BLACKROCK MUNIYIELD FUND, INC.
Table of Contents

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: 811-06414

Name of Fund:   BlackRock MuniYield Fund, Inc. (MYD)

Fund Address:   100 Bellevue Parkway, Wilmington, DE 19809

Name and address of agent for service: John M. Perlowski, Chief Executive Officer, BlackRock MuniYield

Fund, 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: 04/30/2014

Date of reporting period: 04/30/2014


Table of Contents

Item 1 – Report to Stockholders


Table of Contents

APRIL 30, 2014

 

 

ANNUAL REPORT

 

    LOGO

 

BlackRock MuniYield Fund, Inc. (MYD)

BlackRock MuniYield Quality Fund, Inc. (MQY)

BlackRock MuniYield Quality Fund II, Inc. (MQT)

 

Not FDIC Insured • May Lose Value • No Bank Guarantee


Table of Contents
Table of Contents     

 

     Page  

Shareholder Letter

    3   

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

    35   

Statements of Operations

    36   

Statements of Changes in Net Assets

    37   

Statements of Cash Flows

    39   

Financial Highlights

    40   

Notes to Financial Statements

    43   

Report of Independent Registered Public Accounting Firm

    52   

Automatic Dividend Reinvestment Plan

    53   

Officers and Directors

    54   

Additional Information

    58   

 

                
2    ANNUAL REPORT    APRIL 30, 2014   


Table of Contents
Shareholder Letter

 

Dear Shareholder,

Markets have remained highly attuned to potential changes in U.S. monetary policy over the past year. This was markedly evident one year ago in May of 2013 when then-Federal Reserve Chairman Bernanke first mentioned the possibility of reducing (or “tapering”) the central bank’s asset purchase programs — comments that were widely misinterpreted as signaling an end to the Fed’s zero-interest-rate policy. U.S. Treasury yields rose sharply following his comments, triggering a steep sell-off across fixed income markets. (Bond prices move in the opposite direction of yields.) Global equities also suffered as investors feared the implications of a potential end to a program that had greatly supported stocks. Emerging markets, which are more sensitive to changes in global liquidity, were especially hurt by the prospect of ebbing cash flows from the United States. Markets broadly rebounded in late June, however, when the Fed’s tone turned more dovish. At the same time, improving economic indicators and better corporate earnings helped extend gains through most of the summer.

Although the tone of economic and financial news was mixed last autumn, it was a surprisingly positive period for most asset classes. Early on, the Fed defied market expectations with its decision to delay tapering, but higher volatility returned in late September 2013 when the U.S. Treasury Department warned that the national debt would soon breach its statutory maximum. The ensuing political brinksmanship led to a partial government shutdown, roiling global financial markets through the first half of October. Equities and other so-called “risk assets” managed to resume their rally when politicians finally engineered a compromise to reopen the government and extend the debt ceiling.

The remainder of 2013 was a generally positive period for stock markets in the developed world, although investors continued to grapple with uncertainty about when and how much the Fed would scale back on stimulus. When the Fed ultimately announced its tapering plans in mid-December, markets reacted positively, as this action signaled the Fed’s perception of real improvement in the economy, and investors were finally released from the anxiety that had gripped them for quite some time.

The start of the new year brought a stark change in sentiment. Heightened volatility in emerging markets — driven by reduced global liquidity, severe currency weakness, high levels of debt and uneven growth – combined with mixed U.S. economic data caused global equities to weaken in January while bond markets found renewed strength from investors seeking relatively safer assets. Although these headwinds persisted, equities were back on the rise in February as investors were encouraged by a one-year extension of the U.S. debt ceiling and market-friendly comments from new Fed Chair Janet Yellen. While U.S. economic data had softened, investors were assuaged by increasing evidence that this was a temporary trend resulting from harsher-than-usual winter weather.

In the final months of the period, signs of decelerating growth in China and geopolitical tensions in Russia and Ukraine made for a bumpy ride, but markets continued their climb as investors focused on improving U.S. economic data, stronger corporate earnings and a still-dovish central bank. Within developed markets, investors shifted from growth to value stocks as the strong performance of growth stocks in 2013 had pushed valuations higher in many of these sectors. Emerging markets also benefited from this broad rotation into cheaper valuations and were further supported by an improving growth outlook for a number of developing countries.

Even though investors were gearing up for a modest shift toward tighter monetary policy from the Fed, equity markets in the developed world posted solid gains for the six- and 12-month periods ended April 30. Emerging markets, however, experienced increased volatility amid heightened risks for the asset class. Interest rate uncertainty posed a headwind for fixed income assets, and higher-quality sectors of the market performed poorly over the reporting period. Conversely, high yield bonds benefited from income-oriented investors’ search for yield in the overall low-rate environment. Short-term interest rates remained near zero, keeping yields on money market securities close to historic lows.

At BlackRock, we believe investors need to think globally, extend their scope across a broad array of asset classes and be prepared to move freely as market conditions change over time. We encourage you to talk with your financial advisor and visit www.blackrock.com for further insight about investing in today’s world.

Sincerely,

 

LOGO

Rob Kapito

President, BlackRock Advisors, LLC

 

LOGO

  In a modest global growth environment, expectations around monetary policy changes continued to be a key theme in financial market performance.

Rob Kapito

President, BlackRock Advisors, LLC

 

Total Returns as of April 30, 2014  
    6-month     12-month  

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

    8.36     20.44

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

    3.08        20.50   

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

    4.44        13.35   

Emerging market equities (MSCI Emerging
Markets Index)

    (2.98     (1.84

3-month Treasury bills
(BofA Merrill Lynch 3-Month
U.S. Treasury Bill Index)

    0.03        0.06   

U.S. Treasury securities
(BofA Merrill Lynch 10-Year
U.S. Treasury Index)

    0.88        (5.25

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

    1.74        (0.26

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

    4.24        0.46   

U.S. high yield bonds

(Barclays U.S.
Corporate High Yield 2%
Issuer Capped Index)

    4.72        6.28   

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

   

 

                
   THIS PAGE NOT PART OF YOUR FUND REPORT       3


Table of Contents
Municipal Market Overview     

 

For the Reporting Period Ended April 30, 2014      

Municipal Market Conditions

After a strong start to 2013, the municipal market was upturned as investors reacted to statements issued by the U.S. Federal Reserve in May and June relating to the eventual reduction of its bond-buying stimulus program (which ultimately took effect in January 2014). The prospect of U.S. monetary policy tightening sooner than previously expected led to a sharp rise in interest rates and waning municipal bond performance. (Bond prices fall as rates rise.) Municipal bond mutual funds saw strong outflows through the remainder of 2013, before investors again sought the relative safety of the asset class in the New Year. For the 12-month period ended April 30, 2014, net outflows were approximately $60 billion (based on data from the Investment Company Institute).

High levels of interest rate volatility, particularly on the long-end of the curve resulted in a sharp curtailment of tax-exempt issuance in May of 2013 through the end of the period. However, from a historical perspective, total new issuance for the 12 months ended April 30, 2014 remained relatively strong at $300 billion (but meaningfully lower than the $388 billion issued in the prior 12-month period). A significant portion of new supply during this period was attributable to refinancing activity (roughly 40%) as issuers took advantage of lower interest rates to reduce their borrowing costs.

S&P Municipal Bond Index

Total Returns as of April 30, 2014

  6 months :   4.24%

12 months :   0.46%

A Closer Look at Yields

 

LOGO

From April 30, 2013 to April 30, 2014, muni yields increased by 65 basis points (“bps”) from 2.84% to 3.49% on AAA-rated 30-year municipal bonds, while increasing 61 bps from 1.69% to 2.30% on 10-year bonds and rising another 49 bps from 0.74% to 1.23% on 5-year issues (as measured by Thomson Municipal Market Data). Overall, the municipal yield curve remained relatively steep over the 12-month period as the spread between 2- and 30-year maturities widened by 59 bps and the spread between 2- and 10-year maturities widened by 55 bps.

During the same time period, U.S. Treasury rates rose by 58 bps on 30-year and 98 bps on 10-year bonds, while moving up 100 bps in 5-years. Accordingly, tax-exempt municipal bonds underperformed Treasuries on the long end of the yield curve as investors sought to reduce interest rate risk later in the period. On the short and intermediate parts of the curve, the outperformance of municipal bonds versus Treasuries was driven largely by a supply/demand imbalance within the municipal market and a rotation from long-duration assets (which are more sensitive to interest rate movements) into short- and intermediate-duration investments (which are less sensitive to interest rate movements). Additionally, municipal bonds benefited from the increased appeal of tax-exempt investing in the new higher tax rate environment. The asset class is known for its lower relative volatility and preservation of principal with an emphasis on income as tax rates rise. The municipal market continues to be an attractive avenue for investors seeking yield in today’s environment. However, opportunities have not been as broad-based as in 2011 and 2012, warranting a more tactical approach going forward.

Financial Conditions of Municipal Issuers Continue to Improve

Following an extended period of nation-wide austerity and de-leveraging as states sought to balance their budgets, 15 consecutive quarters of positive revenue growth coupled with the elimination of more than 750,000 jobs in recent years have put state and local governments in a better financial position. Many local municipalities, however, continue to face increased health care and pension costs passed down from the state level. BlackRock maintains the view that municipal bond defaults will be minimal and remain in the periphery, and that the overall market is fundamentally sound. We continue to recognize that careful credit research, appropriate structure and security selection remain imperative amid uncertainty in a modestly improving economic environment.

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

 

                
4    ANNUAL REPORT    APRIL 30, 2014   


Table of Contents
The Benefits and Risks of Leveraging     

 

The Funds may utilize leverage to seek to enhance the yield and net asset value (“NAV”) of their common shares (“Common Shares”). However, these objectives cannot 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 will be based on short-term interest rates, will normally be 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 Fund (including the assets obtained from leverage) are invested in higher-yielding portfolio investments, the Fund’s shareholders will 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, the 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 the Fund with the proceeds from leverage earn income based on longer-term interest rates. In this case, the Fund’s financing cost of leverage are significantly lower than the income earned on the Fund’s longer-term investments acquired from 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 or dividends and other costs of leverage exceed the Fund’s return on assets purchased with leverage proceeds, income to shareholders will be lower than if the Fund had not used leverage. Furthermore, the value of the Fund’s 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 Fund’s obligations under its leverage arrangement generally does not fluctuate in relation to interest rates. As a result, changes in interest rates can influence the Fund’s NAVs positively or negatively. Changes in the future direction of interest rates are very difficult to predict accurately, and there is no assurance that a Fund’s intended leveraging strategy will be successful.

Leverage also will generally cause greater changes in the Funds’ NAVs, market prices and dividend rates than comparable portfolios without leverage. In a declining market, leverage is likely to cause a greater decline in the net asset value and market price of a Fund’s Common Shares than if the Fund were not leveraged. In addition, the 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 the Fund’s ability to invest in certain types of securities or use certain types of hedging strategies. The Fund will incur expenses in connection with the use of leverage, all of which are borne by Common Shareholders and may reduce income to the Common Shares.

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 (“TOBs”) as described in the Notes to Financial Statements.

Under the Investment Company Act of 1940 (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.

 

Derivative Financial Instruments     

 

The Funds may invest in various derivative financial instruments, including financial futures contracts, as specified in Note 4 of the Notes to Financial Statements, which may constitute forms of economic leverage. Such derivative financial instruments are used to obtain exposure to a market without owning or taking physical custody of securities or to hedge market, interest rate and/or other risks. Derivative financial instruments 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 derivative financial instrument. The Funds’ ability to use a derivative financial instrument successfully depends on the investment advisor’s ability to predict pertinent market movements accurately, which cannot be assured. The use of derivative financial instruments may result in losses greater than if they had not been used, may require a Fund to sell or purchase portfolio investments at inopportune times or for distressed values, may limit the amount of appreciation a Fund can realize on an investment, may result in lower dividends paid to shareholders or may cause a Fund to hold an investment that it might otherwise sell. The Funds’ investments in these instruments are discussed in detail in the Notes to Financial Statements.

 

                
   ANNUAL REPORT    APRIL 30, 2014    5


Table of Contents
Fund Summary as of April 30, 2014    BlackRock MuniYield Fund, Inc.

 

Fund Overview

BlackRock MuniYield Fund, Inc.’s (MYD) (the “Fund”) investment objective is to provide shareholders with as high a level of current income exempt from federal income taxes as is consistent with its investment policies and prudent investment management. The Fund seeks to achieve its investment objective by investing at least 80% of its assets in municipal bonds exempt from federal income taxes (except that the interest may be subject to the federal alternative minimum tax). The Fund invests, under normal market conditions, at least 75% of its assets in municipal bonds rated investment grade 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.

 

Performance
Ÿ  

For the 12-month period ended April 30, 2014, the Fund returned (6.38)% based on market price and (1.21)% based on NAV. For the same period, the closed-end Lipper General & Insured Municipal Debt Funds (Leveraged) category posted an average return of (5.00)% based on market price and (0.78)% based on NAV. All returns reflect reinvestment of dividends and/or distributions. The Fund moved from a premium to NAV to a discount by period end, which accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV.

 

Ÿ  

As interest rates moved sharply higher early in the period, the Fund’s duration exposure (sensitivity to interest rate movements) was the most significant detractor from performance. (Bond prices fall when rates rise.) The Fund’s state and local tax-backed and transportation holdings generally produced negative returns for the period. In the beginning of the period, the Fund’s exposure to Puerto Rico government-related credits, although limited, was a detractor from results as credit spreads on these bonds widened materially due to investors’ lack of confidence and a weak local economy. The Fund sold its exposure to these securities during the period. Additionally, the Fund’s various holdings of higher quality investment grade bonds generated modestly negative returns.

 

Ÿ  

During a period in which interest rates increased in the earlier half and declined in the latter half, the additional income afforded by the Fund’s use of leverage, a persistently low cost of borrowing and the Fund’s emphasis on credit exposure helped mitigate much of the market-related volatility. The Fund benefited from holding unrated as well as low investment grade and non-investment grade bonds, which exhibited superior performance compared to higher quality investment grade bonds during the period. The Fund’s concentrations in education, health care, utilities and corporate-related debt also had a positive impact on results.

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.

 

Fund Information      

Symbol on New York Stock Exchange (“NYSE”)

   MYD

Initial Offering Date

   November 29, 1991

Yield on Closing Market Price as of April 30, 2014 ($14.14)1

   6.83%

Tax Equivalent Yield2

   12.07%

Current Monthly Distribution per Common Share3

   $0.0805

Current Annualized Distribution per Common Share3

   $0.9660

Economic Leverage as of April 30, 20144

   38%

 

  1   

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.

 

  2   

Tax equivalent yield assumes the maximum marginal federal tax rate of 43.4%, 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.

 

  3   

The distribution rate is not constant and is subject to change.

 

  4   

Represents VRDP Shares and TOBs as a percentage of total managed assets, which is the total assets of the Fund, including any assets attributable to VRDP Shares and TOBs, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Fund, please see The Benefits and Risks of Leveraging on page 5.

 

                
6    ANNUAL REPORT    APRIL 30, 2014   


Table of Contents
     BlackRock MuniYield Fund, Inc.

 

Market Price and Net Asset Value Per Share Summary                                        
           
      4/30/14      4/30/13      Change      High      Low  

Market Price

     $14.14         $16.24         (12.93)%         $16.30         $12.30   

Net Asset Value

     $14.71         $16.01         (8.12)%         $16.06         $12.99   

 

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

 

LOGO

 

Overview of the Fund’s Long-Term Investments

 

Sector Allocation    4/30/14     4/30/13  

Health

     21     22

Transportation

     20        21   

Education

     13        11   

State

     12        13   

Corporate

     11        9   

County/City/Special District/School District

     10        11   

Utilities

     10        12   

Tobacco

     3        1   

 

Credit Quality Allocation1    4/30/14     4/30/13  

AAA/Aaa

     9     9

AA/Aa

     41        43   

A

     28        29   

BBB/Baa

     10        9   

BB/Ba

     2        1   

B

     4        2   

CCC/Caa

            1   

Not Rated2

     6        6   

 

  1   

Using the higher of Standard & Poor’s (“S&P’s”) or Moody’s Investor Service (“Moody’s”) ratings.

 

  2   

The investment advisor has deemed certain of these non-rated securities to be of investment grade quality. As of April 30, 2014 and April 30, 2013, the market value of these securities was $9,493,537 and $8,883,640, each representing 1%, respectively, of the Fund’s long-term investments.

 

   
Call/Maturity Schedule3        

Calendar Year Ended December 31,

  

2014

     8

2015

     4   

2016

     5   

2017

     4   

2018

     6   

 

  3   

Scheduled maturity dates and/or bonds that are subject to potential calls by issuers over the next five years.

 

                
   ANNUAL REPORT    APRIL 30, 2014    7


Table of Contents
Fund Summary as of April 30, 2014    BlackRock MuniYield Quality Fund, Inc.

 

Fund Overview

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 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 federal income taxes (except that the interest may be subject to the 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, of comparable quality 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.

 

Performance
Ÿ  

For the 12-month period ended April 30, 2014, the Fund returned (6.23)% based on market price and 0.04% based on NAV. For the same period, the closed-end Lipper General & Insured Municipal Debt Funds (Leveraged) category posted an average return of (5.00)% based on market price and (0.78)% based on NAV. All returns reflect reinvestment of dividends and/or distributions. The Fund moved from a premium to NAV to a discount by period end, which accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV.

 

Ÿ  

The Fund benefited from the accrual of income generated from coupon payments on its municipal bond holdings.

 

Ÿ  

The largest detractor from performance was the Fund’s duration exposure (sensitivity to interest rate movements) as tax-exempt municipal rates increased significantly during the first half of the period. (Bond prices fall when rates rise.) During the second half of the period, however, intermediate and long-term rates fell, resulting in less significant rate increases for the overall annual period. The Fund’s exposure to the long-end of the yield curve also detracted from performance, especially in the first half of the period when shorter rates (two to five years) rose less than long rates (twenty years and longer). In the beginning of the period, the Fund’s exposure to Puerto Rico government-related credits, although limited, was a detractor from results as credit spreads on these bonds widened materially due to investors’ lack of confidence and a weak local economy. The Fund sold its exposure to these securities early in the period.

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.

 

Fund Information

Symbol on NYSE

  MQY

Initial Offering Date

  June 26, 1992

Yield on Closing Market Price as of April 30, 2014 ($14.84)1

  6.47%

Tax Equivalent Yield2

  11.43%

Current Monthly Distribution per Common Share3

  $0.08

Current Annualized Distribution per Common Share3

  $0.96

Economic Leverage as of April 30, 20144

  38%

 

  1   

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.

 

  2   

Tax equivalent yield assumes the maximum marginal federal tax rate of 43.4%, 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.

 

  3   

The distribution rate is not constant and is subject to change.

 

  4   

Represents VRDP Shares and TOBs as a percentage of total managed assets, which is the total assets of the Fund, including any assets attributable to VRDP Shares and TOBs, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Fund, please see The Benefits and Risks of Leveraging on page 5.

 

                
8    ANNUAL REPORT    APRIL 30, 2014   


Table of Contents
     BlackRock MuniYield Quality Fund, Inc.

 

Market Price and Net Asset Value Per Share Summary                                        
           
      4/30/14      4/30/13      Change      High      Low  

Market Price

     $14.84         $16.94         (12.40)%         $17.24         $13.05   

Net Asset Value

     $15.73         $16.83         (6.54)%         $16.89         $14.00   

 

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

 

LOGO

 

Overview of the Fund’s Long-Term Investments

 

Sector Allocation    4/30/14     4/30/13  

County/City/Special District/School District

     32     24

Transportation

     21        21   

Utilities

     16        16   

State

     15        19   

Health

     8        10   

Education

     5        6   

Housing

     2        3   

Corporate

     1        1   

 

Credit Quality Allocation1    4/30/14     4/30/13  

AAA/Aaa

     10     10

AA/Aa

     63        61   

A

     24        27   

BBB/Baa

     3        1   

Not Rated

            1 2  

 

  1  

Using the higher of S&P’s or Moody’s ratings.

 

  2   

The investment advisor has deemed certain of these non-rated securities to be of investment grade quality. As of April 30, 2013, the market value of these securities was $2,950,141, representing less than 1% of the Fund’s long-term investments.

 

   
Call/Maturity Schedule3        

Calendar Year Ended December 31,

  

2014

     5

2015

     9   

2016

     3   

2017

     12   

2018

     15   

 

  3   

Scheduled maturity dates and/or bonds that are subject to potential calls by issuers over the next five years.

 

                
   ANNUAL REPORT    APRIL 30, 2014    9


Table of Contents
Fund Summary as of April 30, 2014    BlackRock MuniYield Quality Fund II, Inc.

 

Fund Overview

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 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 federal income taxes (except that the interest may be subject to the 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, of comparable quality 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.

 

Performance
Ÿ  

For the 12-month period ended April 30, 2014, the Fund returned (4.04)% based on market price and 0.55% based on NAV. For the same period, the closed-end Lipper General & Insured Municipal Debt Funds (Leveraged) category posted an average return of (5.00)% based on market price and (0.78)% based on NAV. All returns reflect reinvestment of dividends and/or distributions. The Fund’s discount to NAV, which widened during the period, accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV.

 

Ÿ  

The Fund benefited from the accrual of income generated from coupon payments on its municipal bond holdings. Additionally, short positions in U.S. Treasury futures contracts used to manage interest rate risk had a positive impact on the Fund’s performance for the period.

 

Ÿ  

The largest detractor from performance was the Fund’s duration exposure (sensitivity to interest rate movements) as tax-exempt municipal rates increased significantly during the first half of the period. (Bond prices fall when rates rise.) During the second half of the period, however, intermediate and long-term rates fell, resulting in less significant rate increases for the overall annual period. The Fund’s exposure to the long-end of the yield curve also detracted from performance, especially in the first half of the period when shorter rates (two to five years) rose less than long rates (twenty years and longer). In the beginning of the period, the Fund’s exposure to Puerto Rico government-related credits, although limited, was a detractor from results as credit spreads on these bonds widened materially due to investors’ lack of confidence and a weak local economy. The Fund sold its exposure to these securities early in the period.

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.

 

Fund Information     

Symbol on NYSE

  MQT

Initial Offering Date

  August 28, 1992

Yield on Closing Market Price as of April 30, 2014 ($12.91)1

  6.55%

Tax Equivalent Yield2

  11.57%

Current Monthly Distribution per Common Share3

  $0.0705

Current Annualized Distribution per Common Share3

  $0.8460

Economic Leverage as of April 30, 20144

  38%

 

  1  

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.

 

  2  

Tax equivalent yield assumes the maximum marginal federal tax rate of 43.4%, 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.

 

  3  

The distribution rate is not constant and is subject to change.

 

  4  

Represents VMTP Shares and TOBs as a percentage of total managed assets, which is the total assets of the Fund, including any assets attributable to VMTP Shares and TOBs, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Fund, please see The Benefits and Risks of Leveraging on page 5.

 

                
10    ANNUAL REPORT    APRIL 30, 2014   


Table of Contents
     BlackRock MuniYield Quality Fund II, Inc.

 

Market Price and Net Asset Value Per Share Summary                                        
           
      4/30/14      4/30/13      Change      High      Low  

Market Price

     $12.91         $14.41         (10.41)%         $14.81         $11.25   

Net Asset Value

     $13.78         $14.68         (6.13)%         $14.73         $12.30   

 

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

 

LOGO

 

Overview of the Fund’s Long-Term Investments

 

Sector Allocation    4/30/14     4/30/13  

County/City/Special District/School District

     29     28

Transportation

     22        22   

State

     16        17   

Utilities

     12        12   

Health

     10        11   

Education

     8        6   

Housing

     2        3   

Corporate

     1        1   

 

Credit Quality Allocation1    4/30/14     4/30/13  

AAA/Aaa

     7     8

AA/Aa

     70        68   

A

     20        21   

BBB/Baa

     3        2   

Not Rated

            1 2  

 

  1  

Using the higher of S&P’s or Moody’s ratings.

 

  2   

The investment advisor has deemed certain of these non-rated securities to be of investment grade quality. As of April 30, 2013, the market value of these securities was $2,695,818, representing less than 1% of the Fund’s long-term investments.

 

   
Call/Maturity Schedule3        

Calendar Year Ended December 31,

  

2014

     7

2015

     7   

2016

     5   

2017

     11   

2018

     12   

 

  3   

Scheduled maturity dates and/or bonds that are subject to potential calls by issuers over the next five years.

 

                
   ANNUAL REPORT    APRIL 30, 2014    11


Table of Contents

Schedule of Investments April 30, 2014

  

BlackRock MuniYield Fund, Inc. (MYD)

(Percentages shown are based on Net Assets)

 

Municipal Bonds    Par  
(000)
    Value  

Alabama — 2.8%

    

County of Jefferson Alabama, RB, Limited Obligation School, Series A, 5.50%, 1/01/22

   $ 5,250      $ 5,250,577   

County of Jefferson Alabama Sewer, Refunding RB:

    

Convertible CAB, Senior Lien, Series C (AGM), 6.50%, 10/01/38 (a)

     1,215        738,404   

Convertible CAB, Senior Lien, Series C (AGM), 6.60%, 10/01/42 (a)

     1,060        640,092   

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

     1,665        1,689,559   

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

     3,175        3,265,583   

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

     7,410        7,816,809   
    

 

 

 
               19,401,024   

Alaska — 1.0%

  

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

    

4.63%, 6/01/23

     2,050        1,978,352   

5.00%, 6/01/46

     6,450        4,682,442   
    

 

 

 
               6,660,794   

Arizona — 3.9%

    

County of Maricopa Arizona IDA, RB, Arizona Charter Schools Project, Series A, 6.75%, 7/01/29

     2,800        2,561,608   

Phoenix IDA Arizona, Refunding RB, America West Airlines, Inc. Project, AMT:

    

6.25%, 6/01/19

     3,000        3,000,960   

6.30%, 4/01/23

     5,090        5,100,333   

Salt Verde Financial Corp., RB, Senior:

    

5.00%, 12/01/32

     7,365        8,069,609   

5.00%, 12/01/37

     5,000        5,476,150   

Vistancia Community Facilities District Arizona, GO, 5.75%, 7/15/24

     2,125        2,176,786   
    

 

 

 
               26,385,446   

California — 10.0%

  

California Health Facilities Financing Authority, RB:

    

St. Joseph Health System, Series A, 5.75%, 7/01/39

     4,425        5,093,883   

Sutter Health, Series B, 6.00%, 8/15/42

     6,465        7,658,310   
Municipal Bonds    Par  
(000)
    Value  

California (continued)

  

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

    

Catholic Healthcare West, 6.00%, 7/01/34

   $  3,155      $ 3,559,850   

St. Joseph Health System, 5.00%, 7/01/33

     2,560        2,800,000   

California Pollution Control Financing Authority, RB (b):

    

County of San Diego California Water Authority Desalination Project Pipeline, 5.00%, 11/21/45

     2,510        2,510,552   

Poseidon Resources (Channel Side) LP Desalination Project, AMT, 5.00%, 7/01/37

     3,465        3,473,974   

Poseidon Resources (Channel Side) LP Desalination Project, AMT, 5.00%, 11/21/45

     1,650        1,617,346   

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

    

Series I, 5.00%, 11/01/38

     1,605        1,720,351   

Sub-Series I-1, 6.38%, 11/01/34

     2,385        2,859,830   

California Statewide Communities Development Authority, RB, John Muir Health, Series A, 5.13%, 7/01/39

     2,300        2,452,812   

California Statewide Communities Development Authority, Refunding RB, Episcopal Communities & Services:

    

5.00%, 5/15/42

     585        589,996   

5.00%, 5/15/47

     735        740,138   

California Statewide Financing Authority, RB, Tobacco Settlement, Series A, 6.00%, 5/01/43

     3,285        3,282,733   

City of Los Angeles California Department of Airports, Refunding ARB, Los Angeles International Airport, Series A, 5.25%, 5/15/39

     1,605        1,808,129   

City of Stockton California Public Financing Authority, ARB, Delta Water Supply Project, Series A, 6.25%, 10/01/40

     335        374,681   

City of Stockton California Public Financing Authority, RB, Delta Water Supply Project,
Series A, 6.25%, 10/01/38

     405        450,688   

 

Portfolio Abbreviations                        

 

  

AGC

  

Assured Guaranty Corp.

   HDA    Housing Development Authority
  

AGM

  

Assured Guaranty Municipal Corp.

   HFA    Housing Finance Agency
  

AMBAC

  

American Municipal Bond Assurance Corp.

   HRB    Housing Revenue Bonds
  

AMT

  

Alternative Minimum Tax (subject to)

   IDA    Industrial Development Authority
  

ARB

  

Airport Revenue Bonds

   ISD    Industrial Development Authority
  

BARB

  

Building Aid Revenue Bonds

   LRB    Lease Revenue Bonds
  

BHAC

  

Berkshire Highway Assurance Corp.

