 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 the fund invests in a recourse TOB Trust, the 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 the fund at October 31, 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 the fund at October 31, 2018.

 

 

 

NOTES TO FINANCIAL STATEMENTS      49  


Notes to Financial Statements  (unaudited) (continued)

 

 

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), and 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. Amount pledged, which are considered restricted, are included in cash pledged for futures in the Statements of Assets and Liabilities.

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 and 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 stock (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 six months ended October 31, 2018, the amounts waived were as follows:

 

     MYD      MQY      MQT  

Amounts waived

  $ 4,246      $ 902      $ 795  

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 thereafter, and may be terminated on 90 days’ notice, each subject to approval by a majority of the Funds’ Independent Directors. For the six months ended October 31, 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 six months ended October 31, 2018, purchases and sales of investments, excluding short-term securities, were as follows:

 

     MYD      MQY      MQT  

Purchases

  $ 62,584,211      $ 109,229,645      $ 64,587,343  

Sales

  $ 83,329,965      $ 107,809,740      $ 54,062,040  

 

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.

 

 

50    2018 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Notes to Financial Statements  (unaudited) (continued)

 

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 October 31, 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 Fund’s financial statements.

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.

 

As of October 31, 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

  $ 868,779,516     $ 613,941,986     $ 400,705,439  
 

 

 

   

 

 

   

 

 

 

Gross unrealized appreciation

  $ 45,861,860     $ 30,212,285     $ 19,012,714  

Gross unrealized depreciation

    (9,295,453     (7,449,457     (5,677,967
 

 

 

   

 

 

   

 

 

 

Net unrealized appreciation

  $ 36,566,407     $ 22,762,828     $ 13,334,747  
 

 

 

   

 

 

   

 

 

 

 

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.

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

 

 

NOTES TO FINANCIAL STATEMENTS      51  


Notes to Financial Statements  (unaudited) (continued)

 

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, MQY invested a significant portion of its assets in securities in the transportation sector. Changes in economic conditions affecting such sectors would have a greater impact on MQY 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. The Funds may be subject to a greater risk of rising interest rates due to the current period of historically low rates. The Federal Reserve has begun to raise the Federal Funds rate, and each increase results in more pronounced interest rate risk in the current market environment.

 

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 periods shown, shares issued and outstanding increased by the following amounts as a result of dividend reinvestment:

 

     MYD      MQY  

Six Months Ended October 31, 2018

            

Year Ended April 30, 2018

    125,519        12,019  

For the six months ended October 31, 2018 and the year ended April 30, 2018, shares issued and outstanding remained constant for MQT.

Preferred Shares

A Fund’s Preferred Shares rank prior to its Common Shares as to the payment of dividends by the Fund and distribution of assets upon dissolution or liquidation of the Fund. The 1940 Act prohibits the declaration of any dividend on Common Shares or the repurchase of Common Shares if the Fund fails to maintain asset coverage of at least 200% of the liquidation preference of the its 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 its Preferred Shares or repurchasing such shares if the 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.

Holders of Preferred Shares have voting rights equal to the voting rights of holders of Common Shares (one vote per share) and vote together with holders of Common Shares (one vote per share) as a single class on certain matters. Holders of Preferred Shares, voting as a separate class, are also entitled to (i) elect two members of the Board, (ii) elect the full Board if dividends on the Preferred Shares are not paid for a period of two years and (iii) 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.

VRDP Shares

MYD and MQY, (for purposes of this section, a “VRDP Fund”), have issued Series W-7 VRDP Shares, $100,000 liquidation preference per share, in one or more privately negotiated offerings 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 may be subject to a special rate period. As of period end, the VRDP Shares outstanding were as follows:

 

    

Issue

Date

    

Shares

Issued

    

Aggregate

Principal

    

Term
Redemption
Date

 

MYD

    06/30/11        2,514      $ 251,400,000        07/01/41  

MQY

    09/15/11        1,766        176,600,000        10/01/41  

 

 

52    2018 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Notes to Financial Statements  (unaudited) (continued)

 

Redemption Terms: A 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, a VRDP Fund is required to begin to segregate liquid assets with the Fund’s custodian to fund the redemption. In addition, a VRDP Fund is required to redeem certain of its outstanding VRDP Shares if it fails 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 a VRDP Fund. The redemption price per VRDP Share is equal to the liquidation preference per share plus any outstanding unpaid dividends.

