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 811-06728

 

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

 

Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809

 

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

 

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

 

Date of fiscal year end: 04/30/2012

 

Date of reporting period: 10/31/2011

 

Item 1 – Report to Stockholders

 



 

 

(BLACKROCK LOGO)

October 31, 2011


 

 

 

Semi-Annual Report (Unaudited)

 

 

 

BlackRock MuniYield Fund, Inc. (MYD)

 

 

 

BlackRock MuniYield Quality Fund, Inc. (MQY)

 

 

 

BlackRock MuniYield Quality Fund II, Inc. (MQT)


 

Not FDIC Insured § No Bank Guarantee § May Lose Value




 

 

Table of Contents


 

 

 

 

 

Page

 

 

 

Dear Shareholder

 

3

Semi-Annual Report:

 

 

Municipal Market Overview

 

4

Fund Summaries

 

5

The Benefits and Risks of Leveraging

 

8

Derivative Financial Instruments

 

8

Financial Statements:

 

 

Schedules of Investments

 

9

Statements of Assets and Liabilities

 

28

Statements of Operations

 

29

Statements of Changes in Net Assets

 

30

Statements of Cash Flows

 

31

Financial Highlights

 

32

Notes to Financial Statements

 

35

Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements

 

42

Officers and Directors

 

46

Additional Information

 

47


 

 

 

 

 

 

2

SEMI-ANNUAL REPORT

OCTOBER 31, 2011




 

 

Dear Shareholder

One year ago, the global economy appeared to solidly be in recovery mode and investors were optimistic as the US Federal Reserve launched its second round of quantitative easing. Stock markets rallied despite ongoing sovereign debt problems in Europe and inflationary pressures looming over emerging markets. Fixed income markets, however, saw yields move sharply upward (pushing prices down), especially on the long end of the historically steep yield curve. While high yield bonds benefited from the risk rally, most fixed income sectors declined in the fourth quarter of 2010. The tax-exempt municipal market faced additional headwinds as it became evident that the Build America Bond program would not be extended and municipal finance troubles burgeoned.

Early 2011 saw spikes of volatility as political turmoil swept across the Middle East/North Africa region and prices of oil and other commodities soared. Natural disasters in Japan disrupted industrial supply chains and concerns mounted regarding US debt and deficit issues. Nevertheless, equities generally performed well early in the year as investors chose to focus on the continuing stream of strong corporate earnings and positive economic data. Credit markets were surprisingly resilient in this environment and yields regained relative stability in 2011. The tax-exempt market saw relief from its headwinds and steadily recovered from its fourth-quarter lows. Equities, commodities and high yield bonds outpaced higher-quality assets as investors increased their risk tolerance.

However, the environment changed dramatically in the middle of the second quarter. Markets dropped sharply in May when fears mounted over the possibility of Greece defaulting on its debt, rekindling fears about the broader sovereign debt crisis. Concurrently, economic data signaled that the recovery had slowed in the United States and other developed nations. Confidence was further shaken by the prolonged debt ceiling debate in Washington, DC. On August 5th, Standard & Poor’s downgraded the US government’s credit rating and turmoil erupted in financial markets around the world. Extraordinary levels of volatility persisted in the months that followed as Greece teetered on the brink of default. Financial problems intensified in Italy and Spain and both countries faced credit rating downgrades. Debt worries spread to the core European nations of France and Germany, and the entire euro-zone banking system came under intense pressure. Late in the summer, economic data out of the United States and Europe grew increasingly bleak while China and other emerging economies began to show signs of slowing growth. By the end of the third quarter, equity markets had fallen nearly 20% from their April peak while safe-haven assets such as US Treasuries, gold and the Swiss franc skyrocketed.

October brought enough positive economic data to assuage fears of a double-dip recession in the United States and corporate earnings continued to be strong. Additionally, European policymakers demonstrated an increased willingness to unite in their struggle to resolve the region’s debt and banking crisis. These encouraging developments brought many investors back from the sidelines and risk assets rallied through the month, albeit with large daily swings as investor reactions to news from Europe vacillated between faith and skepticism.

Overall, lower-risk investments including US Treasuries, municipal securities and investment grade credits posted gains for the 6- and 12-month periods ended October 31, 2011. Risk assets, including equities and high yield debt, broadly declined over the six months; however, US stocks and high yield bonds remained in positive territory on a 12-month basis. Continued low short-term interest rates kept yields on money market securities near their all-time lows. While markets remain volatile and uncertainties abound, BlackRock remains dedicated to finding opportunities and managing risk in this environment.

Sincerely,

-s- Rob Kapito

Rob Kapito
President, BlackRock Advisors, LLC

(PHOTO OF ROB KAPITO)

“While markets remain volatile and uncertainties abound, BlackRock remains dedicated to finding opportunities and managing risk in this environment.”

 

Rob Kapito

President, BlackRock Advisors, LLC


Total Returns as of October 31, 2011


 

 

 

 

 

 

 

 

 

 

6-month

 

12-month

 

US large cap equities (S&P 500® Index)

 

 

(7.11

)%

 

8.09

%

US small cap equities (Russell 2000® Index)

 

 

(13.76

)

 

6.71

 

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

 

 

(14.90

)

 

(4.08

)

Emerging market equities (MSCI Emerging Markets Index)

 

 

(15.91

)

 

(7.72

)

3-month Treasury bill (BofA Merrill Lynch 3-Month Treasury Bill Index)

 

 

0.04

 

 

0.13

 

US Treasury securities (BofA Merrill Lynch 10-Year US Treasury Index)

 

 

12.11

 

 

7.79

 

US investment grade bonds (Barclays Capital US Aggregate Bond Index)

 

 

4.98

 

 

5.00

 

Tax-exempt municipal bonds (Barclays Capital Municipal Bond Index)

 

 

5.56

 

 

3.78

 

US high yield bonds (Barclays Capital US Corporate High Yield 2% Issuer Capped Index)

 

 

(0.95

)

 

5.16

 


 

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




 

 

Municipal Market Overview


 

For the 12-Month Period Ended October 31, 2011

At the outset of the 12-month period, the municipal bond market was faced with a “perfect storm” of events that ultimately resulted in losses for the fourth quarter of 2010 at a level not seen since the Fed tightening cycle of 1994. US Treasury yields lost support due to concerns over the federal deficit and municipal valuations suffered a quick and severe setback, as it became evident the Build America Bond (“BAB”) program would expire at the end of 2010. The program had opened the taxable market to municipal issuers, successfully alleviating supply pressure in the traditional tax-exempt marketplace and bringing down yields in that space.

(LINE GRAPH)

Towards the end of 2010, news about municipal finance troubles mounted and damaged confidence among retail investors. From mid-November through year end, weekly outflows from municipal mutual funds averaged over $2.5 billion. Political uncertainty surrounding the midterm elections and tax policies exacerbated the situation. These conditions combined with seasonal illiquidity sapped willful market participation from the trading community. December brought declining demand with no comparable reduction in supply as issuers rushed their deals to market before the BAB program was retired. This supply-demand imbalance led to wider quality spreads and higher yields.

Demand is usually strong at the beginning of a new year, but retail investors continued to move away from municipal mutual funds in 2011. From the middle of November 2010, outflows persisted for 29 consecutive weeks, totaling $35.1 billion before the trend finally broke in June. Weak demand has been counterbalanced by lower supply in 2011. According to Thomson Reuters, year-to-date through October, new issuance was down 34% compared to the same period last year. Higher interest rates during the first quarter, fiscal policy changes and a reduced need for municipal borrowing were among the factors that deterred issuers from bringing new deals to the market. In this positive technical environment, the S&P/Investortools Main Municipal Bond Index returned 8.05% for the first ten months of 2011, as municipal bonds outperformed most other fixed income asset classes year-to-date.

On August 5th, Standard & Poor’s (“S&P’s”) downgraded the US government credit rating from AAA to AA+, leading to the downgrade of approximately 11,000 municipal issues directly linked to the US debt rating. Nevertheless, the municipal market posted solid gains for the month of August, aided primarily by an exuberant Treasury market, severe volatility in US equities and continued supply constraint in the primary municipal market. Increased demand from both traditional and non-traditional buyers pushed long-term municipal bond yields lower, resulting in a curve-flattening trend that continued through period end.

Overall, the municipal yield curve flattened during the period from October 31, 2010 to October 31, 2011. As measured by Thomson Municipal Market Data, yields declined by 11 basis points (“bps”) to 3.75% on AAA quality-rated 30-year municipal bonds and by 12 bps to 2.39%, on 10-year bonds, while yields on 5-year issues rose 6 bps to 1.26%. With the exception of the 2- to 5-year range, the yield spreads between maturities decreased over the past year. The most significant decrease was seen in the 5- to 10-year range, where the spread tightened by 18 bps, while the overall slope between 2- and 30-year maturities decreased by 9 bps to 3.31%.

The fundamental picture for municipalities is improving. Austerity is the general theme across the country, while a small number of states continue to rely on the “kick the can” approach to close their shortfalls, using aggressive revenue projections and accounting gimmicks. It has been nearly a year since the first highly publicized interview about the fiscal problems plaguing state and local governments. Thus far, the prophecy of widespread defaults across the municipal market has not materialized. According to S&P’s, municipal defaults in 2011 are down 69% compared to the same period in 2010. Year-to-date monetary defaults in the S&P/Investortools Main Municipal Bond Index total roughly $750 million, representing less than 0.5% of the index. BlackRock maintains the view that municipal bond defaults will remain in the periphery and the overall market is fundamentally sound. We continue to recognize that careful credit research and security selection remain imperative amid uncertainty in this 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

SEMI-ANNUAL REPORT

OCTOBER 31, 2011




 

 

 

 

Fund Summary as of October 31, 2011

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

For the six months ended October 31, 2011, the Fund returned 12.37% based on market price and 11.34% based on net asset value (“NAV”). For the same period, the closed-end Lipper General & Insured Municipal Debt Funds (Leveraged) category posted an average return of 11.60% based on market price and 11.08% based on NAV. During the period, Lipper combined the General Municipal Debt Funds (Leveraged) and Insured Municipal Debt Funds (Leveraged) categories into one General & Insured Municipal Debt Funds (Leveraged) category. All returns reflect reinvestment of dividends. The Fund’s premium 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. The Fund performed well due to its yield-curve-flattening bias and duration positioning. The Fund has consistently emphasized longer-dated securities in order to benefit from long-term rates declining faster than short-term rates, a scenario that occurred during the period. In addition, the Fund’s holdings generated a high distribution yield, which in the aggregate had a meaningful impact on returns. Sector concentrations in health and transportation had a positive impact on performance, as did holding only minimal exposure to pre-refunded and escrowed issues, which underperformed the broader market. Detracting from performance was the Fund’s long-standing focus on corporate-related debt, which modestly underperformed for the six-month period. Additionally, low exposure to the top-performing tobacco sector was a modest impediment to performance.

 

 

 

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 October 31, 2011 ($14.28)1

 

 

6.93%

 

Tax Equivalent Yield2

 

 

10.66%

 

Current Monthly Distribution per Common Share3

 

 

$0.0825

 

Current Annualized Distribution per Common Share3

 

 

$0.9900

 

Leverage as of October 31, 20114

 

 

37%

 


 

 

 

 

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 federal tax rate of 35%.

 

 

 

 

3

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

 

 

 

 

4

Represents Variable Rate Demand Preferred Shares (“VRDP Shares”) and tender option bond trusts (“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 8.

The table below summarizes the changes in the Fund’s market price and NAV per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10/31/11

 

4/30/11

 

Change

 

High

 

Low

 

Market Price

 

$

14.28

 

$

13.17

 

 

8.43

%

$

14.79

 

$

12.73

 

Net Asset Value

 

$

14.02

 

$

13.05

 

 

7.43

%

$

14.33

 

$

13.05

 

The following charts show the sector and credit quality allocations of the Fund’s long-term investments:

 

Sector Allocations


 

 

 

 

 

 

 

 

 

 

10/31/11

 

4/30/11

 

Health

 

23

%

 

23

%

 

Transportation

 

18

 

 

15

 

 

Corporate

 

14

 

 

15

 

 

State

 

14

 

 

13

 

 

Education

 

11

 

 

9

 

 

Utilities

 

10

 

 

10

 

 

County/City/Special District/School District

 

8

 

 

9

 

 

Tobacco

 

1

 

 

1

 

 

Housing

 

1

 

 

5

 

 


 

Credit Quality Allocations5


 

 

 

 

 

 

 

 

 

 

10/31/11

 

4/30/11

 

AAA/Aaa

 

10

%

 

13

%

 

AA/Aa

 

39

 

 

36

 

 

A

 

23

 

 

22

 

 

BBB/Baa

 

12

 

 

12

 

 

BB/Ba

 

2

 

 

2

 

 

B

 

4

 

 

3

 

 

CCC/Caa

 

1

 

 

2

 

 

CC/Ca

 

1

 

 

1

 

 

Not Rated6

 

8

 

 

9

 

 


 

 

 

 

5

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

 

 

 

 

6

The investment advisor has deemed certain of these non-rated securities to be of investment grade quality. As of October 31, 2011 and April 30, 2011, the market value of these securities was $5,125,586, representing 1% and $3,786,237, representing 0%, respectively, of the Fund’s long-term investments.


 

 

 

 

 

 

 

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2011

5




 

 

 

 

Fund Summary as of October 31, 2011

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

For the six months ended October 31, 2011, the Fund returned 14.04% based on market price and 12.62% based on NAV. For the same period, the closed-end Lipper General & Insured Municipal Debt Funds (Leveraged) category posted an average return of 11.60% based on market price and 11.08% based on NAV. During the period, Lipper combined the General Municipal Debt Funds (Leveraged) and Insured Municipal Debt Funds (Leveraged) categories into one General & Insured Municipal Debt Funds (Leveraged) category. All returns reflect reinvestment of dividends. The Fund’s discount to NAV, which narrowed 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. The Fund’s performance was positively impacted by its longer duration holdings (those with higher sensitivity to interest rate movements) as yields fell during the period (bond prices rise when their yields fall). The Fund also benefited from its yield curve positioning. The Fund favored longer-term securities, which outperformed those with short and intermediate maturities as rates fell more on the long end of the curve. Given the broad rally in the municipal market during the period, most sectors performed well. However, the Fund’s exposure to bonds with shorter maturities or shorter call dates detracted from performance as the yield curve flattened.

 

 

 

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 October 31, 2011 ($14.52)1

 

 

6.36%

 

Tax Equivalent Yield2

 

 

9.78%

 

Current Monthly Distribution per Common Share3

 

 

$0.0770

 

Current Annualized Distribution per Common Share3

 

 

$0.9240

 

Leverage as of October 31, 20114

 

 

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 federal tax rate of 35%.

 

 

 

 

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 8.

The table below summarizes the changes in the Fund’s market price and NAV per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10/31/11

 

4/30/11

 

Change

 

High

 

Low

 

Market Price

 

$

14.52

 

$

13.15

 

 

10.42

%

$

15.17

 

$

12.76

 

Net Asset Value

 

$

14.96

 

$

13.72

 

 

9.04

%

$

15.22

 

$

13.72

 

The following charts show the sector and credit quality allocations of the Fund’s long-term investments:

 

Sector Allocations


 

 

 

 

 

 

 

 

 

 

10/31/11

 

4/30/11

 

County/City/Special District/School District

 

26

%

 

25

%

 

Transportation

 

20

 

 

22

 

 

Utilities

 

19

 

 

17

 

 

State

 

17

 

 

15

 

 

Health

 

11

 

 

9

 

 

Education

 

4

 

 

4

 

 

Housing

 

2

 

 

3

 

 

Corporate

 

1

 

 

3

 

 

Tobacco

 

 

 

2

 

 


 

Credit Quality Allocations5


 

 

 

 

 

 

 

 

 

 

10/31/11

 

4/30/11

 

AAA/Aaa

 

18

%

 

12

%

 

AA/Aa

 

51

 

 

59

 

 

A

 

24

 

 

23

 

 

BBB/Baa

 

7

 

 

6

 

 


 

 

 

 

5

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


 

 

 

 

 

 

 

6

SEMI-ANNUAL REPORT

OCTOBER 31, 2011




 

 

 

 

Fund Summary as of October 31, 2011

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

For the six months ended October 31, 2011, the Fund returned 11.22% based on market price and 13.32% based on NAV. For the same period, the closed-end Lipper General & Insured Municipal Debt Funds (Leveraged) category posted an average return of 11.60% based on market price and 11.08% based on NAV. During the period, Lipper combined the General Municipal Debt Funds (Leveraged) and Insured Municipal Debt Funds (Leveraged) categories into one General & Insured Municipal Debt Funds (Leveraged) category. All returns reflect reinvestment of dividends. 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. The Fund’s performance was positively impacted by its longer duration holdings (those with higher sensitivity to interest rate movements) as yields fell during the period (bond prices rise when their yields fall). The Fund also benefited from its yield curve positioning. The Fund favored longer-term securities, which outperformed those with short and intermediate maturities as rates fell more on the long end of the curve. Given the broad rally in the municipal market during the period, most sectors performed well. However, the Fund’s exposure to bonds with shorter maturities or shorter call dates detracted from performance as the yield curve flattened.

 

 

 

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 October 31, 2011 ($12.47)1

 

 

6.54%

 

Tax Equivalent Yield2

 

 

10.06%

 

Current Monthly Distribution per Common Share3

 

 

$0.0680

 

Current Annualized Distribution per Common Share3

 

 

$0.8160

 

Leverage as of October 31, 20114

 

 

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 federal tax rate of 35%.

 

 

 

 

3

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

 

 

 

 

4

Represents Auction Market Preferred Shares (“AMPS”) and TOBs as a percentage of total managed assets, which is the total assets of the Fund, including any assets attributable to AMPS 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 8.

The table below summarizes the changes in the Fund’s market price and NAV per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10/31/11

 

4/30/11

 

Change

 

High

 

Low

 

Market Price

 

$

12.47

 

$

11.59

 

 

7.59

%

$

12.95

 

$

11.05

 

Net Asset Value

 

$

12.99

 

$

11.85

 

 

9.62

%

$

13.20

 

$

11.85

 

The following charts show the sector and credit quality allocations of the Fund’s long-term investments:

 

Sector Allocations


 

 

 

 

 

 

 

 

 

 

10/31/11

 

4/30/11

 

County/City/Special District/School District

 

33

%

 

29

%

 

Transportation

 

20

 

 

22

 

 

State

 

16

 

 

17

 

 

Utilities

 

14

 

 

13

 

 

Health

 

9

 

 

8

 

 

Housing

 

6

 

 

7

 

 

Education

 

1

 

 

3

 

 

Corporate

 

1

 

 

1

 

 


 

Credit Quality Allocations5


 

 

 

 

 

 

 

 

 

 

10/31/11

 

4/30/11

 

AAA/Aaa

 

14

%

 

9

%

 

AA/Aa

 

64

 

 

68

 

 

A

 

18

 

 

19

 

 

BBB/Baa

 

4

 

 

4

 

 


 

 

 

 

5

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


 

 

 

 

 

 

 

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2011

7




 

 

The Benefits and Risks of Leveraging

The Funds may utilize leverage to seek to enhance the yield and NAV of their common shares (“Common Shares”). However, these objectives cannot be achieved in all interest rate environments.

To leverage, the Funds issue AMPS or VRDP Shares (collectively, “Preferred Shares”), which pay dividends at prevailing short-term interest rates, and invest the proceeds in long-term municipal bonds. In general, the concept of leveraging is based on the premise that the financing cost of assets to be obtained from leverage, which will be based on short-term interest rates, will normally be lower than the income earned by each Fund on its longer-term portfolio investments. To the extent that the total assets of each Fund (including the assets obtained from leverage) are invested in higher-yielding portfolio investments, each Fund’s shareholders will benefit from the incremental net income.

To illustrate these concepts, assume a Fund’s Common Shares capitalization is $100 million and it issues Preferred Shares for an additional $50 million, creating a total value of $150 million available for investment in long-term municipal bonds. If prevailing short-term interest rates are 3% and long-term interest rates are 6%, the yield curve has a strongly positive slope. In this case, the Fund pays dividends on the $50 million of Preferred Shares based on the lower short-term interest rates. At the same time, the securities purchased by the Fund with assets received from Preferred Shares issuance earn income based on long-term interest rates. In this case, the dividends paid to holders of Preferred Shares (“Preferred Shareholders”) are significantly lower than the income earned on the Fund’s long-term investments, and therefore the Common Shareholders are the beneficiaries of the incremental net income.

If short-term interest rates rise, narrowing the differential between short-term and long-term interest rates, the incremental net income pickup will be reduced or eliminated completely. Furthermore, if prevailing short-term interest rates rise above long-term interest rates, the yield curve has a negative slope. In this case, the Fund pays higher short-term interest rates whereas the Fund’s total portfolio earns income based on lower long-term interest rates.

Furthermore, the value of the Funds’ portfolio investments generally varies inversely with the direction of long-term interest rates, although other factors can influence the value of portfolio investments. In contrast, the redemption value of the Funds’ Preferred Shares does not fluctuate in relation to interest rates. As a result, changes in interest rates can influence the Funds’ NAV positively or negatively in addition to the impact on Fund performance from leverage from Preferred Shares discussed above.

The Funds may also leverage their assets through the use of TOBs, as described in Note 1 of the Notes to Financial Statements. TOB investments generally will provide the Funds with economic benefits in periods of declining short-term interest rates, but expose the Funds to risks during periods of rising short-term interest rates similar to those associated with Preferred Shares issued by the Funds, as described above. Additionally, fluctuations in the market value of municipal bonds deposited into the TOB trust may adversely affect each Fund’s NAV per share.

The use of leverage may enhance opportunities for increased income to the Funds and Common Shareholders, but as described above, it also creates risks as short- or long-term interest rates fluctuate. Leverage also will generally cause greater changes in the Funds’ NAVs, market prices and dividend rates than comparable portfolios without leverage. If the income derived from securities purchased with assets received from leverage exceeds the cost of leverage, the Funds’ net income will be greater than if leverage had not been used. Conversely, if the income from the securities purchased is not sufficient to cover the cost of leverage, each Fund’s net income will be less than if leverage had not been used, and therefore the amount available for distribution to Common Shareholders will be reduced. Each Fund may be required to sell portfolio securities at inopportune times or at distressed values in order to comply with regulatory requirements applicable to the use of leverage or as required by the terms of leverage instruments, which may cause a Fund to incur losses. The use of leverage may limit each Fund’s ability to invest in certain types of securities or use certain types of hedging strategies, such as in the case of certain restrictions imposed by rating agencies that rate the Preferred Shares issued by the Funds. Each 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.