   M/F    Multi-Family
  

CAB

  

Capital Appreciation Bonds

   NPFGC    National Public Finance Guarantee Corp.
  

COP

  

Certificates of Participation

   PSF-GTD    Permanent School Fund Guaranteed
  

EDA

  

Economic Development Authority

   Radian    Radian Financial Guaranty
  

EDC

  

Economic Development Corp.

   RB    Revenue Bonds
  

ERB

  

Education Revenue Bonds

   S/F    Single-Family
  

GAB

  

Grant Anticipation Bonds

   SO    Special Obligation
  

GARB

  

General Airport Revenue Bonds

   Syncora    Syncora Guarantee
  

GO

  

General Obligation Bonds

     

 

See Notes to Financial Statements.

 

                
12    ANNUAL REPORT    APRIL 30, 2014   


Table of Contents

Schedule of Investments (continued)

  

BlackRock MuniYield Fund, Inc. (MYD)

(Percentages shown are based on Net Assets)

 

Municipal Bonds    Par  
(000)
    Value  

California (concluded)

  

San Diego Community College District California, GO, Election of 2006, 5.00%, 8/01/43

   $ 2,190      $ 2,413,030   

State of California, GO:

    

(AMBAC), 5.00%, 4/01/31

     10        10,037   

Various Purposes, 6.00%, 3/01/33

     5,085        6,094,576   

Various Purposes, 6.50%, 4/01/33

     14,075        17,153,625   

Tobacco Securitization Authority of Southern California, Refunding RB, Tobacco Settlement, Asset-Backed, Senior Series A-1, 4.75%, 6/01/25

     2,175        2,124,540   
    

 

 

 
               68,789,081   

Colorado — 2.3%

  

Colorado Health Facilities Authority, Refunding RB, Evangelical Lutheran Good Samaritan Society Project, 5.00%, 12/01/42

     3,580        3,636,958   

Plaza Metropolitan District No. 1 Colorado, Tax Allocation Bonds, Public Improvement Fee, Tax Increment, 8.00%, 6/01/14 (c)

     6,850        6,896,237   

University of Colorado, RB, Series A:

    

5.25%, 6/01/30

     2,250        2,601,563   

5.38%, 6/01/32

     1,250        1,446,763   

5.38%, 6/01/38

     830        949,445   
    

 

 

 
               15,530,966   

Connecticut — 1.6%

  

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

     2,770        2,950,327   

Connecticut State Health & Educational Facility Authority, Refunding RB, Wesleyan University:

    

5.00%, 7/01/39

     5,000        5,430,050   

Series G, 5.00%, 7/01/35

     2,225        2,433,171   
    

 

 

 
               10,813,548   

Delaware — 1.6%

  

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

     2,305        2,466,696   

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

     8,275        8,443,230   
    

 

 

 
               10,909,926   

District of Columbia — 3.1%

  

District of Columbia, Tax Allocation Bonds, City Market at O Street Project, 5.13%, 6/01/41

     4,440        4,614,803   

Metropolitan Washington Airports Authority, Refunding RB:

    

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

     2,425        2,550,785   

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

     8,350        3,532,467   

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

     15,000        5,921,850   

CAB, 2nd Senior Lien, Series B (AGC), 0.00%, 10/01/33 (d)

     13,410        4,939,171   
    

 

 

 
               21,559,076   
Municipal Bonds    Par  
(000)
    Value  

Florida — 7.1%

  

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

   $ 2,805      $ 2,934,507   

City of Clearwater Florida Water & Sewer Revenue, RB, Series A, 5.25%, 12/01/39

     6,900        7,417,017   

County of Broward Florida Water & Sewer Utility, Refunding RB, Series A, 5.25%, 10/01/34

     2,155        2,415,108   

County of Hillsborough Florida IDA, RB, National Gypsum Co. AMT:

    

Series A, 7.13%, 4/01/30

     7,500        7,533,750   

Series B, 7.13%, 4/01/30

     5,000        5,003,950   

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

     7,530        8,170,728   

County of Tampa-Hillsborough Florida Expressway Authority, Refunding RB, Series A, 5.00%, 7/01/37

     1,310        1,399,512   

Mid-Bay Bridge Authority, RB, Springing Lien, Series A, 7.25%, 10/01/40

     6,150        7,014,997   

Midtown Miami Community Development District, Special Assessment Bonds, Series B, 6.50%, 5/01/37

     4,895        4,913,552   

Santa Rosa Bay Bridge Authority, RB, 6.25%, 7/01/28 (e)(f)

     4,226        1,731,771   
    

 

 

 
               48,534,892   

Georgia — 1.4%

  

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

     1,700        1,884,110   

Metropolitan Atlanta Rapid Transit Authority, RB, Sales Tax, 3rd Indenture, Series A, 5.00%, 7/01/39

     6,945        7,552,687   
    

 

 

 
               9,436,797   

Hawaii — 0.4%

  

State of Hawaii Harbor System, RB, Series A, 5.25%, 7/01/30

     2,760        3,046,736   

Idaho — 1.5%

    

County of Power Idaho Industrial Development Corp., RB, FMC Corp. Project, AMT, 6.45%, 8/01/32

     10,000        10,013,600   

Illinois — 16.9%

    

Bolingbrook Special Service Area No. 1, Special Tax Bonds, Forest City Project, 5.90%, 3/01/27

     1,000        947,200   

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

    

Series A, 5.63%, 1/01/35

     4,200        4,570,188   

Series A, 5.75%, 1/01/39

     3,500        3,820,985   

Series C, 6.50%, 1/01/41

     11,920        13,830,061   

City of Chicago Illinois, GO, Series A:

    

Project, 5.00%, 1/01/34

     6,515        6,576,502   

Refunding, 5.25%, 1/01/32

     6,390        6,629,944   

City of Chicago Illinois, Refunding RB, Sales Tax, Series A, 5.25%, 1/01/38

     1,660        1,760,878   

City of Chicago Illinois Board of Education, GO, Series A, 5.25%, 12/01/41

     9,280        9,308,304   

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

     2,130        2,273,924   

 

See Notes to Financial Statements.

 

                
   ANNUAL REPORT    APRIL 30, 2014    13


Table of Contents

Schedule of Investments (continued)

  

BlackRock MuniYield Fund, Inc. (MYD)

(Percentages shown are based on Net Assets)

 

Municipal Bonds    Par  
(000)
    Value  

Illinois (concluded)

    

City of Chicago Illinois Waterworks, Refunding RB, 2nd Lien Project, 5.00%, 11/01/42

   $ 6,030      $ 6,223,864   

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

     1,635        1,802,604   

Illinois Finance Authority, Refunding RB:

    

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

     1,970        2,114,362   

Ascension Health, Series A, 5.00%, 11/15/42

     3,575        3,808,090   

Central Dupage Health, Series B, 5.50%, 11/01/39

     3,235        3,591,497   

Illinois State Toll Highway Authority, RB, Series A, 5.00%, 1/01/38

     4,720        4,977,712   

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

    

CAB, Series B (AGM), 0.00%, 6/15/47 (d)

     27,225        4,426,240   

Series B (AGM), 5.00%, 6/15/50

     12,435        12,686,933   

Series B-2, 5.00%, 6/15/50

     5,085        5,186,802   

Railsplitter Tobacco Settlement Authority, RB:

    

5.50%, 6/01/23

     2,730        3,181,542   

6.00%, 6/01/28

     2,335        2,709,581   

State of Illinois, GO:

    

5.50%, 7/01/38

     4,000        4,363,480   

5.00%, 2/01/39

     3,195        3,309,541   

Series A, 5.00%, 4/01/38

     2,510        2,597,549   

State of Illinois, RB, Build Illinois, Series B, 5.25%, 6/15/34

     1,275        1,413,223   

University of Illinois, RB, Auxiliary Facilities System, Series A:

    

5.00%, 4/01/39

     1,675        1,798,213   

5.00%, 4/01/44

     2,045        2,183,385   
    

 

 

 
               116,092,604   

Indiana — 5.4%

    

Carmel Redevelopment Authority, Refunding RB, Multipurpose, Series A, 4.00%, 2/01/38

     1,950        1,955,343   

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

    

6.75%, 1/01/34

     1,635        1,753,554   

7.00%, 1/01/44

     3,950        4,263,235   

Indiana Finance Authority, RB, Series A:

    

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

     6,665        7,329,700   

Private Activity Bond, Ohio River Bridges East End Crossing Project, AMT, 5.00%, 7/01/44

     910        918,873   

Private Activity Bond, Ohio River Bridges East End Crossing Project, AMT, 5.00%, 7/01/48

     3,015        3,054,647   

Sisters of St. Francis Health Services, 5.25%, 11/01/39

     1,690        1,785,722   

Indiana Finance Authority, Refunding RB, Series A:

    

Community Health Network Project, 5.00%, 5/01/42

     3,495        3,646,858   

Parkview Health System, 5.75%, 5/01/31

     6,645        7,214,543   

Indiana Municipal Power Agency, RB, Series B, 6.00%, 1/01/39

     2,230        2,503,866   
Municipal Bonds    Par  
(000)
    Value  

Indiana (concluded)

    

Indianapolis Local Public Improvement Bond Bank, RB, Series A, 5.00%, 1/15/40

   $ 2,580      $ 2,787,690   
    

 

 

 
               37,214,031   

Iowa — 2.5%

    

Iowa Finance Authority, RB, Midwestern Disaster Area, Alcoa, Inc. Project, 4.75%, 8/01/42

     1,830        1,731,930   

Iowa Finance Authority, Refunding RB, Midwestern Disaster Area, Iowa Fertilizer Co. Project:

    

5.00%, 12/01/19

     1,950        1,973,595   

5.50%, 12/01/22

     4,765        4,841,860   

5.25%, 12/01/25

     940        939,633   

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

     3,475        3,630,020   

Iowa Tobacco Settlement Authority, Refunding RB, Asset-Backed, Series C, 5.63%, 6/01/46

     4,970        4,230,663   
    

 

 

 
               17,347,701   

Kansas — 0.7%

    

Kansas Development Finance Authority, Refunding RB, Adventist Health, Series C, 5.75%, 11/15/38

     4,380        4,893,511   

Kentucky — 0.5%

    

Kentucky Economic Development Finance Authority, RB, Catholic Health Initiatives, Series A, 5.25%, 1/01/45

     2,055        2,208,776   

Kentucky Public Transportation Infrastructure Authority, RB, Downtown Crossing Project, Convertible CAB, 1st Tier, Series C, 6.75%, 7/01/43 (a)

     2,485        1,513,191   
    

 

 

 
               3,721,967   

Louisiana — 3.4%

    

East Baton Rouge Sewerage Commission, RB, Series A, 5.25%, 2/01/39

     1,610        1,750,666   

Louisiana Local Government Environmental Facilities & Community Development Authority, RB, Westlake Chemical Corp. Project, 6.75%, 11/01/32

     9,000        9,987,750   

New Orleans Aviation Board, RB, Passenger Facility Charge, Series A, 5.25%, 1/01/41

     1,260        1,314,432   

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

    

5.50%, 5/15/30

     2,055        2,221,003   

5.25%, 5/15/31

     1,750        1,851,692   

5.25%, 5/15/32

     2,240        2,356,122   

5.25%, 5/15/33

     2,430        2,549,264   

5.25%, 5/15/35

     1,025        1,075,738   
    

 

 

 
               23,106,667   

Maine — 0.5%

    

Maine Health & Higher Educational Facilities Authority, RB, Series A, 5.00%, 7/01/39

     3,140        3,286,638   

Maryland — 0.8%

    

County of Prince George’s Maryland, SO, Remarketing, National Harbor Project, 5.20%, 7/01/34

     1,500        1,506,315   

 

See Notes to Financial Statements.

 

                
14    ANNUAL REPORT    APRIL 30, 2014   


Table of Contents

Schedule of Investments (continued)

  

BlackRock MuniYield Fund, Inc. (MYD)

(Percentages shown are based on Net Assets)

 

Municipal Bonds    Par  
(000)
    Value  

Maryland (concluded)

    

Maryland EDC, RB, Transportation Facilities Project, Series A, 5.75%, 6/01/35

   $ 880      $ 916,705   

Maryland EDC, Refunding RB, CNX Marine Terminals, Inc., 5.75%, 9/01/25

     2,400        2,567,736   

Maryland Industrial Development Financing Authority, RB, Our Lady Of Good Counsel School, Series A, 6.00%, 5/01/15 (c)

     500        527,925   
    

 

 

 
               5,518,681   

Massachusetts — 2.0%

    

Massachusetts Bay Transportation Authority, Refunding RB, Senior Series A-1, 5.25%, 7/01/29

     3,250        3,966,495   

Massachusetts Development Finance Agency, Refunding RB:

    

Covanta Energy Project, Series C, AMT, 5.25%, 11/01/42

     4,565        4,589,606   

Seven Hills Foundation & Affiliates (Radian), 5.00%, 9/01/35

     3,500        3,427,830   

Massachusetts Health & Educational Facilities Authority, Refunding RB, Partners Healthcare System, Series J1, 5.00%, 7/01/39

     1,640        1,752,389   
    

 

 

 
               13,736,320   

Michigan — 4.9%

    

City of Detroit Michigan Sewage Disposal System, Refunding RB, Senior Lien:

    

Series A, 5.00%, 7/01/32

     3,175        3,064,510   

Series A, 5.25%, 7/01/39

     8,995        8,749,436   

Series B (AGM), 7.50%, 7/01/33

     1,835        1,990,865   

Kalamazoo Hospital Finance Authority, Refunding RB, Bronson Methodist Hospital, 5.50%, 5/15/36

     2,795        2,954,986   

Royal Oak Hospital Finance Authority, Refunding RB, William Beaumont Hospital (c):

    

8.25%, 9/01/18

     6,365        7,806,800   

Series V, 8.00%, 9/01/18

     2,000        2,457,880   

State of Michigan Hospital Finance Authority, Refunding RB, Henry Ford Health, 5.75%, 11/15/39

     6,085        6,522,025   
    

 

 

 
               33,546,502   

Minnesota — 0.1%

    

City of Minneapolis Minnesota, HRB, Gaar Scott Loft Project, AMT, 5.95%, 5/01/30 (g)

     785        787,590   

Mississippi — 0.0%

    

University of Southern Mississippi, RB, Campus Facilities Improvements Project, 5.38%, 9/01/36

     280        302,789   

Missouri — 0.2%

    

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

     510        551,438   

State of Missouri Health & Educational Facilities Authority, Refunding RB, St. Louis College of Pharmacy Project, 5.50%, 5/01/43

     510        539,284   
    

 

 

 
               1,090,722   
Municipal Bonds    Par  
(000)
    Value  

Nebraska — 0.4%

    

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

    

5.25%, 9/01/37

   $ 1,670      $ 1,766,860   

5.00%, 9/01/42

     925        956,145   
    

 

 

 
               2,723,005   

New Jersey — 3.3%

    

New Jersey EDA, RB:

    

1st Mortgage, Lions Gate Project, Series A, 5.75%, 1/01/25

     710        712,016   

1st Mortgage, Lions Gate Project, Series A, 5.88%, 1/01/37

     230        228,199   

Continental Airlines, Inc. Project, AMT, 5.25%, 9/15/29

     975        985,364   

Kapkowski Road Landfill Project, Series B, AMT, 6.50%, 4/01/31

     2,500        2,859,575   

New Jersey State Turnpike Authority, RB, Series A:

    

5.00%, 1/01/38

     1,355        1,451,490   

5.00%, 1/01/43

     1,835        1,955,119   

New Jersey Transportation Trust Fund Authority, RB, Transportation System:

    

CAB, Series C (AMBAC), 0.00%, 12/15/35 (d)

     8,110        2,775,729   

Series A, 5.50%, 6/15/41

     3,630        3,990,459   

Series B, 5.25%, 6/15/36

     4,990        5,414,998   

Rutgers—The State University of New Jersey, Refunding RB, Series L:

    

5.00%, 5/01/38

     1,025        1,131,190   

5.00%, 5/01/43

     1,065        1,165,920   
    

 

 

 
               22,670,059   

New York — 6.0%

    

City of New York New York Industrial Development Agency, ARB, British Airways PLC Project, AMT, 7.63%, 12/01/32

     1,250        1,256,362   

City of New York New York Transitional Finance Authority, Future Tax Secured Bonds, RB, Fiscal 2012, Sub-Series E-1, 5.00%, 2/01/42

     4,985        5,376,223   

County of Dutchess New York IDA, Refunding RB, St. Francis Hospital, Series A, 7.50%, 3/01/29 (e)(f)

     2,000        1,819,800   

County of Oneida New York Industrial Development Agency, RB, Hamilton College Civic Facility, 5.00%, 9/15/26

     1,990        2,195,308   

Metropolitan Transportation Authority, RB, Series B:

    

5.25%, 11/15/38

     4,960        5,459,869   

5.25%, 11/15/39

     1,765        1,944,412   

Metropolitan Transportation Authority, Refunding RB, Dedicated Tax Fund, Series B, 5.00%, 11/15/34

     4,910        5,396,925   

New York Liberty Development Corp., Refunding RB, 2nd Priority, Bank of America Tower at One Bryant Park Project, Class 3, 6.38%, 7/15/49

     2,480        2,697,298   

New York State Dormitory Authority, RB, Series F:

    

5.00%, 3/15/15 (c)

     75        78,133   

5.00%, 3/15/35

     6,305        6,533,808   

New York State Dormitory Authority, Refunding RB, General Purpose, Series A, 5.00%, 6/15/31

     3,595        4,027,443   

 

See Notes to Financial Statements.

 

                
   ANNUAL REPORT    APRIL 30, 2014    15


Table of Contents

Schedule of Investments (continued)

  

BlackRock MuniYield Fund, Inc. (MYD)

(Percentages shown are based on Net Assets)

 

Municipal Bonds    Par  
(000)
    Value  

New York (concluded)

    

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      $ 2,887,159   

6.00%, 12/01/42

     1,485        1,630,634   
    

 

 

 
               41,303,374   

North Carolina — 2.4%

    

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

     3,675        3,795,797   

North Carolina Medical Care Commission, RB, Health Care Facilities, Duke University Health System, Series A, 5.00%, 6/01/42

     2,805        3,055,627   

North Carolina Medical Care Commission, Refunding RB:

    

1st Mortage, Aldersgate, 6.25%, 7/01/35

     2,970        3,059,456   

1st Mortgage, Presbyterian Homes, 5.40%, 10/01/27

     5,000        5,021,100   

First Mortgage, Retirement Facilities Whitestone Project, Series A, 7.75%, 3/01/41

     1,210        1,331,436   
    

 

 

 
               16,263,416   

Ohio — 0.6%

    

County of Franklin Ohio, RB, Health Care Facilities Improvement, OPRS Communities Obligation Group, Series A, 6.13%, 7/01/40

     1,380        1,445,260   

County of Montgomery Ohio, Refunding RB, Catholic Health, Series A, 5.00%, 5/01/39

     2,840        2,928,637   
    

 

 

 
               4,373,897   

Pennsylvania — 2.8%

    

Allentown Neighborhood Improvement Zone Development Authority, Refunding RB, Series A, 5.00%, 5/01/42

     5,250        5,256,877   

City of Philadelphia Pennsylvania IDA, RB, Commercial Development, AMT, 7.75%, 12/01/17

     1,265        1,268,428   

Pennsylvania Economic Development Financing Authority, RB:

    

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

     3,805        4,037,029   

National Gypsum Co., Series A, AMT, 6.25%, 11/01/27

     2,000        2,000,300   

Pennsylvania Higher Educational Facilities Authority, RB, Shippensburg University Student Services, Student Housing, 5.00%, 10/01/44

     1,890        1,886,995   

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

     2,305        2,477,529   

Philadelphia Hospitals & Higher Education Facilities Authority, RB, Temple University Health System, Series A, 5.63%, 7/01/42

     2,560        2,446,746   
    

 

 

 
               19,373,904   

Rhode Island — 0.4%

    

Central Falls Detention Facility Corp., Refunding RB, 7.25%, 7/15/35

     4,155        3,045,199   
Municipal Bonds    Par  
(000)
    Value  

South Carolina — 3.8%

    

Charleston Educational Excellence Finance Corp., RB (AGC) (c):

    

5.25%, 12/01/15

   $ 7,795      $ 8,410,649   

5.25%, 12/01/15

     6,920        7,466,542   

5.25%, 12/01/15

     2,510        2,708,240   

South Carolina State Ports Authority, RB, 5.25%, 7/01/40

     6,695        7,140,619   
    

 

 

 
               25,726,050   

Tennessee — 1.3%

    

City of Chattanooga Tennessee Health Educational & Housing Facility Board, RB, Catholic Health Initiatives, Series A, 5.25%, 1/01/45

     2,855        3,068,640   

County of Hardeman Tennessee Correctional Facilities Corp., RB, 7.75%, 8/01/17

     2,030        2,011,344   

Metropolitan Government Nashville & Davidson County Health & Educational Facility Board, Refunding RB, Vanderbilt University, Series D, 3.25%, 10/01/37

     4,530        4,148,393   
    

 

 

 
               9,228,377   

Texas — 10.5%

    

Central Texas Regional Mobility Authority, Refunding RB:

    

Senior Lien, 6.25%, 1/01/46

     4,365        4,776,925   

Sub-Lien, 5.00%, 1/01/33

     725        727,581   

Sub-Lien, 5.00%, 1/01/42

     645        627,063   

City of Dallas Texas Waterworks & Sewer System, Refunding RB, 5.00%, 10/01/35

     3,060        3,431,270   

City of Houston Texas Airport System, RB, Special Facilities Continental Airlines Inc., AMT Series E:

    

7.38%, 7/01/22

     3,500        3,500,910   

6.75%, 7/01/29

     4,520        4,521,356   

7.00%, 7/01/29

     3,000        3,000,840   

City of Houston Texas Airport System, Refunding ARB, Senior Lien, Series A, 5.50%, 7/01/39

     3,100        3,503,434   

Clifton Higher Education Finance Corp., RB, Idea Public Schools, 6.00%, 8/15/43

     1,525        1,697,035   

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

    

6.38%, 1/01/33

     460        488,065   

7.00%, 1/01/43

     485        518,033   

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

     4,320        4,891,234   

Fort Bend County Industrial Development Corp., RB, NRG Energy Project, Series B, 4.75%, 11/01/42

     410        400,607   

La Vernia Higher Education Finance Corp., RB, Kipp, Inc., Series A, 6.38%, 8/15/44

     1,000        1,110,170   

North Texas Tollway Authority, RB, CAB, Special Project System, Series B, 0.00%, 9/01/37 (d)

     4,110        1,149,033   

North Texas Tollway Authority, Refunding RB, 2nd Tier System, Series F, 6.13%, 1/01/31

     12,140        13,005,582   

San Antonio Energy Acquisition Public Facility Corp., RB, Gas Supply, 5.50%, 8/01/25

     6,365        7,303,837   

 

See Notes to Financial Statements.

 

                
16    ANNUAL REPORT    APRIL 30, 2014   


Table of Contents

Schedule of Investments (continued)

  

BlackRock MuniYield Fund, Inc. (MYD)

(Percentages shown are based on Net Assets)

 

Municipal Bonds    Par  
(000)
    Value  

Texas (concluded)

    

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

    

LBJ Infrastructure Group LLC, LBJ Freeway Managed Lanes Project, 7.00%, 6/30/40

   $ 6,000      $ 6,956,880   

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

     6,655        7,596,150   

Texas Transportation Commission, Refunding RB, Central Texas Turnpike System, 1st Tier, Series A, 5.00%, 8/15/41

     2,445        2,511,626   
    

 

 

 
               71,717,631   

Virginia — 2.1%

    

County of James City Virginia EDA, Refunding RB, 1st Mortgage, Williamsburg Lodge, Series A:

    

5.35%, 9/01/26

     1,500        1,519,995   

5.50%, 9/01/34

     2,000        2,014,160   

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

    

5.25%, 1/01/32

     3,270        3,425,881   

6.00%, 1/01/37

     5,905        6,403,677   

Winchester Industrial Development Authority, RB, Westminster-Canterbury, Series A, 5.20%, 1/01/27

     1,000        1,006,210   
    

 

 

 
               14,369,923   

Washington — 1.1%

    

Vancouver Housing Authority, HRB, M/F Housing, Teal Pointe Apartments Project, AMT:

    

6.00%, 9/01/22

     875        875,140   

6.20%, 9/01/32

     1,250        1,249,850   

Washington Health Care Facilities Authority, RB, Catholic Health Initiatives, Series A, 5.75%, 1/01/45

     4,745        5,270,888   
    

 

 

 
               7,395,878   

Wisconsin — 3.2%

    

State of Wisconsin, Refunding RB, Series A, 6.00%, 5/01/36

     14,300        16,730,714   

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

     4,970        5,454,426   
    

 

 

 
               22,185,140   

Wyoming — 1.1%

    

County of Sweetwater Wyoming, Refunding RB, Idaho Power Co. Project, Remarketing, 5.25%, 7/15/26

     6,195        6,744,434   

Wyoming Municipal Power Agency, Inc., RB, Series A, 5.00%, 1/01/42

     595        611,910   
    

 

 

 
               7,356,344   
Total Municipal Bonds — 113.6%              779,459,806   
Municipal Bonds Transferred to
Tender Option Bond Trusts (h)
   Par  
(000)
    Value  

Alabama — 0.7%

    

City of Birmingham Alabama Special Care Facilities Financing Authority, Refunding RB, Ascension Health, Senior Credit, Series C-2, 5.00%, 11/15/36

   $ 4,538      $ 4,670,005   

California — 8.0%

    

Bay Area Toll Authority, Refunding RB, San Francisco Bay Area, Series F-1, 5.63%, 4/01/44

     6,581        7,201,600   

California Educational Facilities Authority, RB, University of Southern California, Series B, 5.25%, 10/01/39 (i)

     5,310        6,020,159   

City & County of San Francisco California Public Utilities Commission, RB, Water Revenue, Series B, 5.00%, 11/01/39

     19,080        21,042,187   

City of Los Angeles California Department of Airports, Refunding ARB, Los Angeles International Airport, Senior Series A, 5.00%, 5/15/40

     11,977        12,909,267   

Los Angeles Community College District California, GO, Election of 2001, Series A (AGM), 5.00%, 8/01/32

     4,650        5,154,014   

San Diego Community College District California, GO, Election of 2002, 5.25%, 8/01/33

     2,154        2,475,060   
    

 

 

 
               54,802,287   

Colorado — 2.6%

    

Colorado Health Facilities Authority, RB, Catholic Health (AGM):

    

Series C-3, 5.10%, 10/01/41

     7,490        7,769,152   

Series C-7, 5.00%, 9/01/36

     4,800        4,979,520   

Colorado Health Facilities Authority, Refunding RB, Catholic Health Initiatives, Series A, 5.50%, 7/01/34 (i)

     4,299        4,874,930   
    

 

 

 
               17,623,602   

Connecticut — 2.9%

    

Connecticut State Health & Educational Facility Authority, RB, Yale University:

    

Series T-1, 4.70%, 7/01/29

     9,117        9,970,832   

Series X-3, 4.85%, 7/01/37

     9,266        10,114,738   
    

 

 

 
               20,085,570   

Florida — 1.8%

    

County of Miami-Dade Florida, RB, Water & Sewer System, 5.00%, 10/01/34

     11,448        12,291,529   

Georgia — 1.0%

    

Private Colleges & Universities Authority, Refunding RB, Emory University, Series C, 5.00%, 9/01/38

     6,398        6,977,699   

Massachusetts — 0.7%

    

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

     4,607        5,015,588   

New Hampshire — 0.7%

    

New Hampshire Health & Education Facilities Authority, RB, Dartmouth College, 5.25%, 6/01/39 (i)

     4,048        4,594,050   

 

See Notes to Financial Statements.