Liquidity Feature: VRDP Shares are subject to a fee agreement between the VRDP Fund and the liquidity provider that requires a per annum liquidity fee and, in some cases, an upfront or initial commitment fee, payable to the liquidity provider. These fees, if applicable, are shown as liquidity fees in the Statement of Operations. The fee agreement is set to expire, unless renewed or terminated in advance, as follows:

 

     MYD      MQY  

Expiration Date

    04/15/20        10/21/19  

In the event a fee agreement is not renewed or is terminated in advance, and the VRDP Fund does not enter into a fee agreement with an alternate liquidity provider, the VRDP Shares 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, a VRDP Fund is required to redeem the VRDP Shares six months after the purchase date. Immediately after such mandatory purchase, the VRDP Fund is required to begin to segregate liquid assets with its custodian to fund the redemption. There is no assurance that a VRDP Fund will replace such redeemed VRDP Shares with any other preferred shares or other form of leverage.

Remarketing: A VRDP Fund may incur remarketing fees of 0.10% on the aggregate principal amount of all its VRDP 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), a VRDP Fund may incur nominal or no remarketing fees. MQY incurs no remarketing fees and MYD incurs nominal remarketing fee.

Ratings: As of period end, the VRDP Shares were assigned the following long-term ratings:

 

     Moody’s      Fitch  

MYD

    Aa1        AAA  

MQY

    Aa1        AAA  

Special Rate Period: A VRDP Fund may commence a “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. During a special rate period, short-term ratings on VRDP Shares are withdrawn. The following VRDP Funds have commenced or are set to commence a special rate period:

 

     Commencement Date     

Expiration Date as of period

ended October 31, 2018

 

MYD

    04/17/2014        04/15/2020  

MQY

    10/22/2015        04/17/2019  

Prior to the expiration date, the VRDP Fund and the VRDP Shares holder may mutually agree to extend the special rate period. If a 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.

During the special rate period: (i) the liquidity and fee agreements remain in effect, (ii) VRDP Shares remain subject to mandatory redemption by the VRDP Fund on the maturity date, (iii) VRDP Shares will not be remarketed or subject to optional or mandatory tender events, (iv) the VRDP Fund is 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, (v) the VRDP Fund will 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 and (vi) the VRDP Fund will pay nominal or no fees to the liquidity provider and remarketing agent.

If a VRDP Fund redeems its 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.

Dividends: Except during the Special Rate Period, 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. A change in the short-term credit rating of the liquidity provider or the VRDP Shares may adversely affect the dividend rate paid on such shares, although the dividend rate paid on the VRDP Shares is not directly based upon either short-term rating. 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.

For the six months ended October 31, 2018, the annualized dividend rates for the VRDP Shares were as follows:

 

     MYD      MQY  

Rate

    2.27      2.29

 

 

NOTES TO FINANCIAL STATEMENTS      53  


Notes to Financial Statements  (unaudited) (continued)

 

VMTP Shares

MQT has issued Series W-7 VMTP Shares, $100,000 liquidation preference per share, in one or more privately negotiated offerings to qualified institutional buyers as defined pursuant to Rule 144A under the Securities Act. The VMTP Shares are subject to certain restrictions on transfer, and MQT may also be required to register its VMTP Shares for sale under the Securities Act under certain circumstances.

As of period end, the VMTP Shares outstanding were as follows:

 

    

Issue

Date

    

Shares

Issued

    

Aggregate

Principal

    

Maturity

Date

 

MQT

    12/16/11        1,165      $ 116,500,000        07/02/19  

Redemption Terms: MQT is required to redeem its VMTP Shares on the term redemption date, unless earlier redeemed or repurchased or unless extended. There is no assurance that a term will be extended further or that any 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 its 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, VMTP Shares may be redeemed, in whole or in part, at any time at the option of the 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 its 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 or to a percentage of the one-month LIBOR rate, as set forth in the VMTP Shares governing instrument. 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. As of period end, the VMTP Shares were assigned the following long-term ratings:

 

     Moody’s      Fitch  

MQT

    Aa1        AAA  

The dividend rate on VMTP Shares is subject to a step-up spread if MQT 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 six months ended October 31, 2018, the average annualized dividend rate for the VMTP Shares was 2.39%

For the six months ended October 31, 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 by a VRDP Fund to the liquidity provider which, if any, 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 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

  $ 2,875,299      $ 7,995  

MQY

    2,041,053        5,077  

MQT

    1,405,009         

 

11.