Under the Investment Company Act of 1940, the Funds are permitted to issue Preferred Shares in an amount of up to 50% of their total managed assets at the time of issuance. Under normal circumstances, each Fund anticipates that the total economic leverage from Preferred Shares and/or TOBs will not exceed 50% (45% for MYD and MQY) of its total managed assets at the time such leverage is incurred. As of October 31, 2011, the Funds had economic leverage from Preferred Shares and/or TOBs as a percentage of their total managed assets as follows:

 

 

 

 

 

 

 

Percent of
Leverage

 

MYD

 

 

37%

 

MQY

 

 

38%

 

MQT

 

 

38%

 


 

 

Derivative Financial Instruments

The Funds may invest in various derivative financial instruments, including financial futures contracts as specified in Note 2 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 and/or interest rate 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.

 

 

 

 

 

 

 

8

SEMI-ANNUAL REPORT

OCTOBER 31, 2011




 

 

 

 

Schedule of Investments October 31, 2011 (Unaudited)

BlackRock MuniYield Fund, Inc. (MYD)
(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Alabama — 0.8%

 

 

 

 

 

 

 

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

 

$

5,250

 

$

4,975,373

 

Alaska — 1.0%

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

4.63%, 6/01/23

 

 

2,500

 

 

2,300,200

 

5.00%, 6/01/46

 

 

6,450

 

 

4,068,789

 

 

 

 

 

 

 

6,368,989

 

Arizona — 8.8%

 

 

 

 

 

 

 

Arizona State Transportation Board, RB, Sub-Series A:

 

 

 

 

 

 

 

5.00%, 7/01/22

 

 

7,030

 

 

7,614,896

 

5.00%, 7/01/23

 

 

5,240

 

 

5,675,968

 

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

 

 

3,300

 

 

2,214,729

 

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

 

 

 

 

 

 

 

6.25%, 6/01/19

 

 

3,000

 

 

2,662,560

 

6.30%, 4/01/23

 

 

5,090

 

 

4,349,405

 

Pima County IDA, IDRB, Tucson Electric Power Co.,
Series A, 6.38%, 9/01/29

 

 

3,000

 

 

3,066,750

 

Pima County IDA, Refunding RB, Charter Schools II,
Series A, 6.75%, 7/01/31

 

 

720

 

 

689,378

 

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

 

 

4,905

 

 

5,143,138

 

Salt Verde Financial Corp., RB, Senior:

 

 

 

 

 

 

 

5.00%, 12/01/32

 

 

7,365

 

 

6,778,893

 

5.00%, 12/01/37

 

 

14,190

 

 

12,848,619

 

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

 

 

2,125

 

 

2,235,309

 

Yavapai County IDA Arizona, RB, Yavapai Regional
Medical Center, Series A, 6.00%, 8/01/33

 

 

3,900

 

 

3,909,165

 

 

 

 

 

 

 

57,188,810

 

Arkansas — 0.5%

 

 

 

 

 

 

 

County of Little River Arkansas, Refunding RB,
Georgia-Pacific Corp. Project, AMT, 5.60%,
10/01/26

 

 

3,385

 

 

3,357,818

 


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

California — 10.7%

 

 

 

 

 

 

 

California Health Facilities Financing Authority,
Refunding RB:

 

 

 

 

 

 

 

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

 

$

3,155

 

$

3,395,222

 

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

 

 

4,425

 

 

4,608,151

 

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

 

 

6,465

 

 

7,049,307

 

California State Public Works Board, RB, Various
Capital Projects, Sub-Series I-1, 6.38%,
11/01/34

 

 

2,385

 

 

2,621,329

 

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

 

 

4,375

 

 

4,295,331

 

Los Angeles Department of Airports, RB, Series A,
5.25%, 5/15/39

 

 

1,605

 

 

1,712,904

 

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

 

 

11,970

 

 

12,598,305

 

State of California, GO:

 

 

 

 

 

 

 

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

 

 

10

 

 

10,136

 

Various Purpose, 6.00%, 3/01/33

 

 

5,085

 

 

5,722,659

 

Various Purpose, 6.50%, 4/01/33

 

 

14,075

 

 

16,411,591

 

Various Purpose, 5.00%, 10/01/41

 

 

6,190

 

 

6,170,687

 

University of California, RB, Limited Project, Series B,
4.75%, 5/15/38

 

 

4,435

 

 

4,460,191

 

 

 

 

 

 

 

69,055,813

 

Colorado — 2.7%

 

 

 

 

 

 

 

City & County of Denver Colorado, RB, Series D, AMT
(AMBAC), 7.75%, 11/15/13

 

 

3,990

 

 

4,256,931

 

Colorado Housing & Finance Authority, Refunding
RB, S/F Program, Senior Series D-2, AMT,
6.90%, 4/01/29

 

 

115

 

 

121,700

 

Plaza Metropolitan District No. 1 Colorado, Tax
Allocation Bonds, Public Improvement Fee,
Tax Increment:

 

 

 

 

 

 

 

8.00%, 12/01/25

 

 

6,850

 

 

6,906,650

 

Subordinate, 8.13%, 12/01/25

 

 

1,885

 

 

1,761,495

 


 

Portfolio Abbreviations

To simplify the listings of portfolio holdings in the Schedules of Investments, the names and descriptions of many of the securities have been abbreviated according to the following list:

 

 

ACA

American Capital Access Corp.

AGC

Assured Guaranty Corp.

AGM

Assured Guaranty Municipal Corp.

AMBAC

American Municipal Bond Assurance Corp.

AMT

Alternative Minimum Tax (subject to)

ARB

Airport Revenue Bonds

BHAC

Berkshire Hathaway Assurance Corp.

CAB

Capital Appreciation Bonds

COP

Certificate of Participation

EDA

Economic Development Authority

EDC

Economic Development Corp.

ERB

Education Revenue Bonds

FHA

Federal Housing Administration

GAB

Grant Anticipation Bonds

GARB

General Airport Revenue Bonds

GO

General Obligation Bonds

HDA

Housing Development Authority

HFA

Housing Finance Agency

HRB

Housing Revenue Bonds

IDA

Industrial Development Authority

IDRB

Industrial Development Revenue Bonds

ISD

Independent School District

MRB

Mortgage Revenue Bonds

NPFGC

National Public Finance Guarantee Corp.

PSF-GTD

Permanent School Fund Guaranteed

Radian

Radian Corp.

RB

Revenue Bonds

S/F

Single-Family

SAN

State Aid Notes

SO

Special Obligation

Syncora

Syncora Guaranteed

TRAN

Tax Revenue Anticipation Notes


 

 

 

 

See Notes to Financial Statements.

 

 

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2011

9




 

 

 

 

Schedule of Investments (continued)

BlackRock MuniYield Fund, Inc. (MYD)
(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Colorado (concluded)

 

 

 

 

 

 

 

University of Colorado, RB, Series A:

 

 

 

 

 

 

 

5.25%, 6/01/30

 

$

2,250

 

$

2,450,745

 

5.38%, 6/01/32

 

 

1,250

 

 

1,361,425

 

5.38%, 6/01/38

 

 

830

 

 

890,515

 

 

 

 

 

 

 

17,749,461

 

Connecticut — 1.6%

 

 

 

 

 

 

 

Connecticut State Health & Educational Facility
Authority, RB:

 

 

 

 

 

 

 

Ascension Health Senior Credit, 5.00%,
11/15/40

 

 

2,770

 

 

2,845,565

 

Wesleyan University, 5.00%, 7/01/35

 

 

2,225

 

 

2,379,749

 

Wesleyan University, 5.00%, 7/01/39

 

 

5,000

 

 

5,325,200

 

 

 

 

 

 

 

10,550,514

 

Delaware — 1.5%

 

 

 

 

 

 

 

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

 

 

2,305

 

 

2,318,484

 

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

 

 

8,275

 

 

7,588,837

 

 

 

 

 

 

 

9,907,321

 

District of Columbia — 1.9%

 

 

 

 

 

 

 

Metropolitan Washington Airports Authority, RB:

 

 

 

 

 

 

 

CAB, Second Senior Lien, Series B (AGC),
7.00%, 10/01/31 (a)

 

 

8,350

 

 

2,572,385

 

CAB, Second Senior Lien, Series B (AGC),
7.03%, 10/01/32 (a)

 

 

15,000

 

 

4,347,000

 

CAB, Second Senior Lien, Series B (AGC),
7.05%, 10/01/33 (a)

 

 

13,410

 

 

3,654,895

 

First Senior Lien, Series A, 5.25%, 10/01/44

 

 

1,500

 

 

1,558,980

 

 

 

 

 

 

 

12,133,260

 

Florida — 9.0%

 

 

 

 

 

 

 

City of Clearwater Florida, RB, Series A, 5.25%,
12/01/39

 

 

6,900

 

 

7,426,263

 

County of Broward Florida, RB, Series A, 5.25%,
10/01/34

 

 

2,155

 

 

2,313,608

 

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

 

 

11,450

 

 

11,960,326

 

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

 

 

7,530

 

 

7,741,744

 

Greater Orlando Aviation Authority Florida, RB,
Special Purpose, JetBlue Airways Corp., AMT,
6.50%, 11/15/36

 

 

2,500

 

 

2,350,425

 

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

 

 

 

 

 

 

 

Series A, 7.13%, 4/01/30

 

 

11,500

 

 

10,248,800

 

Series B, 7.13%, 4/01/30

 

 

5,000

 

 

4,456,000

 

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

 

 

4,615

 

 

4,830,428

 

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

 

 

5,170

 

 

5,186,492

 

Santa Rosa Bay Bridge Authority, RB, 6.25%,
7/01/28 (b)(c)

 

 

4,620

 

 

1,616,954

 

 

 

 

 

 

 

58,131,040

 


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Georgia — 1.4%

 

 

 

 

 

 

 

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

 

$

1,700

 

$

1,747,073

 

Metropolitan Atlanta Rapid Transit Authority, RB, Third
Series, 5.00%, 7/01/39

 

 

6,945

 

 

7,240,788

 

 

 

 

 

 

 

8,987,861

 

Guam — 0.7%

 

 

 

 

 

 

 

Territory of Guam, GO, Series A:

 

 

 

 

 

 

 

6.00%, 11/15/19

 

 

1,270

 

 

1,292,619

 

6.75%, 11/15/29

 

 

1,815

 

 

1,871,138

 

7.00%, 11/15/39

 

 

1,200

 

 

1,243,440

 

 

 

 

 

 

 

4,407,197

 

Hawaii — 0.5%

 

 

 

 

 

 

 

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

 

 

2,760

 

 

2,900,953

 

Idaho — 1.6%

 

 

 

 

 

 

 

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

 

 

10,000

 

 

10,008,100

 

Illinois — 9.4%

 

 

 

 

 

 

 

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

 

 

1,000

 

 

832,420

 

City of Chicago Illinois, Board of Education, GO,
Series A:

 

 

 

 

 

 

 

5.50%, 12/01/39

 

 

4,280

 

 

4,534,660

 

5.00%, 12/01/41

 

 

1,410

 

 

1,405,587

 

City of Chicago Illinois, RB, General, Third Lien:

 

 

 

 

 

 

 

Series A, 5.63%, 1/01/35

 

 

4,200

 

 

4,538,310

 

Series A, 5.75%, 1/01/39

 

 

3,500

 

 

3,819,935

 

Series C, 6.50%, 1/01/41

 

 

11,920

 

 

13,713,006

 

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

 

 

2,130

 

 

2,193,794

 

Illinois Finance Authority, RB, Navistar International,
Recovery Zone, 6.50%, 10/15/40

 

 

3,130

 

 

3,229,002

 

Illinois Finance Authority, Refunding RB:

 

 

 

 

 

 

 

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

 

 

3,235

 

 

3,349,195

 

Friendship Village Schaumburg, Series A,
5.63%, 2/15/37

 

 

875

 

 

712,451

 

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

 

 

 

 

 

 

 

CAB, Series B, 6.25%, 6/15/46 (a)

 

 

11,405

 

 

1,372,592

 

CAB, Series B, 6.25%, 6/15/47 (a)

 

 

27,225

 

 

3,082,142

 

Series B, 5.00%, 6/15/50

 

 

6,405

 

 

6,244,234

 

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

 

 

5,085

 

 

4,949,078

 

Railsplitter Tobacco Settlement Authority, RB:

 

 

 

 

 

 

 

5.50%, 6/01/23

 

 

2,730

 

 

2,881,733

 

6.00%, 6/01/28

 

 

2,335

 

 

2,427,980

 

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

 

 

1,275

 

 

1,334,390

 

 

 

 

 

 

 

60,620,509

 

Indiana — 2.2%

 

 

 

 

 

 

 

Indiana Finance Authority, RB, Sisters of St. Francis
Health, 5.25%, 11/01/39

 

 

1,690

 

 

1,722,042

 

Indiana Finance Authority, Refunding RB, Parkview
Health System, Series A, 5.75%, 5/01/31

 

 

6,645

 

 

6,957,780

 


 

 

 

See Notes to Financial Statements.

 

 

 

10

SEMI-ANNUAL REPORT

OCTOBER 31, 2011




 

 

 

 

Schedule of Investments (continued)

BlackRock MuniYield Fund, Inc. (MYD)
(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Indiana (concluded)

 

 

 

 

 

 

 

Indiana Finance Authority, Wastewater Utility, RB,
First Lien, CWA Authority, Series A, 5.25%,
10/01/38

 

$

3,200

 

$

3,413,920

 

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

 

 

2,230

 

 

2,434,246

 

 

 

 

 

 

 

14,527,988

 

Kansas — 1.3%

 

 

 

 

 

 

 

Kansas Development Finance Authority,
Refunding RB:

 

 

 

 

 

 

 

Adventist Health, 5.75%, 11/15/38

 

 

4,380

 

 

4,727,422

 

Sisters of Leavenworth, Series A, 5.00%,
1/01/40

 

 

3,365

 

 

3,400,736

 

 

 

 

 

 

 

8,128,158

 

Louisiana — 3.9%

 

 

 

 

 

 

 

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

 

 

1,610

 

 

1,704,298

 

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

 

 

9,000

 

 

9,391,590

 

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

 

 

1,260

 

 

1,284,204

 

Port of New Orleans Louisiana, Refunding RB,
Continental Grain Co. Project, 6.50%, 1/01/17

 

 

13,000

 

 

13,003,900

 

 

 

 

 

 

 

25,383,992

 

Maine — 0.5%

 

 

 

 

 

 

 

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

 

 

3,140

 

 

3,189,738

 

Maryland — 0.7%

 

 

 

 

 

 

 

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

 

 

1,500

 

 

1,364,325

 

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

 

 

880

 

 

870,654

 

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

 

 

1,690

 

 

1,696,693

 

Maryland Industrial Development Financing
Authority, RB, Our Lady Of Good Counsel School,
Series A, 6.00%, 5/01/35

 

 

500

 

 

502,030

 

 

 

 

 

 

 

4,433,702

 

Massachusetts — 3.2%

 

 

 

 

 

 

 

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

 

 

3,250

 

 

3,884,823

 

Massachusetts Development Finance Agency, RB,
Seven Hills Foundation & Affiliates (Radian),
5.00%, 9/01/35

 

 

3,500

 

 

2,923,305

 

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

 

 

3,640

 

 

3,714,074

 

Massachusetts State School Building Authority, RB,
Sales Tax Revenue, Senior, Series B, 5.00%,
10/15/41

 

 

9,200

 

 

9,824,496

 

 

 

 

 

 

 

20,346,698

 


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Michigan — 3.3%

 

 

 

 

 

 

 

City of Detroit Michigan, RB, Senior Lien, Series B
(AGM), 7.50%, 7/01/33

 

$

1,835

 

$

2,175,374

 

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

 

 

2,795

 

 

2,811,938

 

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

 

 

6,085

 

 

6,218,261

 

Royal Oak Hospital Finance Authority Michigan,
Refunding RB, William Beaumont Hospital:

 

 

 

 

 

 

 

8.00%, 9/01/29

 

 

2,000

 

 

2,383,040

 

8.25%, 9/01/39

 

 

6,365

 

 

7,549,272

 

 

 

 

 

 

 

21,137,885

 

Minnesota — 0.5%

 

 

 

 

 

 

 

City of Eden Prairie Minnesota, RB, Rolling Hills
Project, Series A (Ginnie Mae):

 

 

 

 

 

 

 

6.00%, 8/20/21

 

 

420

 

 

441,617

 

6.20%, 2/20/43

 

 

2,000

 

 

2,101,660

 

City of Minneapolis Minnesota, HRB, Gaar Scott Loft
Project, Mandatory Put Bonds, AMT, 5.95%,
5/01/30 (d)

 

 

850

 

 

851,360

 

 

 

 

 

 

 

3,394,637

 

Mississippi — 0.00%

 

 

 

 

 

 

 

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

 

 

280

 

 

301,364

 

New Hampshire — 0.5%

 

 

 

 

 

 

 

New Hampshire Health & Education Facilities
Authority, Refunding RB, Elliot Hospital, Series B,
5.60%, 10/01/22

 

 

2,860

 

 

2,954,923

 

New Jersey — 6.9%

 

 

 

 

 

 

 

New Jersey EDA, RB:

 

 

 

 

 

 

 

Cigarette Tax, 5.50%, 6/15/24

 

 

9,715

 

 

9,558,297

 

Continental Airlines Inc. Project, AMT,
6.25%, 9/15/19

 

 

3,905

 

 

3,825,026

 

Continental Airlines Inc. Project, AMT,
6.25%, 9/15/29

 

 

11,000

 

 

10,400,170

 

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

 

 

710

 

 

656,203

 

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

 

 

230

 

 

199,067

 

First Mortgage, Presbyterian Homes, Series A,
6.38%, 11/01/31

 

 

3,000

 

 

2,643,930

 

Motor Vehicle Surcharge, Series A (NPFGC),
5.00%, 7/01/29

 

 

10,000

 

 

10,239,800

 

New Jersey Health Care Facilities Financing Authority,
RB, Pascack Valley Hospital Association (b)(c):

 

 

 

 

 

 

 

6.00%, 7/01/13

 

 

1,335

 

 

13

 

6.63%, 7/01/36

 

 

1,835

 

 

18

 

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

 

 

 

 

 

 

 

CAB, Series C (AMBAC), 5.05%, 12/15/35 (a)

 

 

13,110

 

 

3,039,685

 

Series A, 5.50%, 6/15/41

 

 

3,630

 

 

3,919,602

 

 

 

 

 

 

 

44,481,811

 


 

 

 

 

See Notes to Financial Statements.

 

 

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2011

11




 

 

 

 

Schedule of Investments (continued)

BlackRock MuniYield Fund, Inc. (MYD)
(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

New York — 5.9%

 

 

 

 

 

 

 

Dutchess County Industrial Development Agency
New York, Refunding RB, St. Francis Hospital,
Series A, 7.50%, 3/01/29

 

$

2,100

 

$

2,077,635

 

Hudson New York Yards Infrastructure Corp., RB,
Series A, 5.75%, 2/15/47

 

 

3,260

 

 

3,452,047

 

Metropolitan Transportation Authority, Refunding RB:

 

 

 

 

 

 

 

Series B, 5.00%, 11/15/34

 

 

4,910

 

 

5,175,533

 

Transportation, Series D, 5.25%, 11/15/40

 

 

2,465

 

 

2,584,207

 

New York City Industrial Development Agency, RB,
British Airways Plc Project, 7.63%, 12/01/32

 

 

1,250

 

 

1,254,975

 

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

 

 

2,480

 

 

2,573,422

 

Port Authority of New York & New Jersey, RB, JFK
International Air Terminal:

 

 

 

 

 

 

 

6.00%, 12/01/36

 

 

2,625

 

 

2,717,715

 

6.00%, 12/01/42

 

 

1,485

 

 

1,552,894

 

State of New York Dormitory Authority, RB, North
Shore Long Island Jewish, Obligated Group,
Series A, 5.00%, 5/01/41

 

 

2,560

 

 

2,532,736

 

Triborough Bridge & Tunnel Authority, RB, Subordinate
Bonds, 5.25%, 11/15/30

 

 

10,000

 

 

10,479,900

 

Westchester County Industrial Development Agency
New York, MRB, Kendal on Hudson Project,
Series A, 6.38%, 1/01/24

 

 

3,450

 

 

3,444,721

 

 

 

 

 

 

 

37,845,785

 

North Carolina — 1.2%

 

 

 

 

 

 

 

North Carolina HFA, RB:

 

 

 

 

 

 

 

Home Ownership, Series 8A, AMT, 6.20%,
7/01/16

 

 

80

 

 

80,143

 

S/F, Series II (FHA), 6.20%, 3/01/16

 

 

405

 

 

406,276

 

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

 

 

2,805

 

 

2,852,685

 

North Carolina Medical Care Commission,
Refunding RB, First Mortgage, Presbyterian Homes,
5.40%, 10/01/27

 

 

5,000

 

 

4,575,050

 

 

 

 

 

 

 

7,914,154

 

Ohio — 1.0%

 

 

 

 

 

 

 

County of Lucas Ohio, Refunding RB, Sunset
Retirement, Series A, 6.63%, 8/15/30

 

 

2,175

 

 

2,176,783

 

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

 

 

2,840

 

 

2,871,865

 

Toledo-Lucas County Port Authority, RB, St. Mary
Woods Project, Series A:

 

 

 

 

 

 

 

6.00%, 5/15/24

 

 

750

 

 

397,298

 

6.00%, 5/15/34

 

 

2,250

 

 

1,191,892

 

 

 

 

 

 

 

6,637,838

 


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Pennsylvania — 2.2%

 

 

 

 

 

 

 

Allegheny County Hospital Development Authority,
Refunding RB, Health System, West Penn,
Series A, 5.38%, 11/15/40

 

$

5,490

 

$

4,504,380

 

Pennsylvania Economic Development Financing
Authority, RB:

 

 

 

 

 

 

 

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

 

 

3,805

 

 

3,997,533

 

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

 

 

5,270

 

 

4,481,555

 

Philadelphia Authority for Industrial Development,
RB, Commercial Development, AMT, 7.75%,
12/01/17

 

 

1,265

 

 

1,266,063

 

 

 

 

 

 

 

14,249,531

 

Puerto Rico — 2.7%

 

 

 

 

 

 

 

Puerto Rico Sales Tax Financing Corp., RB, First
Sub-Series A, 6.50%, 8/01/44

 

 

10,120

 

 

11,395,829

 

Puerto Rico Sales Tax Financing Corp., Refunding
RB, CAB (a):

 

 

 

 

 

 

 

First Sub-Series C, 6.58%, 8/01/38

 

 

23,695

 

 

4,416,274

 

Series A (AMBAC), 6.43%, 8/01/47

 

 

14,900

 

 

1,542,299

 

 

 

 

 

 

 

17,354,402

 

Rhode Island — 0.8%

 

 

 

 

 

 

 

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

 

 

4,240

 

 

3,310,719

 

City of Woonsocket Rhode Island, GO (NPFGC):

 

 

 

 

 

 

 

6.00%, 10/01/17

 

 

1,200

 

 

1,173,132

 

6.00%, 10/01/18

 

 

695

 

 

673,587

 

 

 

 

 

 

 

5,157,438

 

South Carolina — 1.6%

 

 

 

 

 

 

 

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

 

 

6,695

 

 

7,061,484

 

South Carolina State Public Service Authority,
Refunding RB, Santee Cooper Project, Series C,
5.00%, 12/01/36

 

 

3,125

 

 

3,357,938

 

 

 

 

 

 

 

10,419,422

 

Tennessee — 0.4%

 

 

 

 

 

 

 

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

 

 

2,870

 

 

2,868,422

 

Texas — 16.9%

 

 

 

 

 

 

 

Alliance Airport Authority Texas, Refunding RB,
American Airlines Inc. Project, AMT, 5.75%,
12/01/29

 

 

3,500

 

 

1,855,035

 

Bexar County Housing Finance Corp., RB, Waters at
Northern Hills Apartments, Series A (NPFGC):

 

 

 

 

 

 

 

6.00%, 8/01/31

 

 

805

 

 

711,620

 

6.05%, 8/01/36

 

 

1,000

 

 

866,850

 

Brazos River Authority, Refunding RB, TXU Electric Co.
Project, Series C, Mandatory Put Bonds, AMT,
5.75%, 5/01/36 (d)

 

 

4,580

 

 

4,580,000

 

Central Texas Regional Mobility Authority, RB, Senior
Lien, 6.25%, 1/01/46

 

 

4,365

 

 

4,439,118

 

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

 

 

3,060

 

 

3,320,957

 


 

 

 

See Notes to Financial Statements.