 

                
   ANNUAL REPORT    APRIL 30, 2014    17


Table of Contents

Schedule of Investments (continued)

  

BlackRock MuniYield Fund, Inc. (MYD)

(Percentages shown are based on Net Assets)

 

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

New York — 6.6%

    

City of New York New York Municipal Water Finance Authority, Refunding RB, Water & Sewer System, 2nd General Resolution, Series FF-2, 5.50%, 6/15/40

   $ 3,194      $ 3,618,347   

Hudson Yards Infrastructure Corp., RB, Fiscal 2012, Series A, 5.75%, 2/15/47 (i)

     3,260        3,619,845   

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

     21,630        23,346,557   

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

     13,080        14,467,657   
    

 

 

 
               45,052,406   

North Carolina — 3.5%

    

North Carolina Capital Facilities Finance Agency, Refunding RB:

    

Duke University Project, Series A, 5.00%, 10/01/41

     18,897        20,339,188   

Wake Forest University, 5.00%, 1/01/38

     3,120        3,442,171   
    

 

 

 
               23,781,359   

Ohio — 4.6%

    

State of Ohio, Refunding RB, Cleveland Clinic Health System Obligated Group, Series A, 5.50%, 1/01/39

     27,896        31,404,128   

Tennessee — 1.7%

    

County of Shelby Tennessee Health Educational & Housing Facilities Board, Refunding RB, St. Jude’s Children’s Research Hospital, 5.00%, 7/01/31

     11,240        12,002,971   

Texas — 2.9%

    

City of San Antonio Texas Public Service Board, RB, Electric & Gas Systems, Junior Lien, 5.00%, 2/01/43

     5,060        5,472,997   

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

     6,920        7,499,965   

University of Texas, Refunding RB, Financing System, Series B, 5.00%, 8/15/43

     6,241        6,895,479   
    

 

 

 
               19,868,441   

Utah — 1.1%

    

City of Riverton Utah, RB, IHC Health Services, Inc., 5.00%, 8/15/41

   $ 7,300      $ 7,702,141   

Virginia — 3.7%

    

County of Fairfax Virginia IDA, Refunding RB, Health Care, Inova Health System, Series A, 5.50%, 5/15/35

     6,266        6,879,701   

University of Virginia, Refunding RB, General, 5.00%, 6/01/40

     10,618        11,822,694   

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

     6,075        6,466,645   
    

 

 

 
               25,169,040   

Washington — 0.8%

    

Central Puget Sound Regional Transit Authority, RB, Series A (AGM), 5.00%, 11/01/32

     5,384        5,930,978   

Wisconsin — 1.8%

    

Wisconsin Health & Educational Facilities Authority, Refunding RB, Froedtert & Community Health, Inc., Obligated Group, Series C, 5.25%, 4/01/39 (i)

     11,456        12,184,364   
Total Municipal Bonds Transferred to Tender Option Bond Trusts — 45.1%              309,156,158   
Total Long-Term Investments
(Cost — $1,016,708,915) — 158.7%
             1,088,615,964   
    
                  
Short-Term Securities    Shares         

FFI Institutional Tax-Exempt Fund, 0.03% (j)(k)

     4,902,847        4,902,847   
Total Short-Term Securities
(Cost — $4,902,847) — 0.7%
             4,902,847   
Total Investments (Cost — $1,021,611,762) — 159.4%        1,093,518,811   
Other Assets Less Liabilities — 1.9%        13,373,090   

Liability for TOB Trust Certificates, Including Interest
Expense and Fees Payable — (24.7)%

   

    (169,279,278
VRDP Shares, at Liquidation Value — (36.6)%        (251,400,000
    

 

 

 
Net Assets Applicable to Common Shares — 100.0%      $ 686,212,623   
    

 

 

 

 

Notes to Schedule of Investments

 

(a)   Represents 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 shown is as of report date.

 

(b)   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.

 

(c)   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.

 

(d)   Zero-coupon bond.

 

(e)   Issuer filed for bankruptcy and/or is in default of principal and/or interest payments.

 

(f)   Non-income producing security.

 

(g)   Variable rate security. Rate shown is as of report date.

 

(h)   Represent bonds transferred to a TOB. In exchange for which the Fund acquired residual interest certificates. These bonds serve as collateral in a financing transaction. See Note 3 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs.

 

See Notes to Financial Statements.

 

                
18    ANNUAL REPORT    APRIL 30, 2014   


Table of Contents

Schedule of Investments (continued)

  

BlackRock MuniYield Fund, Inc. (MYD)

 

 

(i)   All or a portion of security is subject to a recourse agreement, which may require the Fund to pay the liquidity provider in the event there is a shortfall between the TOB trust certificates and proceeds received from the sale of the security contributed to the TOB trust. In the case of a shortfall, the aggregate maximum potential amount the Fund could ultimately be required to pay under the agreements, which expire from October 1, 2016 to November 15, 2019 is $23,449,481.

 

(j)   Investments in issuers considered to be an affiliate of the Fund during the year ended April 30, 2014, for purposes of Section 2(a)(3) of the 1940 Act, were as follows:

 

Affiliate      Shares Held
at April 30,
2013
       Net
Activity
       Shares Held
at April 30,
2014
       Income  

FFI Institutional Tax-Exempt Fund

       6,265,241           (1,362,394        4,902,847         $ 3,073   

 

(k)   Represents the current yield as of report date.

 

Ÿ  

Financial futures contracts outstanding as of April 30, 2014 were as follows:

 

Contracts
Sold
    Issue   Exchange   Expiration   Notional
Value
    Unrealized
Depreciation
 
  (777   10-Year U.S Treasury Note   Chicago Board of Trade   June 2014   $ 96,675,797      $ (240,954

 

Ÿ  

Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes as follows:

 

  Ÿ  

Level 1 — unadjusted price quotations in active markets/exchanges for identical assets or liabilities that the Fund has the ability to access

 

  Ÿ  

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)

 

  Ÿ  

Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the 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.

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value disclosure 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 investment and derivative financial instrument and is not necessarily an indication of the risks associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and derivative financial instruments, please refer to Note 2 of the Notes to Financial Statements.

The following tables summarize the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy as of April 30, 2014:

 

     Level 1        Level 2        Level 3        Total  

Assets:

                
Investments:                 

Long-Term Investments1

            $ 1,088,615,964                   $ 1,088,615,964   

Short-Term Securities

  $ 4,902,847                               4,902,847   
 

 

 

      

 

 

      

 

 

      

 

 

 

Total

  $ 4,902,847         $ 1,088,615,964                   $ 1,093,518,811   
 

 

 

      

 

 

      

 

 

      

 

 

 

 

1  See above Schedule of Investments for values in each state or political subdivision.

     

     Level 1        Level 2        Level 3        Total  
Derivative Financial Instruments2             

Liabilities:

                

Interest rate contracts

  $ (240,954                          $ (240,954

2  Derivative financial instruments are financial futures contracts, which are valued at the unrealized appreciation/depreciation on the instrument.

     

 

 

See Notes to Financial Statements.

 

                
   ANNUAL REPORT    APRIL 30, 2014    19


Table of Contents

Schedule of Investments (concluded)

  

BlackRock MuniYield Fund, Inc. (MYD)

 

The carrying amount for certain of the Fund’s assets and/or liabilities approximates fair value for financial statement purposes. As of April 30, 2014, such assets and/or liabilities are categorized within the disclosure hierarchy as follows:

 

     Level 1        Level 2        Level 3        Total  

Assets:

                

Cash pledged for financial futures contracts

  $ 1,061,000                             $ 1,061,000   

Liabilities:

                

TOB trust certificates

            $ (169,240,920                  (169,240,920

VRDP Shares

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

 

 

      

 

 

      

 

 

      

 

 

 

Total

  $ 1,061,000         $ (420,640,920                $ (419,579,920
 

 

 

      

 

 

      

 

 

      

 

 

 

There were no transfers between levels during the year ended April 30, 2014.

 

See Notes to Financial Statements.

 

                
20    ANNUAL REPORT    APRIL 30, 2014   


Table of Contents
Schedule of Investments April 30, 2014   

BlackRock MuniYield Quality Fund, Inc. (MQY)

(Percentages shown are based on Net Assets)

 

Municipal Bonds   

Par  

(000)

    Value  

Alabama — 2.2%

  

City of Birmingham Alabama, GO, CAB, Series A, 0.00%, 3/01/43 (a)

   $ 560      $ 507,253   

County of Jefferson Alabama, RB, Limited Obligation Schools, Series A, 4.75%, 1/01/25

     3,000        2,874,180   

University of Alabama, RB, Series A (NPFGC), 5.00%, 7/01/34

     7,125        7,177,654   
    

 

 

 
               10,559,087   

Alaska — 1.5%

  

Alaska Housing Finance Corp., RB, General Housing, Series B (NPFGC), 5.25%, 12/01/30

     600        634,500   

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

     1,400        1,542,114   

Borough of Matanuska-Susitna Alaska, RB, Goose Creek Correctional Center (AGC), 6.00%, 9/01/32

     4,425        5,214,951   
    

 

 

 
               7,391,565   

Arizona — 0.8%

  

Greater Arizona Development Authority, RB, Series B (NPFGC), 5.00%, 8/01/35

     1,600        1,666,800   

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

    

5.00%, 10/01/27

     1,525        1,672,879   

5.25%, 10/01/28

     250        276,225   
    

 

 

 
               3,615,904   

Arkansas — 0.3%

  

Arkansas Development Finance Authority, RB (AMBAC), 0.00%, 7/01/46 (b)

     7,000        1,369,620   

California — 19.1%

  

Alameda Corridor Transportation Authority, Refunding RB, CAB, Subordinate Lien, Series A (AMBAC), 5.45%, 10/01/25

     4,150        4,466,769   

Cabrillo Community College District, GO, CAB, Election of 2004, Series B (NPFGC) (b):

    

0.00%, 8/01/37

     3,250        959,790   

0.00%, 8/01/38

     7,405        2,081,545   

California Health Facilities Financing Authority, RB:

    

St. Joseph Health System, Series A, 5.75%, 7/01/39

     775        892,149   

Sutter Health, Series B, 5.88%, 8/15/31

     1,500        1,779,930   

California State Public Works Board, LRB, Various Judicial Council Projects, Series A, 5.00%, 3/01/38

     955        1,019,577   

California Statewide Communities Development Authority, RB, Kaiser Permanente, Series A, 5.00%, 4/01/42

     2,000        2,126,180   

Carlsbad California Unified School District, GO, Election of 2006, Series B, 0.00%, 5/01/34 (a)

     5,000        4,186,450   

City of San Jose California, Refunding ARB, AMT:

    

Series A (AMBAC), 5.50%, 3/01/32

     5,100        5,615,406   

Series A-1, 5.75%, 3/01/34

     1,150        1,278,823   

Coast Community College District, GO, CAB, Election of 2002, Series C (AGM), 5.00%, 8/01/31

     2,800        2,991,884   

County of Orange California Sanitation District, COP, Series B (AGM):

    

5.00%, 2/01/30

     3,500        3,854,165   

5.00%, 2/01/31

     1,200        1,312,188   
Municipal Bonds   

Par  

(000)

    Value  

California (concluded)

  

County of San Diego California Water Authority, COP, Refunding, Series A (AGM), 5.00%, 5/01/38

   $ 3,000      $ 3,312,480   

County of San Joaquin California Transportation Authority, Refunding RB, Limited Tax, Measure K, Series A, 6.00%, 3/01/36

     900        1,087,821   

El Monte Union High School District, GO, Series C (AGM), 5.25%, 6/01/28

     6,110        6,610,348   

Grossmont Union High School District, GO, CAB, Election of 2004, 0.00%, 8/01/31 (b)

     5,000        2,235,750   

Grossmont-Cuyamaca Community College District, GO, Refunding CAB, Election of 2002, Series C (AGC), 0.00%, 8/01/30 (b)

     10,030        4,959,935   

Hartnell Community College District California, GO, CAB, Election of 2002, Series D, 0.00%, 8/01/34 (a)

     4,125        3,092,719   

Los Angeles Community College District California, GO, Election of 2001, Series A (NPFGC), 5.00%, 8/01/32

     770        853,460   

Mount San Antonio Community College District, GO, Refunding, CAB, Election of 2008, Series A, 0.00%, 8/01/43 (a)

     1,945        1,058,022   

Poway Unified School District, GO, Refunding, CAB, School Facilities Improvement, Election of 2008, Series B, 0.00%, 8/01/36 (b)

     5,000        1,713,800   

Rio Hondo Community College District California, GO, CAB, Election of 2004, Series C, 0.00%, 8/01/37 (b)

     4,005        1,290,091   

San Bernardino Community College District, GO, CAB, Election of 2008, Series B, 0.00%, 8/01/34 (a)

     10,000        8,853,100   

San Diego California Unified School District, GO, CAB, Election of 2008, Series C, 0.00%, 7/01/38 (b)

     2,200        676,368   

San Diego California Unified School District, GO, Refunding, CAB, Series R-1, 0.00%, 7/01/31 (b)

     1,725        799,417   

San Diego California Unified School District, GO, Series G (b):

    

0.00%, 7/01/34

     900        317,259   

0.00%, 7/01/35

     950        314,488   

0.00%, 7/01/36

     1,430        445,431   

0.00%, 7/01/37

     950        278,531   

San Jose California Unified School District, GO, Election of 2002, Series B (NPFGC), 5.00%, 8/01/15 (c)

     2,825        2,994,443   

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

    

5.00%, 8/01/34

     900        977,355   

5.00%, 8/01/38

     760        816,795   

State of California, GO, 5.50%, 4/01/28

     5        5,021   

State of California, GO, Refunding, Various Purpose:

    

5.00%, 2/01/38

     2,000        2,154,180   

5.00%, 9/01/41

     2,300        2,456,929   

5.00%, 10/01/41

     1,300        1,389,596   

State of California, GO:

    

Various Purpose, 5.00%, 4/01/42

     1,500        1,608,270   

Various Purposes, 5.50%, 3/01/40

     2,000        2,268,060   

Ventura County Community College District, GO, Election of 2002, Series B (NPFGC), 5.00%, 8/01/15 (c)

     1,825        1,934,938   

Yosemite Community College District, GO, CAB, Election of 2004, Series D, 0.00%, 8/01/36 (b)

     15,000        5,141,400   
    

 

 

 
               92,210,863   

 

See Notes to Financial Statements.

 

                
   ANNUAL REPORT    APRIL 30, 2014    21


Table of Contents

Schedule of Investments (continued)

  

BlackRock MuniYield Quality Fund, Inc. (MQY)

(Percentages shown are based on Net Assets)

 

Municipal Bonds   

Par  

(000)

    Value  

Colorado — 0.4%

  

Regional Transportation District, COP, Refunding, Series A, 5.38%, 6/01/31

   $ 1,885      $ 2,056,120   

Florida — 10.2%

  

County of Duval Florida School Board, COP, Master Lease Program (AGM), 5.00%, 7/01/33

     4,765        5,171,169   

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

     1,250        1,453,562   

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

     2,700        2,966,706   

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

    

5.63%, 10/01/26

     1,280        1,442,240   

5.38%, 10/01/32

     1,700        1,822,587   

County of Miami-Dade Florida, GO, Building Better Communities Program, Series B, 6.38%, 7/01/28

     3,300        3,878,358   

County of Miami-Dade Florida, RB, Seaport:

    

Series A, 6.00%, 10/01/38

     2,755        3,162,823   

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

     870        1,002,458   

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

     560        637,308   

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

     895        1,000,028   

County of Miami-Dade Florida, Refunding RB, Special Obligation, Sub-Series B, 5.00%, 10/01/37

     1,705        1,775,058   

County of Miami-Dade Florida Aviation, Refunding ARB, Series A:

    

Miami International Airport, AMT (AGC),

5.00%, 10/01/40

     1,000        1,012,490   

5.50%, 10/01/36

     6,490        7,142,310   

AMT, 5.00%, 10/01/32

     3,550        3,765,059   

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

     260        274,921   

County of Palm Beach Florida Solid Waste Authority, Refunding RB, 5.00%, 10/01/31

     2,825        3,044,192   

County of Sarasota Florida Public Hospital District, RB, Sarasota Memorial Hospital Project, Series A, 5.63%, 7/01/39

     375        395,479   

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

    

5.13%, 6/01/27

     1,395        1,559,261   

5.38%, 10/01/29

     1,900        2,145,480   

Florida State Department of Environmental Protection, RB, Florida Forever Project, Series B (NPFGC), 5.00%, 7/01/27

     1,350        1,496,124   

Reedy Creek Improvement District, GO, Series A, 5.25%, 6/01/33

     1,620        1,800,322   

South Florida Water Management District, COP:

    

(AGC), 5.00%, 10/01/22

     700        769,517   

(AMBAC), 5.00%, 10/01/36

     1,500        1,608,960   
    

 

 

 
               49,326,412   

Georgia — 1.7%

  

City of Atlanta Georgia Department of Aviation, Refunding GARB, Series C (AGM), 5.00%, 7/01/14 (c)

     5,000        5,041,050   

County of Burke Georgia Development Authority, Refunding RB, Oglethorpe Power-Vogtle Project, Series C, 5.70%, 1/01/43

     3,150        3,342,591   
    

 

 

 
               8,383,641   
Municipal Bonds   

Par  

(000)

    Value  

Hawaii — 0.6%

  

Honolulu City & County Board of Water Supply, RB, Series A, 5.00%, 7/01/14 (c)

   $ 3,000      $ 3,024,690   

Illinois — 19.8%

  

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

    

Series A, 5.75%, 1/01/39

     5,500        6,004,405   

Series B-2, AMT (Syncora), 6.00%, 1/01/29

     1,930        1,938,395   

City of Chicago Illinois, GO, CAB, City Colleges (NPFGC), 0.00%, 1/01/31 (b)

     13,000        5,578,690   

City of Chicago Illinois, GO, Refunding, Series A, 5.25%, 1/01/33

     3,710        3,831,873   

City of Chicago Illinois, GO, Series A, 5.25%, 1/01/35

     1,250        1,273,838   

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

    

Series C, 5.38%, 1/01/39

     4,090        4,302,312   

Passenger Facility Charge, Series B, 5.00%, 1/01/31

     7,500        7,874,475   

City of Chicago Illinois, Refunding RB, Series A:

    

Sales Tax Receipts, 5.00%, 1/01/41

     1,140        1,169,116   

Waterworks, Second Lien (AMBAC), 5.00%, 11/01/36

     1,500        1,557,840   

City of Chicago Illinois Board of Education, GO, Series A, 5.50%, 12/01/39

     2,975        3,058,359   

City of Chicago Illinois Park District, GO, Harbor Facilities, Series C, 5.25%, 1/01/40

     750        789,113   

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

     840        902,404   

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

     380        406,121   

County of Cook Illinois Forest Preserve District, GO, Series C, 5.00%, 12/15/37

     440        467,421   

Illinois Finance Authority, RB, Carle Foundation, Series A, 5.75%, 8/15/34

     850        940,950   

Illinois HDA, RB, Liberty Arms Senior Apartments, Series D, AMT (AMBAC), 4.88%, 7/01/47

     2,740        2,715,340   

Illinois Sports Facilities Authority, RB, State Tax Supported (AMBAC), 5.50%, 6/15/30

     26,525        27,984,936   

Metropolitan Pier & Exposition Authority, RB, CAB, McCormick Place Expansion Project, Series A (NPFGC), 0.00%, 6/15/30 (b)

     15,000        7,170,450   

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

    

CAB (AGM), 0.00%, 6/15/44 (b)

     4,625        923,520   

4.25%, 6/15/42

     6,000        5,890,320   

Railsplitter Tobacco Settlement Authority, RB, 6.00%, 6/01/28

     900        1,044,378   

Regional Transportation Authority, RB, Series B (NPFGC), 5.75%, 6/01/33

     3,200        4,021,408   

State of Illinois, GO:

    

5.25%, 2/01/33

     1,140        1,223,573   

5.50%, 7/01/33

     1,100        1,205,204   

5.25%, 2/01/34

     1,140        1,218,888   

5.50%, 7/01/38

     590        643,613   

University of Illinois, RB, Auxiliary Facilities System, Series A, 5.00%, 4/01/39

     1,245        1,336,582   
    

 

 

 
               95,473,524   

 

See Notes to Financial Statements.

 

                
22    ANNUAL REPORT    APRIL 30, 2014   


Table of Contents

Schedule of Investments (continued)

  

BlackRock MuniYield Quality Fund, Inc. (MQY)

(Percentages shown are based on Net Assets)

 

Municipal Bonds   

Par  

(000)

    Value  

Indiana — 1.8%

  

Indiana Finance Authority, RB, Series A:

    

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

   $ 1,400      $ 1,539,622   

Private Activity Bond, Ohio River Bridges East End Crossing Project, AMT, 5.00%, 7/01/40

     1,190        1,210,063   

Private Activity Bond, Ohio River Bridges East End Crossing Project, AMT, 5.00%, 7/01/44

     690        696,728   

Indiana Municipal Power Agency, RB, Series A (NPFGC), 5.00%, 1/01/37

     1,150        1,220,966   

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

    

5.75%, 1/01/38

     1,300        1,416,155   

(AGC), 5.25%, 1/01/29

     2,350        2,562,628   
    

 

 

 
               8,646,162   

Iowa — 3.3%

  

Iowa Finance Authority, RB, Iowa Health Facilities, Series A (AGC), 5.63%, 8/15/37

     7,700        8,677,669   

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

    

5.60%, 12/01/26

     1,950        2,060,818   

5.70%, 12/01/27

     1,950        2,052,804   

5.80%, 12/01/29

     1,320        1,380,839   

5.85%, 12/01/30

     1,775        1,853,260   
    

 

 

 
               16,025,390   

Louisiana — 1.2%

  

Louisiana Local Government Environmental Facilities & Community Development Authority, RB, East Baton Rouge Sewerage Commission Projects, Sub-Lien, Series A:

    

5.00%, 2/01/43

     1,910        2,038,142   

4.00%, 2/01/48

     1,910        1,755,462   

Louisiana Public Facilities Authority, Refunding RB, Christus Health, Series B (AGC), 6.50%, 7/01/30

     1,800        2,029,824   
    

 

 

 
               5,823,428   

Massachusetts — 5.1%

  

Massachusetts HFA, RB, S/F Housing, Series 124, AMT, 5.00%, 12/01/31

     975        984,428   

Massachusetts HFA, Refunding RB, Series C, AMT:

    

5.00%, 12/01/30

     3,000        3,093,480   

5.35%, 12/01/42

     1,525        1,555,043   

Massachusetts School Building Authority, RB, Dedicated Sales Tax Series A:

    

Senior, 5.00%, 5/15/43

     1,720        1,893,256   

(AGM), 5.00%, 8/15/15 (c)

     270        286,675   

(AGM), 5.00%, 8/15/15 (c)

     13,800        14,652,288   

(AGM), 5.00%, 8/15/30

     95        100,145   

Massachusetts Water Resources Authority, Refunding RB, General, Series A (NPFGC), 5.00%, 8/01/34

     1,800        1,981,242   
    

 

 

 
               24,546,557   

Michigan — 6.0%

  

City of Detroit Michigan, Refunding RB, 2nd Lien, Water Supply System, Series D (NPFGC), 5.00%, 7/01/33

     1,000        964,910   

City of Detroit Michigan Sewage Disposal System, Refunding RB, 2nd Lien, Series E (BHAC), 5.75%, 7/01/31

     8,300        8,496,212   
Municipal Bonds   

Par  

(000)

    Value  

Michigan (concluded)

    

City of Lansing Michigan, RB, Board of Water & Light Utilities System, Series A, 5.50%, 7/01/41

   $ 2,500      $ 2,833,125   

Royal Oak Hospital Finance Authority, Refunding RB, William Beaumont Hospital, 8.25%, 9/01/18 (c)

     3,510        4,305,085   

State of Michigan, RB, GAB (AGM), 5.25%, 9/15/26

     3,350        3,711,733   

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

    

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

     1,200        1,316,832   

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

     1,000        1,094,640   

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

     4,270        4,645,632   

State of Michigan HDA, RB, Series C, AMT, 5.50%, 12/01/28

     1,175        1,235,677   

Western Michigan University, Refunding RB (AGM), 5.00%, 11/15/39

     520        554,102   
    

 

 

 
               29,157,948   

Minnesota — 0.7%

  

City of Minneapolis Minnesota, Refunding RB, Fairview Health Services, Series B (AGC), 6.50%, 11/15/38

     2,700        3,168,099   

Nebraska — 0.2%

  

Central Plains Nebraska Energy Project, RB, Gas Project No. 3, 5.25%, 9/01/37

     1,000        1,058,000   

Nevada — 2.0%

  

City of Las Vegas Nevada, GO, Limited Tax, Performing Arts Center, 6.00%, 4/01/34

     1,150        1,329,021   

County of Clark Nevada, ARB:

    

Department of Aviation, Subordinate Lien, Series A-2 (NPFGC), 5.00%, 7/01/14 (c)

     6,600        6,653,262   

Las Vegas-McCarran International Airport, Series A, 5.25%, 7/01/42

     1,500        1,602,810   
    

 

 

 
               9,585,093   

New Jersey — 6.7%

  

New Jersey EDA, RB:

    

Motor Vehicle Surcharge, Series A (NPFGC), 5.25%, 7/01/31

     12,375        12,471,277   

The Goethals Bridge Replacement Project, AMT, 5.38%, 1/01/43

     1,220        1,284,282   

The Goethals Bridge Replacement Project, AMT, 5.13%, 1/01/34

     935        980,871   

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

    

5.50%, 12/01/25

     800        883,184   

5.75%, 12/01/27

     375        415,103   

5.75%, 12/01/28

     400        441,272   

5.88%, 12/01/33

     1,980        2,143,330   

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

     1,555        1,542,871   

New Jersey Transportation Trust Fund Authority, RB:

    

Transportation Program, Series AA, 5.25%, 6/15/33

     2,000        2,218,520   

Transportation Program, Series AA, 5.50%, 6/15/39

     1,565        1,746,728   

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

     10,000        4,883,500   

Transportation System, Series A (NPFGC), 5.75%, 6/15/25

     2,000        2,473,960   

 

See Notes to Financial Statements.

 

                
   ANNUAL REPORT    APRIL 30, 2014    23


Table of Contents

Schedule of Investments (continued)

  

BlackRock MuniYield Quality Fund, Inc. (MQY)

(Percentages shown are based on Net Assets)

 

Municipal Bonds   

Par  

(000)

    Value  

New Jersey (concluded)

  

Rutgers — The State University of New Jersey, Refunding RB, Series L, 5.00%, 5/01/43

   $ 640      $ 700,646   
    

 

 

 
               32,185,544   

New York — 3.2%

  

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

     5,520        6,158,775   

Hudson Yards Infrastructure Corp., RB, Senior, Fiscal 2012, Series A, 5.75%, 2/15/47

     1,000        1,110,470   

Port Authority of New York & New Jersey, Refunding RB, Consolidated, 172nd Series, AMT, 4.50%, 4/01/37

     2,270        2,307,750   

State of New York Dormitory Authority, ERB, Series B, 5.75%, 3/15/36

     2,000        2,327,260   

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

     3,350        3,428,323   
    

 

 

 
               15,332,578   

Ohio — 0.7%

  

County of Lucas Ohio, Refunding RB, Promedica Healthcare, Series A, 6.50%, 11/15/37

     725        862,772   

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

    

5.25%, 2/15/32

     950        1,060,352   

5.25%, 2/15/33

     1,325        1,471,558   
    

 

 

 
               3,394,682   

Pennsylvania — 2.1%

  

Pennsylvania Turnpike Commission, RB:

    

Series A, 5.00%, 12/01/38

     860        932,051   

Series C, 5.50%, 12/01/33

     760        862,311   

Subordinate, Special Motor License Fund, 6.00%, 12/01/36

     775        893,474   

Subordinate, Special Motor License Fund, 5.50%, 12/01/41

     6,700        7,300,856   
    

 

 

 
               9,988,692   

South Carolina — 2.5%

  

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

    

5.50%, 7/01/38

     1,500        1,624,470   

5.50%, 7/01/41

     2,725        2,959,704   

South Carolina Jobs EDA, Refunding RB, Palmetto Health, Series A (AGM), 6.50%, 8/01/39

     320        365,152   

South Carolina Transportation Infrastructure Bank, RB, Series A, 5.25%, 10/01/40

     2,500        2,734,775   

State of South Carolina Public Service Authority, RB, Santee Cooper, Series E, 5.50%, 12/01/53

     985        1,091,075   

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

     2,850        3,056,197   
    

 

 

 
               11,831,373   

Tennessee — 0.5%

  

Memphis Center City Revenue Finance Corp., RB, Pyramid & Pinch District, Series B (AGM), 5.25%, 11/01/30

     2,330        2,600,280   
Municipal Bonds   

Par  

(000)

    Value  

Texas — 13.0%

  

Bell County Health Facility Development Corp., RB, Lutheran General Health Care System, 6.50%, 7/01/19 (d)

   $ 1,000      $ 1,189,210   

City of Houston Texas Utility System, Refunding RB, Combined 1st Lien, Series A (AGC), 6.00%, 11/15/35

     2,850        3,329,940   

City of San Antonio Texas Public Service Board, RB, Junior Lien, 5.00%, 2/01/38

     760        827,914   

Comal Texas ISD, GO, School Building (PSF-GTD), 5.00%, 2/01/36

     2,500        2,659,150   

County of Midland Texas Fresh Water Supply District No. 1, RB, CAB, City of Midland Project, Series A, 0.00%, 9/15/36 (b)

     2,870        1,010,240   

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

     1,100        1,219,647   

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

    

5.00%, 11/01/38

     9,450        9,748,053   

5.00%, 11/01/42

     1,500        1,546,350   

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

     1,325        1,487,154   

Lone Star College System, GO, 5.00%, 8/15/33

     4,800        5,364,000   

Mansfield Texas ISD, GO, School Building (PSF-GTD), 5.00%, 2/15/33

     2,300        2,550,447   

North Texas Tollway Authority, Refunding RB, 1st Tier System Series A:

    

6.00%, 1/01/28

     3,380        3,909,477   

(NPFGC), 5.75%, 1/01/40

     12,300        13,615,362   

San Antonio Public Facilities Corp., Refunding RB, Convention Center Refinancing and Expansion Project:

    

4.00%, 9/15/42

     1,080        1,022,058   

CAB, 0.00%, 9/15/35 (b)

     3,180        1,134,560   

CAB, 0.00%, 9/15/36 (b)

     6,015        2,018,393   

CAB, 0.00%, 9/15/37 (b)

     4,305        1,359,476   

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

    

5.00%, 12/15/31

     1,600        1,650,816   

5.00%, 12/15/32

     1,500        1,543,320   

Texas Transportation Commission, Refunding RB, Central Texas Turnpike System, 1st Tier, Series A, 5.00%, 8/15/41

     5,500        5,649,875   
    

 

 

 
               62,835,442   

Utah — 1.1%

  

Salt Lake City Corp., Refunding RB, IHC Hospitals, Inc. (NPFGC), 6.30%, 2/15/15 (d)

     5,060        5,287,700   

Vermont — 0.0%

  

Vermont HFA, Refunding RB, Multiple Purpose, Series C, AMT (AGM), 5.50%, 11/01/38

     30        30,526   

Washington — 1.8%

  

Central Puget Sound Regional Transit Authority, RB, Series A, 5.00%, 11/01/36

     2,000        2,188,400   

 

See Notes to Financial Statements.