REGULATION S-X AMENDMENTS

On August 17, 2018, the SEC adopted amendments to certain disclosure requirements in Securities Act Release No. 33-10532, Disclosure Update and Simplification. The Funds have adopted the amendments pertinent to Regulation S-X in this shareholder report. The amendments impacted certain disclosure presentation on the Statements of Assets and Liabilities, Statements of Changes in Net Assets and Notes to the Financial Statements.

Prior year distribution information and undistributed (distributions in excess of) net investment income in the Statements of Changes in Net Assets has been modified to conform to the current year presentation in accordance with the Regulations S-X changes.

 

 

54    2018 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Notes to Financial Statements  (unaudited) (continued)

 

Distributions for the year ended April 30, 2018 were classified as follows:

 

     Net Investment Income  

MYD

  $ 38,299,513  

MQY

    25,268,200  

MQT

    15,558,100  

Undistributed net investment income as of April 30, 2018 is as follows:

 

     Undistributed
Net Investment Income
 

MYD

  $ 1,718,990  

MQY

    2,286,868  

MQT

    2,617,106  

 

12.

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      $ 0.0590           VRDP        W-7      $ 557,764  

MQY

    0.0560        0.0560           VRDP        W-7        394,907  

MQT

    0.0480        0.0480                 VMTP        W-7        253,555  

 

  (a) 

Net investment income dividend paid on December 3, 2018 to Common Shareholders of record on November 15, 2018.

 
  (b) 

Net investment income dividend declared on December 3, 2018, payable to Common Shareholders of record on December 13, 2018.

 
  (c) 

Dividends declared for period November 1, 2018 to November 30, 2018.

 

 

     Common Distribution
Per Share
 
     Declared (a)      Declared (b)  

MYD

  $ 0.000879      $  

MQY

    0.004133        0.018105  

MQT

    0.003867         

 

  (a) 

Net investment income special dividend declared amounts per share on December 3, 2018, payable to Common Shareholders of record on December 13, 2018.

 
  (b) 

Special long-term capital gain distribution declared amounts per share on December 3, 2018, payable to Common Shareholders of record on December 13, 2018.

 

On November 15, 2018, the Board authorized each Fund to participate in an open market share repurchase program. Under the program, each Fund may repurchase, up to 5% of its outstanding common shares through November 30, 2019, based on common shares outstanding as of the close of business on November 30, 2018, subject to certain conditions. There is no assurance that the Funds will purchase shares in any particular amounts.

 

 

 

NOTES TO FINANCIAL STATEMENTS      55  


Disclosure of Investment Advisory Agreement

 

The Board of Directors (each, a “Board,” collectively, the “Boards,” and the members of which are referred to as “Board Members”) of BlackRock MuniYield Fund, Inc. (“MYD”), BlackRock MuniYield Quality Fund, Inc. (“MQY”), and BlackRock MuniYield Fund II, Inc. (“MQT”), (each a “Fund,” and collectively, the “Funds”) met in person on April 24, 2018 (the “April Meeting”) and June 6-7, 2018 (the “June Meeting”) to consider the approval of each Fund’s investment advisory agreement (each, an “Agreement,” and collectively, the “Agreements”) with BlackRock Advisors, LLC (the “Manager”), each Fund’s investment advisor. The Manager is referred to herein as “BlackRock”.

Activities and Composition of the Board

On the date of the June Meeting, the Board of each Fund consisted of ten individuals, eight of whom were not “interested persons” of the Fund as defined in the Investment Company Act of 1940, as amended (the “1940 Act”) (the “Independent Board Members”). The Board Members are responsible for the oversight of the operations of its Fund and perform the various duties imposed on the directors of investment companies by the 1940 Act. The Independent Board Members have retained independent legal counsel to assist them in connection with their duties. The Chair of each Board is an Independent Board Member. Each Board has established five standing committees: an Audit Committee, a Governance and Nominating Committee, a Compliance Committee, a Performance Oversight Committee, and an Executive Committee, each of which is chaired by an Independent Board Member and composed of Independent Board Members (except for the Executive Committee, which also has one interested Board Member).

The Agreements

Pursuant to the 1940 Act, each Board is required to consider the continuation of the Agreement for its Fund on an annual basis. Each Board has four quarterly meetings per year, each typically extending for two days, and additional in-person and telephonic meetings throughout the year, as needed. Each Board also has a fifth one-day meeting to consider specific information surrounding the consideration of renewing the Agreement for its Fund. Each Board’s consideration of the Agreement for its Fund is a year-long deliberative process, during which the Board assessed, among other things, the nature, extent and quality of the services provided to its Fund by BlackRock, BlackRock’s personnel and affiliates, including, as applicable; investment management, accounting, administrative, and shareholder services; oversight of the Fund’s service providers; marketing; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements.