 

 

 

12

SEMI-ANNUAL REPORT

OCTOBER 31, 2011




 

 

 

 

Schedule of Investments (continued)

BlackRock MuniYield Fund, Inc. (MYD)
(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Texas (concluded)

 

 

 

 

 

 

 

City of Houston Texas, RB:

 

 

 

 

 

 

 

Senior Lien, Series A, 5.50%, 7/01/39

 

$

3,100

 

$

3,291,301

 

Special Facilities, Continental Airlines, Series E,
AMT, 7.38%, 7/01/22

 

 

3,500

 

 

3,500,945

 

Special Facilities, Continental Airlines, Series E,
AMT, 7.00%, 7/01/29

 

 

3,000

 

 

2,996,580

 

City of Houston Texas, Refunding RB, Sub-Lien
Series A, AMT, 5.00%, 7/01/21

 

 

6,240

 

 

6,658,454

 

Dallas-Fort Worth International Airport Facilities
Improvement Corp., Refunding RB, American
Airlines Inc. Project, AMT, 5.50%, 11/01/30

 

 

12,500

 

 

6,625,125

 

Gulf Coast IDA, RB, Citgo Petroleum Corp. Project,
Mandatory Put Bonds, AMT, 7.50%, 5/01/25 (d)

 

 

3,900

 

 

3,931,590

 

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

 

 

6,920

 

 

7,391,598

 

Houston Industrial Development Corp., RB, Senior,
Air Cargo, AMT, 6.38%, 1/01/23

 

 

1,620

 

 

1,432,663

 

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

 

 

1,000

 

 

1,059,920

 

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

 

 

4,320

 

 

4,643,093

 

North Texas Tollway Authority, RB:

 

 

 

 

 

 

 

CAB, Special Projects System, Series B, 7.55%,
9/01/37 (a)

 

 

4,110

 

 

810,985

 

Toll, 2nd Tier, Series F, 6.13%, 1/01/31

 

 

12,140

 

 

12,716,650

 

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

 

 

6,365

 

 

6,633,094

 

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

 

 

 

 

 

 

 

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

 

 

8,730

 

 

9,385,536

 

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

 

 

6,655

 

 

7,101,084

 

Texas State Public Finance Authority, Refunding
ERB, KIPP Inc., Series A (ACA), 5.00%, 2/15/36

 

 

1,000

 

 

947,440

 

Texas State Turnpike Authority, RB, First Tier, Series A
(AMBAC), 5.50%, 8/15/39

 

 

14,210

 

 

14,168,507

 

 

 

 

 

 

 

109,068,145

 

US Virgin Islands — 0.9%

 

 

 

 

 

 

 

Virgin Islands Public Finance Authority, RB, Senior
Secured, Hovensa Refinery, AMT, 6.13%, 7/01/22

 

 

6,250

 

 

5,730,937

 

Utah — 1.1%

 

 

 

 

 

 

 

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

 

 

7,310

 

 

7,408,320

 

Virginia — 0.6%

 

 

 

 

 

 

 

James City County EDA, RB, First Mortgage,
Williamsburg Lodge, Series A:

 

 

 

 

 

 

 

5.35%, 9/01/26

 

 

1,500

 

 

1,365,960

 

5.50%, 9/01/34

 

 

2,000

 

 

1,706,660

 

Winchester IDA Virginia, RB, Westminster-Canterbury,
Series A, 5.20%, 1/01/27

 

 

1,000

 

 

1,000,210

 

 

 

 

 

 

 

4,072,830

 


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Washington — 1.0%

 

 

 

 

 

 

 

Vancouver Housing Authority Washington, HRB, Teal
Pointe Apartments Project, AMT:

 

 

 

 

 

 

 

6.00%, 9/01/22

 

$

945

 

$

878,018

 

6.20%, 9/01/32

 

 

1,250

 

 

1,070,575

 

Washington Health Care Facilities Authority, RB,
Swedish Health Services, Series A, 6.75%,
11/15/41

 

 

4,045

 

 

4,457,307

 

 

 

 

 

 

 

6,405,900

 

Wisconsin — 4.3%

 

 

 

 

 

 

 

City of Milwaukee Wisconsin, RB, Senior, Air Cargo,
AMT, 6.50%, 1/01/25

 

 

600

 

 

529,464

 

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

 

 

14,300

 

 

15,999,841

 

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

 

 

4,970

 

 

5,135,998

 

Wisconsin Health & Educational Facilities Authority,
Refunding RB, Franciscan Sisters Healthcare,
5.00%, 9/01/26

 

 

6,470

 

 

6,220,452

 

 

 

 

 

 

 

27,885,755

 

Wyoming — 1.1%

 

 

 

 

 

 

 

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

 

 

6,195

 

 

6,670,714

 

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

 

 

595

 

 

608,263

 

 

 

 

 

 

 

7,278,977

 

Total Municipal Bonds — 116.8%

 

 

 

 

 

754,921,771

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (e)

 

 

 

 

 

 

 

Alabama — 0.7%

 

 

 

 

 

 

 

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

 

 

4,538

 

 

4,618,930

 

California — 6.2%

 

 

 

 

 

 

 

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

 

 

6,581

 

 

7,127,377

 

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

 

 

5,310

 

 

5,737,402

 

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

 

 

4,650

 

 

4,879,152

 

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

 

 

2,154

 

 

2,346,410

 

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

 

 

19,080

 

 

19,923,527

 

 

 

 

 

 

 

40,013,868

 


 

 

 

 

See Notes to Financial Statements.

 

 

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2011

13




 

 

 

 

Schedule of Investments (continued)

BlackRock MuniYield Fund, Inc. (MYD)

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (e)

 

Par
(000)

 

Value

 

Colorado — 2.6%

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

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

 

$

7,490

 

$

7,589,093

 

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

 

 

4,800

 

 

4,863,744

 

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

 

 

4,299

 

 

4,503,753

 

 

 

 

 

 

 

16,956,590

 

Connecticut — 3.0%

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

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

 

 

9,130

 

 

9,735,684

 

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

 

 

9,270

 

 

9,742,307

 

 

 

 

 

 

 

19,477,991

 

Georgia — 1.0%

 

 

 

 

 

 

 

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

 

 

6,398

 

 

6,722,211

 

New Hampshire — 0.7%

 

 

 

 

 

 

 

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

 

 

4,048

 

 

4,476,546

 

New York — 3.2%

 

 

 

 

 

 

 

New York City Municipal Water & Sewer Finance
Authority, RB, Series FF-2, 5.50%, 6/15/40

 

 

3,194

 

 

3,519,397

 

New York State Dormitory Authority, ERB, Series F,
5.00%, 3/15/35

 

 

16,723

 

 

17,308,541

 

 

 

 

 

 

 

20,827,938

 

North Carolina — 3.6%

 

 

 

 

 

 

 

North Carolina Capital Facilities Finance Agency,
Refunding RB:

 

 

 

 

 

 

 

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

 

 

18,897

 

 

19,741,381

 

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

 

 

3,120

 

 

3,298,620

 

 

 

 

 

 

 

23,040,001

 

Ohio — 4.5%

 

 

 

 

 

 

 

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

 

 

27,900

 

 

29,036,088

 

South Carolina — 2.8%

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

5.25%, 12/01/28

 

 

7,795

 

 

8,263,947

 

5.25%, 12/01/29

 

 

6,920

 

 

7,306,689

 

5.25%, 12/01/30

 

 

2,510

 

 

2,643,457

 

 

 

 

 

 

 

18,214,093

 

Tennessee — 1.8%

 

 

 

 

 

 

 

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

 

 

11,240

 

 

11,660,264

 

 

 

 

 

 

 

 

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (e)

 

Par
(000)

 

Value

 

Virginia — 3.8%

 

 

 

 

 

 

 

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

 

$

6,266

 

$

6,695,614

 

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

 

 

10,619

 

 

11,437,733

 

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

 

 

6,075

 

 

6,274,421

 

 

 

 

 

 

 

24,407,768

 

Washington — 0.9%

 

 

 

 

 

 

 

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

 

 

5,384

 

 

5,680,414

 

Wisconsin — 1.8%

 

 

 

 

 

 

 

Wisconsin Health & Educational Facilities Authority,
Refunding RB, Froedtert & Community Health Inc.,
5.25%, 4/01/39

 

 

11,458

 

 

11,590,168

 

Total Municipal Bonds Transferred to
Tender Option Bond Trusts — 36.6%

 

 

 

 

 

236,722,870

 

Total Long-Term Investments
(Cost — $970,176,301) — 153.4%

 

 

 

 

 

991,644,641

 

 

 

 

 

 

 

 

 

 

 

Short-Term Securities

 

 

 

 

 

 

 

Michigan Finance Authority, RB, SAN, Detroit Schools,
Series A-1, 6.45%, 2/20/12

 

 

6,640

 

 

6,640,000

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

 

 

FFI Institutional Tax-Exempt Fund, 0.01% (f)(g)

 

 

23,365,055

 

 

23,365,055

 

Total Short-Term Securities
(Cost — $30,005,055) — 4.6%

 

 

 

 

 

30,005,055

 

Total Investments (Cost — $1,000,181,356*) — 158.0%

 

 

 

 

 

1,021,649,696

 

Other Assets Less Liabilities — 0.1%

 

 

 

 

 

357,786

 

Liability for TOB Trust Certificates, Including
Interest Expense and Fees Payable — (19.2)%

 

 

 

 

 

(124,166,520

)

VRDP Shares, at Liquidation Value — (38.9)%

 

 

 

 

 

(251,400,000

)

Net Assets Applicable to Common Shares– 100.0%

 

 

 

 

$

646,440,962

 


 

 

 

 

*

The cost and unrealized appreciation (depreciation) of investments as of October 31, 2011, as computed for federal income tax purposes, were as follows:


 

 

 

 

 

Aggregate cost

 

$

874,630,951

 

Gross unrealized appreciation

 

$

45,095,400

 

Gross unrealized depreciation

 

 

(22,196,649

)

Net unrealized appreciation

 

$

22,898,751

 


 

 

(a)

Represents a zero-coupon bond. Rate shown reflects the current yield as of report date.

 

 

(b)

Issuer filed for bankruptcy and/or is in default of interest payments.

 

 

(c)

Non-income producing security.

 

 

(d)

Variable rate security. Rate shown is as of report date.

 

 

(e)

Securities represent bonds transferred to a TOB in exchange for which the Fund acquired residual interest certificates. These securities serve as collateral in a financing transaction. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs.


 

 

 

See Notes to Financial Statements.

 

 

 

14

SEMI-ANNUAL REPORT

OCTOBER 31, 2011




 

 

 

 

Schedule of Investments (concluded)

BlackRock MuniYield Fund, Inc. (MYD)


 

 

(f)

Investments in companies considered to be an affiliate of the Fund during the period, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Affiliate

 

Shares Held at
April 30, 2011

 

Net
Activity

 

Shares Held at
October 31, 2011

 

Income

 

FFI Institutional
Tax-Exempt Fund

 

 

16,277,332

 

 

7,087,723

 

 

23,365,055

 

$

1,876

 


 

 

(g)

Represents the current yield as of report date.

 

 

Financial futures contracts sold as of October 31, 2011 were as follows:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contracts

 

Issue

 

Exchange

 

Expiration

 

Notional
Value

 

Unrealized
Appreciation

 

129

 

10-Year US
Treasury Note

 

Chicago Board
of Trade

 

December
2011

 

$

16,649,063

 

$

144,801

 


 

 

 

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

 

 

 

Level 1 — unadjusted price quotations in active markets/exchanges for identical assets and liabilities

 

 

 

 

Level 2 — other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

 

 

 

Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Fund’s own assumptions used in determining the fair value of investments and derivative financial instruments)

 

 

 

 

Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. 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 does not necessarily correspond to the Fund’s perceived risk of investing in those securities. For information about the Fund’s policy regarding valuation of investments and derivative financial instruments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

 

 

 

 

The following tables summarize the inputs used as of October 31, 2011 in determining the fair valuation of the Fund’s investments and derivative financial instruments:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Valuation Inputs

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-Term Investments1

 

 

 

$

991,644,641

 

 

 

$

991,644,641

 

Short-Term Securities

 

$

23,365,055

 

 

6,640,000

 

 

 

 

30,005,055

 

Total

 

$

23,365,055

 

$

998,284,641

 

 

 

$

1,021,649,696

 


 

 

 

 

1

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


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Valuation Inputs

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Derivative Financial
Instruments2

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate contracts

 

$

144,801

 

 

 

 

 

$

144,801

 


 

 

 

 

2

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


 

 

 

 

See Notes to Financial Statements.

 

 

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2011

15




 

 

 

 

Schedule of Investments October 31, 2011 (Unaudited)

BlackRock MuniYield Quality Fund, Inc. (MQY)

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Alabama — 2.2%

 

 

 

 

 

 

 

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

 

$

3,000

 

$

2,644,500

 

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

 

 

7,125

 

 

7,281,394

 

 

 

 

 

 

 

9,925,894

 

Alaska — 1.2%

 

 

 

 

 

 

 

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

 

 

600

 

 

612,924

 

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

 

 

4,425

 

 

4,992,639

 

 

 

 

 

 

 

5,605,563

 

Arizona — 0.7%

 

 

 

 

 

 

 

Arizona State Health Facilities Authority, RB, Catholic
Healthcare West, Series B-2 (AGM), 5.00%,
3/01/41 (a)

 

 

550

 

 

543,290

 

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

 

 

 

 

 

 

 

5.00%, 10/01/27

 

 

1,850

 

 

1,979,593

 

5.25%, 10/01/28

 

 

800

 

 

864,440

 

 

 

 

 

 

 

3,387,323

 

California — 17.7%

 

 

 

 

 

 

 

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

 

 

4,150

 

 

3,694,579

 

Anaheim Public Financing Authority California, RB,
Electric System Distribution Facilities, Series A
(AGM), 5.00%, 10/01/31

 

 

1,250

 

 

1,284,675

 

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

 

 

 

 

 

 

 

5.18%, 8/01/37

 

 

3,250

 

 

637,780

 

4.87%, 8/01/38

 

 

7,405

 

 

1,361,631

 

California Health Facilities Financing Authority,
Refunding RB:

 

 

 

 

 

 

 

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

 

 

775

 

 

807,077

 

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

 

 

1,500

 

 

1,619,970

 

California State University, RB, Systemwide, Series A
(NPFGC), 5.00%, 11/01/35

 

 

2,130

 

 

2,154,218

 

Carlsbad Unified School District, GO, Election of
2006, Series B, 6.00%, 5/01/34 (b)

 

 

5,000

 

 

3,384,650

 

Chino Valley Unified School District, GO, Election of
2002, Series C (NPFGC), 5.25%, 8/01/30

 

 

1,200

 

 

1,250,400

 

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

 

 

1,150

 

 

1,200,531

 

City of San Jose California, Refunding RB, Series A,
AMT (AMBAC), 5.50%, 3/01/32

 

 

5,100

 

 

5,165,331

 

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

 

 

2,800

 

 

2,583,840

 

El Monte Union High School District California, GO,
Election of 2002, Series C (AGM), 5.25%,
6/01/28

 

 

6,110

 

 

6,518,148

 

Grossmont-Cuyamaca Community College District
California, GO, Refunding, CAB, Election of 2002,
Series C (AGC), 5.80%, 8/01/30 (c)

 

 

10,030

 

 

3,289,539

 

Hartnell Community College District California, GO,
CAB, Election of 2002, Series D, 6.38%,
8/01/34 (b)

 

 

4,125

 

 

2,332,027

 

 

 

 

 

 

 

 

 

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

 

$

770

 

$

807,946

 

Metropolitan Water District of Southern California,
RB, Series B-1 (NPFGC):

 

 

 

 

 

 

 

5.00%, 10/01/29

 

 

3,465

 

 

3,577,370

 

5.00%, 10/01/36

 

 

2,035

 

 

2,090,678

 

Mount Diablo Unified School District California, GO,
Election of 2002 (NPFGC), 5.00%, 7/01/27

 

 

1,750

 

 

1,772,208

 

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

 

 

 

 

 

 

 

5.00%, 2/01/30

 

 

3,500

 

 

3,699,710

 

5.00%, 2/01/31

 

 

1,200

 

 

1,263,792

 

Poway Redevelopment Agency California, Tax
Allocation Bonds, Refunding, Paguay
Redevelopment Project (AMBAC), 5.13%, 6/15/33

 

 

2,000

 

 

1,802,840

 

Poway Unified School District, GO, CAB, School
Facilities Improvement, Election of 2007-1, 6.26%,
8/01/36 (c)

 

 

5,000

 

 

1,090,050

 

Sacramento Unified School District California, GO,
Election of 2002 (NPFGC), 5.00%, 7/01/30

 

 

1,450

 

 

1,489,948

 

San Bernardino Community College District California,
GO, CAB, Election of 2008, Series B, 6.38%,
8/01/34 (b)

 

 

10,000

 

 

6,743,500

 

San Diego County Water Authority, COP, Refunding,
Series 2008-A (AGM), 5.00%, 5/01/38

 

 

3,000

 

 

3,119,700

 

San Diego County Water Authority, SAN, Series A
(NPFGC), 5.00%, 5/01/32

 

 

3,150

 

 

3,190,383

 

San Diego Unified School District California, GO, CAB,
Election of 2008, Series C, 6.84%, 7/01/38 (c)

 

 

2,200

 

 

438,570

 

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

 

 

900

 

 

1,027,701

 

San Jose Unified School District Santa Clara County
California, GO, Election of 2002, Series B (NPFGC),
5.00%, 8/01/29

 

 

2,825

 

 

2,913,366

 

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

 

 

 

 

 

 

 

5.00%, 8/01/34

 

 

900

 

 

936,585

 

5.00%, 8/01/38

 

 

760

 

 

787,846

 

State of California, GO:

 

 

 

 

 

 

 

5.13%, 6/01/27

 

 

30

 

 

30,039

 

5.50%, 4/01/28

 

 

5

 

 

5,251

 

Ventura County Community College District, GO,
Election of 2002, Series B (NPFGC), 5.00%,
8/01/30

 

 

3,150

 

 

3,271,842

 

Yosemite Community College District, GO, CAB,
Election of 2004, Series D, 6.55%, 8/01/36 (c)

 

 

15,000

 

 

3,270,150

 

 

 

 

 

 

 

80,613,871

 

Colorado — 1.5%

 

 

 

 

 

 

 

Colorado Health Facilities Authority, RB, Covenant
Retirement Communities, Series A (Radian):

 

 

 

 

 

 

 

5.50%, 12/01/27

 

 

1,600

 

 

1,500,848

 

5.50%, 12/01/33

 

 

900

 

 

833,877

 

E-470 Public Highway Authority Colorado, Refunding
RB, CAB, Series B (NPFGC), 5.61%, 9/01/29 (c)

 

 

9,000

 

 

2,670,570

 

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

 

 

1,885

 

 

1,998,534

 

 

 

 

 

 

 

7,003,829

 

 

 

 

 

 

 

 

 


 

 

 

See Notes to Financial Statements.