 

                
24    ANNUAL REPORT    APRIL 30, 2014   


Table of Contents

Schedule of Investments (continued)

  

BlackRock MuniYield Quality Fund, Inc. (MQY)

(Percentages shown are based on Net Assets)

 

Municipal Bonds   

Par  

(000)

    Value  

Washington (concluded)

  

Washington Health Care Facilities Authority, RB:

    

MultiCare Health System, Remarketing, Series B, 5.00%, 8/15/44

   $ 4,000      $ 4,179,120   

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

     1,525        1,593,991   

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

     850        904,562   
    

 

 

 
               8,866,073   

Wisconsin — 0.4%

  

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

     1,850        2,030,320   
Total Municipal Bonds108.9%              525,805,313   
    
   
Municipal Bonds Transferred to
Tender Option Bond Trusts (e)
 

Arizona — 2.3%

  

Phoenix Civic Improvement Corp., RB, Sub-Civic Plaza Expansion Project, Series A (NPFGC), 5.00%, 7/01/37

     8,000        8,326,160   

Salt River Project Agricultural Improvement & Power District, RB, Electric System, Series A, 5.00%, 1/01/38

     2,750        3,003,797   
    

 

 

 
               11,329,957   

California — 4.9%

  

California State University, Refunding RB, Systemwide, Series A (AGM), 5.00%, 11/01/32

     7,000        7,707,420   

County of San Diego California Water Authority, COP, Refunding, Series A (AGM), 5.00%, 5/01/33

     5,170        5,749,195   

Los Angeles Community College District California, GO, Election of 2001, Series A (NPFGC), 5.00%, 8/01/32

     6,120        6,783,347   

Los Angeles Community College District California, GO, Refunding, Election of 2008, Series A, 6.00%, 8/01/33

     2,639        3,134,475   

San Diego Community College District California, GO, Election of 2002, 5.25%, 8/01/33

     509        584,389   
    

 

 

 
               23,958,826   

Colorado — 0.3%

  

Colorado Health Facilities Authority, Refunding RB, Catholic Health Initiatives, Series A, 5.50%, 7/01/34 (f)

     1,220        1,383,119   

District of Columbia — 1.1%

  

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

     1,320        1,548,919   

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

     3,400        3,714,568   
    

 

 

 
               5,263,487   

Florida — 14.7%

  

City of Tallahassee Florida, RB, Energy System (NPFGC):

    

5.00%, 10/01/32 (f)

     2,700        2,945,916   

5.00%, 10/01/37

     6,000        6,431,340   
Municipal Bonds Transferred to
Tender Option Bond Trusts (e)
  

Par  

(000)

    Value  

Florida (concluded)

  

County of Highlands Florida Health Facilities Authority, RB, Adventist, Series C, 5.25%, 11/15/16

   $ 5,990      $ 6,446,678   

County of Miami-Dade Florida, Refunding RB, Transit System Sales Surtax, 5.00%, 7/01/42

     2,390        2,553,309   

County of Miami-Dade Florida Water & Sewer System, RB, (AGM), 5.00%, 10/01/39

     12,729        13,494,401   

County of Orange Florida School Board, COP, Series A:

    

(NPFGC), 5.00%, 8/01/31

     5,000        5,333,500   

(AGC), 5.50%, 8/01/34

     3,544        3,875,711   

(NPFGC), 5.00%, 8/01/30

     2,000        2,133,400   

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

     6,300        7,482,636   

Jacksonville Electric Authority Florida, RB, Sub-Series A, 5.63%, 10/01/32

     4,310        4,845,711   

Miami-Dade County School Board, COP, Refunding, 5.25%, 5/01/27

     11,350        12,760,919   

State of Florida Board of Education, GO, Series D, 5.00%, 6/01/37 (f)

     2,399        2,655,636   
    

 

 

 
               70,959,157   

Illinois — 6.6%

  

City of Chicago Illinois, RB, Motor Fuel Tax Project, Series A (AGC), 5.00%, 1/01/38

     4,000        4,055,920   

City of Chicago Illinois, Refunding RB, Waterworks, 2nd Lien (AGM), 5.25%, 11/01/33

     14,427        15,242,694   

Metropolitan Pier & Exposition Authority, RB, McCormick Place Expansion Project, Series A, 5.00%, 6/15/42

     360        374,108   

State of Illinois, RB, Build Illinois, Series B, 5.25%, 6/15/34 (f)

     6,198        6,870,059   

State of Illinois Toll Highway Authority, RB:

    

Senior Priority, Series B, 5.50%, 1/01/33

     2,000        2,222,813   

State of Illinois Toll Highway Authority, RB:

    

Series A, 5.00%, 1/01/38

     2,878        3,035,134   
    

 

 

 
               31,800,728   

Michigan — 2.0%

  

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

     9,100        9,610,783   

Nevada — 1.8%

  

City of Las Vegas Nevada, GO, Limited Tax, Performing Arts Center, 6.00%, 4/01/39 (f)

     5,007        5,769,346   

County of Clark Nevada Water Reclamation District, GO, Limited Tax, Series B, 5.75%, 7/01/34

     2,429        2,838,747   
    

 

 

 
               8,608,093   

New Jersey — 0.6%

  

New Jersey Transportation Trust Fund Authority, RB, Transportation System, Series B, 5.25%, 6/15/36 (f)

     2,581        2,800,334   

New York — 8.8%

  

City of New York New York Municipal Water Finance Authority, RB, Water & Sewer System, Fiscal 2009, Series A, 5.75%, 6/15/40

     3,509        4,019,437   

 

See Notes to Financial Statements.

 

                
   ANNUAL REPORT    APRIL 30, 2014    25


Table of Contents

Schedule of Investments (continued)

  

BlackRock MuniYield Quality Fund, Inc. (MQY)

(Percentages shown are based on Net Assets)

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (e)
  

Par  

(000)

    Value  

New York (concluded)

  

City of New York New York Municipal Water Finance Authority, Refunding RB, Water & Sewer System, 2nd General Resolution, Fiscal 2013, Series C, 5.00%, 6/15/47

   $ 7,641      $ 8,189,335   

City of New York New York Water & Sewer System, RB, Series DD, 5.00%, 6/15/35

     2,280        2,544,640   

County of Erie New York Industrial Development Agency, RB, City of Buffalo School District Project, Series A (AGM), 5.75%, 5/01/28

     2,007        2,254,057   

New York State Thruway Authority, Refunding RB, General, Series G (AGM), 5.00%, 1/01/32

     10,000        10,433,900   

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

     10,830        11,579,869   

State of New York Dormitory Authority, ERB, Series B, 5.75%, 3/15/36

     1,540        1,791,990   

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

     1,500        1,694,370   
    

 

 

 
               42,507,598   

North Carolina — 0.4%

  

North Carolina HFA, RB, Series 31-A, AMT, 5.25%, 7/01/38

     1,901        1,939,032   

Ohio — 0.2%

  

State of Ohio, RB, Cleveland Clinic Health Obligated Group, Series B, 5.50%, 1/01/34

     780        852,602   

South Carolina — 1.1%

  

State of South Carolina Public Service Authority, Refunding RB, Santee Cooper, Series A, 5.50%, 1/01/38 (f)

     4,695        5,274,504   

Texas — 4.0%

  

Clear Creek ISD Texas, GO, Refunding, School Building (PSF-GTD), 5.00%, 2/15/33

     5,900        6,436,546   

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

     879        939,283   

Cypress-Fairbanks ISD, GO, Refunding, Schoolhouse (PSF-GTD), 5.00%, 2/15/32

     4,750        5,247,848   

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

     4,501        4,660,809   

North East Texas ISD, GO, School Building, Series A (PSF-GTD), 5.00%, 8/01/37 (f)

     2,000        2,198,160   
    

 

 

 
               19,482,646   
Municipal Bonds Transferred to
Tender Option Bond Trusts (e)
  

Par  

(000)

    Value  

Virginia — 0.1%

  

County of Fairfax Virginia IDA, Refunding RB, Health Care, Inova Health System, Series A, 5.50%, 5/15/35

   $ 450      $ 493,758   

Washington — 0.6%

  

Central Puget Sound Regional Transit Authority, RB, Series A (AGM), 5.00%, 11/01/32

     2,504        2,758,979   

Wisconsin — 0.6%

  

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

    

Series A, 5.00%, 4/01/42

     640        681,107   

Series C, 5.25%, 4/01/39

     2,000        2,127,100   
    

 

 

 
               2,808,207   

Total Municipal Bonds Transferred to

Tender Option Bond Trusts — 50.1%

  

  

    241,831,810   

Total Long-Term Investments

(Cost — $715,901,958) — 159.0%

  

  

    767,637,123   
    
   
Short-Term Securities    Shares         

FFI Institutional Tax-Exempt
Fund, 0.03% (g)(h)

     5,091,221        5,091,221   
Total Short-Term Securities
(Cost — $5,091,221) — 1.1%
        5,091,221   
Total Investments (Cost — $720,993,179) — 160.1%        772,728,344   
Other Assets Less Liabilities — 1.6%        7,904,601   

Liability for TOB Trust Certificates, Including Interest
Expense and Fees Payable — (25.1%)

   

    (121,367,388
VRDP Shares, at Liquidation Value — (36.6%)        (176,600,000
    

 

 

 
Net Assets Applicable to Common Shares — 100.0%      $ 482,665,557   
    

 

 

 

 

Notes to Schedule of Investments

 

(a)   Represents 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 shown reflects the current yield as of report date.

 

(b)   Zero-coupon bond.

 

(c)   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.

 

(d)   Security is collateralized by municipal or U.S. Treasury obligations.

 

(e)   Represent bonds transferred to a TOB. In exchange for which the Fund acquired residual interest certificates. These bonds serve as collateral in a financing transaction. See Note 3 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs.

 

(f)   All or a portion of security is subject to a recourse agreement, which may require the Fund to pay the liquidity provider in the event there is a shortfall between the TOB trust certificates and proceeds received from the sale of the security contributed to the TOB trust. In the case of a shortfall, the aggregate maximum potential amount the Fund could ultimately be required to pay under the agreements, which expire from February 1, 2016 to December 1, 2029 is $21,224,963.

 

See Notes to Financial Statements.

 

                
26    ANNUAL REPORT    APRIL 30, 2014   


Table of Contents

Schedule of Investments (concluded)

  

BlackRock MuniYield Quality Fund, Inc. (MQY)

 

 

(g)   Investments in issuers considered to be an affiliate of the Fund during the year ended April 30, 2014, for purposes of Section 2(a)(3) of the 1940 Act, were as follows:

 

Affiliate      Shares Held
at April 30,
2013
       Net
Activity
       Shares Held
at April 30,
2014
       Income  

FFI Institutional Tax-Exempt Fund

       802,157           4,289,064           5,091,221         $ 1,825   

 

(h)   Represents the current yield as of report date.

 

Ÿ  

Financial futures contracts outstanding as of April 30, 2014 were as follows:

 

Contracts Sold     Issue   Exchange   Expiration   Notional
Value
    Unrealized
Depreciation
 
  (365   10-Year U.S Treasury Note   Chicago Board of Trade   June 2014   $ 45,413,984      $ (136,536

 

Ÿ  

Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes as follows:

 

  Ÿ  

Level 1 — unadjusted price quotations in active markets/exchanges for identical assets or liabilities that the Fund has the ability to access

 

  Ÿ  

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)

 

  Ÿ  

Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the 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.

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value disclosure 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 investment and derivative financial instrument and is not necessarily an indication of the risks associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and derivative financial instruments, please refer to Note 2 of the Notes to Financial Statements.

The following tables summarize the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy as of April 30, 2014:

 

     Level 1        Level 2        Level 3        Total  

Assets:

                
Investments:                 

Long-Term Investments 1

            $ 767,637,123                   $ 767,637,123   

Short-Term Securities

  $ 5,091,221                               5,091,221   
 

 

 

      

 

 

      

 

 

      

 

 

 

Total

  $ 5,091,221         $ 767,637,123                   $ 772,728,344   
 

 

 

      

 

 

      

 

 

      

 

 

 

 

1   See above Schedule of Investments for values in each state or political subdivision.

      

    
     Level 1        Level 2        Level 3        Total  
Derivative Financial Instruments 2             

Liabilities:

                

Interest rate contracts

  $ (136,536                          $ (136,536

2   Derivative financial instruments are financial futures contracts, which are valued at the unrealized appreciation/depreciation on the instrument.

      

The carrying amount for certain of the Fund’s assets and/or liabilities approximates fair value for financial statement purposes. As of April 30, 2014, such assets and/or liabilities are categorized within the disclosure hierarchy as follows:

 

     Level 1        Level 2        Level 3        Total  

Assets:

                

Cash pledged for financial futures contracts

  $ 476,000         $                   $ 476,000   

Liabilities:

                

TOB trust certificates

              (121,320,613                  (121,320,613

VRDP Shares

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

 

 

      

 

 

      

 

 

      

 

 

 

Total

  $ 476,000         $ (297,920,613                $ (297,444,613
 

 

 

 

There were no transfers between levels during the year ended April 30, 2014.

 

See Notes to Financial Statements.

 

                
   ANNUAL REPORT    APRIL 30, 2014    27


Table of Contents

Schedule of Investments April 30, 2014

  

BlackRock MuniYield Quality Fund II, Inc. (MQT)

(Percentages shown are based on Net Assets)

 

Municipal Bonds    Par  
(000)
    Value  

Alabama — 0.9%

    

City of Birmingham Alabama Special Care Facilities Financing Authority, RB, Children’s Hospital (AGC), 6.00%, 6/01/39

   $ 650      $ 750,763   

County of Jefferson Alabama, RB, Limited Obligation School, Series A, 4.75%, 1/01/25

     2,000        1,916,120   
    

 

 

 
               2,666,883   

Alaska — 0.3%

    

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

     850        936,284   

Arizona — 1.4%

    

City of Phoenix Arizona Civic Improvement Corp., Refunding RB, Senior Lien, AMT, 5.00%, 7/01/32

     1,000        1,084,070   

Greater Arizona Development Authority, RB,
Series B (NPFGC), 5.00%, 8/01/35

     1,100        1,145,925   

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

    

5.00%, 10/01/27

     1,075        1,179,243   

5.00%, 10/01/29

     925        1,006,261   
    

 

 

 
               4,415,499   

California — 16.9%

    

Alameda Corridor Transportation Authority, Refunding RB, CAB, Subordinate Lien, Series A (AMBAC), 5.45%, 10/01/25

     7,150        7,695,759   

Cabrillo Community College District, GO, CAB,

Election of 2004, Series B (NPFGC) (a):

    

0.00%, 8/01/37

     2,100        620,172   

0.00%, 8/01/38

     4,800        1,349,280   

California Health Facilities Financing Authority, RB:

    

St. Joseph Health System, Series A, 5.75%, 7/01/39

     500        575,580   

Sutter Health, Series B, 5.88%, 8/15/31

     1,000        1,186,620   

California Health Facilities Financing Authority, Refunding RB, Saint Joseph’s Health System,
Series A, 5.00%, 7/01/37

     945        1,020,657   

California State Public Works Board, LRB, Various Judicial Council Projects, Series A, 5.00%, 3/01/38

     615        656,586   

California State University, RB, Systemwide Series A:

    

5.50%, 11/01/39

     1,000        1,150,600   

(AGC), 5.25%, 11/01/38

     3,000        3,413,490   

California Statewide Communities Development Authority, RB, Kaiser Permanente, Series A, 5.00%, 4/01/42

     1,290        1,371,386   

City of San Jose California, Refunding ARB,
Series A-1, AMT, 5.75%, 3/01/34

     700        778,414   

Coast Community College District, GO, CAB, Election of 2002, Series C (AGM), 5.00%, 8/01/31

     1,800        1,923,354   

County of San Diego California Water Authority, COP, Refunding, Series A (AGM), 5.00%, 5/01/38

     2,015        2,224,882   

County of San Joaquin California Transportation Authority, Refunding RB, Limited Tax, Measure K, Series A, 6.00%, 3/01/36

     575        694,997   

El Monte Union High School District, GO, Series C (AGM), 5.25%, 6/01/28

     4,000        4,327,560   

Fairfield-Suisun Unified School District California, GO, Election of 2002 (NPFGC), 5.50%, 8/01/14 (b)

     2,770        2,807,423   
Municipal Bonds    Par  
(000)
    Value  

California (concluded)

    

Los Angeles Community College District California, GO, Election of 2001, Series A (AGM),
5.00%, 8/01/32

   $ 2,200      $ 2,438,458   

Monterey Peninsula Community College District, GO, CAB, Series C, 0.00%, 8/01/28 (a)

     11,975        6,074,678   

Mount San Antonio Community College District, GO, Refunding, CAB, Election of 2008, Series A, 0.00%, 8/01/43 (c)

     5,000        2,719,850   

San Diego California Unified School District, GO, CAB, Election of 2008, Series C, 0.00%, 7/01/38 (a)

     1,400        430,416   

San Diego California Unified School District, GO, Refunding, CAB, Series R-1, 0.00%, 7/01/31 (a)

     1,110        514,407   

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

    

0.00%, 8/01/31

     1,855        784,572   

0.00%, 8/01/32

     2,320        909,904   

San Diego Unified School District, GO, Series G (a):

    

0.00%, 7/01/34

     580        204,456   

0.00%, 7/01/35

     615        203,590   

0.00%, 7/01/36

     920        286,571   

0.00%, 7/01/37

     615        180,312   

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

    

5.00%, 8/01/34

     600        651,570   

5.00%, 8/01/38

     490        526,618   

State of California, GO, Refunding, Various Purpose, 5.00%, 10/01/41

     900        962,028   

State of California, GO, Various Purpose,
5.00%, 4/01/42

     1,500        1,608,270   

Ventura County Community College District, GO, Election of 2002, Series B (NPFGC),
5.00%, 8/01/15 (b)

     675        715,662   

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

    

0.00%, 8/01/36

     2,000        685,520   

0.00%, 8/01/37

     2,790        897,013   
    

 

 

 
               52,590,655   

Colorado — 1.0%

    

E-470 Public Highway Authority, Refunding RB, CAB, Series B (NPFGC), 0.00%, 9/01/32 (a)

     5,500        1,999,360   

Regional Transportation District, COP, Refunding, Series A, 5.38%, 6/01/31

     1,000        1,090,780   
    

 

 

 
               3,090,140   

Florida — 11.0%

    

County of Broward Florida School Board, COP, Series A (AGM), 5.25%, 7/01/33

     1,000        1,108,860   

County of Duval Florida School Board, COP, Master Lease Program (AGM), 5.00%, 7/01/33

     7,875        8,546,265   

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

     550        639,568   

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

     3,250        3,571,035   

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

    

5.63%, 10/01/26

     825        929,569   

5.38%, 10/01/32

     1,100        1,179,321   

 

See Notes to Financial Statements.

 

                
28    ANNUAL REPORT    APRIL 30, 2014   


Table of Contents

Schedule of Investments (continued)

  

BlackRock MuniYield Quality Fund II, Inc. (MQT)

(Percentages shown are based on Net Assets)

 

Municipal Bonds    Par  
(000)
    Value  

Florida (concluded)

    

County of Miami-Dade Florida, RB:

    

Jackson Health System (AGC), 5.63%, 6/01/34

   $ 900      $ 959,418   

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

     1,780        2,043,493   

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

     570        656,783   

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

     360        409,698   

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

     580        648,063   

County of Miami-Dade Florida, Refunding RB, Special Obligation, Sub-Series B, 5.00%, 10/01/37

     725        754,790   

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

    

Miami International Airport (AGC),
5.00%, 10/01/40

     2,600        2,632,474   

5.00%, 10/01/32

     1,730        1,834,803   

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

     160        169,182   

County of Palm Beach Florida Solid Waste Authority, Refunding RB, 5.00%, 10/01/31

     1,900        2,047,421   

County of Sarasota Florida Public Hospital District, RB, Sarasota Memorial Hospital Project, Series A, 5.63%, 7/01/39

     250        263,653   

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

     2,400        2,710,080   

Reedy Creek Improvement District, GO, Series A, 5.25%, 6/01/33

     1,040        1,155,762   

South Florida Water Management District, COP (AGC), 5.00%, 10/01/22

     1,800        1,978,758   
    

 

 

 
               34,238,996   

Georgia — 4.4%

    

City of Atlanta Georgia Department of Aviation, Refunding GARB (AGM) (b):

    

Series B, 5.25%, 7/01/14

     5,000        5,043,200   

Series C, 5.00%, 7/01/14

     7,500        7,561,575   

County of Burke Georgia Development Authority, Refunding RB, Oglethorpe Power-Vogtle Project, Series C, 5.70%, 1/01/43

     1,000        1,061,140   
    

 

 

 
               13,665,915   

Hawaii — 0.7%

    

Honolulu City & County Board of Water Supply, RB, Series A, 5.00%, 7/01/14 (b)

     2,000        2,016,460   

Illinois — 19.8%

    

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

    

Series A, 5.75%, 1/01/39

     2,000        2,183,420   

Series B-2, AMT (Syncora), 6.00%, 1/01/29

     1,280        1,285,568   

City of Chicago Illinois, GO, CAB, City Colleges (NPFGC), 0.00%, 1/01/31 (a)

     8,370        3,591,818   

City of Chicago Illinois, GO, Refunding, Series A, 5.25%, 1/01/33

     2,400        2,478,840   

City of Chicago Illinois, GO, Series A,
5.25%, 1/01/35

     2,000        2,038,140   

City of Chicago Illinois, Refunding GARB, AMT:

    

O’Hare International Airport, Third Lien, Series C-2 (AGM), 5.25%, 1/01/30

     1,620        1,621,555   

O’Hare International Airport, Series C,
5.38%, 1/01/39

     3,235        3,402,929   
Municipal Bonds    Par  
(000)
    Value  

Illinois (concluded)

    

City of Chicago Illinois, Refunding RB, Sales Tax Receipts, Series A, 5.00%, 1/01/41

   $ 700      $ 717,878   

City of Chicago Illinois Board of Education, GO, Series A, 5.50%, 12/01/39

     1,915        1,968,658   

City of Chicago Illinois Park District, GO, Series C Harbor Facilities:

    

Revenues, 5.25%, 1/01/37

     4,000        4,208,600   

5.25%, 1/01/40

     500        526,075   

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

     515        553,259   

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

     250        267,185   

County of Cook Illinois Forest Preserve District, GO, Series C, 5.00%, 12/15/37

     285        302,761   

Illinois Finance Authority, RB, Carle Foundation, Series A, 5.75%, 8/15/34

     400        442,800   

Illinois Finance Authority, Refunding RB, Central Dupage Health, Series B, 5.50%, 11/01/39

     2,070        2,298,114   

Illinois Sports Facilities Authority, RB, State Tax Supported (AMBAC), 5.50%, 6/15/30

     18,175        19,175,352   

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

     10,000        3,207,200   

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

    

CAB (AGM), 0.00%, 6/15/44 (a)

     2,980        595,046   

4.25%, 6/15/42

     4,000        3,926,880   

Railsplitter Tobacco Settlement Authority, RB, 6.00%, 6/01/28

     575        667,242   

Regional Transportation Authority, RB, Series B (NPFGC), 5.75%, 6/01/33

     2,000        2,513,380   

State of Illinois, GO:

    

5.25%, 2/01/33

     735        788,883   

5.50%, 7/01/33

     710        777,905   

5.25%, 2/01/34

     735        785,862   

5.50%, 7/01/38

     380        414,531   

University of Illinois, RB, Auxiliary Facilities System, Series A, 5.00%, 4/01/39

     805        864,216   
    

 

 

 
               61,604,097   

Indiana — 2.0%

    

Indiana Finance Authority, RB, Series A:

    

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

     1,000        1,099,730   

Private Activity Bond, Ohio River Bridges East End Crossing Project, AMT, 5.00%, 7/01/40

     770        782,982   

Private Activity Bond, Ohio River Bridges East End Crossing Project, AMT, 5.00%, 7/01/44

     445        449,339   

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

    

5.75%, 1/01/38

     2,000        2,178,700   

(AGC), 5.50%, 1/01/38

     1,575        1,694,070   
    

 

 

 
               6,204,821   

Iowa — 3.1%

    

Iowa Finance Authority, RB, Iowa Health Facilities, Series A (AGC), 5.63%, 8/15/37

     4,925        5,550,327   

 

See Notes to Financial Statements.

 

                
   ANNUAL REPORT    APRIL 30, 2014    29


Table of Contents

Schedule of Investments (continued)

  

BlackRock MuniYield Quality Fund II, Inc. (MQT)

(Percentages shown are based on Net Assets)

 

Municipal Bonds    Par  
(000)
    Value  

Iowa (concluded)

    

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

    

5.60%, 12/01/26

   $ 1,185      $ 1,252,344   

5.70%, 12/01/27

     1,190        1,252,737   

5.80%, 12/01/29

     800        836,872   

5.85%, 12/01/30

     835        871,815   
    

 

 

 
               9,764,095   

Kentucky — 0.7%

    

State of Kentucky Property & Building Commission, Refunding RB, Project No. 93 (AGC),
5.25%, 2/01/29

     2,000        2,266,860   

Louisiana — 1.2%

    

Louisiana Local Government Environmental Facilities & Community Development Authority, RB, East Baton Rouge Sewerage Commission Projects, Sub-Lien, Series A:

    

5.00%, 2/01/43

     1,235        1,317,856   

4.00%, 2/01/48

     1,235        1,135,076   

Louisiana Public Facilities Authority, Refunding RB, Christus Health, Series B (AGC), 6.50%, 7/01/30

     1,150        1,296,832   
    

 

 

 
               3,749,764   

Massachusetts — 5.5%

    

Massachusetts HFA, Refunding RB, Series C, AMT:

    

5.00%, 12/01/30

     5,000        5,155,800   

5.35%, 12/01/42

     975        994,208   

Massachusetts School Building Authority, RB, Dedicated Sales Tax Series A:

    

Senior, 5.00%, 5/15/43

     1,110        1,221,810   

(AGM), 5.00%, 8/15/15 (b)

     180        191,117   

(AGM), 5.00%, 8/15/15 (b)

     6,015        6,386,486   

(AGM), 5.00%, 8/15/30

     65        68,520   

Massachusetts Water Resources Authority, Refunding RB, General, Series A (NPFGC), 5.00%, 8/01/34

     2,700        2,971,863   
    

 

 

 
               16,989,804   

Michigan — 4.6%

    

City of Detroit Michigan, Refunding RB, Sewage Disposal System, Series A (BHAC), 5.50%, 7/01/36

     4,500        4,540,590   

City of Detroit Michigan Sewage Disposal System, Refunding RB, 2nd Lien, Series E (BHAC), 5.75%, 7/01/31

     2,200        2,252,008   

City of Detroit Michigan Water Supply System, RB, 2nd Lien, Series B (AGM):

    

6.25%, 7/01/36

     350        353,895   

7.00%, 7/01/36

     200        213,394   

City of Lansing Michigan, RB, Board of Water & Light Utilities System, Series A, 5.50%, 7/01/41

     1,700        1,926,525   

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

    

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

     600        656,784   

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

     1,000        1,097,360   

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

     1,900        2,067,143   

State of Michigan HDA, RB, Series C, AMT,
5.50%, 12/01/28

     740        778,214   

Western Michigan University, Refunding RB (AGM), 5.00%, 11/15/39

     340        362,297   
    

 

 

 
               14,248,210   
Municipal Bonds    Par  
(000)
    Value  

Minnesota — 0.7%

    

City of Minneapolis Minnesota, Refunding RB, Fairview Health Services, Series B (AGC), 6.50%, 11/15/38

   $ 1,800      $ 2,112,066   

Nebraska — 0.9%

    

Central Plains Energy Project Nebraska, RB, Gas Project No. 3, 5.25%, 9/01/37

     2,650        2,803,700   

Nevada — 2.2%

    

County of Clark Nevada, ARB, Department of Aviation, Subordinate Lien, Series A-2 (NPFGC) :

    

5.00%, 7/01/14 (b)

     1,250        1,260,087   

5.00%, 7/01/14 (b)

     2,700        2,721,789   

Las Vegas-McCarran International Airport, Series A:

    

5.25%, 7/01/42

     1,000        1,068,540   

(AGM), 5.25%, 7/01/39

     1,700        1,823,675   
    

 

 

 
               6,874,091   

New Jersey — 4.9%

    

New Jersey EDA, RB:

    

Motor Vehicle Surcharge, Series A (NPFGC), 5.25%, 7/01/33

     6,700        6,752,126   

The Goethals Bridge Replacement Project, AMT, 5.38%, 1/01/43

     790        831,625   

The Goethals Bridge Replacement Project, AMT, 5.13%, 1/01/34

     610        639,927   

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

    

5.50%, 12/01/25

     500        551,990   

5.50%, 12/01/26

     350        383,026   

5.75%, 12/01/28

     200        220,636   

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

     1,070        1,061,654   

New Jersey Transportation Trust Fund Authority, RB:

    

Transportation Program, Series AA, 5.25%, 6/15/33

     1,290        1,430,945   

Transportation Program, Series AA, 5.50%, 6/15/39

     1,010        1,127,281   

Transportation System, Series A (NPFGC), 5.75%, 6/15/25

     1,400        1,731,772   

Rutgers-The State University of New Jersey, Refunding RB, Series L, 5.00%, 5/01/43

     400        437,904   
    

 

 

 
               15,168,886   

New York — 3.9%

    

City of New York New York Municipal Water Finance Authority, Refunding RB, Second General Resolution, Fiscal 2012, Series BB,
5.25%, 6/15/44

     1,250        1,362,037   

City of New York New York Transitional Finance Authority, BARB, Fiscal 2009, Series S-4,
5.50%, 1/15/33

     3,035        3,468,216   

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

     2,200        2,454,584   

Hudson Yards Infrastructure Corp., RB, Senior,
Fiscal 2012, Series A, 5.75%, 2/15/47

     610        677,387   

Port Authority of New York & New Jersey, Refunding RB, Consolidated, 172nd Series, AMT,
4.50%, 4/01/37

     1,230        1,250,455   

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

     2,835        2,901,282   
    

 

 

 
               12,113,961   

 

See Notes to Financial Statements.