Each Board, acting directly and through its committees, considers at each of its meetings, and from time to time as appropriate, factors that are relevant to its annual consideration of the renewal of the Agreement for its Fund, including the services and support provided by BlackRock to the Fund and its shareholders. BlackRock also furnished additional information to each Board in response to specific questions from the Board. This additional information is discussed further below in the section titled “Board Considerations in Approving the Agreements.” Among the matters each Board considered were: (a) investment performance for one-year, three-year, five-year, ten-year, and/or since inception periods, as applicable, against peer funds, applicable benchmarks, and performance metrics, as applicable, as well as senior management’s and portfolio managers’ analysis of the reasons for any over-performance or underperformance relative to its peers, benchmarks, and other performance metrics, as applicable; (b) leverage management, as applicable; (c) fees, including advisory, administration, if applicable, paid to BlackRock and its affiliates by the Fund for services; (d) Fund operating expenses and how BlackRock allocates expenses to the Fund; (e) the resources devoted to, risk oversight of, and compliance reports relating to, implementation of the Fund’s investment objective(s), policies and restrictions, and meeting regulatory requirements; (f) the Fund’s adherence to its compliance policies and procedures; (g) the nature, character and scope of non-investment management services provided by BlackRock and its affiliates and the estimated cost of such services; (h) BlackRock’s and other service providers’ internal controls and risk and compliance oversight mechanisms; (i) BlackRock’s implementation of the proxy voting policies approved by the Board; (j) execution quality of portfolio transactions; (k) BlackRock’s implementation of the Fund’s valuation and liquidity procedures; (l) an analysis of management fees for products with similar investment mandates across the open-end fund, closed-end fund, sub-advised mutual fund, collective investment trust, and institutional separate account product channels, as applicable, and the similarities and differences between these products and the services provided as compared to the Fund; (m) BlackRock’s compensation methodology for its investment professionals and the incentives and accountability it creates, along with investment professionals’ investments in the fund(s) they manage; and (n) periodic updates on BlackRock’s business.

The Board of each Fund considered BlackRock’s efforts during the past several years with regard to the redemption of outstanding auction rate preferred securities. Each Fund has redeemed all of its outstanding auction rate preferred securities.

Board Considerations in Approving the Agreements

The Approval Process: Prior to the April Meeting, each Board requested and received materials specifically relating to the Agreement for its Fund. Each Board is continuously engaged in a process with its independent legal counsel and BlackRock to review the nature and scope of the information provided to better assist its deliberations. The materials provided in connection with the April Meeting included, among other things: (a) information independently compiled and prepared by Broadridge Financial Solutions, Inc. (“Broadridge”), based on Lipper classifications, regarding the Funds’ fees and expenses as compared with a peer group of funds as determined by Broadridge (“Expense Peers”) and the investment performance of the Funds’ as compared with a peer group of funds (“Performance Peers”) and other metrics, as applicable; (b) information on the composition of the Expense Peers and Performance Peers, and a description of the Broadridge’s methodology; (c) information on the estimated profits realized by BlackRock and its affiliates pursuant to each Fund’s Agreement and a discussion of fall-out benefits to BlackRock and its affiliates; (d) a general analysis provided by BlackRock concerning investment management fees received in connection with other types of investment products, such as institutional accounts, sub-advised mutual funds, closed-end funds, and open-end funds, under similar investment mandates, as applicable; (e) review of non-management fees; (f) the existence and impact and sharing of potential economies of scale, if any, and the sharing of potential economies of scale with each Fund; (g) a summary of aggregate amounts paid by each Fund to BlackRock; and (h) various additional information requested by each Board as appropriate regarding BlackRock’s and the operations of its Fund.

At the April Meeting, each Board reviewed materials relating to its consideration of the Agreement for its Fund. As a result of the discussions that occurred during the April Meeting, and as a culmination of each Board’s year-long deliberative process, each Board presented BlackRock with questions and requests for additional information. BlackRock responded to these requests with additional written information in advance of the June Meeting.