 

 

 

16

SEMI-ANNUAL REPORT

OCTOBER 31, 2011




 

 

 

 

Schedule of Investments (continued)

BlackRock MuniYield Quality Fund, Inc. (MQY)

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Connecticut — 0.2%

 

 

 

 

 

 

 

Connecticut State Health & Educational Facilities
Authority, RB, Hartford Healthcare, Series A,
5.00%, 7/01/32

 

$

900

 

$

904,734

 

Florida — 12.4%

 

 

 

 

 

 

 

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

 

 

7,050

 

 

7,210,035

 

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

 

 

 

 

 

 

 

5.63%, 10/01/26

 

 

1,280

 

 

1,331,174

 

5.38%, 10/01/32

 

 

1,700

 

 

1,690,412

 

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

 

 

3,300

 

 

3,701,544

 

County of Miami-Dade Florida, RB:

 

 

 

 

 

 

 

Series A, 5.50%, 10/01/36

 

 

6,490

 

 

6,759,984

 

Water & Sewer System (AGM), 5.00%,
10/01/39

 

 

4,000

 

 

4,157,320

 

County of Miami-Dade Florida, Refunding RB,
Miami International Airport, AMT (AGC),
5.00%, 10/01/40

 

 

8,200

 

 

7,861,094

 

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

 

 

 

 

 

 

 

5.13%, 6/01/27

 

 

1,395

 

 

1,475,575

 

5.38%, 10/01/29

 

 

1,900

 

 

2,009,915

 

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

 

 

2,545

 

 

2,687,927

 

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

 

 

1,250

 

 

1,349,900

 

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

 

 

2,700

 

 

2,764,800

 

Orange County School Board, COP, Series A:

 

 

 

 

 

 

 

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

 

 

3,550

 

 

3,763,178

 

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

 

 

5,000

 

 

5,075,600

 

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

 

 

375

 

 

381,859

 

South Florida Water Management District, COP:

 

 

 

 

 

 

 

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

 

 

2,700

 

 

2,878,011

 

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

 

 

1,500

 

 

1,528,065

 

 

 

 

 

 

 

56,626,393

 

Georgia — 1.0%

 

 

 

 

 

 

 

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

 

 

3,150

 

 

3,260,817

 

Gwinnett County Hospital Authority, Refunding RB,
Gwinnett Hospital System, Series D (AGM), 5.50%,
7/01/41

 

 

1,125

 

 

1,172,734

 

 

 

 

 

 

 

4,433,551

 

Illinois — 20.3%

 

 

 

 

 

 

 

City of Chicago Illinois, ARB, General, Third Lien,
Series B-2, AMT:

 

 

 

 

 

 

 

(AGM), 5.75%, 1/01/23

 

 

3,400

 

 

3,562,452

 

(AGM), 5.75%, 1/01/24

 

 

4,000

 

 

4,172,400

 

(Syncora), 6.00%, 1/01/29

 

 

3,300

 

 

3,426,423

 

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

 

 

3,180

 

 

3,369,210

 

City of Chicago Illinois, Board of Education, GO,
Refunding, Chicago School Reform Board,
Series A (NPFGC), 5.50%, 12/01/26

 

 

2,000

 

 

2,146,940

 

 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Illinois (concluded)

 

 

 

 

 

 

 

City of Chicago Illinois, GO, CAB, City Colleges
(NPFGC), 5.90%, 1/01/31 (c)

 

$

13,000

 

$

4,163,120

 

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

 

 

750

 

 

787,222

 

City of Chicago Illinois, RB, Series A:

 

 

 

 

 

 

 

(AGC), 5.00%, 1/01/38

 

 

4,000

 

 

4,071,920

 

General, Third Lien, 5.75%, 1/01/39

 

 

5,500

 

 

6,002,755

 

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

 

 

1,500

 

 

1,507,245

 

City of Chicago Illinois, Refunding ARB, General,
Third Lien, Series A-2, AMT (AGM), 5.75%,
1/01/21

 

 

2,665

 

 

2,810,029

 

City of Chicago Illinois, Refunding GARB, Third Lien,
Series A, AMT (NPFGC):

 

 

 

 

 

 

 

5.75%, 1/01/21

 

 

5,500

 

 

5,531,955

 

5.38%, 1/01/32

 

 

5,000

 

 

5,000,100

 

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

 

 

840

 

 

868,543

 

County of Cook Illinois, GO, Capital Improvement,
Series C (AMBAC), 5.50%, 11/15/26 (d)

 

 

5,080

 

 

5,351,628

 

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

 

 

850

 

 

856,239

 

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

 

 

26,525

 

 

27,920,215

 

Metropolitan Pier & Exposition Authority, RB, CAB,
McCormick Place Expansion Project, Series A
(NPFGC), 5.82%, 6/15/30 (c)

 

 

15,000

 

 

5,153,700

 

Metropolitan Pier & Exposition Authority, Refunding
RB, CAB, McCormick Place Expansion Project,
Series B (AGM) (c):

 

 

 

 

 

 

 

5.83%, 6/15/27

 

 

1,750

 

 

740,688

 

6.25%, 6/15/44

 

 

4,625

 

 

639,083

 

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

 

 

900

 

 

935,838

 

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

 

 

3,200

 

 

3,680,928

 

 

 

 

 

 

 

92,698,633

 

Indiana — 1.9%

 

 

 

 

 

 

 

Indiana Finance Authority Wastewater Utility, RB,
First Lien, CWA Authority, Series A, 5.25%, 10/01/38

 

 

1,400

 

 

1,493,590

 

Indiana Municipal Power Agency, RB:

 

 

 

 

 

 

 

Series A (NPFGC), 5.00%, 1/01/37

 

 

2,750

 

 

2,816,412

 

Series B, 5.75%, 1/01/34

 

 

550

 

 

564,916

 

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

 

 

 

 

 

 

 

5.75%, 1/01/38

 

 

1,300

 

 

1,408,446

 

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

 

 

2,350

 

 

2,523,759

 

 

 

 

 

 

 

8,807,123

 

Iowa — 1.8%

 

 

 

 

 

 

 

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

 

 

7,700

 

 

8,087,772

 

Louisiana — 0.9%

 

 

 

 

 

 

 

Jefferson Parish Hospital Service District No. 1,
Refunding RB, Jefferson Medical Center, Series A,
6.00%, 1/01/39

 

 

1,900

 

 

1,989,794

 

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

 

 

1,800

 

 

2,018,304

 

 

 

 

 

 

 

4,008,098

 


 

 

 

 

See Notes to Financial Statements.

 

 

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2011

17




 

 

 

 

Schedule of Investments (continued)

BlackRock MuniYield Quality Fund, Inc. (MQY)

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Massachusetts — 2.3%

 

 

 

 

 

 

 

Massachusetts HFA, RB, Rental Mortgage, Series C,
AMT (AGM), 5.60%, 1/01/45

 

$

4,000

 

$

4,009,240

 

Massachusetts HFA, Refunding RB, Series C, AMT:

 

 

 

 

 

 

 

5.00%, 12/01/30

 

 

3,000

 

 

2,956,350

 

5.35%, 12/01/42

 

 

1,525

 

 

1,536,407

 

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

 

 

1,800

 

 

1,892,484

 

 

 

 

 

 

 

10,394,481

 

Michigan — 11.8%

 

 

 

 

 

 

 

City of Detroit Michigan, RB, System, Second Lien,
Series B (NPFGC), 5.00%, 7/01/36

 

 

3,150

 

 

3,114,562

 

City of Detroit Michigan, Refunding RB:

 

 

 

 

 

 

 

Second Lien, Series E (BHAC), 5.75%, 7/01/31

 

 

8,300

 

 

8,896,189

 

Series D (NPFGC), 5.00%, 7/01/28

 

 

6,000

 

 

5,952,720

 

Series D (NPFGC), 5.00%, 7/01/33

 

 

1,000

 

 

1,000,340

 

Kalamazoo Hospital Finance Authority, RB, Bronson
Methodist Hospital (AGM), 5.25%, 5/15/36

 

 

575

 

 

588,087

 

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

 

 

2,500

 

 

2,751,700

 

Michigan Higher Education Student Loan Authority,
Refunding RB, Student Loan, Series XVII-G, AMT
(AMBAC), 5.20%, 9/01/20

 

 

2,140

 

 

2,153,311

 

Michigan State Building Authority, Refunding RB,
Facilities Program:

 

 

 

 

 

 

 

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

 

 

1,200

 

 

1,290,468

 

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

 

 

1,000

 

 

1,070,400

 

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

 

 

4,270

 

 

4,549,301

 

Michigan State Finance Authority, Refunding RB,
Trinity Health, 5.00%, 12/01/39

 

 

5,700

 

 

5,665,686

 

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

 

 

1,455

 

 

1,481,816

 

Michigan Strategic Fund, Refunding RB, Detroit
Edison Co. Project, AMT (Syncora):

 

 

 

 

 

 

 

Series A, 5.50%, 6/01/30

 

 

1,700

 

 

1,703,213

 

Series C, 5.45%, 12/15/32

 

 

5,800

 

 

5,801,450

 

Royal Oak Hospital Finance Authority Michigan,
Refunding RB, William Beaumont Hospital, 8.25%,
9/01/39

 

 

3,510

 

 

4,163,070

 

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

 

 

3,350

 

 

3,599,709

 

 

 

 

 

 

 

53,782,022

 

Minnesota — 0.7%

 

 

 

 

 

 

 

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

 

 

2,700

 

 

3,027,834

 

Nevada — 3.8%

 

 

 

 

 

 

 

City of Carson City Nevada, RB, Carson-Tahoe
Hospital Project, Series A (Radian), 5.50%,
9/01/33

 

 

3,900

 

 

3,664,050

 

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

 

 

1,150

 

 

1,282,250

 

County of Clark Nevada, RB, Subordinate Lien,
Series A-2 (NPFGC):

 

 

 

 

 

 

 

5.00%, 7/01/30

 

 

2,000

 

 

2,020,740

 

5.00%, 7/01/36

 

 

10,350

 

 

10,421,104

 

 

 

 

 

 

 

17,388,144

 

 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

New Jersey — 6.2%

 

 

 

 

 

 

 

New Jersey EDA, RB:

 

 

 

 

 

 

 

Cigarette Tax (Radian), 5.50%, 6/15/31

 

$

1,285

 

$

1,193,225

 

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

 

 

14,975

 

 

15,727,793

 

School Facilities Construction, Series O,
5.13%, 3/01/30

 

 

5,000

 

 

5,175,550

 

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

 

 

 

 

 

 

 

5.50%, 12/01/25

 

 

800

 

 

821,768

 

5.75%, 12/01/27

 

 

375

 

 

387,735

 

5.75%, 12/01/28

 

 

400

 

 

412,640

 

5.88%, 12/01/33

 

 

1,980

 

 

2,058,527

 

New Jersey Transportation Trust Fund Authority, RB,
Transportation System, Series A (NPFGC), 5.75%,
6/15/25

 

 

2,000

 

 

2,312,220

 

 

 

 

 

 

 

28,089,458

 

New York — 0.7%

 

 

 

 

 

 

 

Hudson New York Yards Infrastructure Corp., RB,
Series A, 5.75%, 2/15/47

 

 

1,000

 

 

1,058,910

 

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

 

 

2,000

 

 

2,260,960

 

 

 

 

 

 

 

3,319,870

 

North Carolina — 0.5%

 

 

 

 

 

 

 

North Carolina Medical Care Commission, RB,
Novant Health Obligation, Series A, 4.75%,
11/01/43

 

 

2,300

 

 

2,112,688

 

Ohio — 0.5%

 

 

 

 

 

 

 

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

 

 

725

 

 

825,355

 

Ohio Higher Educational Facility Commission,
Refunding RB, Summa Health System, 2010
Project (AGC), 5.25%, 11/15/40

 

 

1,400

 

 

1,413,496

 

 

 

 

 

 

 

2,238,851

 

Pennsylvania — 2.1%

 

 

 

 

 

 

 

Pennsylvania HFA, Refunding RB, S/F, Series 99A,
AMT, 5.25%, 10/01/32

 

 

2,000

 

 

2,024,940

 

Pennsylvania Turnpike Commission, RB, Subordinate,
Special Motor License Fund:

 

 

 

 

 

 

 

6.00%, 12/01/36

 

 

775

 

 

893,962

 

5.50%, 12/01/41

 

 

6,000

 

 

6,569,520

 

 

 

 

 

 

 

9,488,422

 

Puerto Rico — 3.9%

 

 

 

 

 

 

 

Puerto Rico Sales Tax Financing Corp., RB:

 

 

 

 

 

 

 

First Sub-Series A, 6.38%, 8/01/39

 

 

4,700

 

 

5,209,198

 

First Sub-Series A, 6.00%, 8/01/42

 

 

5,000

 

 

5,390,800

 

First Sub-Series C, 5.50%, 8/01/40

 

 

1,630

 

 

1,683,545

 

Puerto Rico Sales Tax Financing Corp., Refunding RB:

 

 

 

 

 

 

 

CAB, Series A (NPFGC), 5.72%, 8/01/41 (c)

 

 

28,000

 

 

4,359,880

 

First Sub-Series C, 6.00%, 8/01/39

 

 

1,050

 

 

1,140,636

 

 

 

 

 

 

 

17,784,059

 

South Carolina — 0.6%

 

 

 

 

 

 

 

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

 

 

320

 

 

350,189

 

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

 

 

2,500

 

 

2,630,425

 

 

 

 

 

 

 

2,980,614

 


 

 

 

See Notes to Financial Statements.

 

 

 

18

SEMI-ANNUAL REPORT

OCTOBER 31, 2011




 

 

 

 

Schedule of Investments (continued)

BlackRock MuniYield Quality Fund, Inc. (MQY)

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Tennessee — 0.3%

 

 

 

 

 

 

 

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

 

$

1,520

 

$

1,614,772

 

Texas — 10.6%

 

 

 

 

 

 

 

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

 

 

1,000

 

 

1,250,290

 

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

 

 

2,850

 

 

3,253,617

 

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

 

 

2,500

 

 

2,613,575

 

Dallas-Fort Worth International Airport Facilities
Improvement Corp., Refunding RB, Joint Series A,
AMT (NPFGC):

 

 

 

 

 

 

 

5.88%, 11/01/17

 

 

1,125

 

 

1,129,095

 

5.88%, 11/01/18

 

 

1,315

 

 

1,319,787

 

5.88%, 11/01/19

 

 

1,465

 

 

1,468,706

 

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

 

 

4,800

 

 

5,192,304

 

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

 

 

2,300

 

 

2,453,686

 

North Texas Tollway Authority, Refunding RB, First Tier:

 

 

 

 

 

 

 

Series A, 6.00%, 1/01/28

 

 

3,380

 

 

3,744,127

 

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

 

 

12,300

 

 

12,816,477

 

Texas State Turnpike Authority, RB, First Tier,
Series A (AMBAC):

 

 

 

 

 

 

 

5.75%, 8/15/38

 

 

7,200

 

 

7,226,784

 

5.00%, 8/15/42

 

 

6,045

 

 

5,761,913

 

 

 

 

 

 

 

48,230,361

 

Utah — 3.7%

 

 

 

 

 

 

 

City of Salt Lake City Utah, Refunding RB, IHC
Hospitals Inc. (NPFGC), 6.30%, 2/15/15 (e)

 

 

15,000

 

 

16,789,650

 

Vermont — 0.0%

 

 

 

 

 

 

 

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

 

 

70

 

 

71,970

 

Washington — 1.0%

 

 

 

 

 

 

 

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

 

 

2,000

 

 

2,101,400

 

Washington Health Care Facilities Authority, RB,
Providence Health & Services, Series A:

 

 

 

 

 

 

 

5.00%, 10/01/39

 

 

1,525

 

 

1,532,213

 

5.25%, 10/01/39

 

 

850

 

 

871,463

 

 

 

 

 

 

 

4,505,076

 

Wisconsin — 0.9%

 

 

 

 

 

 

 

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

 

 

1,850

 

 

1,911,790

 

Wisconsin Health & Educational Facilities Authority,
Refunding RB, Froedtert & Community Health,
5.25%, 4/01/39

 

 

2,000

 

 

2,023,160

 

 

 

 

 

 

 

3,934,950

 

Total Municipal Bonds — 111.4%

 

 

 

 

 

507,856,006

 


 

 

 

 

 

 

 

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (g)

 

Par
(000)

 

Value

 

Arizona — 2.4%

 

 

 

 

 

 

 

Phoenix Civic Improvement Corp., RB, Subordinate,
Civic Plaza Expansion Project, Series A, 5.00%,
7/01/37

 

$

8,000

 

$

8,125,200

 

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

 

 

2,750

 

 

2,883,513

 

 

 

 

 

 

 

11,008,713

 

California — 6.0%

 

 

 

 

 

 

 

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

 

 

7,000

 

 

7,296,940

 

Los Angeles Community College District California,
GO, Series A:

 

 

 

 

 

 

 

Election of 2001 (AGM), 5.00%, 8/01/32

 

 

6,120

 

 

6,421,594

 

Election of 2008, 6.00%, 8/01/33

 

 

2,639

 

 

3,008,099

 

Orange County Sanitation District, COP (NPFGC),
5.00%, 2/01/33

 

 

2,749

 

 

2,795,694

 

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

 

 

509

 

 

554,013

 

San Diego County Water Authority, COP, Refunding,
Series 2008-A (AGM), 5.00%, 5/01/33

 

 

5,170

 

 

5,421,107

 

Tamalpais Union High School District California, GO,
Election of 2001 (AGM), 5.00%, 8/01/28

 

 

1,950

 

 

2,031,978

 

 

 

 

 

 

 

27,529,425

 

Colorado — 0.3%

 

 

 

 

 

 

 

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

 

 

1,220

 

 

1,277,809

 

District of Columbia — 0.3%

 

 

 

 

 

 

 

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

 

 

1,320

 

 

1,495,494

 

Florida — 11.5%

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

5.00%, 10/01/32

 

 

2,700

 

 

2,786,319

 

5.00%, 10/01/37

 

 

6,000

 

 

6,210,780

 

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

 

 

8,728

 

 

9,071,404

 

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

 

 

6,300

 

 

6,943,293

 

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

 

 

2,399

 

 

2,532,300

 

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

 

 

5,990

 

 

6,079,790

 

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

 

 

4,310

 

 

4,662,213

 

Miami-Dade County School Board, COP, Refunding,
Series B (AGC), 5.25%, 5/01/27

 

 

11,350

 

 

11,899,454

 

Orange County School Board, COP, Series A (NPFGC),
5.00%, 8/01/30

 

 

2,000

 

 

2,032,800

 

 

 

 

 

 

 

52,218,353

 

Georgia — 2.3%

 

 

 

 

 

 

 

Augusta-Richmond County Georgia, Water & Sewer,
RB (AGM), 5.25%, 10/01/34

 

 

5,000

 

 

5,296,100

 

City of Atlanta Georgia, RB, General, Subordinate
Lien, Series C (AGM), 5.00%, 1/01/33

 

 

5,000

 

 

5,095,850

 

 

 

 

 

 

 

10,391,950

 

Hawaii — 1.3%

 

 

 

 

 

 

 

Honolulu City & County Board of Water Supply, RB,
Series A (NPFGC), 5.00%, 7/01/33

 

 

6,000

 

 

6,139,320

 


 

 

 

 

See Notes to Financial Statements.

 

 

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2011

19




 

 

 

 

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 (g)

 

Par
(000)

 

Value

 

Illinois — 5.2%

 

 

 

 

 

 

 

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

 

$

14,429

 

$

15,054,858

 

Illinois State Toll Highway Authority, RB, Series B,
5.50%, 1/01/33

 

 

2,000

 

 

2,109,493

 

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

 

 

6,198

 

 

6,486,837

 

 

 

 

 

 

 

23,651,188

 

Massachusetts — 3.9%

 

 

 

 

 

 

 

Massachusetts School Building Authority, RB,
Series A (AGM), 5.00%, 8/15/30

 

 

16,500

 

 

17,602,271

 

Nevada — 1.8%

 

 

 

 

 

 

 

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

 

 

5,007

 

 

5,552,763

 

Clark County Water Reclamation District, GO,
Series B, 5.75%, 7/01/34

 

 

2,429

 

 

2,726,141

 

 

 

 

 

 

 

8,278,904

 

New York — 6.8%

 

 

 

 

 

 

 

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

 

 

2,007

 

 

2,200,390

 

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

 

 

3,509

 

 

3,954,502

 

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

 

 

1,545

 

 

1,746,592

 

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

 

 

10,000

 

 

10,427,500

 

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

 

 

10,830

 

 

11,137,789

 

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

 

 

1,500

 

 

1,643,865

 

 

 

 

 

 

 

31,110,638

 

North Carolina — 0.5%

 

 

 

 

 

 

 

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

 

 

2,369

 

 

2,374,600

 

Ohio — 0.2%

 

 

 

 

 

 

 

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

 

 

780

 

 

818,025

 

South Carolina — 1.1%

 

 

 

 

 

 

 

South Carolina State Public Service Authority, RB,
Santee Cooper, Series A, 5.50%, 1/01/38

 

 

4,695

 

 

5,105,390

 

Texas — 3.0%

 

 

 

 

 

 

 

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

 

 

5,900

 

 

6,491,357

 

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

 

 

4,750

 

 

5,095,800

 

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

 

 

2,000

 

 

2,117,500

 

 

 

 

 

 

 

13,704,657

 


 

 

 

 

 

 

 

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (g)

 

Par
(000)

 

Value

 

Virginia — 0.1%

 

 

 

 

 

 

 

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

 

$

450

 

$

480,546

 

Washington — 0.6%

 

 

 

 

 

 

 

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

 

 

2,504

 

 

2,642,421

 

Total Municipal Bonds Transferred to
Tender Option Bond Trusts — 47.3%

 

 

 

 

 

215,829,704

 

Total Long-Term Investments
(Cost — $700,971,731) — 158.7%

 

 

 

 

 

723,685,710

 


 

 

 

 

 

 

 

 

 

 

Short-Term Securities

 

Shares

 

 

 

 

FFI Institutional Tax-Exempt Fund, 0.01% (h)(i)

 

 

18,133,131

 

 

18,133,131

 

Total Short-Term Securities
(Cost — $18,133,131) — 4.0%

 

 

 

 

 

18,133,131

 

Total Investments (Cost — $719,104,862*) — 162.7%

 

 

 

 

 

741,818,841

 

Liabilities in Excess of Other Assets — (0.5)%

 

 

 

 

 

(2,196,724

)

Liability for Trust Certificates, Including
Interest Expense and Fees Payable — (23.5)%

 

 

 

 

 

(106,945,194

)

VRDP Shares, at Liquidation Value — (38.7)%

 

 

 

 

 

(176,600,000

)

Net Assets Applicable to Common Shares — 100.0%

 

 

 

 

$

456,076,923

 


 

 

*

The cost and unrealized appreciation (depreciation) of investments as of October 31, 2011, as computed for federal income tax purposes, were as follows:


 

 

 

 

 

Aggregate cost

 

$

612,340,979

 

Gross unrealized appreciation

 

$

27,813,750

 

Gross unrealized depreciation

 

 

(5,226,312

)

Net unrealized appreciation

 

$

22,587,438

 


 

 

(a)

When-issued security. Unsettled when-issued transactions were as follows:


 

 

 

 

 

 

 

 

Counterparty

 

Value

 

Unrealized
Appreciation

 

JPMorgan Securities

 

$

543,290

 

$

9,790

 

Pershing LLC

 

$

3,369,210

 

$

77,401

 

Wells Fargo Bank

 

$

868,543

 

$

3,402

 


 

 

(b)

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.

 

 

(c)

Represents a zero-coupon bond. Rate shown reflects the current yield as of report date.

 

 

(d)

US 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.

 

 

(e)

Security is collateralized by Municipal or US Treasury obligations.

 

 

(f)

Variable rate security. Rate shown is as of report date.

 

 

(g)

Securities represent bonds transferred to a TOB in exchange for which the Fund acquired residual interest certificates. These securities serve as collateral in a financing transaction. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs.


 

 

 

See Notes to Financial Statements.

 

 

 

20

SEMI-ANNUAL REPORT

OCTOBER 31, 2011




 

 

 

 

Schedule of Investments (concluded)

BlackRock MuniYield Quality Fund, Inc. (MQY)


 

 

 

(h)

Investments in companies considered to be an affiliate of the Fund during the period, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Affiliate

 

 

Shares Held at
April 30, 2011

 

 

Net
Activity

 

 

Shares Held at
October 31, 2011

 

 

Income

 

FFI Institutional
Tax-Exempt Fund

 

 

4,098,484

 

 

14,034,647

 

 

18,133,131

 

$

1,260

 


 

 

 

(i)

Represents the current yield as of report date.