 

                
30    ANNUAL REPORT    APRIL 30, 2014   


Table of Contents

Schedule of Investments (continued)

  

BlackRock MuniYield Quality Fund II, Inc. (MQT)

(Percentages shown are based on Net Assets)

 

Municipal Bonds    Par  
(000)
    Value  

Ohio — 0.7%

    

County of Lucas Ohio, Refunding RB, Promedica Healthcare, Series A, 6.50%, 11/15/37

   $ 460      $ 547,414   

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

    

5.25%, 2/15/32

     610        680,858   

5.25%, 2/15/33

     850        944,018   
    

 

 

 
               2,172,290   

Pennsylvania — 2.9%

    

Commonwealth Financing Authority, RB, Series B, 5.00%, 6/01/42

     2,235        2,348,605   

Pennsylvania Turnpike Commission, RB:

    

Series A, 5.00%, 12/01/38

     550        596,079   

Series C, 5.50%, 12/01/33

     490        555,964   

Sub-Series A, 5.00%, 12/01/43

     1,000        1,063,060   

Subordinate, Special Motor License Fund, 6.00%, 12/01/36

     500        576,435   

Subordinate, Special Motor License Fund, 5.50%, 12/01/41

     2,245        2,446,331   

Philadelphia School District, GO Series E,
6.00%, 9/01/38

     1,300        1,418,157   
    

 

 

 
               9,004,631   

South Carolina — 4.7%

    

Charleston Educational Excellence Finance Corp., RB (AGC) (b):

    

5.25%, 12/01/15

     2,725        2,940,221   

5.25%, 12/01/15

     2,425        2,616,527   

5.25%, 12/01/15

     880        949,502   

County of Charleston South Carolina Airport District, ARB, Series A, AMT, 5.50%, 7/01/41

     1,360        1,477,137   

South Carolina Jobs EDA, Refunding RB, Palmetto Health, Series A (AGM), 6.50%, 8/01/39

     100        114,110   

South Carolina Transportation Infrastructure Bank, RB, Series A, 5.25%, 10/01/40

     3,420        3,741,172   

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

     1,840        1,973,124   

State of South Carolina Public Service Authority, Santee Cooper, RB, Series E, 5.50%, 12/01/53

     635        703,383   
    

 

 

 
               14,515,176   

Texas — 15.0%

    

City of San Antonio Texas Public Service Board, RB, Junior Lien, 5.00%, 2/01/38

     500        544,680   

County of Midland Texas Fresh Water Supply District No. 1, RB, CAB, City of Midland Project, Series A, 0.00%, 9/15/36 (a)

     1,850        651,200   

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

     750        831,577   

Dallas-Fort Worth International Airport, ARB, Joint Improvement:

    

Series D, AMT, 5.00%, 11/01/38

     1,800        1,856,772   

Series D, AMT, 5.00%, 11/01/42

     1,140        1,175,226   

Series H, 5.00%, 11/01/32

     2,715        2,855,338   

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

     865        970,859   

Lone Star College System, GO, 5.00%, 8/15/33

     3,000        3,352,500   
Municipal Bonds    Par  
(000)
    Value  

Texas (concluded)

    

Mansfield Texas ISD, GO, School Building (PSF-GTD), 5.00%, 2/15/33

   $ 1,065      $ 1,180,968   

North Texas Tollway Authority, RB, Convertible CAB, Series C, 6.75%, 9/01/45 (c)

     10,000        8,448,200   

North Texas Tollway Authority, Refunding RB, 1st Tier System:

    

Series A, 6.00%, 1/01/28

     2,415        2,793,310   

Series A (NPFGC), 5.75%, 1/01/40

     3,600        3,984,984   

Series K-1 (AGC), 5.75%, 1/01/38

     3,400        3,856,722   

San Antonio Public Facilities Corp., Refunding RB, Convention Center Refinancing and Expansion Project:

    

4.00%, 9/15/42

     2,870        2,716,024   

CAB, 0.00%, 9/15/35 (a)

     1,150        410,297   

CAB, 0.00%, 9/15/36 (a)

     3,875        1,300,295   

CAB, 0.00%, 9/15/37 (a)

     17,775        5,613,167   

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

    

5.00%, 12/15/31

     1,030        1,062,713   

5.00%, 12/15/32

     2,500        2,572,200   

Texas Transportation Commission, Refunding RB, Central Texas Turnpike System, 1st Tier, Series A, 5.00%, 8/15/41

     450        462,263   
    

 

 

 
        46,639,295   

Vermont — 0.3%

    

Vermont HFA, Refunding RB, Multiple Purpose, Series C, AMT (AGM), 5.50%, 11/01/38

     960        976,829   

Washington — 2.0%

    

Central Puget Sound Regional Transit Authority, RB, Series A, 5.00%, 11/01/36

     1,400        1,531,880   

Washington Health Care Facilities Authority, RB:

    

MultiCare Health System, Remarketing, Series B, 5.00%, 8/15/44

     3,000        3,134,340   

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

     1,000        1,045,240   

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

     550        585,305   
    

 

 

 
               6,296,765   

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        1,316,965   
Total Municipal Bonds112.1%              348,443,138   
    
Municipal Bonds Transferred to
Tender Option Bond Trusts (d)
            

Arizona — 1.0%

                

City of Phoenix Arizona Civic Improvement Corp., Refunding RB, Water System, Junior Lien,
Series A, 5.00%, 7/01/34

     1,000        1,118,240   

Salt River Project Agricultural Improvement & Power District, RB, Electric System, Series A,
5.00%, 1/01/38

     1,750        1,911,507   
    

 

 

 
               3,029,747   

 

See Notes to Financial Statements.

 

                
   ANNUAL REPORT    APRIL 30, 2014    31


Table of Contents

Schedule of Investments (continued)

  

BlackRock MuniYield Quality Fund II, Inc. (MQT)

(Percentages shown are based on Net Assets)

 

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

California — 3.4%

    

County of San Diego California Water Authority, COP, Refunding, Series A (AGM), 5.00%, 5/01/33

   $ 3,030      $ 3,369,451   

Los Angeles Community College District California, GO, Election of 2001, Series A (NPFGC),
5.00%, 8/01/32

     4,330        4,799,328   

Los Angeles Community College District California, GO, Refunding, Election of 2008, Series A,
6.00%, 8/01/33

     1,699        2,018,412   

San Diego Community College District California, GO, Election of 2002, 5.25%, 8/01/33

     359        412,510   
    

 

 

 
               10,599,701   

Colorado — 1.3%

    

Colorado Health Facilities Authority, Refunding RB, Catholic Health Initiatives, Series A:

    

5.50%, 7/01/34 (e)

     780        884,290   

5.00%, 2/01/41

     2,999        3,139,870   
    

 

 

 
               4,024,160   

District of Columbia — 1.7%

    

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

     855        1,003,277   

District of Columbia Water & Sewer Authority, Refunding RB, Senior Lien, Series A,
6.00%, 10/01/35 (e)

     1,580        1,811,895   

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

     2,190        2,392,619   
    

 

 

 
               5,207,791   

Florida — 12.7%

    

City of Tallahassee Florida, RB, Energy System (NPFGC), 5.00%, 10/01/37

     4,000        4,287,560   

County of Highlands Florida Health Facilities Authority, RB, Adventist, Series C,
5.25%, 11/15/36

     4,000        4,304,960   

County of Miami-Dade Florida, Refunding RB, Transit System Sales Surtax, 5.00%, 7/01/42

     1,540        1,645,228   

County of Miami-Dade Florida Expressway Authority, Refunding RB, Series A (AGC), 5.00%, 7/01/35

     2,100        2,218,398   

County of Miami-Dade Florida Water & Sewer System, RB, (AGM), 5.00%, 10/01/39

     6,901        7,316,062   

County of Orange Florida School Board, COP, Series A:

    

(NPFGC), 5.00%, 8/01/31

     9,000        9,600,300   

(AGC), 5.50%, 8/01/34

     3,394        3,711,486   

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

     4,200        4,988,424   

State of Florida Board of Education, GO, Series D, 5.00%, 6/01/37 (e)

     1,189        1,316,753   
    

 

 

 
               39,389,171   

Illinois — 9.2%

    

City of Chicago Illinois, RB, Motor Fuel Tax Project, Series A (AGC), 5.00%, 1/01/38

     4,000        4,055,920   

City of Chicago Illinois, Refunding RB, Waterworks, 2nd Lien (AGM), 5.25%, 11/01/33

     2,548        2,692,183   

Metropolitan Pier & Exposition Authority, RB, McCormick Place Expansion Project, Series A, 5.00%, 6/15/42

     1,630        1,693,880   
Municipal Bonds Transferred to
Tender Option Bond Trusts (d)
   Par  
(000)
    Value  

Illinois (concluded)

    

Regional Transportation Authority, RB,
6.50%, 7/01/26

   $ 10,000      $ 13,169,481   

State of Illinois, RB, Build Illinois, Series B,
5.25%, 6/15/34 (e)

     1,130        1,252,123   

State of Illinois Toll Highway Authority, RB:

    

Senior Priority, Series B, 5.50%, 1/01/33

     3,499        3,889,923   

Series A, 5.00%, 1/01/38

     1,859        1,960,191   
    

 

 

 
               28,713,701   

Louisiana — 1.6%

    

State of Louisiana Gas & Fuels, RB, Series A (AGM), 5.00%, 5/01/36

     4,600        4,905,210   

Michigan — 1.6%

    

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

     4,700        4,963,811   

Nevada — 1.8%

    

City of Las Vegas Nevada, GO, Limited Tax, Performing Arts Center, 6.00%, 4/01/39 (e)

     3,298        3,800,168   

County of Clark Nevada Water Reclamation District, GO, Limited Tax, Series B, 5.75%, 7/01/34

     1,574        1,839,928   
    

 

 

 
               5,640,096   

New Jersey — 0.5%

    

New Jersey Transportation Trust Fund Authority, RB, Transportation System, Series B,
5.25%, 6/15/36 (e)

     1,580        1,714,933   

New York — 4.6%

    

City of New York New York Municipal Water Finance Authority, RB, Water & Sewer System,
Fiscal 2009, Series A, 5.75%, 6/15/40

     1,050        1,202,396   

City of New York New York Municipal Water Finance Authority, Refunding RB, Water & Sewer System, 2nd General Resolution, Fiscal 2013, Series C, 5.00%, 6/15/47

     4,920        5,273,760   

City of New York New York Water & Sewer System, RB, Series DD, 5.00%, 6/15/35

     1,470        1,640,623   

Port Authority of New York & New Jersey, Refunding RB, Construction, 143rd Series, AMT,
5.00%, 10/01/30

     3,500        3,621,590   

State of New York Dormitory Authority, ERB, Series B, 5.75%, 3/15/36

     1,000        1,163,630   

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

     1,200        1,355,496   
    

 

 

 
               14,257,495   

Ohio — 0.2%

    

State of Ohio, RB, Cleveland Clinic Health Obligated Group, Series B, 5.50%, 1/01/34

     500        546,540   

South Carolina — 0.4%

    

State of South Carolina Public Service Authority, Refunding RB, Santee Cooper, Series A,
5.50%, 1/01/38 (e)

     1,125        1,263,859   

Texas — 5.1%

    

Clear Creek ISD Texas, GO, Refunding, School Building (PSF-GTD), 5.00%, 2/15/33

     1,900        2,072,786   

County of Harris Texas Cultural Education Facilities Finance Corp., RB, Texas Children’s Hospital Project, 5.50%, 10/01/39

     4,000        4,562,680   

 

See Notes to Financial Statements.

 

                
32    ANNUAL REPORT    APRIL 30, 2014   


Table of Contents

Schedule of Investments (continued)

  

BlackRock MuniYield Quality Fund II, Inc. (MQT)

(Percentages shown are based on Net Assets)

 

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

Texas (concluded)

    

Cypress-Fairbanks ISD, GO, Refunding, Schoolhouse (PSF-GTD), 5.00%, 2/15/32

   $ 5,250      $ 5,800,252   

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

     1,996        2,066,292   

North East Texas ISD, GO, School Building, Series A (PSF-GTD), 5.00%, 8/01/37 (e)

     1,400        1,538,712   
    

 

 

 
               16,040,722   

Virginia — 0.1%

    

County of Fairfax Virginia IDA, Refunding RB, Health Care, Inova Health System, Series A, 5.50%, 5/15/35

     300        329,172   

Wisconsin — 1.8%

    

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

    

Series A, 5.00%, 4/01/42

     1,920        2,043,322   

Series C, 5.25%, 4/01/39 (e)

     3,250        3,456,110   
    

 

 

 
               5,499,432   

Total Municipal Bonds Transferred to

Tender Option Bond Trusts47.0%

             146,125,541   
Total Long-Term Investments
(Cost — $462,543,397) — 159.1%
        494,568,679   
Short-Term Securities    Shares     Value  

FFI Institutional Tax-Exempt Fund, 0.03% (f)(g)

     3,656,710      $ 3,656,710   
Total Short-Term Securities
(Cost — $3,656,710) — 1.2%
             3,656,710   
Total Investments (Cost — $466,200,107) — 160.3%        498,225,389   
Other Assets Less Liabilities1.4%        4,374,617   

Liability for TOB Trust Certificates, Including Interest
Expense and Fees Payable
(24.2%)

   

    (75,213,654
VMTP Shares, at Liquidation Value(37.5%)        (116,500,000
    

 

 

 
Net Assets Applicable to Common Shares100.0%      $ 310,886,352   
    

 

 

 

 

Notes to Schedule of Investments
(a)   Zero-coupon bond.

 

(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)   Represents 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 shown is as of report date.

 

(d)   Represent bonds transferred to a TOB. In exchange for which the Fund acquired residual interest certificates. These bonds serve as collateral in a financing transaction. See Note 3 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs.

 

(e)   All or a portion of security is subject to a recourse agreement, which may require the Fund to pay the liquidity provider in the event there is a shortfall between the TOB trust certificates and proceeds received from the sale of the security contributed to the TOB trust. In the case of a shortfall, the aggregate maximum potential amount the Fund could ultimately be required to pay under the agreements, which expire from February 1, 2016 to December 1, 2029 is $11,177,976.

 

(f)   Investments in issuers considered to be an affiliate of the Fund during the year ended April 30, 2014, for purposes of Section 2(a)(3) of the 1940 Act were as follows:

 

Affiliate      Shares Held
at April 30,
2013
       Net
Activity
       Shares Held
at April 30,
2014
       Income  

FFI Institutional Tax-Exempt Fund

       849,388           2,807,322           3,656,710         $ 1,269   

 

(g)   Represents the current yield as of report date.

 

Ÿ  

Financial futures contracts outstanding as of April 30, 2014 were as follows:

 

Contracts Sold     Issue   Exchange   Expiration   Notional
Value
    Unrealized
Depreciation
 
  (180   10-Year U.S Treasury Note   Chicago Board of Trade   June 2014   $ 22,395,938      $ (55,592

 

Ÿ  

Fair Value Measurements—Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes as follows:

 

  Ÿ  

Level 1 — unadjusted price quotations in active markets/exchanges for identical assets or liabilities that the Fund has the ability to access

 

  Ÿ  

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)

 

  Ÿ  

Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Fund’s own assumptions used in determining the fair value of investments and derivative financial instruments)

 

See Notes to Financial Statements.

 

                
   ANNUAL REPORT    APRIL 30, 2014    33


Table of Contents

Schedule of Investments (concluded)

  

BlackRock MuniYield Quality Fund II, Inc. (MQT)

 

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.

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value disclosure 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 investment and derivative financial instrument and is not necessarily an indication of the risks associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and derivative financial instruments, please refer to Note 2 of the Notes to Financial Statements.

The following tables summarize the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy as of April 30, 2014:

 

     Level 1        Level 2        Level 3        Total  

Assets:

                
Investments:                 

Long-Term Investments 1

            $ 494,568,679                   $ 494,568,679   

Short-Term Securities

  $ 3,656,710                               3,656,710   
 

 

 

      

 

 

      

 

 

      

 

 

 

Total

  $ 3,656,710         $ 494,568,679                   $ 498,225,389   
 

 

 

      

 

 

      

 

 

      

 

 

 

1   See above Schedule of Investments for values in each state or political subdivision.

      

     Level 1        Level 2        Level 3        Total  
Derivative Financial Instruments 2             

Liabilities:

                

Interest rate contracts

  $ (55,592                          $ (55,592

2   Derivative financial instruments are financial futures contracts, which are valued at the unrealized appreciation/depreciation on the instrument.

      

The carrying amount for certain of the Fund’s assets and/or liabilities approximates fair value for financial statement purposes. As of April 30, 2014, such assets and/or liabilities are categorized within the disclosure hierarchy as follows:

 

     Level 1        Level 2        Level 3        Total  

Assets:

                

Cash pledged for financial futures contracts

  $ 268,000                             $ 268,000   

Liabilities:

                

TOB trust certificates

            $ (75,188,723                  (75,188,723

VMTP Shares

              (116,500,000                  (116,500,000
 

 

 

      

 

 

      

 

 

      

 

 

 

Total

  $ 268,000         $ (191,688,723                $ (191,420,723
 

 

 

      

 

 

      

 

 

      

 

 

 

There were no transfers between levels during the year ended April 30, 2014.

 

See Notes to Financial Statements.

 

                
34    ANNUAL REPORT    APRIL 30, 2014   


Table of Contents
Statements of Assets and Liabilities     

 

April 30, 2014   BlackRock
MuniYield
Fund, Inc.
(MYD)
    BlackRock
MuniYield Quality
Fund, Inc.
(MQY)
    BlackRock
MuniYield Quality
Fund II, Inc.
(MQT)
 
     
Assets                        

Investments at value — unaffiliated1

  $ 1,088,615,964      $ 767,637,123      $ 494,568,679   

Investments at value — affiliated2

    4,902,847        5,091,221        3,656,710   

Cash pledged for financial futures contracts

    1,061,000        476,000        268,000   

Interest receivable

    16,754,013        10,058,008        6,421,171   

Investments sold receivable

    100,000        143,424        8,044,152   

Deferred offering costs

    431,100        298,685        46,543   

Prepaid expenses

    44,727        36,107        31,218   
 

 

 

 

Total assets

    1,111,909,651        783,740,568        513,036,473   
 

 

 

 
     
Accrued Liabilities                        

Investments purchased payable

                  8,462,700   

Income dividends payable — Common Shares

    3,754,275        2,454,151        1,590,340   

Investment advisory fees payable

    451,764        319,128        205,625   

Variation margin payable on financial futures contracts

    327,801        153,986        75,938   

Officer’s and Directors’ fees payable

    247,623        176,526        3,977   

Interest expense and fees payable

    38,358        46,775        24,931   

Other accrued expenses payable

    236,287        3,832        97,887   
 

 

 

 

Total accrued liabilities

    5,056,108        3,154,398        10,461,398   
 

 

 

 
     
Other Liabilities                        

TOB trust certificates

    169,240,920        121,320,613        75,188,723   

VRDP Shares, at liquidation value of $100,000 per share3,4

    251,400,000        176,600,000          

VMTP Shares, at liquidation value of $100,000 per share3,4

                  116,500,000   
 

 

 

 

Total other liabilities

    420,640,920        297,920,613        191,688,723   
 

 

 

 

Total liabilities

    425,697,028        301,075,011        202,150,121   
 

 

 

 

Net Assets Applicable to Common Shareholders

  $ 686,212,623      $ 482,665,557      $ 310,886,352   
 

 

 

 
     
Net Assets Applicable to Common Shareholders Consist of                        

Paid-in capital5

  $ 639,797,752      $ 430,068,416      $ 283,550,053   

Undistributed net investment income

    8,548,517        7,899,172        5,960,369   

Accumulated net realized loss

    (33,799,741     (6,900,660     (10,593,760

Net unrealized appreciation/depreciation

    71,666,095        51,598,629        31,969,690   
 

 

 

 

Net Assets Applicable to Common Shareholders

  $ 686,212,623      $ 482,665,557      $ 310,886,352   
 

 

 

 

Net asset value per Common Share

  $ 14.71      $ 15.73      $ 13.78   
 

 

 

 

1 Investments at cost — unaffiliated

  $ 1,016,708,915      $ 715,901,958      $ 462,543,397   

2 Investments at cost — affiliated

  $ 4,902,847      $ 5,091,221      $ 3,656,710   

3 VRDP/VMTP Shares outstanding, par value $0.10 per share

    2,514        1,766        1,165   

4 Preferred Shares authorized, including Auction Market Preferred Shares (“AMPS”)

    16,234        11,766        7,565   

5 Common Shares outstanding, 200 million shares authorized, $0.10 par value

    46,636,954        30,676,888        22,558,009   

 

See Notes to Financial Statements.      
                
   ANNUAL REPORT    APRIL 30, 2014    35


Table of Contents
Statements of Operations     

 

Year Ended April 30, 2014   BlackRock
MuniYield
Fund, Inc.
(MYD)
    BlackRock
MuniYield Quality
Fund, Inc.
(MQY)
    BlackRock
MuniYield Quality
Fund II, Inc.
(MQT)
 
     
Investment Income                        

Interest

  $ 53,768,916      $ 36,324,051      $ 23,500,027   

Income — affiliated

    3,073        1,825        1,269   
 

 

 

 

Total income

    53,771,989        36,325,876        23,501,296   
 

 

 

 
     
Expenses                        

Investment advisory

    5,433,398        3,828,891        2,475,076   

Liquidity fees

    1,621,118        1,641,289          

Remarketing fees on Preferred Shares

    242,723        179,054          

Professional

    128,091        114,356        84,215   

Accounting services

    131,347        101,624        71,762   

Officer and Directors

    78,850        55,956        32,370   

Transfer agent

    55,135        46,826        30,441   

Custodian

    43,760        34,081        28,092   

Registration

    16,708        10,750        9,356   

Printing

    12,054        10,712        9,931   

Miscellaneous

    111,183        96,657        80,169   
 

 

 

 

Total expenses excluding interest expense, fees and amortization of offering costs

    7,874,367        6,120,196        2,821,412   

Interest expense, fees and amortization of offering costs1

    1,904,226        1,191,843        1,845,257   
 

 

 

 

Total expenses

    9,778,593        7,312,039        4,666,669   

Less fees waived by Manager

    (2,536     (1,300     (955
 

 

 

 

Total expenses after fees waived

    9,776,057        7,310,739        4,665,714   
 

 

 

 

Net investment income

    43,995,932        29,015,137        18,835,582   
 

 

 

 
     
Realized and Unrealized Gain (Loss)                        

Net realized gain (loss) from:

     

Investments

    (11,461,183     (5,471,169     (3,495,452

Financial futures contracts

    66,452        546,914        352,446   
 

 

 

 
    (11,394,731     (4,924,255     (3,143,006
 

 

 

 

Net change in unrealized appreciation/depreciation on:

     

Investments

    (47,899,904     (28,066,330     (17,060,632

Financial futures contracts

    1,015,955        174,136        144,904   
 

 

 

 
    (46,883,949     (27,892,194     (16,915,728
 

 

 

 

Total realized and unrealized loss

    (58,278,680     (32,816,449     (20,058,734
 

 

 

 

Net Decrease in Net Assets Applicable to Common Shareholders Resulting from Operations

  $ (14,282,748   $ (3,801,312   $ (1,223,152
 

 

 

 

1 Related to TOBs, VRDP Shares and/or VMTP Shares.

     

 

 

See Notes to Financial Statements.      
                
36    ANNUAL REPORT    APRIL 30, 2014   


Table of Contents
Statements of Changes in Net Assets     

 

    BlackRock MuniYield
Fund, Inc. (MYD)
 
    Year Ended April 30,  
Increase (Decrease) in Net Assets Applicable to Common Shareholders:   2014     2013  
   
Operations                

Net investment income

  $ 43,995,932      $ 44,247,872   

Net realized gain (loss)

    (11,394,731     4,533,539   

Net change in unrealized appreciation/depreciation

    (46,883,949     36,319,313   
 

 

 

 

Net increase (decrease) in net assets applicable to Common Shareholders resulting from operations

    (14,282,748     85,100,724   
 

 

 

 
   
Dividends to Common Shareholders From1                

Net investment income

    (46,099,468     (47,224,460
 

 

 

 
   
Capital Share Transactions                

Reinvestment of common dividends

    1,019,486        4,409,201   
 

 

 

 
   
Net Assets Applicable to Common Shareholders                

Total increase (decrease) in net assets applicable to Common Shareholders

    (59,362,730     42,285,465   

Beginning of year

    745,575,353        703,289,888   
 

 

 

 

End of year

  $ 686,212,623      $ 745,575,353   
 

 

 

 

Undistributed net investment income, end of year

  $ 8,548,517      $ 10,706,509   
 

 

 

 

1 Determined in accordance with federal income tax regulations.

   

 

    BlackRock MuniYield Quality
Fund, Inc. (MQY)
 
    Year Ended April 30,  
Increase (Decrease) in Net Assets Applicable to Common Shareholders:   2014     2013  
   
Operations   

Net investment income

  $ 29,015,137      $ 28,525,982   

Net realized gain (loss)

    (4,924,255     65,452   

Net change in unrealized appreciation/depreciation

    (27,892,194     19,607,267   
 

 

 

 

Net increase (decrease) in net assets applicable to Common Shareholders resulting from operations

    (3,801,312     48,198,701   
 

 

 

 
   
Dividends and Distributions to Common Shareholders From1                
Net investment income     (29,447,646     (29,381,768

Net realized gain

    (497,242       
 

 

 

 

Decrease in net assets resulting from dividends and distributions to Common Shareholders

    (29,944,888     (29,381,768
 

 

 

 
   
Capital Share Transactions                

Reinvestment of common dividends and distributions

    417,081        1,917,950   
 

 

 

 
   
Net Assets Applicable to Common Shareholders                

Total increase (decrease) in net assets applicable to Common Shareholders

    (33,329,119     20,734,883   

Beginning of year

    515,994,676        495,259,793   
 

 

 

 

End of year

  $ 482,665,557      $ 515,994,676   
 

 

 

 

Undistributed net investment income, end of year

  $ 7,899,172      $ 8,241,052   
 

 

 

 

1 Determined in accordance with federal income tax regulations.

   

 

See Notes to Financial Statements.      
                