 

 

56    2018 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Disclosure of Investment Advisory Agreement  (continued)

 

At the June Meeting, each Board considered, among other things: (a) the nature, extent and quality of the services provided by BlackRock; (b) the investment performance of the Fund as compared with Performance Peers and other metrics, as applicable; (c) the advisory fee and the estimated cost of the services and estimated profits realized by BlackRock and its affiliates from their relationship with the Fund; (d) the Fund’s fees and expenses compared to Expense Peers; (e) the sharing of potential economies of scale; (f) fall-out benefits to BlackRock and its affiliates as a result of BlackRock’s relationship with the Fund; and (g) other factors deemed relevant by the Board Members.

Each Board also considered other matters it deemed important to the approval process, such as other payments made to BlackRock or its affiliates relating to securities lending and cash management, services related to the valuation and pricing of Fund portfolio holdings, and advice from independent legal counsel with respect to the review process and materials submitted for the Board’s review. Each Board noted the willingness of BlackRock personnel to engage in open, candid discussions with the Board. Each Board did not identify any particular information as determinative, and each Board Member may have attributed different weights to the various items considered.

A. Nature, Extent and Quality of the Services Provided by BlackRock: Each Board, including the Independent Board Members, reviewed the nature, extent and quality of services provided by BlackRock, including the investment advisory services and the resulting performance of its Fund. Throughout the year, each Board compared its Fund’s performance to the performance of a comparable group of closed-end funds, relevant benchmark, and performance metrics, as applicable. Each Board met with BlackRock’s senior management personnel responsible for investment activities, including the senior investment officers. Each Board also reviewed the materials provided by its Fund’s portfolio management team discussing the Fund’s performance and the Fund’s investment objective(s), strategies and outlook.

Each Board considered, among other factors, with respect to BlackRock: the number, education and experience of investment personnel generally and its Fund’s portfolio management team; BlackRock’s research capabilities; investments by portfolio managers in the funds they manage; portfolio trading capabilities; use of technology; commitment to compliance; credit analysis capabilities; risk analysis and oversight capabilities; and the approach to training and retaining portfolio managers and other research, advisory and management personnel. Each Board also considered BlackRock’s overall risk management program, including the continued efforts of BlackRock and its affiliates to address cybersecurity risks and the role of BlackRock’s Risk & Quantitative Analysis Group. Each Board engaged in a review of BlackRock’s compensation structure with respect to its Fund’s portfolio management team and BlackRock’s ability to attract and retain high-quality talent and create performance incentives.

In addition to investment advisory services, each Board considered the quality of the administrative and other non-investment advisory services provided to its Fund. BlackRock and its affiliates provide each Fund with certain administrative, shareholder, and other services (in addition to any such services provided to its Fund by third parties) and officers and other personnel as are necessary for the operations of the Fund. In particular, BlackRock and its affiliates provide each Fund with administrative services including, among others: (i) responsibility for disclosure documents, such as the prospectus and the statement of additional information in connection with the initial public offering and periodic shareholder reports; (ii) preparing communications with analysts to support secondary market trading of the Fund; (iii) oversight of daily accounting and pricing; (iv) responsibility for periodic filings with regulators and stock exchanges; (v) overseeing and coordinating the activities of other service providers including, among others, the Fund’s custodian, fund accountant, transfer agent, and auditor; (vi) organizing Board meetings and preparing the materials for such Board meetings; (vii) providing legal and compliance support; (viii) furnishing analytical and other support to assist the Board in its consideration of strategic issues such as the merger, consolidation or repurposing of certain closed-end funds; and (ix) performing administrative functions necessary for the operation of the Fund, such as tax reporting, expense management, fulfilling regulatory filing requirements, and shareholder call center and other services. The Board reviewed the structure and duties of BlackRock’s fund administration, shareholder services, and legal & compliance departments and considered BlackRock’s policies and procedures for assuring compliance with applicable laws and regulations.

B. The Investment Performance of the Funds and BlackRock: Each Board, including the Independent Board Members, also reviewed and considered the performance history of its Fund. In preparation for the April Meeting, each Board was provided with reports independently prepared by Broadridge, which included a comprehensive analysis of its Fund’s performance as of December 31, 2017. The performance information is based on net asset value (NAV), and utilizes Lipper data. Lipper’s methodology calculates a fund’s total return assuming distributions are reinvested on the ex-date at a fund’s ex-date NAV. Broadridge ranks funds in quartiles, ranging from first to fourth, where first is the most desirable quartile position and fourth is the least desirable. In connection with its review, each Board received and reviewed information regarding the investment performance of its Fund as compared to its Performance Peers and a custom peer group of funds as defined by BlackRock (“Customized Peer Group”). Each Board and its Performance Oversight Committee regularly review, and meet with Fund management to discuss, the performance of the Fund throughout the year.