 

 

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

 

 

 

Level 1 — unadjusted price quotations in active markets/exchanges for identical assets and liabilities

 

 

 

 

Level 2 — other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

 

 

 

Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Fund’s own assumptions used in determining the fair value of investments)

 

 

 

 

Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The categorization of a value determined for investments is based on the pricing transparency of the investment and does not necessarily correspond to the Fund’s perceived risk of investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

 

 

 

The following table summarizes the inputs used as of October 31, 2011 in determining the fair valuation of the Fund’s investments:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Valuation Inputs

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-Term Investments1

 

 

 

$

723,685,710

 

 

 

$

723,685,710

 

Short-Term Securities

 

$

18,133,131

 

 

 

 

 

 

18,133,131

 

Total

 

$

18,133,131

 

$

723,685,710

 

 

 

$

741,818,841

 


 

 

 

 

1

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


 

 

 

 

See Notes to Financial Statements.

 

 

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2011

21




 

 

 

 

Schedule of Investments October 31, 2011 (Unaudited)

BlackRock MuniYield Quality Fund II, Inc. (MQT)

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Alabama — 0.8%

 

 

 

 

 

 

 

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

 

$

650

 

$

712,290

 

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

 

 

2,000

 

 

1,763,000

 

 

 

 

 

 

 

2,475,290

 

Arizona — 0.8%

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

5.00%, 10/01/27

 

 

1,300

 

 

1,391,065

 

5.00%, 10/01/29

 

 

925

 

 

961,103

 

 

 

 

 

 

 

2,352,168

 

California — 16.5%

 

 

 

 

 

 

 

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

 

 

7,150

 

 

6,365,359

 

Anaheim Public Financing Authority California, RB,
Electric System Distribution Facilities, Series A
(AGM), 5.00%, 10/01/31

 

 

750

 

 

770,805

 

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

 

 

 

 

 

 

 

5.18%, 8/01/37

 

 

2,100

 

 

412,104

 

4.87%, 8/01/38

 

 

4,800

 

 

882,624

 

California Health Facilities Financing Authority,
Refunding RB:

 

 

 

 

 

 

 

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

 

 

500

 

 

520,695

 

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

 

 

1,000

 

 

1,079,980

 

California State University, RB, SystemWide, Series A:

 

 

 

 

 

 

 

5.25%, 11/01/38

 

 

3,000

 

 

3,130,260

 

5.50%, 11/01/39

 

 

1,000

 

 

1,059,150

 

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

 

 

700

 

 

730,758

 

Coast Community College District California, GO,
Refunding, CAB, Election of 2002, Series C (AGM),
5.00%, 8/01/13 (a)

 

 

1,800

 

 

1,661,040

 

East Side Union High School District, GO, CAB (AGM),
4.92%, 8/01/29 (b)

 

 

15,000

 

 

4,972,650

 

El Monte Union High School District California, GO,
Election of 2002, Series C (AGM), 5.25%, 6/01/28

 

 

4,000

 

 

4,267,200

 

Fairfield-Suisun Unified School District California, GO,
Election of 2002 (NPFGC), 5.50%, 8/01/28

 

 

2,770

 

 

2,944,565

 

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

 

 

2,200

 

 

2,308,416

 

Metropolitan Water District of Southern California, RB,
Series B-1 (NPFGC):

 

 

 

 

 

 

 

5.00%, 10/01/29

 

 

2,255

 

 

2,328,130

 

5.00%, 10/01/36

 

 

1,340

 

 

1,376,662

 

Monterey Peninsula Community College District, GO,
CAB, Series C (AGM), 5.08%, 8/01/28 (b)

 

 

11,975

 

 

4,531,220

 

Poway Redevelopment Agency California, Tax
Allocation Bonds, Refunding, Paguay Redevelopment
Project (AMBAC), 5.13%, 6/15/33

 

 

1,250

 

 

1,126,775

 

Sacramento Unified School District California, GO,
Election of 2002 (NPFGC), 5.00%, 7/01/30

 

 

925

 

 

950,484

 

San Diego County Water Authority, COP, Refunding,
Series 2008-A (AGM), 5.00%, 5/01/38

 

 

2,015

 

 

2,095,398

 

San Diego Unified School District California, GO, CAB,
Election of 2008, Series C, 6.84%, 7/01/38 (b)

 

 

1,400

 

 

279,090

 


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

California (concluded)

 

 

 

 

 

 

 

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

 

$

575

 

$

656,587

 

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

 

 

 

 

 

 

 

5.00%, 8/01/34

 

 

600

 

 

624,390

 

5.00%, 8/01/38

 

 

490

 

 

507,954

 

State of California, GO, 5.13%, 6/01/27

 

 

20

 

 

20,026

 

Ventura County Community College District, GO,
Election of 2002, Series B (NPFGC), 5.00%,
8/01/30

 

 

2,025

 

 

2,103,327

 

Yosemite Community College District, GO, CAB,
Election of 2004, Series D, 6.55%, 8/01/36 (b)

 

 

2,000

 

 

436,020

 

 

 

 

 

 

 

48,141,669

 

Colorado — 1.1%

 

 

 

 

 

 

 

Colorado Health Facilities Authority, RB, Covenant
Retirement Communities, Series A (Radian):

 

 

 

 

 

 

 

5.50%, 12/01/27

 

 

200

 

 

187,606

 

5.50%, 12/01/33

 

 

675

 

 

625,408

 

E-470 Public Highway Authority Colorado, Refunding
RB, CAB, Series B (NPFGC), 5.63%, 9/01/32 (b)

 

 

5,500

 

 

1,288,210

 

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

 

 

1,000

 

 

1,060,230

 

 

 

 

 

 

 

3,161,454

 

Connecticut — 0.2%

 

 

 

 

 

 

 

Connecticut State Health & Educational Facility
Authority, RB, Hartford Healthcare, Series A,
5.00%, 7/01/32

 

 

580

 

 

583,051

 

Florida — 19.5%

 

 

 

 

 

 

 

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

 

 

1,400

 

 

1,445,150

 

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

 

 

8,600

 

 

8,795,220

 

County of Miami-Dade, RB:

 

 

 

 

 

 

 

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

 

 

1,000

 

 

1,036,440

 

Water & Sewer System (AGM), 5.00%, 10/01/39

 

 

6,900

 

 

7,171,377

 

County of Miami-Dade, Refunding RB, Miami
International Airport, AMT (AGC), 5.00%, 10/01/40

 

 

12,550

 

 

12,031,308

 

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

 

 

2,300

 

 

2,381,627

 

County of Miami-Dade School Board, COP, RB,
Series B (AGC), 5.25%, 5/01/31

 

 

725

 

 

760,344

 

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

 

 

2,400

 

 

2,538,840

 

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

 

 

550

 

 

593,956

 

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

 

 

3,250

 

 

3,328,000

 

Lee County, Refunding RB, Series A, AMT:

 

 

 

 

 

 

 

5.63%, 10/01/26

 

 

825

 

 

857,983

 

5.38%, 10/01/32

 

 

1,100

 

 

1,093,796

 

Orange County School Board, COP, Series A:

 

 

 

 

 

 

 

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

 

 

3,400

 

 

3,604,170

 

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

 

 

9,000

 

 

9,136,080

 


 

 

 

See Notes to Financial Statements.

 

 

 

22

SEMI-ANNUAL REPORT

OCTOBER 31, 2011




 

 

 

 

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)

 

 

 

 

 

 

 

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

 

$

250

 

$

254,573

 

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

 

 

1,800

 

 

1,918,674

 

 

 

 

 

 

 

56,947,538

 

Georgia — 0.6%

 

 

 

 

 

 

 

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

 

 

1,000

 

 

1,035,180

 

Gwinnett County Hospital Authority, Refunding RB,
Gwinnett Hospital System, Series D (AGM),
5.50%, 7/01/41

 

 

730

 

 

760,974

 

 

 

 

 

 

 

1,796,154

 

Illinois — 20.3%

 

 

 

 

 

 

 

City of Chicago Illinois, ARB, General, Third Lien,
Series B-2, AMT:

 

 

 

 

 

 

 

(AGM), 5.75%, 1/01/23

 

 

5,200

 

 

5,448,456

 

(Syncora), 6.00%, 1/01/29

 

 

2,200

 

 

2,284,282

 

City of Chicago Illinois, Board of Education, GO,
Refunding, Chicago School Reform Board, Series A
(NPFGC), 5.50%, 12/01/26

 

 

2,500

 

 

2,683,675

 

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

 

 

2,050

 

 

2,171,975

 

City of Chicago Illinois, GO, CAB, City Colleges
(NPFGC), 5.90%, 1/01/31 (b)

 

 

8,370

 

 

2,680,409

 

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

 

 

 

 

 

 

 

5.25%, 1/01/37

 

 

4,000

 

 

4,210,760

 

5.25%, 1/01/40

 

 

500

 

 

524,815

 

City of Chicago Illinois, RB:

 

 

 

 

 

 

 

Series A, (AGC), 5.00%, 1/01/38

 

 

4,000

 

 

4,071,920

 

O’Hare International Airport, Third Lien, Series A,
5.75%, 1/01/39

 

 

2,000

 

 

2,182,820

 

City of Chicago Illinois, Refunding RB, ARB, O’Hare
International Airport, General, Third Lien, Series C-2,
AMT (AGM), 5.25%, 1/01/30

 

 

2,000

 

 

2,002,680

 

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

 

 

515

 

 

532,500

 

County of Cook Illinois, GO, Capital, Improvement,
Series C (AMBAC), 5.50%, 11/15/12 (d)

 

 

2,460

 

 

2,591,536

 

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

 

 

400

 

 

402,936

 

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

 

 

2,070

 

 

2,143,071

 

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

 

 

18,175

 

 

19,131,005

 

Metropolitan Pier & Exposition Authority, RB, CAB,
McCormick Place Expansion Project, Series A
(NPFGC), 6.01%, 12/15/36 (b)

 

 

10,000

 

 

2,226,300

 

Metropolitan Pier & Exposition Authority, Refunding
RB, CAB, McCormick Place Expansion Project,
Series B (AGM) (b):

 

 

 

 

 

 

 

5.83%, 6/15/27

 

 

1,125

 

 

476,156

 

6.25%, 6/15/44

 

 

2,980

 

 

411,776

 

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

 

 

575

 

 

597,897

 

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

 

 

2,000

 

 

2,300,580

 

 

 

 

 

 

 

59,075,549

 


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Indiana — 1.8%

 

 

 

 

 

 

 

Indiana Finance Authority Wastewater Utility,
CWA Authority, First Lien, RB, Series A, 5.25%,
10/01/38

 

$

1,000

 

$

1,066,850

 

Indiana Municipal Power Agency, RB, Series B,
5.75%, 1/01/34

 

 

350

 

 

359,492

 

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

 

 

 

 

 

 

 

5.75%, 1/01/38

 

 

2,000

 

 

2,166,840

 

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

 

 

1,575

 

 

1,695,440

 

 

 

 

 

 

 

5,288,622

 

Iowa — 1.8%

 

 

 

 

 

 

 

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

 

 

4,925

 

 

5,173,023

 

Kentucky — 0.7%

 

 

 

 

 

 

 

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

 

 

2,000

 

 

2,131,240

 

Louisiana — 0.9%

 

 

 

 

 

 

 

Jefferson Parish Hospital Service District No. 1,
Refunding RB, Jefferson Medical Center, Series A,
6.00%, 1/01/39

 

 

1,230

 

 

1,288,130

 

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

 

 

1,150

 

 

1,289,472

 

 

 

 

 

 

 

2,577,602

 

Massachusetts — 8.3%

 

 

 

 

 

 

 

Massachusetts HFA, RB, Rental Mortgage, Series F,
AMT (AGM) 5.25%, 1/01/46

 

 

15,550

 

 

15,560,885

 

Massachusetts HFA, Refunding RB, Series C, AMT:

 

 

 

 

 

 

 

5.00%, 12/01/30

 

 

5,000

 

 

4,927,250

 

5.35%, 12/01/42

 

 

975

 

 

982,293

 

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

 

 

2,700

 

 

2,838,726

 

 

 

 

 

 

 

24,309,154

 

Michigan — 11.1%

 

 

 

 

 

 

 

City of Detroit Michigan, RB, Second Lien:

 

 

 

 

 

 

 

Series B (AGM), 6.25%, 7/01/36

 

 

350

 

 

392,451

 

Series B (AGM), 7.00%, 7/01/36

 

 

200

 

 

235,650

 

System, Series A (BHAC), 5.50%, 7/01/36

 

 

5,500

 

 

5,761,745

 

System, Series B (NPFGC), 5.00%, 7/01/36

 

 

2,000

 

 

1,977,500

 

City of Detroit Michigan, Refunding RB:

 

 

 

 

 

 

 

Second Lien, Series E (BHAC), 5.75%, 7/01/31

 

 

2,200

 

 

2,358,026

 

Series D (NPFGC), 5.00%, 7/01/28

 

 

4,000

 

 

3,968,480

 

Series D (NPFGC), 5.00%, 7/01/33

 

 

1,000

 

 

1,000,340

 

Kalamazoo Hospital Finance Authority, RB, Bronson
Methodist Hospital (AGM), 5.25%, 5/15/36

 

 

375

 

 

383,535

 

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

 

 

1,700

 

 

1,871,156

 

Michigan Higher Education Student Loan Authority,
Refunding RB, Student Loan, Series XVII-G, AMT
(AMBAC), 5.20%, 9/01/20

 

 

1,000

 

 

1,006,220

 

Michigan State Building Authority, Refunding RB,
Facilities Program:

 

 

 

 

 

 

 

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

 

 

600

 

 

642,240

 

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

 

 

1,000

 

 

1,075,390

 

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

 

 

1,900

 

 

2,024,279

 

Michigan State Finance Authority, Refunding RB,
Trinity Health, 5.00%, 12/01/39

 

 

3,700

 

 

3,677,726

 


 

 

 

 

See Notes to Financial Statements.

 

 

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2011

23




 

 

 

 

Schedule of Investments (continued)

BlackRock MuniYield Quality Fund II, Inc. (MQT)

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Michigan (concluded)

 

 

 

 

 

 

 

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

 

$

900

 

$

916,587

 

Michigan Strategic Fund, Refunding RB, Detroit
Edison Co. Project, AMT (Syncora):

 

 

 

 

 

 

 

Series A, 5.50%, 6/01/30

 

 

1,000

 

 

1,001,890

 

Series C, 5.45%, 12/15/32

 

 

3,900

 

 

3,900,975

 

 

 

 

 

 

 

32,194,190

 

Minnesota — 0.7%

 

 

 

 

 

 

 

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

 

 

1,800

 

 

2,018,556

 

Dakota County Community Development Agency, RB,
Mortgage-Backed Securities Program, Series B, AMT
(Ginnie Mae), 5.15%, 12/01/38

 

 

(e)

 

4

 

 

 

 

 

 

 

2,018,560

 

Nevada — 2.9%

 

 

 

 

 

 

 

City of Carson City Nevada, RB, Carson-Tahoe Hospital
Project, Series A (Radian), 5.50%, 9/01/33

 

 

2,650

 

 

2,489,675

 

County of Clark Nevada, RB:

 

 

 

 

 

 

 

Las Vegas-McCarran International Airport,
Series A (AGC), 5.25%, 7/01/39

 

 

1,700

 

 

1,772,063

 

Subordinate Lien, Series A-2 (NPFGC), 5.00%,
7/01/30

 

 

1,500

 

 

1,515,555

 

Subordinate Lien, Series A-2 (NPFGC), 5.00%,
7/01/36

 

 

2,700

 

 

2,718,549

 

 

 

 

 

 

 

8,495,842

 

New Jersey — 4.6%

 

 

 

 

 

 

 

New Jersey EDA, RB:

 

 

 

 

 

 

 

Cigarette Tax (Radian), 5.50%, 6/15/31

 

 

85

 

 

78,929

 

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

 

 

8,200

 

 

8,490,854

 

New Jersey EDA, Refunding RB, School Facilities
Construction, Series N-1 (AGM), 5.50%, 9/01/25

 

 

2,000

 

 

2,259,340

 

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

 

 

 

 

 

 

 

5.50%, 12/01/25

 

 

500

 

 

513,605

 

5.50%, 12/01/26

 

 

350

 

 

356,493

 

5.75%, 12/01/28

 

 

200

 

 

206,320

 

New Jersey Transportation Trust Fund Authority, RB,
Transportation System, Series A (NPFGC), 5.75%,
6/15/25

 

 

1,400

 

 

1,618,554

 

 

 

 

 

 

 

13,524,095

 

New York — 1.4%

 

 

 

 

 

 

 

Hudson New York Yards Infrastructure Corp., RB,
Series A, 5.75%, 2/15/47

 

 

610

 

 

645,935

 

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

 

 

3,035

 

 

3,270,091

 

 

 

 

 

 

 

3,916,026

 

North Carolina — 0.6%

 

 

 

 

 

 

 

North Carolina Medical Care Commission, RB,
Novant Health Obligation, Series A, 4.75%,
11/01/43

 

 

2,020

 

 

1,855,491

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Ohio — 0.5%

 

 

 

 

 

 

 

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

 

$

460

 

$

523,673

 

Ohio Higher Educational Facility Commission,
Refunding RB, Summa Health System, 2010
Project (AGC), 5.25%, 11/15/40

 

 

900

 

 

908,676

 

 

 

 

 

 

 

1,432,349

 

Pennsylvania — 2.0%

 

 

 

 

 

 

 

Pennsylvania HFA, Refunding RB, Series 99A, AMT,
5.25%, 10/01/32

 

 

1,340

 

 

1,356,710

 

Pennsylvania Turnpike Commission, RB, Subordinate,
Special Motor License Fund:

 

 

 

 

 

 

 

6.00%, 12/01/36

 

 

500

 

 

576,750

 

5.50%, 12/01/41

 

 

2,245

 

 

2,458,095

 

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

 

 

1,300

 

 

1,412,736

 

 

 

 

 

 

 

5,804,291

 

Puerto Rico — 3.2%

 

 

 

 

 

 

 

Puerto Rico Sales Tax Financing Corp., RB,
First Sub-Series A:

 

 

 

 

 

 

 

5.75%, 8/01/37

 

 

620

 

 

649,927

 

6.38%, 8/01/39

 

 

3,000

 

 

3,325,020

 

5.50%, 8/01/42

 

 

350

 

 

360,728

 

6.00%, 8/01/42

 

 

2,500

 

 

2,695,400

 

Puerto Rico Sales Tax Financing Corp.,
Refunding RB:

 

 

 

 

 

 

 

CAB, Series A (NPFGC), 5.73%, 8/01/41 (b)

 

 

10,000

 

 

1,557,100

 

First Sub-Series C, 6.00%, 8/01/39

 

 

725

 

 

787,582

 

 

 

 

 

 

 

9,375,757

 

South Carolina — 1.3%

 

 

 

 

 

 

 

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

 

 

100

 

 

109,434

 

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

 

 

3,420

 

 

3,598,421

 

 

 

 

 

 

 

3,707,855

 

Tennessee — 0.4%

 

 

 

 

 

 

 

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

 

 

990

 

 

1,051,727

 

Texas — 8.3%

 

 

 

 

 

 

 

Dallas-Fort Worth International Airport Facilities
Improvement Corp., RB, Series A, AMT (NPFGC),
5.50%, 11/01/33

 

 

5,000

 

 

5,028,150

 

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

 

 

3,000

 

 

3,245,190

 

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

 

 

1,065

 

 

1,136,163

 

North Texas Tollway Authority, RB, System, First Tier,
Series K-1 (AGC), 5.75%, 1/01/38

 

 

3,400

 

 

3,664,146

 

North Texas Tollway Authority, Refunding RB, First Tier:

 

 

 

 

 

 

 

Series A, 6.00%, 1/01/28

 

 

2,415

 

 

2,675,168

 

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

 

 

3,600

 

 

3,751,164

 

Texas State Turnpike Authority, RB, First Tier, Series A
(AMBAC), 5.75%, 8/15/38

 

 

4,800

 

 

4,817,856

 

 

 

 

 

 

 

24,317,837

 

Vermont — 0.7%

 

 

 

 

 

 

 

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

 

 

1,935

 

 

1,989,451

 


 

 

 

See Notes to Financial Statements.