   ANNUAL REPORT    APRIL 30, 2014    37


Table of Contents
Statements of Changes in Net Assets     

 

 

    BlackRock MuniYield Quality
Fund II, Inc. (MQT)
 
    Year Ended April 30,  
Increase (Decrease) in Net Assets Applicable to Common Shareholders:   2014     2013  
   
Operations   

Net investment income

  $ 18,835,582      $ 18,402,461   

Net realized gain (loss)

    (3,143,006     246,588   

Net change in unrealized appreciation/depreciation

    (16,915,728     12,953,419   
 

 

 

 

Net increase (decrease) in net assets applicable to Common Shareholders resulting from operations

    (1,223,152     31,602,468   
 

 

 

 
   
Dividends to Common Shareholders From1                
Net investment income     (19,061,517     (18,785,329
 

 

 

 
   
Capital Share Transactions                

Reinvestment of common dividends

           1,075,952   
 

 

 

 
   
Net Assets Applicable to Common Shareholders                

Total increase (decrease) in net assets applicable to Common Shareholders

    (20,284,669     13,893,091   

Beginning of year

    331,171,021        317,277,930   
 

 

 

 

End of year

  $ 310,886,352      $ 331,171,021   
 

 

 

 

Undistributed net investment income, end of year

  $ 5,960,369      $ 6,138,360   
 

 

 

 

1 Determined in accordance with federal income tax regulations.

   

 

 

See Notes to Financial Statements.      
                
38    ANNUAL REPORT    APRIL 30, 2014   


Table of Contents
Statements of Cash Flows     

 

Year Ended April 30, 2014   BlackRock
MuniYield
Fund, Inc.
(MYD)
    BlackRock
MuniYield Quality
Fund, Inc.
(MQY)
    BlackRock
MuniYield Quality
Fund II, Inc.
(MQT)
 
     
Cash Provided by Operating Activities                        

Net decrease in net assets resulting from operations

  $ (14,282,748   $ (3,801,312   $ (1,223,152

Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities:

     

(Increase) decrease interest receivable

    341,657        (168,970     (90,904

Decrease in variation margin receivable on financial futures contracts

    58,313        20,156        13,125   

Increase in prepaid expenses

    (24,366     (22,199     (22,310

Increase in cash pledged for financial futures contracts

    (258,000     (192,000     (84,000

Decrease in investment advisory fees payable

    (40,028     (17,060     (10,997

Decrease in interest expense and fees payable

    (77,201     (27,616     (14,778

Increase (decrease) in other accrued expenses payable

    (92,970     1,479        9,348   

Increase in variation margin payable on financial futures contracts

    327,801        153,986        75,938   

Increase in Officer’s and Directors’ fees payable

    43,461        31,018        3,632   

Net realized loss on investments

    11,461,183        5,471,169        3,495,452   

Net unrealized loss on investments

    47,899,904        28,066,330        17,060,632   

Amortization of premium and accretion of discount on investments

    442,867        (1,358,560     (846,435

Proceeds from sales of long-term investments

    230,722,044        111,649,754        83,120,554   

Purchases of long-term investments

    (197,769,460     (97,914,779     (72,643,289

Net proceeds from sales (purchases) of short-term securities

    1,362,394        (4,289,064     (2,807,322
 

 

 

 

Cash provided by operating activities

    80,114,851        37,602,332        26,035,494   
 

 

 

 
     
Cash Used for Financing Activities                        

Proceeds from TOB trust certificates

    29,160,223        7,998,496        5,416,684   

Repayments of TOB trust certificates

    (67,862,680     (16,108,551     (12,484,522

Cash dividends paid to Common Shareholders

    (45,214,083     (29,525,726     (19,038,959

Increase in amortization of deferred offering costs

    11,270        33,449        71,303   
 

 

 

 

Cash used for financing activities

    (83,905,270     (37,602,332     (26,035,494
 

 

 

 
     
Cash                        

Net increase (decrease) in cash

    (3,790,419              

Cash at beginning of year

    3,790,419                 
 

 

 

 

Cash at end of year

                    
 

 

 

 
     
Supplemental Disclosure of Cash Flow Information                        

Cash paid during the year for interest

  $ 1,970,157      $ 1,186,010      $ 1,788,732   
 

 

 

 
     
Non-cash Financing Activities                        

Capital shares issued in reinvestment of dividends paid to Common Shareholders

  $ 1,019,486      $ 417,081          
 

 

 

 

 

See Notes to Financial Statements.      
                
   ANNUAL REPORT    APRIL 30, 2014    39


Table of Contents
Financial Highlights    BlackRock MuniYield Fund, Inc. (MYD)

 

    Year Ended April 30,  
    2014     2013     2012     2011     2010  
         
Per Share Operating Performance                                        

Net asset value, beginning of year

  $ 16.01      $ 15.19      $ 13.05      $ 13.87      $ 11.53   
 

 

 

 

Net investment income1

    0.94        0.95        0.99        1.04        1.04   

Net realized and unrealized gain (loss)

    (1.25     0.89        2.15        (0.85     2.17   

Dividends to AMPS Shareholders from net investment income

                  (0.01     (0.03     (0.03
 

 

 

 

Net increase (decrease) from investment operations

    (0.31     1.84        3.13        0.16        3.18   
 

 

 

 

Dividends to Common Shareholders from net investment income2

    (0.99     (1.02     (0.99     (0.98     (0.84
 

 

 

 

Net asset value, end of year

  $ 14.71      $ 16.01      $ 15.19      $ 13.05      $ 13.87   
 

 

 

 

Market price, end of year

  $ 14.14      $ 16.24      $ 15.49      $ 13.17      $ 13.70   
 

 

 

 
         
Total Investment Return Applicable to Common Shareholders3                                        

Based on net asset value

    (1.21)%        12.32%        24.76%        1.07%        28.44%   
 

 

 

 

Based on market price

    (6.38)%        11.73%        26.06%        3.27%        27.75%   
 

 

 

 
         
Ratios to Average Net Assets Applicable to Common Shareholders                                        

Total expenses

    1.49%        1.52%        1.53% 4      1.15% 4      1.14% 4 
 

 

 

 

Total expenses after fees waived and paid indirectly

    1.49%        1.52%        1.53% 4      1.15% 4      1.14% 4 
 

 

 

 

Total expenses after fees waived and paid indirectly and excluding interest expense,
fees and amortization of offering costs5

    1.20% 6      1.17% 6      1.20% 4,6      0.99% 4      1.01% 4 
 

 

 

 

Net investment income

    6.70%        6.02%        6.95% 4      7.64% 4      8.08% 4 
 

 

 

 

Dividends to AMPS Shareholders

                  0.04%        0.23%        0.27%   
 

 

 

 

Net investment income to Common Shareholders

    6.70%        6.02%        6.91%        7.41%        7.81%   
 

 

 

 
         
Supplemental Data                           

Net assets applicable to Common Shareholders, end of year (000)

  $  686,213      $  745,575      $  703,290      $  598,976      $  630,608   
 

 

 

 

AMPS outstanding at $25,000 liquidation preference, end of year (000)

                       $ 251,450      $ 251,450   
 

 

 

 

VRDP Shares outstanding at $100,000 liquidation value, end of year (000)

  $ 251,400      $ 251,400      $ 251,400                 
 

 

 

 

Portfolio turnover

    17%        16%        19%        16%        35%   
 

 

 

 

Asset coverage per AMPS at $25,000 liquidation preference, end of year

                       $ 84,556      $ 87,701   
 

 

 

 

Asset coverage per VRDP Shares at $100,000 liquidation value, end of year

  $ 372,956      $ 396,569      $ 379,749                 
 

 

 

 

 

1   

Based on average Common Shares outstanding.

 

2   

Determined in accordance with federal income tax regulations.

 

3   

Total investment 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 dividends and distributions.

 

4   

Does not reflect the effect of dividends to AMPS Shareholders.

 

5   

Interest expense, fees and amortization of offering costs relate to TOBs and/or VRDP Shares. See Note 3 and Note 9 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs and VRDP Shares, respectively.

 

6   

For the years ended April 30, 2014, April 30, 2013 and April 30, 2012, the total expense ratio after fees waived and paid indirectly and excluding interest expense, fees, amortization of offering costs, liquidity and remarketing fees was 0.92%, 0.90% and 0.92%, respectively.

 

 

See Notes to Financial Statements.      
                
40    ANNUAL REPORT    APRIL 30, 2014   


Table of Contents
Financial Highlights    BlackRock MuniYield Quality Fund, Inc. (MQY)

 

    Year Ended April 30,  
    2014     2013     2012     2011     2010  
         
Per Share Operating Performance                           

Net asset value, beginning of year

  $ 16.83      $ 16.22      $ 13.72      $ 14.63      $ 13.27   
 

 

 

 

Net investment income1

    0.95        0.93        0.95        0.99        0.99   

Net realized and unrealized gain (loss)

    (1.07     0.64        2.49        (0.94     1.23   

Dividends to AMPS Shareholders from net investment income

                  (0.01     (0.04     (0.04
 

 

 

 

Net increase (decrease) from investment operations

    (0.12     1.57        3.43        0.01        2.18   
 

 

 

 

Dividends and distributions to Common Shareholders from: 2

         

Net investment income

    (0.96     (0.96     (0.93     (0.92     (0.82

Net realized gain

    (0.02                            
 

 

 

 

Total dividends and distributions to Common Shareholders

    (0.98     (0.96     (0.93     (0.92     (0.82
 

 

 

 

Net asset value, end of year

  $ 15.73      $ 16.83      $ 16.22      $ 13.72      $ 14.63   
 

 

 

 

Market price, end of year

  $ 14.84      $ 16.94      $ 16.05      $ 13.15      $ 14.48   
 

 

 

 
         
Total Investment Return Applicable to Common Shareholders3                            

Based on net asset value

    0.04%        9.86%        25.78%        0.10%        17.12%   
 

 

 

 

Based on market price

    (6.23)%        11.75%        29.85%        (3.06)%        24.86%   
 

 

 

 
         
Ratios to Average Net Assets Applicable to Common Shareholders                           

Total expenses

    1.58%        1.53%        1.46% 4      1.21% 4      1.20% 4 
 

 

 

 

Total expenses after fees waived and paid indirectly

    1.58%        1.53%        1.46% 4      1.21% 4      1.20% 4 
 

 

 

 

Total expenses after fees waived and paid indirectly and excluding interest expense,
fees and amortization of offering costs5

    1.32% 6      1.23% 6      1.19% 4,6      1.02% 4      1.02% 4 
 

 

 

 

Net investment income

    6.28%        5.57%        6.29% 4      6.97% 4      6.98% 4 
 

 

 

 

Dividends to AMPS Shareholders

                  0.08%        0.25%        0.28%   
 

 

 

 

Net investment income to Common Shareholders

    6.28%        5.57%        6.21%        6.72%        6.70%   
 

 

 

 
         
Supplemental Data                           

Net assets applicable to Common Shareholders, end of year (000)

  $  482,666      $  515,995      $  495,260      $  418,346      $  445,160   
 

 

 

 

AMPS outstanding at $25,000 liquidation preference, end of year (000)

                       $ 176,625      $ 176,625   
 

 

 

 

VRDP Shares outstanding at $100,000 liquidation value, end of year (000)

  $ 176,600      $ 176,600      $ 176,600                 
 

 

 

 

Portfolio turnover

    12%        15%        25%        12%        19%   
 

 

 

 

Asset coverage per AMPS at $25,000 liquidation preference, end of year

                       $ 84,217      $ 88,013   
 

 

 

 

Asset coverage per VRDP Shares at $100,000 liquidation value, end of year

  $ 373,310      $ 392,183      $ 380,442                 
 

 

 

 

 

1   

Based on average Common Shares outstanding.

 

2   

Determined in accordance with federal income tax regulations.

 

3   

Total investment 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 dividends and distributions.

 

4   

Does not reflect the effect of dividends to AMPS Shareholders.

 

5   

Interest expense, fees and amortization of offering costs relate to TOBs and/or VRDP Shares. See Note 3 and Note 9 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs and VRDP Shares, respectively.

 

6   

For the years ended April 30, 2014, April 30, 2013 and April 30, 2012, the total expense ratio after fees waived and paid indirectly and excluding interest expense, fees, amortization of offering costs, liquidity and remarketing fees was 0.93%, 0.90% and 0.95%, respectively.

 

See Notes to Financial Statements.      
                
   ANNUAL REPORT    APRIL 30, 2014    41


Table of Contents
Financial Highlights    BlackRock MuniYield Quality Fund II, Inc. (MQT)

 

    Year Ended April 30,  
    2014     2013     2012     2011     2010  
         
Per Share Operating Performance                           

Net asset value, beginning of year

  $ 14.68      $ 14.11      $ 11.85      $ 12.71      $ 11.55   
 

 

 

 

Net investment income1

    0.83        0.82        0.85        0.86        0.88   

Net realized and unrealized gain (loss)

    (0.88     0.58        2.24        (0.89     1.04   
Dividends and distributions to AMPS Shareholders from:          

Net investment income

                  (0.01     (0.02     (0.03

Net realized gain

                  (0.00 )2               
 

 

 

 

Net increase (decrease) from investment operations

    (0.05     1.40        3.08        (0.05     1.89   
 

 

 

 

Dividends to Common Shareholders from net investment income3

    (0.85     (0.83     (0.82     (0.81     (0.73
 

 

 

 

Net asset value, end of year

  $ 13.78      $ 14.68      $ 14.11      $ 11.85      $ 12.71   
 

 

 

 

Market price, end of year

  $ 12.91      $ 14.41      $ 13.93      $ 11.59      $ 12.52   
 

 

 

 
         
Total Investment Return Applicable to Common Shareholders4                            

Based on net asset value

    0.55%        10.17%        26.85%        (0.36)%        17.15%   
 

 

 

 

Based on market price

    (4.04)%        9.55%        28.04%        (1.07)%        31.18%   
 

 

 

 
         
Ratios to Average Net Assets Applicable to Common Shareholders                           

Total expenses

    1.56%        1.49%        1.31% 5      1.21% 5      1.21% 5 
 

 

 

 

Total expenses after fees waived and paid indirectly

    1.56%        1.49%        1.31% 5      1.20% 5      1.21% 5 
 

 

 

 

Total expenses after fees waived and paid indirectly and excluding interest expense,
fees and amortization of offering costs6

    0.95%        0.90%        0.99% 5, 7      1.03% 5      1.04% 5 
 

 

 

 

Net investment income

    6.32%        5.62%        6.46% 5      7.00% 5      7.13% 5 
 

 

 

 

Dividends to AMPS Shareholders

                  0.08%        0.20%        0.23%   
 

 

 

 

Net investment income to Common Shareholders

    6.32%        5.62%        6.38%        6.80%        6.90%   
 

 

 

 
         
Supplemental Data                           

Net assets applicable to Common Shareholders, end of year (000)

  $  310,886      $  331,171      $  317,278      $  265,918      $  284,395   
 

 

 

 

AMPS outstanding at $25,000 liquidation preference, end of year (000)

                       $ 116,575      $ 116,575   
 

 

 

 

VMTP Shares outstanding at $100,000 liquidation value, end of year (000)

  $ 116,500      $ 116,500      $ 116,500                 
 

 

 

 

Portfolio turnover

    16%        15%        20%        10%        25%   
 

 

 

 

Asset coverage per AMPS at $25,000 liquidation preference, end of year

                       $ 82,031      $ 85,994   
 

 

 

 

Asset coverage per VMTP Shares at $100,000 liquidation value, end of year

  $ 366,855      $ 384,267      $ 372,342                 
 

 

 

 

 

1   

Based on average Common Shares outstanding.

 

2   

Amount is greater than $(0.005) per share.

 

3   

Determined in accordance with federal income tax regulations.

 

4   

Total investment 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 dividends and distributions.

 

5   

Does not reflect the effect of dividends to AMPS Shareholders.

 

6   

Interest expense, fees and amortization of offering costs relate to TOBs and VMTP Shares. See Note 3 and Note 9 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs and VMTP Shares, respectively.

 

7   

For the year ended April 30, 2012, the total expense ratio after fees waived and paid indirectly and excluding interest expense, fees, amortization of offering costs, liquidity and remarketing fees was 0.95%.

 

 

See Notes to Financial Statements.      
                
42    ANNUAL REPORT    APRIL 30, 2014   


Table of Contents
Notes to Financial Statements     

 

1. Organization:

BlackRock MuniYield Fund, Inc. (“MYD”), BlackRock MuniYield Quality Fund, Inc. (“MQY”) and BlackRock MuniYield Quality Fund II, Inc. (“MQT”) (each, a “Fund”, and collectively the “Funds”) are registered under the 1940 Act, as non-diversified, closed-end management investment companies. The Funds are organized as Maryland corporations. 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.

2. Significant Accounting Policies:

The Funds’ 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 and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies followed by the Funds:

Valuation: 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 at market value using independent dealers or pricing services under policies approved by 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 provide oversight of the pricing function for the Fund for all financial instruments.

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. Financial futures contracts traded on exchanges are valued at their last sale price. Short-term securities with remaining maturities of 60 days or less may be valued at amortized cost, which approximates fair value. Investments in open-end registered investment companies are valued at NAV each business day. Short-term securities with remaining maturities of 60 days or less may be valued at amortized cost, which approximates fair value.

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 Value Assets”). When determining the price for Fair Value Assets, the Global Valuation Committee, or its delegate, seeks to determine the price that each Fund might reasonably expect to receive from the current sale of that asset 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 consistent with the principles of fair value measurement. The pricing of all Fair Value Assets is subsequently reported to the Board or a committee thereof on a quarterly basis.

Segregation and Collateralization: In cases where a Fund enters into certain investments that would be “senior securities” for 1940 Act purposes (e.g., financial futures contracts) or certain borrowings (e.g., TOBs) the Fund may segregate or designate on its books and records cash or liquid securities having a market value at least equal to the amount of the Fund’s 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 Fund 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.

Investment Transactions and Investment Income: 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 the accrual basis.

Dividends and Distributions: Dividends from net investment income are declared and paid monthly. Distributions of capital gains are recorded on the ex-dividend date. The character and timing of dividends and distributions are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP. Dividends and distributions to Preferred Shareholders are accrued and determined as described in Note 9.

Income Taxes: 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 federal income tax provision is required.

Each Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Funds’ U.S. federal tax returns remains open for each of

 

                
   ANNUAL REPORT    APRIL 30, 2014    43


Table of Contents
Notes to Financial Statements (continued)     

 

the four years ended April 30, 2014. 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 facts and circumstances and does not believe there are any uncertain tax positions that require recognition of a tax liability.

Deferred Compensation Plan: Under the Deferred Compensation (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. Deferred compensation liabilities are included in officers and directors fees payable in the Statements of Assets and Liabilities and will remain as a liability of the Fund until such amounts are distributed in accordance with the Plan.

Other: Expenses directly related to a Fund are charged to that Fund. Other operating expenses shared by several funds are pro-rated among those funds on the basis of relative net assets or other appropriate methods.

The Funds have an arrangement with the custodians whereby fees may be reduced by credits earned on uninvested cash balances, which, if applicable, are shown as fees paid indirectly in the Statements of Operations. The custodians impose fees on overdrawn cash balances, which can be offset by accumulated credits earned or may result in additional custody charges.

3. Securities and Other Investments:

Zero-Coupon Bonds: The Funds may invest in zero-coupon bonds, which are normally issued at a significant discount from face value and do not provide for periodic interest payments. Zero-coupon bonds may experience greater volatility in market value than similar maturity debt obligations which provide for regular interest payments.

Forward Commitments and When-Issued Delayed Delivery Securities: The 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. The Funds 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, the Funds may be required to pay more at settlement than the security is worth. In addition, the Funds are not entitled to any of the interest earned prior to settlement. When purchasing a security on a delayed delivery basis, the Funds assume 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, the Funds’ maximum amount of loss is the unrealized appreciation of unsettled when-issued transactions, which is shown in the Schedules of Investments.

Municipal Bonds Transferred to TOBs: The Funds leverage their assets through the use of TOBs. A TOB is a special purpose entity established by a third party sponsor, into which a fund, or an agent on behalf of the funds, transfers municipal bonds into a trust (“TOB Trust”). Other funds managed by the investment advisor may also contribute municipal bonds to a TOB into which a Fund has contributed bonds. A TOB typically issues two classes of beneficial interests: short-term floating rate certificates (“TOB Trust Certificates”), which are sold to third party investors, and residual certificates (“TOB Residuals”), which are generally issued to the participating funds that contributed the municipal bonds to the TOB Trust. If multiple funds participate in the same TOB, the rights and obligations under the TOB Residual will be shared among the funds ratably in proportion to their participation

The TOB Residuals held by a Fund include the right of a Fund (1) to cause the holders of a proportional share of the TOB Trust Certificates to tender their certificates at par plus accrued interest upon the occurrence of certain mandatory tender events defined in the TOB agreements, and (2) to transfer, subject to a specified number of days’ prior notice, a corresponding share of the municipal bonds from the TOB to a Fund. The TOB may also be collapsed without the consent of a Fund, as the TOB Residual holder, upon the occurrence of certain termination events as defined in the TOB agreements. Such termination events may include the bankruptcy or default of the municipal bond, a substantial downgrade in credit quality of the municipal bond, the inability of the TOB to obtain renewal of the liquidity support agreement, a substantial decline in market value of the municipal bond and a judgment or ruling that interest on the municipal bond is subject to federal income taxation. Upon the occurrence of a termination event, the TOB would generally be liquidated in full with the proceeds typically applied first to any accrued fees owed to the trustee, remarketing agent and liquidity provider, and then to the holders of the TOB Trust Certificates up to par plus accrued interest owed on the TOB Trust Certificates, with the balance paid out to the TOB Residual holder. During the year ended April 30, 2014, no TOBs in which the Funds participated were terminated without the consent of the Funds.

The cash received by the TOB from the sale of TOB Trust certificates, less transaction expenses, is paid to a Fund. The Fund typically invests the cash received in additional municipal bonds. Each Fund’s transfer of the

 

                
44    ANNUAL REPORT    APRIL 30, 2014   


Table of Contents
Notes to Financial Statements (continued)     

 

municipal bonds to a TOB Trust is accounted for as a secured borrowing: therefore the municipal bonds deposited into a TOB are presented in the Funds’ Schedules of Investments and TOB Trust Certificates issued are shown in other liabilities in the Statements of Assets and Liabilities. The carrying amount of each Fund’s payable to the holder of the TOB Trust Certificates, as reported in Statements of Assets and Liabilities as TOB Trust Certificates approximates its fair value.

The Funds may invest in TOBs on either a non-recourse or recourse basis. TOB Trusts are typically supported by a liquidity facility provided by a 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 from the Liquidity Provider of par plus accrued interest on any business day prior to the occurrence of the termination events described above. When a Fund invests in TOBs on a non-recourse basis, and the Liquidity Provider is required to make a payment under the liquidity facility due to a termination event, the Liquidity Provider will typically liquidate all or a portion of the municipal securities held in the TOB Trust and then fund, on a net basis, the balance, if any, of the amount owed under the liquidity facility over the liquidation proceeds (the “Liquidation Shortfall”). If a Fund invests in a TOB on a recourse basis, the Fund will typically enter into a reimbursement agreement with the Liquidity Provider where the Fund is required to repay the Liquidity Provider the amount of any Liquidation Shortfall. As a result, a Fund investing in a recourse TOB will bear the risk of loss with respect to any Liquidation Shortfall. If multiple funds participate in any such TOB, these losses will be shared ratably, including the maximum potential amounts owed by the Funds at April 30, 2014, in proportion to their participation. The recourse TOB Trusts are identified in the Schedules of Investments, including the maximum potential amounts owed by the Funds at April 30, 2014.

Interest income, including amortization and accretion of premiums and discounts, from the underlying municipal bonds is recorded by the Funds on an accrual basis. Interest expense incurred on the secured borrowing and other expenses related to remarketing, administration and trustee services to a TOB are shown as interest expense, fees and amortization of offering costs in the Statements of Operations. The TOB Trust Certificates have interest rates that generally reset weekly and their holders have the option to tender such certificates to the TOB for redemption at par at each reset date. At April 30, 2014, the aggregate value of the underlying municipal bonds transferred to TOBs, the related liability for TOB Trust Certificates and the range of interest rates on the liability for TOB Trust Certificates were as follows:

 

     Underlying
Municipal Bonds
Transferred to TOBs
    Liability
for TOB Trust
Certificates
   

Range of

Interest Rates

 

MYD

  $ 309,156,158      $ 169,240,920        0.09% - 0.32%   

MQY

  $ 241,831,810      $ 121,320,613        0.09% - 0.38%   

MQT

  $ 146,125,541      $ 75,188,723        0.09% -0.38%   

For the year ended April 30, 2014, the Funds’ average TOB trust certificates outstanding and the daily weighted average interest rate, including fees, were as follows:

 

     Average TOB Trust
Certificates
Outstanding
   

Daily Weighted

Average

Interest Rate

 

MYD

  $ 178,844,220        0.63

MQY

  $ 126,770,233        0.67

MQT

  $ 80,288,497        0.65

Should short-term interest rates rise, the Funds’ investments in TOBs 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’ NAV per share.

4. 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 economically hedge their exposure to certain risks such as interest rate risk. These contracts may be transacted on an exchange.

Financial Futures Contracts: The Funds purchase and/or sell financial futures contracts and options on financial futures contracts to gain exposure to, or economically hedge against, changes in interest rates (interest rate risk). Financial 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 at a specified date. Depending on the terms of the particular contract, financial futures contracts are settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount on the settlement date.

Upon entering into a financial futures contract, the Funds are required to deposit initial margin with the broker in the form of cash or securities in an amount that varies depending on a contract’s size and risk profile. The initial margin deposit must then be maintained at an established level over the life of the contract. Securities deposited as initial margin are designated on the Schedules of Investments and cash deposited, if any, is recorded on the Statements of Assets and Liabilities as cash pledged for financial futures contracts. 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 value of the contract. Such receipts or payments are known as variation margin. Variation margin is recorded by the Funds as unrealized appreciation or depreciation, and, if applicable as a receivable or payable for variation margin in the Statements of Assets and Liabilities.

When the contract is closed, the Funds record a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The use of financial futures contracts involves the risk of an imperfect correlation in the movements in the price of financial futures contracts, interest rates and the underlying assets.

 

                
   ANNUAL REPORT    APRIL 30, 2014    45


Table of Contents
Notes to Financial Statements (continued)     

 

The following is a summary of the Funds’ derivative financial instruments categorized by risk exposure:

 

Fair Values of Derivative Financial Instruments as of April 30, 2014  
Derivative Liabilities  
          MYD      MQY      MQT  
     

Statements of Assets

and Liabilities Location

   Value  
Interest rate contracts:            

Financial futures contracts

   Net unrealized depreciation1    $ (240,954    $ (136,536    $ (55,592

 

  1   

Includes cumulative appreciation/depreciation on financial futures contracts as reported in the Schedules of Investments. Only current day’s variation margin is reported within the Statements of Assets and Liabilities.

 

The Effect of Derivative Financial Instruments in the Statements of Operations

Year Ended April 30, 2014

 
     Net Realized Gain from  
     MYD      MQY     MQT  
Interest rate contracts:        

Financial futures contracts

   $ 66,452       $ 546,914      $ 352,446   
     Net Change in Unrealized Appreciation/Depreciation on    
      MYD      MQY     MQT  
Interest rate contracts:        

Financial futures contracts

   $ 1,015,955       $ 174,136      $ 144,904   
       
For the year ended April 30, 2014, the average quarterly balances of outstanding derivative financial instruments were as follows:   
       
      MYD      MQY     MQT  
Financial futures contracts:        

Average number of contracts sold . . . . . .

     395         131        73   

Average notional value of contracts sold. . . . . .

   $ 49,460,684       $ 16,415,684      $ 9,079,238   

 

Counterparty Credit Risk: 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) of the clearing broker or clearinghouse. 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.

5. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. is the largest stockholder and an affiliate, for 1940 Act purposes, of BlackRock, Inc. (“BlackRock”).

Each Fund entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the “Manager”), the Funds’ investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services. The Manager is responsible for the management of each Fund’s portfolio and provides the necessary 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 0.50% of each Fund’s average daily net assets.

Average daily net assets are the average daily value of each Fund’s total assets minus its total accrued liabilities.

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. However, the Manager does not waive its investment advisory fees by the amount of investment advisory fees paid in connection with each

 

                
46    ANNUAL REPORT    APRIL 30, 2014   


Table of Contents
Notes to Financial Statements (continued)     

 

Fund’s investment in other affiliated investment companies, if any. These amounts are shown as fees waived by Manager in the Statements of Operations.