In evaluating performance, each Board recognized that the performance data reflects a snapshot of a period as of a particular date and that selecting a different performance period could produce significantly different results. Further, each Board recognized that it is possible that long-term performance can be impacted by even one period of significant outperformance or underperformance, so that a single investment theme has the ability to affect long-term performance disproportionately.

The Board of MYD noted that for the one-, three- and five-year periods reported, MYD ranked in the second, first, and first quartiles, respectively, against its Customized Peer Group Composite. BlackRock believes that the Customized Peer Group Composite is an appropriate performance metric for MYD. The Composite measures a blend of total return and yield.

The Board of each of MQY and MQT noted that for each of the one-, three- and five-year periods reported, its Fund ranked first out of two funds against its Customized Peer Group Composite. BlackRock believes that the Customized Peer Group Composite is an appropriate performance metric for MQY and MQT. The Composite measures a blend of total return and yield.

C. Consideration of the Advisory/Management Fees and the Estimated Cost of the Services and Estimated Profits Realized by BlackRock and its Affiliates from their Relationship with the Funds: Each Board, including the Independent Board Members, reviewed its Fund’s contractual management fee rate compared with those of its Expense Peers. The contractual management fee rate represents a combination of the advisory fee and any administrative fees, before taking into account any reimbursements or fee waivers. Each Board also compared its Fund’s total expense ratio, as well as its actual management fee rate as a percentage of total assets, to those of its Expense Peers. The total expense ratio represents a fund’s total net operating expenses, excluding any investment related expenses. The total expense ratio

 

 

DISCLOSURE OF INVESTMENT ADVISORY AGREEMENT      57  


Disclosure of Investment Advisory Agreement  (continued)

 

gives effect to any expense reimbursements or fee waivers that benefit a fund, and the actual management fee rate gives effect to any management fee reimbursements or waivers that benefit a fund. Each Board considered the services provided and the fees charged by BlackRock and its affiliates to other types of clients with similar investment mandates, as applicable, including institutional accounts and sub-advised mutual funds (including mutual funds sponsored by third parties).

Each Board received and reviewed statements relating to BlackRock’s financial condition. Each Board reviewed BlackRock’s profitability methodology and was also provided with an estimated profitability analysis that detailed the revenues earned and the expenses incurred by BlackRock for services provided to its Fund. Each Board reviewed BlackRock’s estimated profitability with respect to its Fund and other funds the Board currently oversees for the year ended December 31, 2017 compared to available aggregate estimated profitability data provided for the prior two years. Each Board reviewed BlackRock’s estimated profitability with respect to certain other U.S. fund complexes managed by the Manager and/or its affiliates. Each Board reviewed BlackRock’s assumptions and methodology of allocating expenses in the estimated profitability analysis, noting the inherent limitations in allocating costs among various advisory products. Each Board recognized that profitability may be affected by numerous factors including, among other things, fee waivers and expense reimbursements by the Manager, the types of funds managed, precision of expense allocations and business mix. As a result, calculating and comparing profitability at individual fund levels is difficult.

Each Board noted that, in general, individual fund or product line profitability of other advisors is not publicly available. Each Board reviewed BlackRock’s overall operating margin, in general, compared to that of certain other publicly-traded asset management firms. Each Board considered the differences between BlackRock and these other firms, including the contribution of technology at BlackRock, BlackRock’s expense management, and the relative product mix.

In addition, each Board considered the estimated cost of the services provided to its Fund by BlackRock, and BlackRock’s and its affiliates’ estimated profits relating to the management of its Fund and the other funds advised by BlackRock and its affiliates. As part of its analysis, each Board reviewed BlackRock’s methodology in allocating its costs of managing its Fund, to the Fund. Each Board considered whether BlackRock has the financial resources necessary to attract and retain high quality investment management personnel to perform its obligations under the Agreement for its Fund and to continue to provide the high quality of services that is expected by the Board. Each Board further considered factors including but not limited to BlackRock’s commitment of time, assumption of risk, and liability profile in servicing its Fund in contrast to what is required of BlackRock with respect to other products with similar investment mandates across the open-end fund, closed-end fund, sub-advised mutual fund, collective investment trust, and institutional separate account product channels, as applicable.