 

 

 

24

SEMI-ANNUAL REPORT

OCTOBER 31, 2011




 

 

 

 

Schedule of Investments (continued)

BlackRock MuniYield Quality Fund II, Inc. (MQT)

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Washington — 1.8%

 

 

 

 

 

 

 

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

 

$

1,400

 

$

1,470,980

 

Washington Health Care Facilities Authority, RB,
Providence Health & Services, Series A:

 

 

 

 

 

 

 

5.00%, 10/01/39

 

 

1,000

 

 

1,004,730

 

5.25%, 10/01/39

 

 

550

 

 

563,888

 

Washington Health Care Facilities Authority,
Refunding RB, Providence Health, Series D (AGM),
5.25%, 10/01/33

 

 

2,000

 

 

2,086,980

 

 

 

 

 

 

 

5,126,578

 

Wisconsin — 1.1%

 

 

 

 

 

 

 

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

 

 

1,200

 

 

1,240,080

 

Wisconsin Health & Educational Facilities Authority,
Refunding RB, Froedtert & Community Health,
5.25%, 4/01/39

 

 

2,000

 

 

2,023,160

 

 

 

 

 

 

 

3,263,240

 

Total Municipal Bonds — 113.9%

 

 

 

 

 

332,085,803

 

 

 

 

 

 

 

 

 

 

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (g)

 

 

 

 

 

 

 

Arizona — 1.0%

 

 

 

 

 

 

 

Phoenix Civic Improvement Corp., RB, Junior Lien,
Series A, 5.00%, 7/01/34

 

 

1,000

 

 

1,070,180

 

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

 

 

1,750

 

 

1,834,962

 

 

 

 

 

 

 

2,905,142

 

California — 4.7%

 

 

 

 

 

 

 

Los Angeles Community College District California,
GO, Series A:

 

 

 

 

 

 

 

Election of 2001 (AGM), 5.00%, 8/01/32

 

 

4,330

 

 

4,543,382

 

Election of 2008, 6.00%, 8/01/33

 

 

1,699

 

 

1,937,034

 

Orange County Sanitation District, COP (NPFGC),
5.00%, 2/01/33

 

 

2,299

 

 

2,338,217

 

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

 

 

359

 

 

391,068

 

San Diego County Water Authority, COP, Refunding,
Series 2008-A (AGM), 5.00%, 5/01/33

 

 

3,030

 

 

3,177,167

 

Tamalpais Union High School District California, GO,
Election of 2001 (AGM), 5.00%, 8/01/28

 

 

1,320

 

 

1,375,493

 

 

 

 

 

 

 

13,762,361

 

Colorado — 0.3%

 

 

 

 

 

 

 

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

 

 

780

 

 

816,960

 

District of Columbia — 1.0%

 

 

 

 

 

 

 

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

 

 

855

 

 

968,672

 

District of Columbia Water & Sewer Authority, RB,
Series A, 6.00%, 10/01/35

 

 

1,580

 

 

1,863,205

 

 

 

 

 

 

 

2,831,877

 

 

 

 

 

 

 

 

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (g)

 

Par
(000)

 

Value

 

Florida — 5.6%

 

 

 

 

 

 

 

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

 

$

4,000

 

$

4,140,520

 

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

 

 

4,200

 

 

4,628,862

 

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

 

 

1,189

 

 

1,255,599

 

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

 

 

4,000

 

 

4,059,960

 

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

 

 

2,100

 

 

2,174,529

 

 

 

 

 

 

 

16,259,470

 

Georgia — 7.0%

 

 

 

 

 

 

 

City of Atlanta Georgia, RB, General (AGM):

 

 

 

 

 

 

 

Series B, 5.25%, 1/01/33

 

 

4,999

 

 

5,173,880

 

Subordinate Lien, Series C, 5.00%, 1/01/33

 

 

15,000

 

 

15,287,550

 

 

 

 

 

 

 

20,461,430

 

Hawaii — 1.8%

 

 

 

 

 

 

 

Honolulu City & County Board of Water Supply, RB,
Series A (NPFG), 5.00%, 7/01/33

 

 

5,000

 

 

5,116,100

 

Illinois — 8.1%

 

 

 

 

 

 

 

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

 

 

2,549

 

 

2,659,827

 

Illinois State Toll Highway Authority, RB, Series B,
5.50%, 1/01/33

 

 

3,499

 

 

3,691,613

 

Metropolitan Pier & Exposition Authority, RB,
McCormick Place Expansion Project, Series A
(NPFGC), 5.00%, 12/15/28

 

 

3,500

 

 

3,522,540

 

Regional Transportation Authority, RB (NPFGC),
6.50%, 7/01/26

 

 

10,000

 

 

12,525,160

 

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

 

 

1,130

 

 

1,182,278

 

 

 

 

 

 

 

23,581,418

 

Louisiana — 1.6%

 

 

 

 

 

 

 

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

 

 

4,600

 

 

4,745,682

 

Massachusetts — 2.6%

 

 

 

 

 

 

 

Massachusetts School Building Authority, RB, Series A
(AGM), 5.00%, 8/15/30

 

 

7,195

 

 

7,675,561

 

Nevada — 1.9%

 

 

 

 

 

 

 

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

 

 

3,298

 

 

3,657,509

 

Clark County Water Reclamation District, GO, Series B,
5.75%, 7/01/34

 

 

1,574

 

 

1,766,943

 

 

 

 

 

 

 

5,424,452

 

New York — 1.2%

 

 

 

 

 

 

 

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

 

 

1,050

 

 

1,182,971

 

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

 

 

1,005

 

 

1,136,132

 

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

 

 

1,200

 

 

1,315,092

 

 

 

 

 

 

 

3,634,195

 

Ohio — 0.2%

 

 

 

 

 

 

 

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

 

 

500

 

 

524,375

 


 

 

 

 

See Notes to Financial Statements.

 

 

 

 

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2011

25




 

 

 

 

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 (g)

 

Par
(000)

 

Value

 

South Carolina — 2.6%

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

5.25%, 12/01/28

 

$

2,725

 

$

2,888,936

 

5.25%, 12/01/29

 

 

2,425

 

 

2,560,509

 

5.25%, 12/01/30

 

 

880

 

 

926,790

 

South Carolina State Public Service Authority, RB,
Santee Cooper, Series A, 5.50%, 1/01/38

 

 

1,125

 

 

1,223,336

 

 

 

 

 

 

 

7,599,571

 

Texas — 4.6%

 

 

 

 

 

 

 

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

 

 

1,900

 

 

2,090,437

 

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

 

 

5,250

 

 

5,632,200

 

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

 

 

4,000

 

 

4,203,960

 

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

 

 

1,400

 

 

1,482,250

 

 

 

 

 

 

 

13,408,847

 

Virginia — 0.1%

 

 

 

 

 

 

 

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

 

 

300

 

 

320,364

 

Wisconsin — 0.4%

 

 

 

 

 

 

 

Wisconsin Health & Educational Facilities Authority,
Refunding RB, Froedtert & Community Health Inc.,
5.25%, 4/01/39

 

 

1,250

 

 

1,264,198

 

Total Municipal Bonds Transferred to
Tender Option Bond Trusts — 44.7%

 

 

 

 

 

130,332,003

 

Total Long-Term Investments
(Cost — $450,911,807) — 158.7%

 

 

 

 

 

462,417,806

 


 

 

 

 

 

 

 

 

Short-Term Securities

 

Shares

 

Value

 

FFI Institutional Tax-Exempt Fund, 0.01% (h)(i)

 

 

10,257,797

 

$

10,257,797

 

Total Short-Term Securities
(Cost — $10,257,797) — 3.5%

 

 

 

 

 

10,257,797

 

Total Investments (Cost — $461,152,416*) — 162.2%

 

 

 

 

 

472,675,603

 

Other Assets Less Liabilities — 0.0%

 

 

 

 

 

8,010

 

Liability for TOB Trust Certificates, Including
Interest Expense and Fees Payable — (22.2)%

 

 

 

 

 

(64,618,287

)

AMPS, at Redemption Value — (40.0)%

 

 

 

 

 

(116,579,110

)

Net Assets Applicable to Common Shares — 100.0%

 

 

 

 

$

291,486,216

 


 

 

*

The cost and unrealized appreciation (depreciation) of investments as of October 31, 2011, as computed for federal income tax purposes, were as follows:


 

 

 

 

 

Aggregate cost

 

$

397,400,065

 

Gross unrealized appreciation

 

$

16,785,788

 

Gross unrealized depreciation

 

 

(6,090,921

)

Net unrealized appreciation

 

$

10,694,867

 


 

 

(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)

Represents a zero-coupon bond. Rate shown reflects the current yield as of report date.

 

 

(c)

When-issued security. Unsettled when-issued transactions were as follows:


 

 

 

 

 

 

 

 

Counterparty

 

Value

 

Unrealized
Appreciation

 

Jefferies and Company

 

$

2,171,975

 

$

49,897

 

Wells Fargo

 

$

532,500

 

$

2,086

 


 

 

(d)

US 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.

 

 

(e)

Amount is less than $1,000.

 

 

(f)

Variable rate security. Rate shown is as of report date.

 

 

(g)

Securities represent bonds transferred to a TOB in exchange for which the Fund acquired residual interest certificates. These securities serve as collateral in a financing transaction. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs.

 

 

(h)

Investments in companies considered to be an affiliate of the Fund during the period, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Affiliate

 

Shares Held at
April 30, 2011

 

Net
Activity

 

Shares Held at
October 31, 2011

 

Income

 

FFI Institutional
Tax-Exempt Fund

 

 

3,066,084

 

 

7,191,713

 

 

10,257,797

 

$

980

 


 

 

(i)

Represents the current yield as of report date.


 

 

 

See Notes to Financial Statements.

 

 

 

26

SEMI-ANNUAL REPORT

OCTOBER 31, 2011




 

 

 

 

Schedule of Investments (concluded)

BlackRock MuniYield Quality Fund II, Inc. (MQT)


 

 

 

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

 

 

 

 

Level 1 — unadjusted price quotations in active markets/exchanges for identical assets and liabilities

 

 

 

 

Level 2 — other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

 

 

 

Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Fund’s own assumptions used in determining the fair value of investments)

 

 

 

 

Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The categorization of a value determined for investments is based on the pricing transparency of the investment and does not necessarily correspond to the Fund’s perceived risk of investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

 

 

 

 

The following table summarizes the inputs used as of October 31, 2011 in determining the fair valuation of the Fund’s investments:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Valuation Inputs

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-Term Investments1

 

 

 

$

462,417,806

 

 

 

$

462,417,806

 

Short-Term Securities

 

$

10,257,797

 

 

 

 

 

 

10,257,797

 

Total

 

$

10,257,797

 

$

462,417,806

 

 

 

$

472,675,603

 


 

 

 

 

1

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


 

 

 

 

See Notes to Financial Statements.

 

 

 

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2011

27




 

 

Statements of Assets and Liabilities


 

 

 

 

 

 

 

 

 

 

 

October 31, 2011 (Unaudited)

 

BlackRock
MuniYield
Fund, Inc.
(MYD)

 

BlackRock
MuniYield
Quality
Fund, Inc.
(MQY)

 

BlackRock
MuniYield
Quality
Fund II, Inc.
(MQT)

 

Assets

 

 

 

 

 

 

 

 

 

 

Investments at value — unaffiliated1

 

$

998,284,641

 

$

723,685,710

 

$

462,417,806

 

Investments at value — affiliated2

 

 

23,365,055

 

 

18,133,131

 

 

10,257,797

 

Cash pledged as collateral for financial futures contracts

 

 

248,080

 

 

 

 

 

Interest receivable

 

 

16,232,761

 

 

9,748,012

 

 

6,293,136

 

Investments sold receivable

 

 

5,524,002

 

 

10,126,073

 

 

6,762,482

 

Deferred offering costs

 

 

802,583

 

 

340,641

 

 

 

Income receivable — affiliated

 

 

460

 

 

1,327

 

 

 

TOB trust receivable

 

 

 

 

5,415,000

 

 

 

Prepaid expenses

 

 

6,818

 

 

4,829

 

 

3,129

 

Other assets

 

 

115,766

 

 

81,887

 

 

 

Total assets

 

 

1,044,580,166

 

 

767,536,610

 

 

485,734,350

 

 

 

 

 

 

 

 

 

 

 

 

Accrued Liabilities

 

 

 

 

 

 

 

 

 

 

Bank overdraft

 

 

 

 

149,535

 

 

13,676

 

Investments purchased payable

 

 

17,780,070

 

 

24,818,565

 

 

11,220,291

 

Income dividends payable — Common Shares

 

 

3,802,716

 

 

2,347,295

 

 

1,525,753

 

Investment advisory fees payable

 

 

427,547

 

 

311,441

 

 

190,851

 

Margin variation payable

 

 

124,969

 

 

 

 

 

Officer’s and Directors’ fees payable

 

 

110,328

 

 

74,455

 

 

2,252

 

Interest expense and fees payable

 

 

46,526

 

 

54,770

 

 

37,616

 

Other accrued expenses payable

 

 

327,054

 

 

213,202

 

 

97,914

 

Total accrued liabilities

 

 

22,619,210

 

 

27,969,263

 

 

13,088,353

 

 

 

 

 

 

 

 

 

 

 

 

Other Liabilities

 

 

 

 

 

 

 

 

 

 

TOB trust certificates

 

 

124,119,994

 

 

106,890,424

 

 

64,580,671

 

VRDP Shares, at liquidation value of $100,000 per share3,4

 

 

251,400,000

 

 

176,600,000

 

 

 

Total other liabilities

 

 

375,519,994

 

 

283,490,424

 

 

64,580,671

 

Total liabilities

 

 

398,139,204

 

 

311,459,687

 

 

77,669,024

 

 

 

 

 

 

 

 

 

 

 

 

AMPS at Redemption Value

 

 

 

 

 

 

 

 

 

 

$25,000 per share liquidation preference, plus unpaid dividends3,4

 

 

 

 

 

 

116,579,110

 

Net Assets Applicable to Common Shareholders

 

$

646,440,962

 

$

456,076,923

 

$

291,486,216

 

 

 

 

 

 

 

 

 

 

 

 

Net Assets Applicable to Common Shareholders Consist of

 

 

 

 

 

 

 

 

 

 

Paid-in capital5,6

 

$

632,204,036

 

$

427,068,944

 

$

287,556,661

 

Undistributed net investment income

 

 

14,769,757

 

 

8,786,449

 

 

6,381,923

 

Accumulated net realized loss

 

 

(22,145,972

)

 

(2,492,449

)

 

(13,958,367

)

Net unrealized appreciation/depreciation

 

 

21,613,141

 

 

22,713,979

 

 

11,505,999

 

Net Assets Applicable to Common Shareholders

 

$

646,440,962

 

$

456,076,923

 

$

291,486,216

 

Net asset value per Common Share

 

$

14.02

 

$

14.96

 

$

12.99

 

 

 

 

 

 

 

 

 

 

 

 

1 Investments at cost — unaffiliated

 

$

976,816,301

 

$

700,971,731

 

$

450,911,807

 

2 Investments at cost — affiliated

 

$

23,365,055

 

$

18,133,131

 

$

10,257,797

 

3 Preferred Shares outstanding:

 

 

 

 

 

 

 

 

 

 

Par value $0.05 per share

 

 

 

 

 

 

4,371

 

Par value $0.10 per share

 

 

2,514

 

 

1,766

 

 

292

 

4 Preferred Shares authorized

 

 

16,214

 

 

11,766

 

 

6,400

 

5 Common Shares outstanding, $0.10 par value

 

 

46,093,534

 

 

30,484,353

 

 

22,437,548

 

6 Common Shares authorized

 

 

200 Million

 

 

200 Million

 

 

200 Million

 


 

 

 

See Notes to Financial Statements.

 

 

 

 

28

SEMI-ANNUAL REPORT

OCTOBER 31, 2011




 

 

Statements of Operations


 

 

 

 

 

 

 

 

 

 

 

Six Months Ended October 31, 2011 (Unaudited)

 

BlackRock
MuniYield
Fund, Inc.
(MYD)

 

BlackRock
MuniYield
Quality
Fund, Inc.
(MQY)

 

BlackRock
MuniYield
Quality
Fund II, Inc.
(MQT)

 

Investment Income

 

 

 

 

 

 

 

 

 

 

Interest

 

$

28,541,037

 

$

17,605,880

 

$

11,278,383

 

Income — affiliated

 

 

6,265

 

 

4,364

 

 

980

 

Total income

 

 

28,547,302

 

 

17,610,244

 

 

11,279,363

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

Investment advisory

 

 

2,518,833

 

 

1,803,453

 

 

1,159,814

 

Liquidity fees

 

 

608,911

 

 

187,862

 

 

 

Remarketing fees on Preferred Shares

 

 

126,929

 

 

152,382

 

 

88,102

 

Professional

 

 

98,992

 

 

76,938

 

 

64,468

 

Accounting services

 

 

82,511

 

 

55,097

 

 

43,000

 

Transfer agent

 

 

30,332

 

 

26,397

 

 

24,608

 

Officer and Directors

 

 

33,553

 

 

17,727

 

 

13,314

 

Printing

 

 

23,739

 

 

24,710

 

 

10,034

 

Custodian

 

 

24,783

 

 

15,959

 

 

11,841

 

Registration

 

 

9,468

 

 

5,269

 

 

4,780

 

Miscellaneous

 

 

59,575

 

 

37,112

 

 

23,896

 

Total expenses excluding interest expense, fees and amortization of offering costs

 

 

3,617,626

 

 

2,402,906

 

 

1,443,857

 

Interest expense, fees and amortization of offering costs1

 

 

863,098

 

 

453,170

 

 

212,610

 

Total expenses

 

 

4,480,724

 

 

2,856,076

 

 

1,656,467

 

Less fees waived by advisor

 

 

(2,220

)

 

(2,246

)

 

(1,476

)

Total expenses after fees waived

 

 

4,478,504

 

 

2,853,830

 

 

1,654,991

 

Net investment income

 

 

24,068,798

 

 

14,756,414

 

 

9,624,372

 

 

 

 

 

 

 

 

 

 

 

 

Realized and Unrealized Gain (Loss)

 

 

 

 

 

 

 

 

 

 

Net realized gain (loss) from:

 

 

 

 

 

 

 

 

 

 

Investments

 

 

525,630

 

 

1,754,436

 

 

1,168,534

 

Financial futures contracts

 

 

(3,726,444

)

 

(2,996,769

)

 

(1,903,448

)

 

 

 

(3,200,814

)

 

(1,242,333

)

 

(734,914

)

Net change in unrealized appreciation/depreciation on:

 

 

 

 

 

 

 

 

 

 

Investments

 

 

45,547,865

 

 

38,039,962

 

 

25,623,382

 

Financial futures contracts

 

 

1,298,011

 

 

617,321

 

 

394,035

 

 

 

 

46,845,876

 

 

38,657,283

 

 

26,017,417

 

Total realized and unrealized gain

 

 

43,645,062

 

 

37,414,950

 

 

25,282,503

 

 

 

 

 

 

 

 

 

 

 

 

Dividends to AMPS Shareholders From

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

(231,075

)

 

(356,663

)

 

(184,326

)

Net Increase in Net Assets Applicable to Common Shareholders Resulting from Operations

 

$

67,482,785

 

$

51,814,701

 

$

34,722,549

 


 

 

 

 

1

Related to TOBs and/or VRDP Shares.


 

 

 

 

See Notes to Financial Statements.

 

 

 

 

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2011

29




 

 

Statements of Changes in Net Assets


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BlackRock
MuniYield Fund, Inc. (MYD)

 

BlackRock
MuniYield Quality Fund, Inc. (MQY)

 

Increase (Decrease) in Net Assets Applicable to Common Shareholders:

 

Six Months Ended
October 31,
2011
(Unaudited)

 

Year Ended
April 30,
2011

 

 

Six Months Ended
October 31,
2011
(Unaudited)

 

Year Ended
April 30,
2011

 

Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

$

24,068,798

 

$

47,436,877

 

$

14,756,414

 

$

30,207,690

 

Net realized gain (loss)

 

 

(3,200,814

)

 

1,133,203

 

 

 

(1,242,333

)

 

2,244,794

 

Net change in unrealized appreciation/depreciation

 

 

46,845,876

 

 

(39,835,659

)

 

38,657,283

 

 

(30,944,684

)

Dividends to AMPS Shareholders from net investment income

 

 

(231,075

)

 

(1,436,987

)

 

 

(356,663

)

 

(1,106,520

)

Net increase in net assets applicable to Common Shareholders resulting from operations

 

 

67,482,785

 

 

7,297,434

 

 

 

51,814,701

 

 

401,280

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends to Common Shareholders From

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

(22,777,413

)

 

(44,688,438

)

 

 

(14,083,771

)

 

(28,084,072

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Share Transactions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reinvestment of common dividends

 

 

2,759,273

 

 

5,759,400

 

 

 

 

868,555

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Assets Applicable to Common Shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total increase (decrease) in net assets applicable to Common Shareholders

 

 

47,464,645

 

 

(31,631,604

)

 

37,730,930

 

 

(26,814,237

)

Beginning of period

 

 

598,976,317

 

 

630,607,921

 

 

 

418,345,993

 

 

445,160,230

 

End of period

 

$

646,440,962

 

$

598,976,317

 

$

456,076,923

 

$

418,345,993

 

Undistributed net investment income

 

$

14,769,757

 

$

13,709,447

 

 

$

8,786,449

 

$

8,470,469

 


 

 

 

 

 

 

 

 

 

 

BlackRock
MuniYield Quality Fund II, Inc. (MQT)

 

Increase (Decrease) in Net Assets Applicable to Common Shareholders:

 

Six Months Ended
October 31,
2011
(Unaudited)

 

Year Ended
April 30,
2011

 

Operations

 

 

 

 

 

 

 

Net investment income

 

$

9,624,372

 

$

19,312,059

 

Net realized loss

 

 

(734,914

)

 

(23,592

)

Net change in unrealized appreciation/depreciation

 

 

26,017,417

 

 

(20,045,066

)

Dividends to AMPS Shareholders from net investment income

 

 

(184,326

)

 

(559,128

)

Net increase (decrease) in net assets applicable to Common Shareholders resulting from operations

 

 

34,722,549

 

 

(1,315,727

)

 

 

 

 

 

 

 

 

Dividends to Common Shareholders From

 

 

 

 

 

 

 

Net investment income

 

 

(9,154,520

)

 

(18,056,525

)

 

 

 

 

 

 

 

 

Capital Share Transactions

 

 

 

 

 

 

 

Reinvestment of common dividends

 

 

 

 

895,133

 

 

 

 

 

 

 

 

 

Net Assets Applicable to Common Shareholders

 

 

 

 

 

 

 

Total increase (decrease) in net assets applicable to Common Shareholders

 

 

25,568,029

 

 

(18,477,119

)

Beginning of period

 

 

265,918,187

 

 

284,395,306

 

End of period

 

$

291,486,216

 

$

265,918,187

 

Undistributed net investment income

 

$

6,381,923

 

$

6,096,397

 


 

 

 

See Notes to Financial Statements.

 

 

 

 

30

SEMI-ANNUAL REPORT

OCTOBER 31, 2011




 

 

Statements of Cash Flows


 

 

 

 

 

 

 

 

 

 

 

Six Months Ended October 31, 2011 (Unaudited)

 

BlackRock
MuniYield
Fund, Inc.
(MYD)

 

BlackRock
MuniYield
Quality
Fund, Inc.
(MQY)

 

BlackRock
MuniYield
Quality
Fund II, Inc.
(MQT)

 

Cash Provided by Operating Activities

 

 

 

 

 

 

 

 

 

 

Net increase in net assets resulting from operations, excluding dividends to AMPS Shareholders

 

$

67,713,860

 

$

52,171,364

 

$

34,906,875

 

Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

Decrease in interest receivable

 

 

264,222

 

 

668,084

 

 

329,835

 

Decrease in cash pledged as collateral in connection with financial futures contracts

 

 

596,920

 

 

455,000

 

 

290,000

 

Increase in other assets

 

 

(3,731

)

 

(1,283

)

 

 

Increase in income receivable — affiliated

 

 

(76

)

 

(1,112

)

 

 

Decrease in prepaid expenses

 

 

48,664

 

 

28,794

 

 

17,483

 

Increase in investment advisory fees payable

 

 

18,249

 

 

17,426

 

 

4,066

 

Decrease in interest expense payable

 

 

(50,367

)

 

(44,063

)

 

(16,908

)

Increase (decrease) in other accrued expenses payable

 

 

119,745

 

 

61,730

 

 

(17,659

)

Increase (decrease) in margin variation payable

 

 

42,657

 

 

(44,062

)

 

(28,125

)

Decrease in Officer’s and Directors’ fees payable

 

 

(5,329

)

 

(8,924

)

 

(1,120

)

Net realized and unrealized loss on investments

 

 

(46,069,764

)

 

(39,793,115

)

 

(26,791,916

)

Amortization of premium and accretion of discount on investments

 

 

(1,509,120

)

 

(671,064

)

 

(383,421

)

Amortization of deferred offering costs

 

 

216,417

 

 

35,079

 

 

 

Proceeds from sales of long-term investments

 

 

92,441,366

 

 

120,693,038

 

 

56,361,752

 

Purchases of long-term investments

 

 

(84,421,080

)

 

(98,702,466

)

 

(48,392,225

)

Net purchases of short-term securities

 

 

(7,087,723

)

 

(14,034,647

)

 

(7,191,713

)

Cash provided by operating activities

 

 

22,314,910

 

 

20,829,779

 

 

9,086,924

 

 

 

 

 

 

 

 

 

 

 

 

Cash Used for Financing Activities

 

 

 

 

 

 

 

 

 

 

Cash receipts from issuance of VRDP Shares

 

 

251,400,000

 

 

176,600,000

 

 

 

Cash payments on redemption of AMPS

 

 

(251,450,000

)

 

(176,625,000

)

 

 

Cash receipts from TOB trust certificates

 

 

14,490,000

 

 

13,818,134

 

 

4,139,660

 

Cash payments for TOB trust certificates

 

 

(15,467,319

)

 

(19,932,496

)

 

(3,888,012

)

Cash dividends paid to Common Shareholders

 

 

(20,001,438

)

 

(14,083,771

)

 

(9,154,520

)

Cash dividends paid to AMPS Shareholders

 

 

(266,769

)

 

(379,814

)

 

(197,728

)

Cash payments for offering costs

 

 

(1,019,000

)

 

(375,720

)

 

 

Increase (decrease) in bank overdraft

 

 

(384

)

 

148,888

 

 

13,676

 

Cash used for financing activities

 

 

(22,314,910

)

 

(20,829,779

)

 

(9,086,924

)

 

 

 

 

 

 

 

 

 

 

 

Cash

 

 

 

 

 

 

 

 

 

 

Net change in cash

 

 

 

 

 

 

 

Cash at beginning of period

 

 

 

 

 

 

 

Cash at end of period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Flow Information

 

 

 

 

 

 

 

 

 

 

Cash paid during the period for interest and fees

 

$

697,048

 

$

462,154

 

$

229,518

 

 

 

 

 

 

 

 

 

 

 

 

Noncash Financing Activities

 

 

 

 

 

 

 

 

 

 

Capital shares issued in reinvestment of dividends paid to Common Shareholders

 

$

2,759,273

 

 

 

 

 


 

 

 

A Statement of Cash Flows is presented when a Fund had a significant amount of borrowing during the year, based on the average borrowing outstanding in relation to average total assets.