The Manager entered into a sub-advisory agreement with BlackRock Investment Management, LLC (“BIM”), an affiliate of the Manager. The Manager pays BIM, for services it provides, a monthly fee that is a percentage of the investments advisory fees paid by each Fund to the Manager.

Certain officers and/or Directors of the Funds are officers and/or directors 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 Officer and Directors in the Statement of Operations.

6. Purchases and sales:

Purchases and sales of investments, excluding short-term securities, for the year ended April 30, 2014, were as follows:

 

     Purchases     Sales  

MYD

  $ 186,654,612      $ 230,712,044   

MQY

  $ 93,302,113      $ 108,669,611   

MQT

  $ 79,030,188      $ 89,962,990   

7. Income Tax Information:

U.S. GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or net asset values per share. The following permanent differences as of April 30, 2014, attributable to amortization and accretion methods on fixed income securities, non-deductible expenses, the reclassification of distributions and the sale of bonds received from tender option bond trusts were reclassified to the following accounts:

 

     MYD     MQY     MQT  

Paid-in capital

  $ (15,784   $ (53,480   $ (73,394

Undistributed net investment income

  $ (54,456   $ 90,629      $ 47,944   

Accumulated net realized loss

  $ 70,240      $ (37,149   $ 25,450   

The tax character of distributions paid during the fiscal years ended April 30, 2014 and April 30, 2013 was as follows:

 

            MYD     MQY     MQT  

Tax-exempt income1

    04/30/14      $ 46,773,165      $ 29,739,832      $ 20,307,588   
    04/30/13        47,468,124        29,903,106        20,128,731   

Ordinary income2

    04/30/14        86,632               64   
    04/30/13        701,541        12,259          

Long-term capital gains3

    04/30/14               503,631          
 

 

 

   

 

 

 
Total     04/30/14      $ 46,859,797      $ 30,243,463      $ 20,307,652   
 

 

 

   

 

 

 
    04/30/13      $ 48,169,665      $ 29,915,365      $ 20,128,731   
 

 

 

   

 

 

 

 

  1  

The Funds designate these amounts paid during the fiscal year ended April 30, 2014, as exempt-interest dividends.

 

  2   

Ordinary incomes consist primarily of taxable income recognized from market discount. Additionally, all ordinary income distributions are comprised of interest related dividends for non-U.S. residents and are eligible for exemption from U.S. withholding tax for nonresident aliens and foreign corporations.

 

  3   

The Funds designate these amounts paid during the fiscal year ended April 30, 2014 as capital gain dividends.

As of April 30, 2014 the tax components of accumulated net earnings were as follows:

 

     MYD     MQY     MQT  

Undistributed tax-exempt income

  $ 7,582,957      $ 6,987,892      $ 4,660,958   

Undistributed ordinary income

    69,908        136          

Capital loss carryforwards

    (23,755,843     (4,521,614     (7,103,904

Net unrealized gains4

    70,223,608        50,249,706        29,839,178   

Qualified late-year losses5

    (7,705,759     (118,979     (59,933
 

 

 

 
Total   $ 46,414,871      $ 52,597,141      $ 27,336,299   
 

 

 

 

 

  4   

The differences between book-basis and tax-basis net unrealized gains were attributable primarily to the tax deferral of losses on wash sales and straddles, amortization and accretion methods of premiums and discounts on fixed income securities, the realization for tax purposes of unrealized losses on certain futures contracts, the deferral of compensation to directors and the treatment of residual interests in tender option bond trusts.

 

  5   

The Funds have elected to defer certain qualified late-year losses and recognize such losses in the year ending April 30, 2015.

As of April 30, 2014, the Funds had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates as follows:

 

Expires April 30,   MYD     MQY     MQT  

2016.

  $ 11,743,926                 

2017

    4,065,755             $ 2,624,082   

2018

    1,196,450               66,689   

2019

    479,687               1,774,764   

No expiration date6

    6,270,025      $ 4,521,614        2,638,369   
 

 

 

   

 

 

   

 

 

 

Total

  $ 23,755,843      $ 4,521,614      $ 7,103,904   
 

 

 

   

 

 

   

 

 

 

 

  6   

Must be utilized prior to losses subject to expiration.

As of April 30, 2014 gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:

 

     MYD     MQY     MQT  

Tax cost

  $ 853,472,490      $ 600,986,089      $ 393,197,487   
 

 

 

 

Gross unrealized appreciation

  $ 79,263,045      $ 54,631,601      $ 33,728,327   

Gross unrealized depreciation

    (8,457,644     (4,209,959     (3,889,148
 

 

 

   

 

 

   

 

 

 

Net unrealized appreciation

  $ 70,805,401      $ 50,421,642      $ 29,839,179   
 

 

 

   

 

 

   

 

 

 

 

                
   ANNUAL REPORT    APRIL 30, 2014    47


Table of Contents
Notes to Financial Statements (continued)     

 

8. Concentration, Market and Credit Risk:

Each Fund invests a substantial amount of its assets in issuers located in a single state or limited number of states. Please see the Schedules of Investments for concentrations in specific states or U.S. territories.

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.

In the normal course of business, the Funds invest in securities and enter into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (issuer credit risk). The value of securities held by the Funds may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Funds; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to issuer credit risk, the Funds may be exposed to counterparty credit risk, or the risk that an entity with which the Funds have unsettled or open transactions may fail to or be unable to perform on its commitments. The Funds manage counterparty credit risk by entering into transactions only with counterparties that they believe have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Funds’ exposure to market, issuer and counterparty credit risks with respect to these financial assets is generally approximated by their value recorded in the Statements of Assets and Liabilities, less any collateral held by the Funds.

The Funds invest a significant portion of their assets in fixed-income securities and/or use derivatives tied to the fixed income markets. See the Schedules of Investments for these securities and/or derivatives. Changes in market interest rates or economic conditions, including the Federal Reserve’s decision in December 2013 to taper its quantitative easing policy, 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.

As of April 30, 2014, MYD invested a significant portion of its assets in securities in the health and transportation sectors. MQY and MQT invested a significant portion of their assets in the county/city/special district/school district and transportation sectors. Changes in economic conditions affecting the health, transportation and county/city/special district/school district sectors would have a greater impact on the Funds and could affect the value, income and/or liquidity of positions in such securities.

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.

On December 10, 2013, regulators published final rules implementing section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Volcker Rule”), which prohibit banking entities from engaging in proprietary trading of certain instruments and limit such entities’ investments in, and relationships with, “covered funds”, as defined in the rules. Banking entities subject to the Volcker Rule are required to fully comply by July 21, 2015. The Volcker Rule may preclude banking entities and their affiliates from (i) sponsoring TOB trust programs (as such programs are presently structured) and (ii) continuing relationships with or services for existing TOB trust programs. As a result, TOB trusts may need to be restructured or unwound. There can be no assurances that TOB trusts can be restructured, that new sponsors of TOB trusts will develop, or that alternative forms of leverage will be available to the Funds. Any alternative forms of leverage may be more or less advantageous to the Funds than existing TOB leverage.

TOB transactions constitute an important component of the municipal bond market. Accordingly, implementation of the Volcker Rule may adversely impact the municipal market, including through reduced demand for and liquidity of municipal bonds and increased financing costs for municipal issuers. Any such developments could adversely affect the Funds. The ultimate impact of these rules on the TOB market and the overall municipal market is not yet certain.

9. 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 approval of Common Shareholders.

Common Shares

For the years shown, shares issued and outstanding increased by the following amounts as a result of dividend reinvestment:

 

     Year Ended April 30,  
     2014     2013  

MYD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

    69,582        278,043   

MQY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

    26,017        114,097   

MQT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..

           73,441   

 

                
48    ANNUAL REPORT    APRIL 30, 2014   


Table of Contents
Notes to Financial Statements (continued)     

 

Preferred Shares

Each Fund’s Preferred Shares rank prior to the Fund’s Common Shares as to the payment of dividends by the Fund and distribution of assets upon dissolution or liquidation of the Fund. The 1940 Act prohibits the declaration of any dividend on the Fund’s Common Shares or the repurchase of the Fund’s Common Shares if the Fund fails to maintain the asset coverage of at least 200% of the liquidation preference of the outstanding Preferred Shares. In addition, pursuant to the Preferred Shares’ governing instruments, the Fund is restricted from declaring and paying dividends on classes of shares ranking junior to or on parity with the 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 agencies rating the Preferred Shares.

The holders of Preferred Shares have voting rights equal to the holders of Common Shares (one vote per share) and will vote together with holders of Common Shares (one vote per share) as a single class. However, the holders of Preferred Shares, voting as a separate class, are also entitled to elect two Directors for each Fund. In addition, the 1940 Act requires that along with approval by shareholders that might otherwise be required, the approval of the holders of a majority of any outstanding Preferred Shares, voting separately as a class would be required 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 (collectively, the “VRDP Funds”), have issued Series W-7 VRDP Shares, $100,000 liquidation value per share, in a privately negotiated offering. The VRDP Shares were offered to qualified institutional buyers as defined pursuant to Rule 144A under the Securities Act of 1933 and include a liquidity feature that allows the holders of VRDP Shares to have their shares purchased by the liquidity provider in the event of a failed remarketing.

The VRDP Funds are required to redeem the VRDP Shares owned by the liquidity provider after six months of continuous, unsuccessful remarketing. Upon the occurrence of the first unsuccessful remarketing, the VRDP Funds are required to segregate liquid assets to fund the redemption. The VRDP Shares are subject to certain restrictions on transfer.

The VRDP Shares outstanding as of April 30, 2014 were as follows:

 

     Issue
Date
    Shares
Issued
    Aggregate
Principal
    Maturity
Date
 

MYD

    6/30/11        2,514      $ 251,400,000        7/01/41   

MQY

    9/15/11        1,766      $ 176,600,000        10/01/41   

The VRDP Funds entered into a fee agreement with the liquidity provider that required a per annum liquidity fee to be paid to the liquidity provider. These fees are shown as liquidity fees in the Statements of Operations.

The fee agreement between MYD and the liquidity provider is for a three year term and is scheduled to expire on April 19, 2017, unless renewed or terminated in advance. The fee agreement between MQY and the liquidity provider is scheduled to expire on December 4, 2014, unless renewed or terminated in advance.

In the event the fee agreement is not renewed or is terminated in advance, and the VRDP Funds do not enter into a fee agreement with an alternate liquidity provider, the VRDP Shares will be subject to mandatory purchase by the liquidity provider prior to the termination of the fee agreement. The VRDP Funds are required to redeem any VRDP Shares purchased by the liquidity provider six months after the purchase date. Immediately after the purchase of any VRDP Shares by the liquidity provider, the VRDP Funds are required to begin to segregate liquid assets with the VRDP Fund’s custodian to fund the redemption. There is no assurance the VRDP Funds will replace such redeemed VRDP Shares with any other preferred shares or other form of leverage.

Each VRDP Fund is required to redeem its VRDP Shares on the maturity date, unless earlier redeemed or repurchased. Six months prior to the maturity date, each VRDP Fund is required to begin to segregate liquid assets with the Fund’s custodian to fund the redemption. In addition, the VRDP Funds are required to redeem certain of their outstanding VRDP Shares if the fail to maintain certain asset coverage, basic maintenance amount or leverage requirements.

Subject to certain conditions, the VRDP Shares may be redeemed, in whole or in part, at any time at the option of the VRDP Funds. The redemption price per VRDP Share is equal to liquidation value per share plus any outstanding unpaid dividends.

Dividends on the VRDP Shares are payable monthly at a variable rate set weekly by the remarketing agent. Such dividend rates are generally based upon a spread over a base rate and cannot exceed a maximum rate. In the event of a failed remarketing, the dividend rate of the VRDP Shares will be reset to a maximum rate. The maximum rate is determined based on, among other things, the long-term preferred share rating assigned to the VRDP Shares and the length of time that the VRDP Shares fail to be remarketed. At the date of issuance, the VRDP Shares were assigned a long-term rating of Aaa from Moody’s and AAA from Fitch. Subsequent to the issue of the VRDP Shares, Moody’s completed a review of its methodology for rating securities issued by registered closed-end funds. As of April 30, 2014, the VRDP Shares were assigned a long term rating of Aa1 from Moody’s under its new rating methodology. The VRDP Shares continue to be assigned a long-term rating of AAA from Fitch.

 

                
   ANNUAL REPORT    APRIL 30, 2014    49


Table of Contents
Notes to Financial Statements (continued)     

 

The short-term ratings on the VRDP Shares are directly related to the short-term ratings of the liquidity provider for such VRDP Shares. Changes in the credit quality of the liquidity provider could cause a change in the short-term credit ratings of the VRDP Shares as rated by Moody’s, Fitch and/or S&P. 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 related based upon either short-term rating. As of April 30, 2014, the short-term ratings of MQY’s liquidity provider and VRDP Shares were P1, F1 and A1 as rated by Moody’s, Fitch and/or S&P respectively, which is within the two highest rating categories. The liquidity provider may be terminated prior to the scheduled termination date if the liquidity provider fails to maintain short-term debt ratings in one of the two highest rating categories. The liquidity provider may be terminated prior to the scheduled termination date if the liquidity provider fails to maintain short-term debt ratings in one of the two highest rating categories. The short-term ratings of MYD’s VRDP Shares were withdrawn by Moody’s, Fitch and/or S&P at the commencement of the special rate period, as described below.

For financial reporting purposes, the VRDP Shares are considered debt of the issuer; therefore, the liquidation value which approximates fair value of the VRDP Shares is recorded as a liability in the Statements of Assets and Liabilities. 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 Shares are included as a component of interest expense, fees and amortization of offering costs in the Statements of Operations. The VRDP Shares are treated as equity for tax purposes. Dividends paid to holders of the VRDP Shares are generally classified as tax-exempt income for tax-reporting purposes.

The VRDP Funds may incur remarketing fees of 0.10% on the aggregate principal amount of all the VRDP Shares, which, if any, are included in remarketing fees on Preferred Shares in the Statements of Operations. All of MYD and MQY’s VRDP Shares that were tendered for remarketing during the year ended April 30, 2014 were successfully remarketed.

The annualized dividend rates for the VRDP Shares for the year ended April, 30, 2014 were as follows:

 

     Rate  

MYD

    0.30

MQY

    0.17

VRDP Shares issued and outstanding remained constant for the year ended April 30, 2014.

On April 17, 2014, MYD commenced a special rate period for a three-year term ending April 19, 2017, with respect to its VRDP Shares. The liquidity and fee agreements remain in effect for the duration of the special rate period and the VRDP Shares are still subject to mandatory redemption by the VRDP Funds on maturity date. The VRDP Shares will not be remarketed or subject to optional or mandatory tender events during such time. During the special rate period, MYD is required to maintain the same asset coverage, basic maintenance amount and leverage requirements for the VRDP Shares. MYD will pay nominal liquidity and remarketing fees during the special rate period and instead will pay dividends monthly based on the sum of SIFMA Municipal Swap Index and a percentage per annum based on the long-term ratings assigned to the VRDP Shares. The short-term ratings were withdrawn by Moody’s, Fitch and/or S&P. Short-term ratings may be re-assigned upon the termination of the special rate period when the VRDP Shares revert back to remarketable securities.

If MYD redeems the VRDP Shares on a date that is one year or more before the end of the special rate period and the VRDP Shares are rated above A1/A by Moody’s and Fitch respectively, then such redemption is 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 maintain minimum asset coverage requirements. After April 19, 2017, the termination date of the special rate period previously defined, the holder of the VRDP Shares and MYD may mutually agree to extend the special rate period. If the special rate period is not extended, the VRDP Shares will revert back to remarketable securities and will be remarketed and available for purchase by qualified institutional investors.

VMTP Shares

MQT issued Series W-7 VMTP Shares, $100,000 liquidation value per share, in a privately negotiated offering and sale of VMTP Shares exempt from registration under the Securities Act.

The VMTP Shares outstanding as of April, 30, 2014 were as follows:

 

     Issue
Date
    Shares
Issued
    Aggregate
Principal
    Term
Date
 

MQT

    12/16/11        1,165      $ 116,500,000        1/02/15   

MQT is required to redeem its VMTP Shares on the term date, unless earlier redeemed or repurchased or unless extended. There is no assurance that the term of MQT’s VMTP Shares will be extended or that MQT’s VMTP Shares will be replaced with any other preferred shares or other form of leverage upon the redemption or repurchase of the VMTP Shares. Six months prior to term 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 maintain certain asset coverage, basic maintenance amount or leverage requirements.

Subject to certain conditions, MQT’s VMTP Shares may be redeemed, in whole or in part, at any time at the option of MQT. The redemption price per VMTP Share is equal to the liquidation value per share plus any outstanding unpaid dividends and applicable redemption premium. If MQT redeems the VMTP Shares on a date that is one year or more prior

 

                
50    ANNUAL REPORT    APRIL 30, 2014   


Table of Contents
Notes to Financial Statements (concluded)     

 

to the term date and the VMTP Shares are rated above A1/A+ by Moody’s and Fitch, respectively, then such redemption is 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 to the term date, subject to certain exceptions for redemptions that are required to maintain minimum asset coverage requirements. The VMTP Shares are subject to certain restrictions on transfer, and MQT may also be required to register the VMTP Shares for sale under the Securities Act under certain circumstances. In addition, amendments to the VMTP governing document generally require the consent of the holders of VMTP Shares.

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 Municipal Swap Index (SIFMA). The fixed spread is determined based on the long-term preferred share rating assigned to the VMTP Shares by Moody’s and Fitch. At the date of issuance, the VMTP Shares were assigned long-term ratings of Aaa from Moody’s and AAA from Fitch.

Subsequent to the issuance of the VMTP Shares, Moody’s completed a review of its methodology for rating securities issued by registered closed-end funds. As of April 30, 2014, the VMTP Shares were assigned a long-term rating of Aa1 from Moody’s under its new rating methodology. The VMTP Shares continue to be assigned a long-term rating of AAA from Fitch. The dividend rate on the VMTP Shares is subject to a step-up spread if MQT fails to comply with certain provisions, including, among other things, the timely payment of dividends, redemptions or gross-up payments, and maintaining certain asset coverage and leverage requirements.

The average annualized dividend rates for the VMTP Shares for the year ended April 30, 2014 were as follows:

 

     Rate  

MQT

    1.07

For financial reporting purposes, the VMTP Shares are considered debt of the issuer; therefore the liquidation value, which approximates fair value, of the VMTP Shares is recorded as a liability in the Statements of Assets and Liabilities. 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 VMTP Shares are included as a component of interest expense, fees and amortization of offering costs in the Statements of Operations. The VMTP Shares are treated as equity for tax purposes. Dividends paid to holders of the VMTP Shares are generally classified as tax-exempt income for tax-reporting purposes.

VMTP Shares issued and outstanding remained constant for the year ended April 30, 2014.

Offering Costs: The Funds incurred costs in connection with the issuance of VRDP Shares and/or VMTP Shares. For VRDP Shares, these costs were recorded as a deferred charge and will be amortized over the 30-year life of the VRDP Shares with the exception of upfront fees paid to the liquidity provider which were amortized over the life of the liquidity agreement. For VMTP Shares, these costs were recorded as a deferred charge and amortized over the 3-year life of the VMTP Shares. Amortization of these costs is included in interest expense, fees and amortization of offering costs in the Statements of Operations.

10. 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:

Each Fund paid a net investment income dividend on June 2, 2014 to Common Shareholders of record on May 15, 2014 as follows:

 

     Common Dividend Per Share  

MYD

  $ 0.0805   

MQY

  $ 0.0800   

MQT

  $ 0.0705   

Additionally, the Funds declared a net investment income dividend on June 2, 2014, payable to Common Shareholders of record on June 16, 2014 for the same amounts noted above.

The dividends declared on Preferred Shares for the period May 1, 2014 to May 31, 2014 were as follows:

 

     Series     Dividends
Declared
 

MYD VRDP Shares

    W-7      $ 212,003   

MQY VRDP Shares

    W-7      $ 26,611   

MQT VMTP Shares

    W-7      $ 107,116   

 

                
   ANNUAL REPORT    APRIL 30, 2014    51


Table of Contents
Report of Independent Registered Public Accounting Firm

 

To the Shareholders and Board of Directors of BlackRock MuniYield Fund, Inc., BlackRock MuniYield Quality Fund, Inc., and BlackRock MuniYield Quality Fund II, Inc.:

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of BlackRock MuniYield Fund, Inc., BlackRock MuniYield Quality Fund, Inc., and BlackRock MuniYield Quality Fund II, Inc. (collectively, the “Funds”), as of April 30, 2014, and the related statements of operations and cash flows for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of April 30, 2014, by correspondence with the custodians and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of BlackRock MuniYield Fund, Inc., BlackRock MuniYield Quality Fund, Inc., and BlackRock MuniYield Quality Fund II, Inc. as of April 30, 2014, the results of their operations and their cash flows for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP

Boston, Massachusetts

June 25, 2014

 

 

                
52    ANNUAL REPORT    APRIL 30, 2014   


Table of Contents
Automatic Dividend Reinvestment Plan     

 

Pursuant to each Fund’s Dividend Reinvestment Plan (the “Reinvestment Plan”), Common Shareholders are automatically enrolled to have all distributions of dividends and capital gains reinvested by Computershare Trust Company, N.A. (the “Reinvestment Plan Agent”) in the respective Fund’s shares pursuant to the Reinvestment Plan. Shareholders who do not participate in the Reinvestment Plan will receive all distributions in cash paid by check and mailed directly to the shareholders of record (or if the shares are held in street name or other nominee name, then to the nominee) by the Reinvestment Plan Agent, which serves as agent for the shareholders in administering the Reinvestment Plan.

After MYD, MQY and MQT declare a dividend or determine to make a capital gain distribution, the Reinvestment Plan Agent will acquire shares for the participants’ accounts, depending upon the following circumstances, either (i) through receipt of unissued but authorized shares from the Funds (“newly issued shares”) or (ii) by purchase of outstanding shares on the open market or on the Fund’s primary exchange (“open-market purchases”). If, on the dividend payment date, the net asset value per share (“NAV”) is equal to or less than the market price per share plus estimated brokerage commissions (such condition often referred to as a “market premium”), the Reinvestment Plan Agent will invest the dividend amount in newly issued shares acquired on behalf of the participants. The number of newly issued shares to be credited to each participant’s account will be determined by dividing the dollar amount of the dividend by the NAV on the date the shares are issued. However, if the NAV is less than 95% of the market price on the dividend payment date, the dollar amount of the dividend will be divided by 95% of the market price on the dividend payment date. If, on the dividend payment date, the NAV is greater than the market price per share plus estimated brokerage commissions (such condition often referred to as a “market discount”), the Reinvestment Plan Agent will invest the dividend amount in shares acquired on behalf of the participants in open-market purchases. If the Reinvestment Plan Agent is unable to invest the full dividend amount in open-market purchases, or if the market discount shifts to a market premium during the purchase period, the Reinvestment Plan Agent will invest any un-invested portion in newly issued shares. Investments in newly issued shares made in this manner would be made pursuant to the same process described above and the date of issue for such newly issued shares will substitute for the dividend payment date.

Participation in the Reinvestment Plan is completely voluntary and may be terminated or resumed at any time without penalty by notice if received and processed by the Reinvestment Plan Agent prior to the dividend record date. Additionally, the Reinvestment Plan Agent seeks to process notices received after the record date but prior to the payable date and such notices often will become effective by the payable date. Where late notices are not processed by the applicable payable date, such termination or resumption will be effective with respect to any subsequently declared dividend or other distribution.

The Reinvestment Plan Agent’s fees for the handling of the reinvestment of dividends and distributions will be paid by each Fund. However, each participant will pay a pro rata share of brokerage commissions incurred with respect to the Reinvestment Plan Agent’s open market purchases in connection with the reinvestment of dividends and distributions. The automatic reinvestment of dividends and distributions will not relieve participants of any federal income tax that may be payable on such dividends or distributions.

Each Fund reserves the right to amend or terminate the Reinvestment Plan. There is no direct service charge to participants in the Reinvestment Plan. However, each Fund reserves the right to amend the Reinvestment Plan to include a service charge payable by the participants. Participants in MQY that request a sale of shares are subject to a $2.50 sales fee and a $0.15 per share fee. Per share fees include any applicable brokerage commissions the Reinvestment Plan Agent is required to pay. Participants in MYD and MQT that request a sale of shares are subject to a $0.02 per share sold brokerage commission. All correspondence concerning the Reinvestment Plan should be directed to Computershare Trust Company, N.A. through the internet at http://www.computershare.com/blackrock, or in writing to Computershare, P.O. Box 30170, College Station, TX 77842-3170, Telephone: (800) 699-1236. Overnight correspondence should be directed to the Computershare, 211 Quality Circle, Suite 210, College Station, TX 77845.

 

                
   ANNUAL REPORT    APRIL 30, 2014    53


Table of Contents
Officers and Directors     

 

 

Name, Address
and Year of Birth
 

Position(s)

Held with
Funds

  Length
of Time
Served as
a Director2
  Principal Occupation(s) During Past Five Years   Number of BlackRock-
Advised Registered
Investment Companies
(“RICs”) Consisting of
Investment Portfolios
(“Portfolios”) Overseen
  Public
Directorships
Independent Directors1                    

Richard E. Cavanagh

 

55 East 52nd Street

New York, NY 10055

 

1946

  Chairman of the Board and Director  

Since

2007

  Trustee, Aircraft Finance Trust from 1999 to 2009; Director, The Guardian Life Insurance Company of America since 1998; Director, Arch Chemical (chemical and allied products) from 1999 to 2011; Trustee, Educational Testing Service from 1997 to 2009 and Chairman thereof from 2005 to 2009; Senior Advisor, The Fremont Group since 2008 and Director thereof since 1996; Faculty Member/Adjunct Lecturer, Harvard University since 2007; President and Chief Executive Officer, The Conference Board, Inc. (global business research organization) from 1995 to 2007.   82 RICs consisting of 82 Portfolios   None

Karen P. Robards

 

55 East 52nd Street

New York, NY 10055

 

1950

  Vice Chairperson of the Board, Chairperson of the Audit Committee and Director  

Since

2007

  Partner of Robards & Company, LLC (financial advisory firm) since 1987; Co-founder and Director of the Cooke Center for Learning and Development (a not-for-profit organization) since 1987; Director of Care Investment Trust, Inc. (health care real estate investment trust) from 2007 to 2010; Investment Banker at Morgan Stanley from 1976 to 1987.   82 RICs consisting of 82 Portfolios   AtriCure, Inc. (medical devices); Greenhill & Co., Inc.

Michael J. Castellano

 

55 East 52nd Street

New York, NY 10055

 

1946

  Director and Member of the Audit Committee  

Since

2011

  Chief Financial Officer of Lazard Group LLC from 2001 to 2011; Chief Financial Officer of Lazard Ltd from 2004 to 2011; Director, Support Our Aging Religious (non-profit) since 2009; Director, National Advisory Board of Church Management at Villanova University since 2010. Trustee, Domestic Church Media Foundation since 2012.   82 RICs consisting of 82 Portfolios   None

Frank J. Fabozzi3

 

55 East 52nd Street

New York, NY 10055

 

1948

  Director and Member of the Audit Committee  

Since

2007

  Editor of and Consultant for The Journal of Portfolio Management since 2006; Professor of Finance, EDHEC Business School since 2011; Professor in the Practice of Finance and Becton Fellow, Yale University School of Management from 2006 to 2011; Adjunct Professor of Finance and Becton Fellow, Yale University from 1994 to 2006.   115 RICs consisting of 237 Portfolios   None

Kathleen F. Feldstein

 

55 East 52nd Street

New York, NY 10055

 

1941

  Director  

Since

2007

  President of Economics Studies, Inc. (private economic consulting firm) since 1987; Chair, Board of Trustees, McLean Hospital from 2000 to 2008 and Trustee Emeritus thereof since 2008; Member of the Board of Partners Community Healthcare, Inc. from 2005 to 2009; Member of the Corporation of Partners HealthCare since 1995; Trustee, Museum of Fine Arts, Boston since 1992; Member of the Visiting Committee to the Harvard University Art Museum since 2003; Director, Catholic Charities of Boston since 2009.   82 RICs consisting of 82 Portfolios   The McClatchy Company (publishing);

James T. Flynn

 

55 East 52nd Street

New York, NY 10055

 

1939

  Director and Member of the Audit Committee  

Since

2007

  Chief Financial Officer of JPMorgan & Co., Inc. from 1990 to 1995.   82 RICs consisting of 82 Portfolios   None

Jerrold B. Harris

 

55 East 52nd Street

New York, NY 10055

 

1942

  Director  

Since

2007

  Trustee, Ursinus College since 2000; Director, Ducks Unlimited, Inc. (conservations) since 2013 ; Director, Troemner LLC (scientific equipment) since 2000; Director of Delta Waterfowl Foundation from 2010 to 2012; President and Chief Executive Officer, VWR Scientific Products Corporation from 1990 to 1999.   82 RICs consisting of 82 Portfolios   BlackRock Kelso Capital Corp. (business development company)

 

                
54    ANNUAL REPORT    APRIL 30, 2014   


Table of Contents
Officers and Directors (continued)     

 

Name, Address
and Year of Birth
 

Position(s)

Held with
Funds

  Length
of Time
Served as
a Director2
  Principal Occupation(s) During Past Five Years   Number of BlackRock-
Advised Registered
Investment Companies
(“RICs”) Consisting of
Investment Portfolios
(“Portfolios”) Overseen
  Public
Directorships
Independent Directors1 (concluded)                    

R. Glenn Hubbard

 

55 East 52nd Street

New York, NY 10055

 

1958

  Director   Since
2007
  Dean, Columbia Business School since 2004; Faculty member, Columbia Business School since 1988.   82 RICs consisting of 82 Portfolios   ADP (data and information services); Metropolitan Life Insurance Company (insurance)

W. Carl Kester

 

55 East 52nd Street

New York, NY 10055

 

1951

  Director and Member of the Audit Committee  

Since

2007

  George Fisher Baker Jr. Professor of Business Administration, Harvard Business School since 2008. Deputy Dean for Academic Affairs from 2006 to 2010; Chairman of the Finance Unit, 2005 to 2006; Senior Associate Dean and Chairman of the MBA Program from 1999 to 2005; Member of the faculty of Harvard Business School since 1981.   82 RICs consisting of 82 Portfolios   None
 

1   Independent Directors serve until their resignation, removal or death, or until December 31 of the year in which they turn 74. The maximum age limitation may be waived as to any Director by action of a majority of the Directors upon finding of good cause thereof. In 2013, the Board of Directors unanimously approved further extending the mandatory retirement age for James T. Flynn by one additional year which the Board believed would be in the best interest of shareholders. Mr. Flynn can serve until December 31 of the year in which he turns 75. Mr Flynn turns 75 in 2014.