The Board noted that MYD’s contractual management fee rate ranked in the first quartile, and that the actual management fee rate and total expense ratio ranked in the first and second quartiles, respectively, relative to the Expense Peers.

The Board of each of MQY and MQT noted that its Fund’s contractual management fee rate ranked in the first quartile, and that the actual management fee rate and total expense ratio each ranked in the first quartile relative to the Expense Peers.

D. Economies of Scale: Each Board, including the Independent Board Members, considered the extent to which economies of scale might be realized as the assets of its Fund increase. Each Board also considered the extent to which its Fund benefits from such economies in a variety of ways, and whether there should be changes in the advisory fee rate or breakpoint structure in order to enable the Fund to more fully participate in these economies of scale. Each Board considered the Fund’s asset levels and whether the current fee was appropriate.

Based on each Board’s review and consideration of the issue, each Board concluded that most closed-end funds do not have fund level breakpoints because closed-end funds generally do not experience substantial growth after the initial public offering. They are typically priced at scale at a fund’s inception.

E. Other Factors Deemed Relevant by the Board Members: Each Board, including the Independent Board Members, also took into account other ancillary or “fall-out” benefits that BlackRock or its affiliates may derive from BlackRock’s respective relationships with its Fund, both tangible and intangible, such as BlackRock’s ability to leverage its investment professionals who manage other portfolios and risk management personnel, an increase in BlackRock’s profile in the investment advisory community, and the engagement of BlackRock’s affiliates as service providers to the Fund, including for administrative, securities lending and cash management services. Each Board also considered BlackRock’s overall operations and its efforts to expand the scale of, and improve the quality of, its operations. Each Board also noted that, subject to applicable law, BlackRock may use and benefit from third party research obtained by soft dollars generated by certain registered fund transactions to assist in managing all or a number of its other client accounts.

In connection with its consideration of the Agreement for its Fund, each Board also received information regarding BlackRock’s brokerage and soft dollar practices. Each Board received reports from BlackRock which included information on brokerage commissions and trade execution practices throughout the year.

Each Board noted the competitive nature of the closed-end fund marketplace, and that shareholders are able to sell their Fund shares in the secondary market if they believe that the Fund’s fees and expenses are too high or if they are dissatisfied with the performance of the Fund.

Each Board also considered the various notable initiatives and projects BlackRock performed in connection with its closed-end fund product line. These initiatives included the completion of the redemption of auction rate preferred securities for all of the BlackRock closed-end funds; developing equity shelf programs; efforts to eliminate product overlap with fund mergers; ongoing services to manage leverage that has become increasingly complex; periodic evaluation of share repurchases and other support initiatives for certain BlackRock funds; and continued communications efforts with shareholders, fund analysts and financial advisers. With respect to the latter, the Independent Board Members of each Fund noted BlackRock’s continued commitment to supporting the secondary market for the common shares of its closed-end funds through a comprehensive secondary market communication program designed to raise investor and analyst awareness and understanding of closed-end funds. BlackRock’s support services included, among other things: sponsoring and participating in conferences; communicating with closed-end fund analysts covering the BlackRock funds throughout the year; providing marketing and product updates for the closed-end funds; and maintaining and enhancing its closed-end fund website.

 

 

58    2018 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Disclosure of Investment Advisory Agreement  (continued)

 

Conclusion

Each Board, including the Independent Board Members, unanimously approved the continuation of the Agreement between the Manager and its Fund for a one-year term ending June 30, 2019. Based upon its evaluation of all of the aforementioned factors in their totality, as well as other information, each Board, including the Independent Board Members, was satisfied that the terms of the Agreement for its Fund were fair and reasonable and in the best interest of the Fund and its shareholders. In arriving at its decision to approve the Agreement for its Fund, each Board did not identify any single factor or group of factors as, all-important or controlling, but considered all factors together, and different Board Members may have attributed different weights to the various factors considered. The Independent Board Members of each Fund were also assisted by the advice of independent legal counsel in making this determination.