 

 

 

 

See Notes to Financial Statements.

 

 

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2011

31




 

 

 

 

Financial Highlights

BlackRock MuniYield Fund, Inc. (MYD)


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months
Ended
October 31,
2011
(Unaudited)

 

 

 

Period
November 1,
2008 to
April 30,
2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended
April 30,

 

 

Year Ended October 31,

 

 

 

 

2011

 

2010

 

 

2008

 

2007

 

2006

 

Per Share Operating Performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, beginning of period

 

$

13.05

 

$

13.87

 

$

11.53

 

$

10.70

 

$

14.36

 

$

14.98

 

$

14.48

 

Net investment income1

 

 

0.50

 

 

1.04

 

 

1.04

 

 

0.49

 

 

1.03

 

 

1.05

 

 

1.08

 

Net realized and unrealized gain (loss)

 

 

0.98

 

 

(0.85

)

 

2.17

 

 

0.77

 

 

(3.62

)

 

(0.57

)

 

0.61

 

Dividends and distributions to AMPS Shareholders from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

(0.01

)

 

(0.03

)

 

(0.03

)

 

(0.04

)

 

(0.27

)

 

(0.28

)

 

(0.25

)

Net realized gain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(0.00

)2

Net increase (decrease) from investment operations

 

 

1.47

 

 

0.16

 

 

3.18

 

 

1.22

 

 

(2.86

)

 

0.20

 

 

1.44

 

Dividends and distributions to Common Shareholders from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

(0.50

)

 

(0.98

)

 

(0.84

)

 

(0.39

)

 

(0.80

)

 

(0.82

)

 

(0.94

)

Net realized gain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(0.00

)2

Total dividends and distributions to Common Shareholders

 

 

(0.50

)

 

(0.98

)

 

(0.84

)

 

(0.39

)

 

(0.80

)

 

(0.82

)

 

(0.94

)

Capital charges with respect to issuance of AMPS Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.00

3

Net asset value, end of period

 

$

14.02

 

$

13.05

 

$

13.87

 

$

11.53

 

$

10.70

 

$

14.36

 

$

14.98

 

Market price, end of period

 

$

14.28

 

$

13.17

 

$

13.70

 

$

11.45

 

$

9.66

 

$

13.72

 

$

15.76

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Investment Return Applicable to Common Shareholders4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Based on net asset value

 

 

11.34

%5

 

1.07

%

 

28.44

%

 

11.76

%5

 

(20.69

)%

 

1.40

%

 

10.30

%

Based on market price

 

 

12.37

%5

 

3.27

%

 

27.75

%

 

22.93

%5

 

(25.06

)%

 

(7.91

)%

 

18.33

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio to Average Net Assets Applicable to Common Shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total expenses6

 

 

1.42

%7

 

1.15

%

 

1.14

%

 

1.25

%7

 

1.38

%

 

1.23

%

 

1.29

%

Total expenses after fees waived6

 

 

1.42

%7

 

1.15

%

 

1.14

%

 

1.24

%7

 

1.38

%

 

1.22

%

 

1.29

%

Total expenses after fees waived and excluding interest expense, fees and amortization of offering costs6,8

 

 

1.15

%7

 

0.99

%

 

1.01

%

 

1.09

%7

 

1.06

%

 

1.01

%

 

1.01

%

Net investment income6

 

 

7.63

%7

 

7.64

%

 

8.08

%

 

9.20

%7

 

7.65

%

 

7.14

%

 

7.35

%

Dividends to AMPS Shareholders

 

 

0.07

%7

 

0.23

%

 

0.27

%

 

0.74

%7

 

1.99

%

 

1.88

%

 

1.71

%

Net investment income to Common Shareholders

 

 

7.56

%7

 

7.41

%

 

7.81

%

 

8.46

%7

 

5.66

%

 

5.26

%

 

5.64

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets applicable to Common Shareholders, end of period (000)

 

$

646,441

 

$

598,976

 

$

630,608

 

$

523,590

 

$

484,945

 

$

647,574

 

$

672,367

 

AMPS outstanding at $25,000 liquidation preference, end of period (000)

 

 

 

$

251,450

 

$

251,450

 

$

271,500

 

$

271,500

 

$

343,000

 

$

343,000

 

VRDP Shares outstanding at $100,000 liquidation value, end of period (000)

 

$

251,400

 

 

 

 

 

 

 

 

 

 

 

 

 

Portfolio turnover

 

 

9

%

 

16

%

 

35

%

 

7

%

 

20

%

 

18

%

 

32

%

Asset coverage per AMPS at $25,000 liquidation preference, end of period

 

 

 

$

84,556

 

$

87,701

 

$

73,217

 

$

69,695

 

$

72,218

 

$

74,034

 

Asset coverage per VRDP Share at $100,000 liquidation value, end of period

 

$

357,136

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

1

Based on average shares outstanding.

 

 

 

 

2

Amount is less than $(0.01) per share.

 

 

 

 

3

Amount is less than $0.01 per share.

 

 

 

 

4

Total investment returns based on market price, which can be significantly greater or lesser than the net asset value, may result in substantially different returns. Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

 

 

 

 

5

Aggregate total investment return.

 

 

 

 

6

Do not reflect the effect of dividends to AMPS Shareholders.

 

 

 

 

7

Annualized.

 

 

 

 

8

Interest expense, fees and amortization of offering costs related to TOBs and/or VRDP Shares. See Note 1 and Note 7 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs and VRDP Shares, respectively.


 

 

 

See Notes to Financial Statements.

 

 

 

32

SEMI-ANNUAL REPORT

OCTOBER 31, 2011




 

 

 

 

Financial Highlights

BlackRock MuniYield Quality Fund, Inc. (MQY)


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months
Ended
October 31,
2011
(Unaudited)

 

 

 

Period
November 1,
2008 to
April 30,
2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended
April 30,

 

 

Year Ended October 31,

 

 

 

 

2011

 

2010

 

 

2008

 

2007

 

2006

 

Per Share Operating Performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, beginning of period

 

$

13.72

 

$

14.63

 

$

13.27

 

$

11.68

 

$

14.88

 

$

15.32

 

$

15.02

 

Net investment income1

 

 

0.48

 

 

0.99

 

 

0.99

 

 

0.46

 

 

0.97

 

 

0.97

 

 

0.99

 

Net realized and unrealized gain (loss)

 

 

1.23

 

 

(0.94

)

 

1.23

 

 

1.51

 

 

(3.12

)

 

(0.42

)

 

0.37

 

Dividends and distributions to AMPS Shareholders from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

(0.01

)

 

(0.04

)

 

(0.04

)

 

(0.04

)

 

(0.27

)

 

(0.30

)

 

(0.27

)

Net realized gain

 

 

 

 

 

 

 

 

 

 

(0.03

)

 

 

 

 

Net increase (decrease) from investment operations

 

 

1.70

 

 

0.01

 

 

2.18

 

 

1.93

 

 

(2.45

)

 

0.25

 

 

1.09

 

Dividends and distributions to Common Shareholders from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

(0.46

)

 

(0.92

)

 

(0.82

)

 

(0.34

)

 

(0.68

)

 

(0.69

)

 

(0.79

)

Net realized gain

 

 

 

 

 

 

 

 

 

 

(0.07

)

 

 

 

 

Total dividends and distributions to Common Shareholders

 

 

(0.46

)

 

(0.92

)

 

(0.82

)

 

(0.34

)

 

(0.75

)

 

(0.69

)

 

(0.79

)

Capital charges with respect to issuance of AMPS shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(0.00

)2

Net asset value, end of period

 

$

14.96

 

$

13.72

 

$

14.63

 

$

13.27

 

$

11.68

 

$

14.88

 

$

15.32

 

Market price, end of period

 

$

14.52

 

$

13.15

 

$

14.48

 

$

12.32

 

$

10.90

 

$

13.20

 

$

14.48

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Investment Return Applicable to Common Shareholders3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Based on net asset value

 

 

12.62

%4

 

0.10

%

 

17.12

%

 

17.07

%4

 

(16.79

)%

 

2.00

%

 

7.78

%

Based on market price

 

 

14.04

%4

 

(3.06

)%

 

24.86

%

 

16.47

%4

 

(12.47

)%

 

(4.26

)%

 

7.22

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio to Average Net Assets Applicable to Common Shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total expenses5

 

 

1.29

%6

 

1.21

%

 

1.20

%

 

1.43

%6

 

1.76

%

 

1.71

%

 

1.76

%

Total expenses after fees waived5

 

 

1.29

%6

 

1.21

%

 

1.20

%

 

1.42

%6

 

1.75

%

 

1.71

%

 

1.75

%

Total expenses after fees waived and excluding interest expense, fees and amortization of offering costs5,7

 

 

1.09

%6

 

1.02

%

 

1.02

%

 

1.13

%6

 

1.10

%

 

1.04

%

 

1.04

%

Net investment income5

 

 

6.69

%6

 

6.97

%

 

6.98

%

 

7.58

%6

 

6.89

%

 

6.46

%

 

6.61

%

Dividends to AMPS Shareholders

 

 

0.16

%6

 

0.25

%

 

0.28

%

 

0.69

%6

 

1.92

%

 

2.01

%

 

1.80

%

Net investment income to Common Shareholders

 

 

6.53

%6

 

6.72

%

 

6.70

%

 

6.89

%6

 

4.97

%

 

4.45

%

 

4.81

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets applicable to Common Shareholders, end of period (000)

 

$

456,077

 

$

418,346

 

$

445,160

 

$

403,796

 

$

355,459

 

$

452,657

 

$

466,002

 

AMPS outstanding at $25,000 liquidation preference, end of period (000)

 

 

 

$

176,625

 

$

176,625

 

$

192,000

 

$

192,000

 

$

250,000

 

$

250,000

 

VRDP Shares outstanding at $100,000 liquidation value, end of period (000)

 

$

176,600

 

 

 

 

 

 

 

 

 

 

 

 

 

Portfolio turnover

 

 

13

%

 

12

%

 

19

%

 

13

%

 

20

%

 

24

%

 

33

%

Asset coverage per AMPS at $25,000 liquidation preference, end of period

 

 

 

$

84,217

 

$

88,013

 

$

77,582

 

$

71,318

 

$

70,282

 

$

71,614

 

Asset coverage per VRDP Share at $100,000 liquidation value, end of period

 

$

358,254

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

1

Based on average shares outstanding.

 

 

 

 

2

Amount is less than $(0.01) per share.

 

 

 

 

3

Total investment returns based on market price, which can be significantly greater or lesser than the net asset value, may result in substantially different returns. Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

 

 

 

 

4

Aggregate total investment return.

 

 

 

 

5

Do not reflect the effect of dividends to AMPS Shareholders.

 

 

 

 

6

Annualized.

 

 

 

 

7

Interest expense, fees and amortization of offering costs relate to TOBs and/or VRDP Shares. See Note 1 and Note 7 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs and VRDP Shares, respectively.


 

 

 

 

See Notes to Financial Statements.

 

 

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2011

33




 

 

 

 

Financial Highlights

BlackRock MuniYield Quality Fund II, Inc. (MQT)


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months
Ended
October 31,
2011
(Unaudited)

 

 

 

Period
November 1,
2008 to
April 30,
2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended
April 30,

 

 

Year Ended October 31,

 

 

 

 

2011

 

2010

 

 

2008

 

2007

 

2006

 

Per Share Operating Performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, beginning of period

 

$

11.85

 

$

12.71

 

$

11.55

 

$

10.17

 

$

13.17

 

$

13.64

 

$

13.36

 

Net investment income1

 

 

0.43

 

 

0.86

 

 

0.88

 

 

0.41

 

 

0.86

 

 

0.86

 

 

0.86

 

Net realized and unrealized gain (loss)

 

 

1.13

 

 

(0.89

)

 

1.04

 

 

1.31

 

 

(3.00

)

 

(0.46

)

 

0.37

 

Dividends to Preferred Shareholders from net investment income

 

 

(0.01

)

 

(0.02

)

 

(0.03

)

 

(0.04

)

 

(0.26

)

 

(0.26

)

 

(0.24

)

Net increase (decrease) from investment operations

 

 

1.55

 

 

(0.05

)

 

1.89

 

 

1.68

 

 

(2.40

)

 

0.14

 

 

0.99

 

Dividends to Common Shareholders from net investment income

 

 

(0.41

)

 

(0.81

)

 

(0.73

)

 

(0.30

)

 

(0.60

)

 

(0.61

)

 

(0.71

)

Capital charges with respect to issuance of AMPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.00

2

Net asset value, end of period

 

$

12.99

 

$

11.85

 

$

12.71

 

$

11.55

 

$

10.17

 

$

13.17

 

$

13.64

 

Market price, end of period

 

$

12.47

 

$

11.59

 

$

12.52

 

$

10.16

 

$

8.75

 

$

11.60

 

$

12.93

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Investment Return Applicable to Common Shareholders3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Based on net asset value

 

 

13.32

%4

 

(0.36

)%

 

17.15

%

 

17.27

%4

 

(18.42

)%

 

1.39

%

 

7.98

%

Based on market price

 

 

11.22

%4

 

(1.07

)%

 

31.18

%

 

19.90

%4

 

(20.31

)%

 

(5.79

)%

 

6.34

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios to Average Net Assets Applicable to Common Shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total expenses5

 

 

1.16

%6

 

1.21

%

 

1.21

%

 

1.52

%6

 

1.80

%

 

1.73

%

 

1.66

%

Total expenses after fees waived5

 

 

1.16

%6

 

1.20

%

 

1.21

%

 

1.52

%6

 

1.79

%

 

1.72

%

 

1.66

%

Total expenses after fees waived and excluding interest expense and fees5,7

 

 

1.01

%6

 

1.03

%

 

1.04

%

 

1.18

%6

 

1.12

%

 

1.06

%

 

1.05

%

Net investment income5

 

 

6.76

%6

 

7.00

%

 

7.13

%

 

7.86

%6

 

6.96

%

 

6.39

%

 

6.44

%

Dividends to AMPS Shareholders

 

 

0.12

%6

 

0.20

%

 

0.23

%

 

0.68

%6

 

2.08

%

 

1.97

%

 

1.78

%

Net investment income to Common Shareholders

 

 

6.63

%6

 

6.80

%

 

6.90

%

 

7.18

%6

 

4.88

%

 

4.42

%

 

4.66

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets applicable to Common Shareholders, end of period (000)

 

$

291,486

 

$

265,918

 

$

284,395

 

$

258,263

 

$

227,551

 

$

294,661

 

$

305,111

 

AMPS outstanding at $25,000 liquidation preference, end of period (000)

 

$

116,575

 

$

116,575

 

$

116,575

 

$

128,250

 

$

128,250

 

$

160,000

 

$

160,000

 

Portfolio turnover

 

 

13

%

 

10

%

 

25

%

 

9

%

 

17

%

 

20

%

 

37

%

Asset coverage per AMPS at $25,000 liquidation preference, end of period

 

$

87,511

 

$

82,031

 

$

85,994

 

$

75,349

 

$

69,420

 

$

71,065

 

$

72,693

 


 

 

 

 

1

Based on average shares outstanding.

 

 

 

 

2

Amount is less than $0.01 per share.

 

 

 

 

3

Total investment returns based on market price, which can be significantly greater or lesser than the net asset value, may result in substantially different returns. Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

 

 

 

 

4

Aggregate total investment return.

 

 

 

 

5

Do not reflect the effect of dividends to AMPS Shareholders.

 

 

 

 

6

Annualized.

 

 

 

 

7

Interest expense and fees related to TOBs. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs.


 

 

 

See Notes to Financial Statements.

 

 

 

34

SEMI-ANNUAL REPORT

OCTOBER 31, 2011




 

 

Notes to Financial Statements (Unaudited)

1. Organization and Significant Accounting Policies:

BlackRock MuniYield Fund, Inc. (“MYD”), BlackRock MuniYield Quality Fund, Inc. (“MQY”) and BlackRock MuniYield Quality Fund II, Inc. (“MQT”) (collectively the “Funds”) are registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as non-diversified, closed-end management investment companies. The Funds are organized as Maryland corporations. The Funds’ financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. The Boards of Directors of the Funds are collectively referred to throughout this report as the “Board of Directors” or the “Board” and the directors, thereof are collectively referred to throughout this report as “Directors.” The Funds determine and make available for publication the NAVs of their Common Shares on a daily basis.

The following is a summary of significant accounting policies followed by the Funds:

Valuation: US 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 fair value their financial instruments at market value using independent dealers or pricing services under policies approved by the Board. 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. Investments in open-end registered investment companies are valued at net asset value 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 application of these methods of valuation results in a price for an investment which 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 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 investment advisor and/or the sub-advisor 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 investment advisor and/or sub-advisor deems relevant. The pricing of all Fair Value Assets is subsequently reported to the Board or a committee thereof.

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 established by a third party sponsor forming a special purpose entity, into which one or more funds, or an agent on behalf of the funds, transfers municipal bonds. 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, which are sold to third party investors, and residual certificates (“TOB Residuals”), which are generally issued to the participating funds that made the transfer. The TOB Residuals held by a Fund include the right of a Fund (1) to cause the holders of a proportional share of the short-term floating rate certificates to tender their certificates at par, including during instances of a rise in short-term interest rates, and (2) to transfer, within seven days, a corresponding share of the municipal bonds from the TOB to a Fund. The TOB may also be terminated without the consent of a Fund upon the occurrence of certain 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 quarterly or annual renewal of the liquidity support agreement, a substantial decline in market value of the municipal bond or the inability to remarket the short-term floating rate certificates to third party investors. During the six months ended October 31, 2011, no TOBs that the Funds participated in were terminated without the consent of the Funds.

       

 

 

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2011

35




 

 

Notes to Financial Statements (continued)

The cash received by the TOB from the sale of the short-term floating rate certificates, less transaction expenses, is paid to a Fund in exchange for TOB trust certificates. The Funds typically invest the cash in additional municipal bonds. Each Fund’s transfer of the municipal bonds to a TOB 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 are shown in other liabilities in the Statements of Assets and Liabilities.

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 short-term floating rate certificates have interest rates that generally reset weekly and their holders have the option to tender certificates to the TOB for redemption at par at each reset date. At October 31, 2011, 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

 

$

236,722,870

 

$

124,119,994

 

 

0.13% – 0.27

%

MQY

 

$

215,829,704

 

$

106,890,424

 

 

0.14% – 0.44

%

MQT

 

$

130,332,003

 

$

64,580,671

 

 

0.14% – 0.29

%

For the six months ended October 31, 2011, 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

 

$

123,945,559

 

 

0.63

%

MQY

 

$

106,890,424

 

 

0.65

%

MQT

 

$

64,580,671

 

 

0.63

%

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 values of municipal bonds deposited into the TOB may adversely affect the Funds’ NAVs per share.

Segregation and Collateralization: In cases in which the 1940 Act and the interpretive positions of the Securities and Exchange Commission (“SEC”) require that the Funds either deliver collateral or segregate assets in connection with certain investments (e.g., financial futures contracts), the Funds will, consistent with SEC rules and/or certain interpretive letters issued by the SEC, segregate collateral or designate on their books and records cash or liquid securities having a market value at least equal to the amount that would otherwise be required to be physically segregated. Furthermore, based on requirements and agreements with certain exchanges and third party broker-dealers, each party to such transactions has requirements to deliver/deposit securities as collateral for certain investments.

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. Dividend income is recorded on the ex-dividend dates. 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 dates. The amount and timing of dividends and distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP. Dividends and distributions to Preferred Shareholders are accrued and determined as described in Note 7.

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 US federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Funds’ US federal income tax returns remains open for the two years ended April 30, 2011, the period ended April 30, 2009 and the year ended October 31, 2008. 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 does not believe there are any uncertain tax positions that require recognition of a tax liability.

Recent Accounting Standard: In May 2011, the Financial Accounting Standards Board issued amended guidance to improve disclosure about fair value measurements which will require the following disclosures for fair value measurements categorized as Level 3: quantitative information about unobservable inputs and assumptions used in the fair value measurement, a description of the valuation policies and procedures and a narrative description of the sensitivity of the fair value measurement to changes in unobservable inputs and the interrelationships between those unobservable inputs. In addition, the amounts and reasons for all transfers in and out of Level 1 and Level 2 will be required to be disclosed.

     

 

 

 

36

SEMI-ANNUAL REPORT

OCTOBER 31, 2011




 

 

Notes to Financial Statements (continued)

The amended guidance is effective for financial statements for fiscal years beginning after December 15, 2011, and interim periods within those fiscal years. Management is evaluating the impact of this guidance on the Funds’ financial statements and disclosures.

Deferred Compensation and BlackRock Closed-End Share Equivalent Investment Plan: Under the deferred compensation plan approved by each Fund’s Board, 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 approximately 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 deferred compensation plan is not funded and obligations thereunder represent general unsecured claims against the general assets of each Fund. Each Fund may, however, elect to invest in common shares of certain other BlackRock Closed-End Funds selected by the Independent Directors in order to match its deferred compensation obligations. Investments to cover each Fund’s deferred compensation liability, if any, are included in other assets in the Statements of Assets and Liabilities. Dividends and distributions from the BlackRock Closed-End Fund investments under the plan are included in income — affiliated in the Statements of Operations.