 

2   Date shown is the earliest date a person has served for the Funds covered by this annual report. Following the combination of Merrill Lynch Investment Managers, L.P. (“MLIM”) and BlackRock, Inc. (“BlackRock”) in September 2006, the various legacy MLIM and legacy BlackRock fund boards were realigned and consolidated into three new fund boards in 2007. As a result, although the chart shows certain Directors as joining the Funds’ board in 2007, those Directors first became members of the boards of other legacy MLIM or legacy BlackRock funds as follows: Richard E. Cavanagh, 1994; Frank J. Fabozzi, 1988; Kathleen F. Feldstein, 2005; James T. Flynn, 1996; Jerrold B. Harris, 1999; R. Glenn Hubbard, 2004; W. Carl Kester, 1995 and Karen P. Robards, 1998.

 

3   Dr. Fabozzi is also a board member of the BlackRock Equity-Liquidity Complex.

Interested Directors4                    

Paul L. Audet

 

55 East 52nd Street

New York, NY 10055

 

1953

  Director  

Since

2011

  Senior Managing Director of BlackRock and Head of U.S. Mutual Funds since 2011; Head of BlackRock’s Real Estate business from 2008 to 2011; Member of BlackRock’s Global Operating and Corporate Risk Management Committees since 2008; Head of BlackRock’s Global Cash Management business from 2005 to 2010; Acting Chief Financial Officer of BlackRock from 2007 to 2008; Chief Financial Officer of BlackRock from 1998 to 2005.   144 RICs consisting of 333 Portfolios   None

Henry Gabbay

 

55 East 52nd Street

New York, NY 10055

 

1947

  Director  

Since

2007

  Consultant, BlackRock from 2007 to 2008; Managing Director, BlackRock from 1989 to 2007; Chief Administrative Officer, BlackRock Advisors, LLC from 1998 to 2007; President of BlackRock Funds and BlackRock Bond Allocation Target Shares from 2005 to 2007; Treasurer of certain closed-end funds in the BlackRock fund complex from 1989 to 2006.   144 RICs consisting of 333 Portfolios   None
 

4   Mr. Audet is an “interested person,” as defined in the 1940 Act, of the Funds based on his position with BlackRock and its affiliates as well as his ownership of BlackRock securities. Mr. Gabbay is an “interested person” of the Funds based on his former positions with BlackRock and its affiliates as well as his ownership of BlackRock and The PNC Financial Services Group, Inc. securities. Mr. Audet and Mr. Gabbay are also Directors of two complexes of BlackRock registered open-end funds, the BlackRock Equity-Liquidity Complex and the BlackRock Equity-Bond Complex. Interested Directors of the BlackRock Closed-End Complex serve until their resignation, removal or death, or until December 31 of the year in which they turn 72. The maximum age limitation may be waived as to any Director by action of a majority of the Directors upon finding good cause thereof.

 

                
   ANNUAL REPORT    APRIL 30, 2014    55


Table of Contents
Officers and Directors (continued)     

 

Name, Address

and Year of Birth

  Position(s)
Held with
the Funds
  Length
of Time
Served
  Principal Occupation(s) During Past Five Years
Officers 1               

John M. Perlowski

 

55 East 52nd Street

New York, NY 10055

 

1964

  President and Chief Executive Officer   Since
2011
  Managing Director of BlackRock since 2009; Global Head of BlackRock Fund Services since 2009; Managing Director and Chief Operating Officer of the Global Product Group at Goldman Sachs Asset Management, L.P. from 2003 to 2009; Treasurer of Goldman Sachs Mutual Funds from 2003 to 2009 and Senior Vice President thereof from 2007 to 2009; Director of Goldman Sachs Offshore Funds from 2002 to 2009; Director of Family Resource Network (charitable foundation) since 2009.

Brendan Kyne

 

55 East 52nd Street

New York, NY 10055

 

1977

  Vice President   Since
2009
  Managing Director of BlackRock, Inc. since 2010; Director of BlackRock, Inc. from 2008 to 2009; Head of Americas Product Development for BlackRock since 2013, Head of Product Development and Management for BlackRock’s U.S. Retail Group 2009 to 2013 and Co-head thereof from 2007 to 2009; Vice President of BlackRock, Inc. from 2005 to 2008.

Robert W. Crothers

 

55 East 52nd Street

New York, NY 10055

 

1981

  Vice President   Since
2012
  Director of BlackRock since 2011; Vice President of BlackRock from 2008 to 2010.

Neal Andrews

 

55 East 52nd Street

New York, NY 10055

 

1966

  Chief Financial Officer   Since
2007
  Managing Director of BlackRock since 2006; Senior Vice President and Line of Business Head of Fund Accounting and Administration at PNC Global Investment Servicing (U.S.) Inc. from 1992 to 2006.

Jay Fife

 

55 East 52nd Street

New York, NY 10055

 

1970

  Treasurer   Since
2007
  Managing Director of BlackRock since 2007; Director of BlackRock in 2006; Assistant Treasurer of the MLIM and Fund Asset Management, L.P. advised funds from 2005 to 2006; Director of MLIM Fund Services Group from 2001 to 2006.

Brian Kindelan

 

55 East 52nd Street

New York, NY 10055

 

1959

 

Chief Compliance Officer and Anti-Money Laundering Officer

  Since
2007
  Chief Compliance Officer of the BlackRock-advised funds since 2007; Managing Director and Senior Counsel of BlackRock since 2005.

Janey Ahn

 

55 East 52nd Street

New York, NY 10055

 

1975

  Secretary   Since
2012
  Director of BlackRock since 2009; Vice President of BlackRock from 2008 to 2009; Assistant Secretary of the Funds from 2008 to 2012.
 

1   Officers of the Funds serve at the pleasure of the Board.

 

Effective June 6, 2014, Brian Kindelan resigned as Chief Compliance Officer and Anti-Money Laundering Officer of the Funds and Charles Park became Chief Compliance Officer and Anti-Money Laundering Officer of the Funds. Mr. Park joined BlackRock in 2009 and is the current Chief Compliance Officer of BlackRock’s iShares exchange traded funds.

 

                
56    ANNUAL REPORT    APRIL 30, 2014   


Table of Contents
Officers and Directors (concluded)     

 

 

Investment Advisor

BlackRock Advisors, LLC Wilmington, DE 19809

 

Custodians

The Bank of New York Mellon1
New York, NY 10286

 

State Street Bank and Trust Company2

Boston, MA 02110

 

VRDP Tender and Paying Agent and VMTP Redemption and Paying Agent

The Bank of New York Mellon New York, NY 10289

 

Accounting Agent

State Street Bank and

Trust Company

Boston, MA 02110

   Legal Counsel Skadden, Arps, Slate,
Meagher & Flom LLP New York, NY 10036

Sub-Advisor

BlackRock Investment Management, LLC

Princeton, NJ 08540

  Transfer Agent Computershare Trust Company, N.A.
Canton, MA 02021
 

VRDP Remarketing Agents

Merrill Lynch, Pierce, Fenner & Smith Incorporated3

New York, NY 10036

 

Barclays Capital Inc.2

New York, NY 10019

  Independent Registered Public Accounting Firm Deloitte & Touche LLP
Boston, MA 02116
   Address of the Funds 100 Bellevue Parkway Wilmington, DE 19809
   

VRDP Liquidity Providers

Bank of America, N.A.3

New York, NY 10036

 

Barclays Bank PLC2

New York, NY 10019

    

 

  1   

For MYD and MQT.

  2   

For MQY.

  3   

For MYD.

 

                
   ANNUAL REPORT    APRIL 30, 2014    57


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Additional Information     

 

Fund Certification      

 

The Funds are listed for trading on the NYSE and have filed with the NYSE their annual chief executive officer certification regarding compliance with the NYSE’s listing standards. Each Fund 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 dividend 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 dividends 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 Statement 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’ portfolio.

Quarterly performance, semi-annual and annual reports and other information regarding the Funds may be found on BlackRock’s website, which can be accessed at http://www.blackrock.com. 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.

Electronic Delivery

Electronic copies of most financial reports are available on the Funds’ websites or shareholders can sign up for e-mail notifications of quarterly statements, annual and semi-annual reports by enrolling in the Funds’ electronic delivery program.

Shareholders Who Hold Accounts with Investment Advisors, Banks or Brokerages:

Please contact your financial advisor to enroll. Please note that not all investment advisors, banks or brokerages may offer this service.

Householding

The Funds will mail only one copy of shareholder documents, including 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 (800) 882-0052.

 

                
58    ANNUAL REPORT    APRIL 30, 2014   


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Additional Information (concluded)     

 

 

General Information (concluded)      

 

Availability of Quarterly Schedule of Investments

The Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the SEC’s website at http://www.sec.gov and may also be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on how to access documents on the SEC’s website without charge may be obtained by calling (800) SEC-0330. The Funds’ Forms N-Q may also be obtained upon request and without charge by calling (800) 882-0052.

Availability of Proxy Voting Policies and Procedures

A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available (1) without charge, upon request, 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 periodically 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.

 

                
   ANNUAL REPORT    APRIL 30, 2014    59


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This report is transmitted to shareholders only. It is not a prospectus. Past performance results shown in this report should not be considered are presentation 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 the short-term rates of the Preferred Shares may reduce the Common Shares’ yield. Statements and other information herein are as dated and are subject to change.

 

 

LOGO

 

MYQII-4/14-AR    LOGO


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Item 2 – Code of Ethics – The registrant (or the “Fund”) has adopted a code of ethics, as of the end of the period covered by this report, applicable to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. During the period covered by this report, there have been no amendments to or waivers granted under the code of ethics. A copy of the code of ethics is available without charge at www.blackrock.com.

 

Item 3 – Audit Committee Financial Expert – The registrant’s board of directors (the “board of directors”), has determined that (i) the registrant has the following audit committee financial experts serving on its audit committee and (ii) each audit committee financial expert is independent:

Michael Castellano

Frank J. Fabozzi

James T. Flynn

W. Carl Kester

Karen P. Robards

The registrant’s board of directors has determined that W. Carl Kester and Karen P. Robards qualify as financial experts pursuant to Item 3(c)(4) of Form N-CSR.

Prof. Kester has a thorough understanding of generally accepted accounting principles, financial statements and internal control over financial reporting as well as audit committee functions. Prof. Kester has been involved in providing valuation and other financial consulting services to corporate clients since 1978. Prof. Kester’s financial consulting services present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the registrant’s financial statements.

Ms. Robards has a thorough understanding of generally accepted accounting principles, financial statements and internal control over financial reporting as well as audit committee functions. Ms. Robards has been President of Robards & Company, a financial advisory firm, since 1987. Ms. Robards was formerly an investment banker for more than 10 years where she was responsible for evaluating and assessing the performance of companies based on their financial results. Ms. Robards has over 30 years of experience analyzing financial statements. She also is a member of the audit committee of one publicly held company and a non-profit organization.

Under applicable securities laws, a person determined to be an audit committee financial expert will not be deemed an “expert” for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and board of directors in the absence of such designation or identification. The designation or identification of a person as an audit committee financial expert does not affect the duties, obligations, or liability of any other member of the audit committee or board of directors.

 

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Item 4 – Principal Accountant Fees and Services

The following table presents fees billed by Deloitte & Touche LLP (“D&T”) in each of the last two fiscal years for the services rendered to the Fund:

 

      (a) Audit Fees    (b) Audit-Related Fees1    (c) Tax Fees2    (d) All Other Fees3
Entity Name   

Current

Fiscal Year
End

  

Previous

Fiscal Year
End

  

Current

Fiscal Year
End

  

Previous

Fiscal Year
End

  

Current

Fiscal Year
End

   Previous
Fiscal Year
End
  

Current

Fiscal Year
End

  

Previous

Fiscal Year
End

BlackRock MuniYield Fund, Inc.    $39,063    $38,363    $0    $0    $22,100    $22,100    $0    $0

The following table presents fees billed by D&T that were required to be approved by the registrant’s audit committee (the “Committee”) for services that relate directly to the operations or financial reporting of the Fund and that are rendered on behalf of BlackRock Advisors, LLC (“Investment Adviser” or “BlackRock”) and entities controlling, controlled by, or under common control with BlackRock (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) that provide ongoing services to the Fund (“Fund Service Providers”):

 

      Current Fiscal Year End    Previous Fiscal Year End

(b) Audit-Related Fees1

   $0    $0

(c) Tax Fees2

   $0    $0

(d) All Other Fees3

   $2,555,000    $2,865,000

1 The nature of the services includes assurance and related services reasonably related to the performance of the audit of financial statements not included in Audit Fees.

2 The nature of the services includes tax compliance, tax advice and tax planning.

3 Aggregate fees borne by BlackRock in connection with the review of compliance procedures and attestation thereto performed by D&T with respect to all of the registered closed-end funds and some of the registered open-end funds advised by BlackRock.

(e)(1) Audit Committee Pre-Approval Policies and Procedures:

The Committee has adopted policies and procedures with regard to the pre-approval of services. Audit, audit-related and tax compliance services provided to the registrant on an annual basis require specific pre-approval by the Committee. The Committee also must approve other non-audit services provided to the registrant and those non-audit services provided to the Investment Adviser and Fund Service Providers that relate directly to the operations and the financial reporting of the registrant. Certain of these non-audit services that the Committee believes are (a) consistent with the SEC’s auditor independence rules and (b) routine and recurring services that will not impair the independence of the independent accountants may be approved by the Committee without consideration on a specific case-by-case basis (“general pre-approval”). The term of any general pre-approval is 12 months from the date of the pre-approval, unless the Committee provides for a different period. Tax or other non-audit services provided to the registrant which have a direct impact on the operations or financial reporting of the registrant will only be deemed pre-approved provided that any individual project does not exceed $10,000 attributable to the registrant or $50,000 per project. For this purpose, multiple projects will be aggregated to determine if they exceed the previously mentioned cost levels.

Any proposed services exceeding the pre-approved cost levels will require specific pre-approval by the Committee, as will any other services not subject to general pre-approval (e.g.,

 

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unanticipated but permissible services). The Committee is informed of each service approved subject to general pre-approval at the next regularly scheduled in-person board meeting. At this meeting, an analysis of such services is presented to the Committee for ratification. The Committee may delegate to the Committee Chairman the authority to approve the provision of and fees for any specific engagement of permitted non-audit services, including services exceeding pre-approved cost levels.

(e)(2) None of the services described in each of Items 4(b) through (d) were approved by the Committee pursuant to the de minimis exception in paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

(f) Not Applicable

(g) The aggregate non-audit fees paid to the accountant for services rendered by the accountant to the registrant, the Investment Adviser and the Fund Service Providers were:

 

    Entity Name   

Current Fiscal

Year End

  

Previous Fiscal

Year End

  BlackRock MuniYield Fund, Inc.    $22,100    $22,100

Additionally, SSAE 16 Review (Formerly, SAS No. 70) fees for the current and previous fiscal years of $2,555,000 and $2, 865,000, respectively, were billed by D&T to the Investment Adviser.

(h) The Committee has considered and determined that the provision of non-audit services that were rendered to the Investment Adviser, and the Fund Service Providers that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.

 

Item 5 – Audit Committee of Listed Registrants

 

  (a) The following individuals are members of the registrant’s separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(58)(A)):

Michael Castellano

Frank J. Fabozzi

James T. Flynn

W. Carl Kester

Karen P. Robards

 

  (b) Not Applicable

 

Item 6 – Investments

(a) The registrant’s Schedule of Investments is included as part of the Report to Stockholders filed under Item 1 of this Form.

 

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(b) Not Applicable due to no such divestments during the semi-annual period covered since the previous Form N-CSR filing.

 

Item 7 – Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies – The board of directors has delegated the voting of proxies for the Fund’s portfolio securities to the Investment Adviser pursuant to the Investment Adviser’s proxy voting guidelines. Under these guidelines, the Investment Adviser will vote proxies related to Fund securities in the best interests of the Fund and its stockholders. From time to time, a vote may present a conflict between the interests of the Fund’s stockholders, on the one hand, and those of the Investment Adviser, or any affiliated person of the Fund or the Investment Adviser, on the other. In such event, provided that the Investment Adviser’s Equity Investment Policy Oversight Committee, or a sub-committee thereof (the “Oversight Committee”) is aware of the real or potential conflict or material non-routine matter and if the Oversight Committee does not reasonably believe it is able to follow its general voting guidelines (or if the particular proxy matter is not addressed in the guidelines) and vote impartially, the Oversight Committee may retain an independent fiduciary to advise the Oversight Committee on how to vote or to cast votes on behalf of the Investment Adviser’s clients. If the Investment Adviser determines not to retain an independent fiduciary, or does not desire to follow the advice of such independent fiduciary, the Oversight Committee shall determine how to vote the proxy after consulting with the Investment Adviser’s Portfolio Management Group and/or the Investment Adviser’s Legal and Compliance Department and concluding that the vote cast is in its client’s best interest notwithstanding the conflict. A copy of the Fund’s Proxy Voting Policy and Procedures are attached as Exhibit 99.PROXYPOL. Information on how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge, (i) at www.blackrock.com and (ii) on the SEC’s website at http://www.sec.gov.

 

Item 8 – Portfolio Managers of Closed-End Management Investment Companies – as of April 30, 2014.

 

  (a)(1) The registrant is managed by a team of investment professionals comprised of Theodore R. Jaeckel, Jr., CFA, Managing Director at BlackRock and Walter O’Connor, Managing Director at BlackRock. Each is a member of BlackRock’s municipal tax-exempt management group. Each is jointly responsible for the day-to-day management of the registrant’s portfolio, which includes setting the registrant’s overall investment strategy, overseeing the management of the registrant and/or selection of its investments. Messrs. Jaeckel and O’Connor have been members of the registrant’s portfolio management team since 2006 and 2006, respectively.

 

Portfolio Manager    Biography
Theodore R. Jaeckel, Jr.    Managing Director of BlackRock since 2006; Managing Director of Merrill Lynch Investment Managers, L.P. (“MLIM”) from 2005 to 2006; Director of MLIM from 1997 to 2005.
Walter O’Connor    Managing Director of BlackRock since 2006; Managing Director of MLIM from 2003 to 2006; Director of MLIM from 1998 to 2003.

 

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  (a)(2) As of April 30, 2014:

 

     

(ii) Number of Other Accounts Managed

and Assets by Account Type

  

(iii) Number of Other Accounts and

Assets for Which Advisory Fee is

Performance-Based

(i) Name of

Portfolio Manager

  

Other

Registered

Investment

Companies

  

Other Pooled

Investment

Vehicles

  

Other

Accounts

  

Other

Registered

Investment

Companies

  

Other Pooled

Investment

Vehicles

  

Other

Accounts

Theodore R. Jaeckel, Jr.    63    0    0    0    0    0
     $24.56 Billion    $0    $0    $0    $0    $0
Walter O’Connor    63    0    0    0    0    0
     $24.56 Billion    $0    $0    $0    $0    $0

 

  (iv) Potential Material Conflicts of Interest

BlackRock has built a professional working environment, firm-wide compliance culture and compliance procedures and systems designed to protect against potential incentives that may favor one account over another. BlackRock has adopted policies and procedures that address the allocation of investment opportunities, execution of portfolio transactions, personal trading by employees and other potential conflicts of interest that are designed to ensure that all client accounts are treated equitably over time. Nevertheless, BlackRock furnishes investment management and advisory services to numerous clients in addition to the Fund, and BlackRock may, consistent with applicable law, make investment recommendations to other clients or accounts (including accounts which are hedge funds or have performance or higher fees paid to BlackRock, or in which portfolio managers have a personal interest in the receipt of such fees), which may be the same as or different from those made to the Fund. In addition, BlackRock, Inc. its affiliates and significant shareholders and any officer, director, shareholder or employee may or may not have an interest in the securities whose purchase and sale BlackRock recommends to the Fund. BlackRock, Inc. or any of its affiliates or significant shareholders, or any officer, director, shareholder, employee or any member of their families may take different actions than those recommended to the Fund by BlackRock with respect to the same securities. Moreover, BlackRock may refrain from rendering any advice or services concerning securities of companies of which any of BlackRock, Inc.’s (or its affiliates’ or significant shareholders’) officers, directors or employees are directors or officers, or companies as to which BlackRock, Inc. or any of its affiliates or significant shareholders or the officers, directors and employees of any of them has any substantial economic interest or possesses material non-public information. Certain portfolio managers also may manage accounts whose investment strategies may at times be opposed to the strategy utilized for a fund. It should also be noted that a portfolio manager may be managing certain hedge fund and/or long only accounts, or may be part of a team managing certain hedge fund and/or long only accounts, subject to incentive fees. Such portfolio managers may therefore be entitled to receive a portion of any incentive fees earned on such accounts. Currently, the portfolio managers of this fund are not entitled to receive a portion of incentive fees of other accounts.

As a fiduciary, BlackRock owes a duty of loyalty to its clients and must treat each client fairly. When BlackRock purchases or sells securities for more than one account, the trades must be allocated in a manner consistent with its fiduciary duties. BlackRock attempts to allocate investments in a fair and equitable manner among client accounts, with no account receiving preferential treatment. To this end, BlackRock, Inc. has adopted policies that are intended to ensure reasonable efficiency in client transactions and provide BlackRock with sufficient flexibility to allocate investments in a manner that is consistent with the particular investment discipline and client base, as appropriate.

 

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(a)(3) As of April 30, 2014:

Portfolio Manager Compensation Overview

The discussion below describes the portfolio managers’ compensation as of April 30, 2014.

BlackRock’s financial arrangements with its portfolio managers, its competitive compensation and its career path emphasis at all levels reflect the value senior management places on key resources. Compensation may include a variety of components and may vary from year to year based on a number of factors. The principal components of compensation include a base salary, a performance-based discretionary bonus, participation in various benefits programs and one or more of the incentive compensation programs established by BlackRock.

Base compensation. Generally, portfolio managers receive base compensation based on their position with the firm.

Discretionary Incentive Compensation

Discretionary incentive compensation is a function of several components: the performance of BlackRock, Inc., the performance of the portfolio manager’s group within BlackRock, the investment performance, including risk-adjusted returns, of the firm’s assets under management or supervision by that portfolio manager relative to predetermined benchmarks, and the individual’s performance and contribution to the overall performance of these portfolios and BlackRock. In most cases, these benchmarks are the same as the benchmark or benchmarks against which the performance of the Funds or other accounts managed by the portfolio managers are measured. Among other things, BlackRock’s Chief Investment Officers make a subjective determination with respect to each portfolio manager’s compensation based on the performance of the Funds and other accounts managed by each portfolio manager relative to the various benchmarks. Performance of fixed income funds is measured on a pre-tax and/or after-tax basis over various time periods including 1-, 3- and 5- year periods, as applicable. With respect to these portfolio managers, such benchmarks for the Fund and other accounts are: a combination of market-based indices (e.g., Standard & Poor’s Municipal Bond Index), certain customized indices and certain fund industry peer groups.

Distribution of Discretionary Incentive Compensation. Discretionary incentive compensation is distributed to portfolio managers in a combination of cash and BlackRock, Inc. restricted stock units which vest ratably over a number of years. For some portfolio managers, discretionary incentive compensation is also distributed in deferred cash awards that notionally track the returns of select BlackRock investment products they manage and that vest ratably over a number of years. The BlackRock, Inc. restricted stock units, upon vesting, will be settled in BlackRock, Inc. common stock. Typically, the cash portion of the discretionary incentive compensation, when combined with base salary, represents more than 60% of total compensation for the portfolio managers. Paying a portion of discretionary incentive compensation in BlackRock,

 

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Inc. stock puts compensation earned by a portfolio manager for a given year “at risk” based on BlackRock’s ability to sustain and improve its performance over future periods. Providing a portion of discretionary incentive compensation in deferred cash awards that notionally track the BlackRock investment products they manage provides direct alignment with investment product results.

Long-Term Incentive Plan Awards From time to time long-term incentive equity awards are granted to certain key employees to aid in retention, align their interests with long-term shareholder interests and motivate performance. Equity awards are generally granted in the form of BlackRock, Inc. restricted stock units that, once vested, settle in BlackRock, Inc. common stock. Messrs. Jaeckel and O’Connor have unvested long-term incentive awards.

Deferred Compensation Program A portion of the compensation paid to eligible United States-based BlackRock employees may be voluntarily deferred at their election for defined periods of time into an account that tracks the performance of certain of the firm’s investment products. Any portfolio manager who is either a managing director or director at BlackRock with compensation above a specified threshold is eligible to participate in the deferred compensation program.

Other compensation benefits. In addition to base salary and discretionary incentive compensation, portfolio managers may be eligible to receive or participate in one or more of the following:

Incentive Savings Plans BlackRock, Inc. has created a variety of incentive savings plans in which BlackRock, Inc. employees are eligible to participate, including a 401(k) plan, the BlackRock Retirement Savings Plan (RSP), and the BlackRock Employee Stock Purchase Plan (ESPP). The employer contribution components of the RSP include a company match equal to 50% of the first 8% of eligible pay contributed to the plan capped at $5,000 per year, and a company retirement contribution equal to 3-5% of eligible compensation up to the Internal Revenue Service limit ($260,000 for 2014). The RSP offers a range of investment options, including registered investment companies and collective investment funds managed by the firm. BlackRock, Inc. contributions follow the investment direction set by participants for their own contributions or, absent participant investment direction, are invested into a target date fund that corresponds to, or is closest to, the year in which the participant attains age 65. The ESPP allows for investment in BlackRock, Inc. common stock at a 5% discount on the fair market value of the stock on the purchase date. Annual participation in the ESPP is limited to the purchase of 1,000 shares of common stock or a dollar value of $25,000 based on its fair market value on the purchase date. All of the eligible portfolio managers are eligible to participate in these plans.

(a)(4) Beneficial Ownership of Securities – As of April 30, 2014.

 

Portfolio Manager   

Dollar Range of Equity Securities

of the Fund Beneficially Owned

Theodore R. Jaeckel, Jr.

   $100,001-$500,000

Walter O’Connor

   None

(b) Not Applicable

 

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Item 9 – Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers – Not Applicable due to no such purchases during the period covered by this report.

 

Item 10 – Submission of Matters to a Vote of Security Holders – There have been no material changes to these procedures.

 

Item 11 – Controls and Procedures

(a) – The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing of this report based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended.

(b) – There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

Item 12 – Exhibits attached hereto

(a)(1) – Code of Ethics – See Item 2

(a)(2) – Certifications – Attached hereto

(a)(3) – Not Applicable

(b) – Certifications – Attached hereto

 

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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 Fund, Inc.

   

By:

 

/s/ John M. Perlowski

   
  John M. Perlowski    
 

Chief Executive Officer (principal executive officer) of

BlackRock MuniYield Fund, Inc.

   
Date: July 1, 2014    

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 Fund, Inc.

Date: July 1, 2014
By:  

/s/ Neal J. Andrews

  Neal J. Andrews
 

Chief Financial Officer (principal financial officer) of

BlackRock MuniYield Fund, Inc.

Date: July 1, 2014

 

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