 

 

DISCLOSURE OF INVESTMENT ADVISORY AGREEMENT      59  


Director and Officer Information  

 

Richard E. Cavanagh, Chair of the Board and Director

Karen P. Robards, Vice Chair of the Board and Director

Michael J. Castellano, Director

Cynthia L. Egan, Director

Frank J. Fabozzi, Director

R. Glenn Hubbard, Director

W. Carl Kester, Director

Catherine A. Lynch, Director

Robert Fairbairn, Director

John M. Perlowski, Director, President and Chief Executive Officer

Jonathan Diorio, Vice President

Neal J. Andrews, Chief Financial Officer

Jay M. Fife, Treasurer

Charles Park, Chief Compliance Officer

Janey Ahn, Secretary

 

Effective January 1, 2019, Henry Gabbay is appointed as an Independent 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

Merrill Lynch, Pierce, Fenner & Smith Incorporated(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.

 

 

60    2018 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Additional Information

 

Proxy Results

The Annual Meeting of Shareholders was held on July 30, 2018 for shareholders of record on May 31, 2018, to elect director nominees for each Fund. There were no broker non-votes with regard to any of the Funds.

Shareholders elected the Directors as follows:

 

  

 

  Michael J. Castellano        Richard E. Cavanagh        Cynthia L. Egan  
     Votes For     Votes Withheld        Votes For     Votes Withheld        Votes For     Votes Withheld  

MYD

    44,463,338       1,168,248          44,443,734       1,187,852          44,371,582       1,260,004  

MQY

    28,254,910       797,232          28,257,332       794,810          28,041,508       1,010,634  

MQT

    20,811,997       712,830          20,729,634       795,193          20,321,671       1,203,156  
                 
  

 

  Robert Fairbairn        R. Glenn Hubbard        Catherine A. Lynch  
     Votes For     Votes Withheld        Votes For     Votes Withheld        Votes For     Votes Withheld  

MYD

    44,491,129       1,140,457          44,009,896       1,621,690          44,007,775       1,623,811  

MQY

    28,490,658       561,484          28,001,368       1,050,774          28,039,306       1,012,836  

MQT

    20,810,719       714,108          20,244,425       1,280,402          20,327,844       1,196,983  
                 
  

 

  John M. Perlowski        Karen P. Robards        Frank J. Fabozzi (a)  
     Votes For     Votes Withheld        Votes For     Votes Withheld        Votes For     Votes Withheld  

MYD

    44,062,721       1,568,865          43,975,610       1,655,976          2,514       0  

MQY

    28,397,172       654,970          28,439,659       612,483          1,766       0  

MQT

    20,829,260       695,567          20,827,427       697,400          1,165       0  
                 
  

 

                      W. Carl Kester (a)  
                                       Votes For     Votes Withheld  

MYD

 

       2,514       0  

MQY

 

       1,766       0  

MQT

 

       1,165       0  

 

  (a) 

Voted on by holders of Preferred Shares only.

 

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.

In accordance with Section 23(c) of the Investment Company Act of 1940, each Fund may from time to time purchase shares of its common stock in open market or in private transactions.

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.

 

 

ADDITIONAL INFORMATION      61  


Additional Information  (continued)

 

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. 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.

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.

 

 

62    2018 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Glossary of Terms Used in this Report

 

Currency
COP    Colombian Peso
  
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
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
GTD    Guaranteed
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.
OTC    Over-the-Counter
PSF    Permanent School Fund
RB    Revenue Bonds
S/F    Single-Family
SONYMA    State of New York Mortgage Agency
 

 

 

GLOSSARY OF TERMS USED IN THIS REPORT      63  


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-10/18-SAR    LOGO


Item 2 –

  Code of Ethics – Not Applicable to this semi-annual report

Item 3 –

  Audit Committee Financial Expert – Not Applicable to this semi-annual report

Item 4 –

  Principal Accountant Fees and Services – Not Applicable to this semi-annual report

Item 5 –

  Audit Committee of Listed Registrants – Not Applicable to this semi-annual report

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 – Not Applicable to this semi-annual report

Item 8 –

  Portfolio Managers of Closed-End Management Investment Companies
 

(a)   Not Applicable to this semi-annual report

 

(b)   As of the date of this filing, there have been no changes in any of the portfolio managers identified in the most recent annual report on Form N-CSR.

Item 9 –

  Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers – Not Applicable

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 – Not Applicable to this semi-annual report
  (a)(2) – Certifications – Attached hereto
  (a)(3) – Not Applicable
  (a)(4) – Not Applicable
  (b) –   Certifications – Attached hereto

 

2


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:   January 4, 2019

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:   January 4, 2019
By:  

/s/ Neal J. Andrews

  Neal J. Andrews
  Chief Financial Officer (principal financial officer) of
  BlackRock MuniYield Quality Fund II, Inc.
Date:   January 4, 2019

 

3