Offering Costs: MYD and MQY incurred costs in connection with their issuance of VRDP Shares, which were recorded as a deferred charge and will be amortized over the 30-year life of the VRDP Shares, with the exception of up front fees paid to the liquidity provider which are amortized over the life of the liquidity agreement. Amortization of these costs is included in interest expense, fees and amortization of offering costs in the Statements of Operations.

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.

2. Derivative Financial Instruments:

The Funds engage in various portfolio investment strategies using derivative contracts both to increase the returns of the Funds and to economically hedge, or protect, their exposure to certain risks such as interest rate risk. These contracts may be transacted on an exchange.

Losses may arise if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument or if the counterparty does not perform under the contract. Counterparty risk related to exchange-traded financial futures contracts is deemed to be minimal due to the protection against defaults provided by the exchange on which these contracts trade.

Financial Futures Contracts: The Funds purchase 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 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, 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. 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 margin variation and are recorded by the Funds as unrealized appreciation or depreciation. 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.

Derivative Financial Instruments Categorized by Risk Exposure:

             

Fair Values of Derivative Financial Instruments as of October 31, 2011

 

 

Asset Derivatives

 

 

 

 

MYD

 

 

 

Statements of Assets and
Liabilities Location

 

Value

 

Interest rate contracts

 

Net unrealized appreciation/depreciation*

 

$

144,801

 


 

 

*

Includes cumulative appreciation/depreciation on financial futures contracts as reported in the Schedules of Investments. Only current day’s margin variation is reported within the Statements of Assets and Liabilities.


                     

The Effect of Derivative Financial Instruments in the Statements of Operations
Six Months Ended October 31, 2011

 

 

 

Net Realized Loss from

 

 

 

 

MYD

 

 

MQY

 

 

MQT

 

Interest rate contracts:

 

 

 

 

 

 

 

 

 

 

Financial futures contracts

 

$

(3,726,444

)

$

(2,996,769

)

$

(1,903,448

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Change in Unrealized
Appreciation/Depreciation on

 

 

 

 

MYD

 

 

MQY

 

 

MQT

 

Interest rate contracts:

 

 

 

 

 

 

 

 

 

 

Financial futures contracts

 

$

1,298,011

 

$

617,321

 

$

394,035

 


       

 

 

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2011

37




 

 

Notes to Financial Statements (continued)

For the six months ended October 31, 2011, the average quarterly balances of outstanding derivative financial instruments were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

MYD

 

MQY

 

MQT

 

Financial futures contracts:

 

 

 

 

 

 

 

 

 

 

Average number of
contracts sold

 

 

174

 

 

118

 

 

75

 

Average notional value of
contracts sold

 

$

22,087,313

 

$

14,768,281

 

$

9,426,563

 

3. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. (“PNC”) and Barclays Bank PLC (“Barclays”) are the largest stockholders of BlackRock, Inc. (“BlackRock”). Due to the ownership structure, PNC is an affiliate for 1940 Act purposes, but Barclays is not.

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 of 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 the sum of its 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 through each Fund’s investment in other affiliated investment companies, if any. These amounts are shown as fees waived by advisor 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 investment 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 compensation paid to the Funds’ Chief Compliance Officer.

4. Investments:

Purchases and sales of investments, excluding short-term securities, for the six months ended October 31, 2011, were as follows:

 

 

 

 

 

 

 

 

 

 

Purchases

 

Sales

 

MYD

 

$

89,626,980

 

$

97,778,574

 

MQY

 

$

123,206,154

 

$

130,814,111

 

MQT

 

$

59,415,718

 

$

62,944,234

 

5. Capital Loss Carryforwards:

As of April 30, 2011, 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

 

2012

 

 

 

 

 

$

5,561,802

 

2016

 

$

11,743,926

 

$

346,339

 

 

493,401

 

2017

 

 

4,065,755

 

 

704,337

 

 

3,726,056

 

2018

 

 

1,196,450

 

 

216,766

 

 

66,689

 

2019

 

 

479,687

 

 

 

 

1,774,764

 

Total

 

$

17,485,818

 

$

1,267,442

 

$

11,622,712

 

Under the recently enacted Regulated Investment Company Modernization Act of 2010, capital losses incurred by the Funds after April 30, 2011 will not be subject to expiration. In addition, any such losses must be utilized prior to the losses incurred in pre-enactment taxable years.

6. 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.

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

 

 

 

 

 

 

 

38

SEMI-ANNUAL REPORT

OCTOBER 31, 2011




 

 

Notes to Financial Statements (continued)

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 Funds’ Statements of Assets and Liabilities, less any collateral held by the Funds.

As of October 31, 2011, MYD invested a significant portion of its assets in the Health sector. MQY and MQT each 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, County/City/Special District/School District and Transportation sectors would have a greater impact on the Funds and could affect the value, income and/or liquidity of positions in such securities.

7. Capital Share Transactions:

Each Fund is authorized to issue 200 million shares of $0.10 par value shares, all of which were initially classified as Common Shares. The par value for each Fund’s Preferred Shares is $0.10, except MQT’s AMPS Series A, Series B, and Series C, which is $0.05. Each Fund’s Board is authorized, however, to reclassify any unissued Common Shares to Preferred Shares without approval of Common Shareholders.

Common Shares

For the periods shown, shares issued and outstanding increased by the following amounts as a result of dividend reinvestment:

 

 

 

 

 

 

 

 

 

 

Six Months Ended
October 31, 2011

 

Year Ended
April 30, 2011

 

MYD

 

 

202,454

 

 

421,588

 

MQY

 

 

 

 

59,095

 

MQT

 

 

 

 

70,618

 

Shares issued and outstanding remained constant for MQY and MQT for the six months ended October 31, 2011 and remained constant for MYD, MQY and MQT during the year ended April 30, 2011.

AMPS

The AMPS are redeemable at the option of MQT, in whole or in part, on any dividend payment date at their liquidation preference per share plus any accumulated and unpaid dividends whether or not declared. The AMPS are also subject to mandatory redemption at their liquidation preference plus any accumulated and unpaid dividends, whether or not declared, if certain requirements relating to the composition of the assets and liabilities of a Fund, as set forth in the MQT’s Articles Supplementary/Statement of Preferences/Certificate of Designation (the “Governing Instrument”) are not satisfied.

From time to time in the future, MQT may effect repurchases of its AMPS at prices below their liquidation preference as agreed upon by MQT and the seller. MQT also may redeem its AMPS from time to time as provided in the applicable Governing Instrument. MQT intends to effect such redemptions and/or repurchases to the extent necessary to maintain applicable asset coverage requirements or for such other reasons as the Board may determine.

MQT had the following series of AMPS outstanding, effective yields and reset frequency as of October 31, 2011:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series

 

AMPS

 

Effective
Yield

 

Reset
Frequency Days

 

MQT

 

 

A

 

 

1,457

 

 

0.23

%

 

28

 

 

 

 

B

 

 

1,457

 

 

0.23

%

 

28

 

 

 

 

C

 

 

1,457

 

 

0.23

%

 

7

 

 

 

 

D

 

 

292

 

 

1.31

%

 

7

 

Dividends on seven-day and 28-day AMPS are cumulative at a rate which is reset every seven or 28 days, respectively, based on the results of an auction. If the AMPS fail to clear the auction on an auction date, each Fund is required to pay the maximum applicable rate on the AMPS to holders of such shares for successive dividend periods until such time as the shares are successfully auctioned. The maximum applicable rate on the AMPS is as footnoted in the table below. The low, high and average dividend rates on the AMPS for each Fund for the six months ended October 31, 2011 were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series

 

Low

 

High

 

Average

 

MYD

 

 

A

1

 

0.15

%

 

0.37

%

 

0.30

%

 

 

 

B

1

 

0.15

%

 

0.38

%

 

0.28

%

 

 

 

C

1

 

0.18

%

 

0.40

%

 

0.30

%

 

 

 

D

1

 

0.21

%

 

0.40

%

 

0.32

%

 

 

 

E

1

 

0.15

%

 

0.40

%

 

0.30

%

 

 

 

F

1

 

0.11

%

 

0.41

%

 

0.28

%

 

 

 

G

2

 

1.26

%

 

1.47

%

 

1.37

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MQY

 

 

A

1

 

0.15

%

 

0.37

%

 

0.27

%

 

 

 

B

1

 

0.11

%

 

0.41

%

 

0.27

%

 

 

 

C

1

 

0.12

%

 

0.40

%

 

0.26

%

 

 

 

D

1

 

0.11

%

 

0.41

%

 

0.26

%

 

 

 

E

2

 

1.26

%

 

1.47

%

 

1.35

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MQT

 

 

A

1

 

0.12

%

 

0.37

%

 

0.25

%

 

 

 

B

1

 

0.13

%

 

0.38

%

 

0.26

%

 

 

 

C

1

 

0.11

%

 

0.40

%

 

0.25

%

 

 

 

D

2

 

1.26

%

 

1.47

%

 

1.33

%


 

 

 

 

1

The maximum applicable rate on this series of AMPS is the higher of 110% of the AA commercial paper rate or 100% of 90% of the Kenny S&P 30-day High Grade Index rate divided by 1.00 minus the marginal tax rate.

 

 

 

 

2

The maximum applicable rate on this series of AMPS is the higher of 110% of the Telerate/BBA LIBOR or 110% of 90% of the Kenny S&P 30-day High Grade Index rate divided by 1.00 minus the marginal tax rate.


 

 

 

 

 

 

 

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2011

39




 

 

Notes to Financial Statements (continued)

Since February 13, 2008, the AMPS of the Funds failed to clear any of their auctions. As a result, the AMPS dividend rates were reset to the maximum applicable rate, which ranged from 0.11% to 1.47% for the six months ended October 31, 2011. A failed auction is not an event of default for the Funds but it has a negative impact on the liquidity of AMPS. A failed auction occurs when there are more sellers of a Fund’s AMPS than buyers. A successful auction for the Funds’ AMPS may not occur for some time, if ever, and even if liquidity does resume, holders of AMPS may not have the ability to sell the AMPS at their liquidation preference.

The Funds paid commissions of 0.15% on the aggregate principal amount of all shares that fail to clear their auctions and 0.25% on the aggregate principal amount of all shares that successfully clear their auctions. Certain broker dealers have individually agreed to reduce commissions for failed auctions.

During the six months ended October 31, 2011, MYD and MQY announced the following redemptions of AMPS at a price of $25,000 per share plus any accrued and unpaid dividends through the redemption date:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series

 

Redemption
Date

 

Shares
Redeemed

 

Aggregate
Principal

 

MYD

 

 

A

 

 

7/27/11

 

 

1,320

 

$

33,000,000

 

 

 

 

B

 

 

7/20/11

 

 

1,320

 

$

33,000,000

 

 

 

 

C

 

 

7/13/11

 

 

1,320

 

$

33,000,000

 

 

 

 

D

 

 

7/13/11

 

 

1,320

 

$

33,000,000

 

 

 

 

E

 

 

7/13/11

 

 

2,052

 

$

51,300,000

 

 

 

 

F

 

 

7/21/11

 

 

1,260

 

$

31,500,000

 

 

 

 

G

 

 

7/18/11

 

 

1,466

 

$

36,650,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MQY

 

 

A

 

 

10/25/11

 

 

1,413

 

$

35,325,000

 

 

 

 

B

 

 

10/11/11

 

 

1,413

 

$

35,325,000

 

 

 

 

C

 

 

10/07/11

 

 

1,413

 

$

35,325,000

 

 

 

 

D

 

 

10/07/11

 

 

1,413

 

$

35,325,000

 

 

 

 

E

 

 

10/03/11

 

 

1,413

 

$

35,325,000

 

MYD and MQY financed the AMPS redemptions with the proceeds received from the issuance of VRDP Shares of $251,400,000 and $176,600,000, respectively.

AMPS issued and outstanding remained constant during the six months ended October 31, 2011 for MQT and remained constant for MYD, MQY and MQT during the year ended April 30, 2011.

VRDP Shares

MYD and MQY 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 VRDP Shareholders to have their shares purchased by the liquidity provider in the event of a failed remarketing. MYD and MQY are required to redeem the VRDP Shares owned by the liquidity provider after six months of continuous, unsuccessful remarketing. The VRDP Shares issued for the six months ended October 31, 2011 were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series

 

Issue Date

 

Shares
Issued

 

Maturity
Date

 

MYD

 

 

W-7

 

 

6/30/11

 

 

2,514

 

 

7/01/41

 

MQY

 

 

W-7

 

 

9/15/11

 

 

1,766

 

 

10/01/41

 

MYD and MQY have entered into a fee agreement with the liquidity provider that required an initial commitment and a per annum liquidity fee to be paid to the liquidity provider. These fees are shown as liquidity fees in the Statements of Operations.

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 as discussed below. In the event of a failed remarketing, the dividend rate of the VRDP Shares will be reset to a maximum rate. The maximum rate is determined based on, among other things, the long-term preferred share rating assigned to the VRDP Shares and the length of time that the VRDP Shares fail to be remarketed. For financial reporting purposes, the liquidation value of 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 paid on the VRDP Shares are included as a component of interest expense, fees and amortization of offering costs in the Statements of Operations. Dividends paid to holders of VRDP Shares are generally classified as tax-exempt income for tax-reporting purposes.

The short-term ratings on the VRDP Shares are directly related to the short-term ratings of the liquidity provider. Changes in the credit quality of the liquidity provider could cause a change in the short-term credit ratings of the VRDP Shares, which could impact the dividend rate paid on such shares. 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.

Subject to certain conditions, VRDP Shares may be redeemed, in whole or in part, at any time at the option of MYD and MQY. The redemption price per VRDP Share is equal to the liquidation value per share plus any outstanding unpaid dividends. In the event of an optional redemption of VRDP Shares prior to the initial termination date of the fee agreement, MYD and MQY must pay the liquidity provider fees on such redeemed VRDP Shares for the remaining term of the fee agreement up to the initial termination date. MYD and MQY are required to redeem certain of its outstanding VRDP Shares if it fails to maintain certain asset coverage and basic maintenance amount requirements.

 

 

 

 

 

 

 

40

SEMI-ANNUAL REPORT

OCTOBER 31, 2011




 

 

Notes to Financial Statements (concluded)

All of MYD and MQY’s VRDP Shares have successfully remarketed since issuance, with an annualized dividend rate of 0.29% for MYD and 0.30% for MQY, for the six months ended October 31, 2011.

Preferred Shares

The Funds’ Preferred Shares rank prior to the Funds’ Common Shares as to the payment of dividends by the Funds and distribution of assets upon dissolution or liquidation of the Funds. The 1940 Act prohibits the declaration of any dividend on the Funds’ Common Shares or the repurchase of the Funds’ Common Shares if the Funds fail 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 instrument, the Funds are 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 Funds fail to declare and pay dividends on the Preferred Shares, redeem any Preferred Shares required to be redeemed under the Preferred Shares governing instrument or comply with the basic maintenance amount requirement of the rating agencies then 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 subclassification 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.

8. 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:

The Funds will pay a net investment income dividend in the following amounts per share on December 1, 2011 to Common Shareholders of record on November 15, 2011:

 

 

 

 

 

 

 

Common
Dividend
Per Share

 

MYD

 

$

0.0825

 

MQY

 

$

0.0770

 

MQT

 

$

0.0680

 

The dividends declared on AMPS or VRDP Shares for the period November 1, 2011 to November 30, 2011 were as follows:

 

 

 

 

 

 

 

 

 

 

Series

 

Dividends
Declared

 

MYD VRDP Shares

 

 

W-7

 

$

58,821

 

MQY VRDP Shares

 

 

W-7

 

$

40,400

 

MQT AMPS

 

 

A

 

$

6,367

 

 

 

 

B

 

$

13,186

 

 

 

 

C

 

$

7,533

 

 

 

 

D

 

$

9,090

 

On December 16, 2011, MQT issued 1,165 Series W-7 Variable Rate MuniFund Term Preferred Shares (“VMTP Shares”), $100,000 liquidation value per share, with a maturity date of January 2, 2015 and total proceeds received of $116,500,000 in a private offering of VMTP Shares with qualified institutional buyers, as defined in rule 144A under Securities Act of 1933 to finance the AMPS redemption.

MQT announced the redemption of all of the outstanding AMPS at the indicated liquidation preference per share plus any accrued and unpaid dividends through the expected redemption date as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series

 

Announcement
Date

 

Redemption
Date

 

Shares
Redeemed

 

Liquidation
Preference
Per Share

 

A

 

 

12/19/11

 

 

1/17/12

 

 

1,457

 

$

25,000

 

B

 

 

12/23/11

 

 

1/23/12

 

 

1,457

 

$

25,000

 

C

 

 

12/19/11

 

 

1/09/12

 

 

1,457

 

$

25,000

 

D

 

 

12/19/11

 

 

1/10/12

 

 

292

 

$

25,000

 


 

 

 

 

 

 

 

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2011

41




 

 

 

Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements

The Board of Directors (each, a “Board,” collectively, the “Boards,” and the members of which are referred to as “Board Members”) of BlackRock MuniYield Fund, Inc. (“MYD”), BlackRock MuniYield Quality Fund, Inc. (“MQY”) and BlackRock MuniYield Quality Fund II, Inc. (“MQT,” and together with MYD and MQY, each a “Fund,” and, collectively, the “Funds”) met on April 14, 2011 and May 12–13, 2011 to consider the approval of each Fund’s investment advisory agreement (each, an “Advisory Agreement”) with BlackRock Advisors, LLC (the “Manager”), each Fund’s investment advisor. The Board of each Fund also considered the approval of the sub-advisory agreement (each, a “Sub-Advisory Agreement”) between the Manager and BlackRock Investment Management, LLC (the “Sub-Advisor”), with respect to each Fund. The Manager and the Sub-Advisor are referred to herein as “BlackRock.” The Advisory Agreements and the Sub-Advisory Agreements are referred to herein as the “Agreements.”

Activities and Composition of the Board

Each Board consists of eleven individuals, nine of whom are not “interested persons” of such Fund as defined in the Investment Company Act of 1940 (the “1940 Act”) (the “Independent Board Members”). The Board Members are responsible for the oversight of the operations of the Funds and perform the various duties imposed on the directors of investment companies by the 1940 Act. The Independent Board Members have retained independent legal counsel to assist them in connection with their duties. The Chairman of the Board is an Independent Board Member. Each Board has established five standing committees: an Audit Committee, a Governance and Nominating Committee, a Compliance Committee, a Performance Oversight Committee and an Executive Committee, each of which is composed of Independent Board Members (except for the Executive Committee, which also has one interested Board Member) and is chaired by an Independent Board Member. The Board of MQT also has established a Committee on Auction Market Preferred Shares. In addition, the Board of each of MYD and MQY had established a Committee on Auction Market Preferred Shares prior to the redemption of all of its respective Fund’s outstanding auction market preferred shares. Further, the Boards, together with the boards of other BlackRock-managed funds, also had established an ad hoc committee, the Joint Product Pricing Committee, which consisted of Independent Board Members and the directors/trustees of the boards of certain other BlackRock-managed funds, who were not “interested persons” of their respective funds.

The Agreements

Pursuant to the 1940 Act, the Boards are required to consider the continuation of the Agreements on an annual basis. In connection with this process, the Boards assessed, among other things, the nature, scope and quality of the services provided to the Funds by BlackRock, its personnel and its affiliates, including investment management, administrative and shareholder services, oversight of fund accounting and custody, marketing services, risk oversight, compliance program and assistance in meeting applicable legal and regulatory requirements.

The Boards, acting directly and through their respective committees, considered at each of their meetings, and from time to time as appropriate, factors that are relevant to their annual consideration of the renewal of the Agreements, including the services and support provided by BlackRock to the Funds and their shareholders. Among the matters the Boards considered were: (a) investment performance for one-, three- and five-year periods, as applicable, against peer funds, and applicable benchmarks, if any, as well as senior management’s and portfolio managers’ analyses of the reasons for any over performance or underperformance against their peers and/or benchmark, as applicable; (b) fees, including advisory and other amounts paid to BlackRock and its affiliates by the Funds for services such as call center and fund accounting; (c) Fund operating expenses and how BlackRock allocates expenses to the Funds; (d) the resources devoted to, risk oversight of, and compliance reports relating to, implementation of the Funds’ investment objectives, policies and restrictions; (e) the Funds’ compliance with their Code of Ethics and other compliance policies and procedures; (f) the nature, cost and character of non-investment management services provided by BlackRock and its affiliates; (g) BlackRock’s and other service providers’ internal controls and risk and compliance oversight mechanisms; (h) BlackRock’s implementation of the proxy voting policies approved by the Boards; (i) execution quality of portfolio transactions; (j) BlackRock’s implementation of the Funds’ valuation and liquidity procedures; (k) analyses of contractual and actual management fee ratios for products with similar investment objectives across the open-end fund, closed-end fund and institutional account product channels, as applicable; (l) BlackRock’s compensation methodology for its investment professionals and the incentives it creates; and (m) periodic updates on BlackRock’s business.

Board Considerations in Approving the Agreements

The Approval Process: Prior to the April 14, 2011 meeting, the Boards requested and received materials specifically relating to the Agreements. The Boards are engaged in a process with BlackRock to review periodically the nature and scope of the information provided to better assist their deliberations. The materials provided in connection with the April meeting included (a) information independently compiled and prepared by Lipper, Inc. (“Lipper”) on Fund fees and expenses and the investment performance of the Funds as compared with a peer group of funds as determined by Lipper and a customized peer group selected by BlackRock (collectively, “Peers”); (b) information on the profitability of the Agreements to BlackRock and a discussion of fall-out benefits to BlackRock and its affiliates and significant shareholders; (c) general analyses provided by BlackRock concerning investment management fees (a combination of the advisory fee and the administration fee, if any) charged to other clients, such as institutional clients and open-end funds, under similar investment mandates, as applicable; (d) the impact of economies of scale; (e) a summary of aggregate amounts paid by each Fund to BlackRock and (f) if applicable, a comparison of management fees to similar BlackRock closed-end funds, as classified by Lipper.

 

 

 

 

 

 

 

42

SEMI-ANNUAL REPORT

OCTOBER 31, 2011




 

 

 

Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements (continued)

At an in-person meeting held on April 14, 2011, the Boards reviewed materials relating to their consideration of the Agreements. As a result of the discussions that occurred during the April 14, 2011 meeting, and as a culmination of the Boards’ year-long deliberative process, the Boards presented BlackRock with questions and requests for additional information. BlackRock responded to these requests with additional written information in advance of the May 12–13, 2011 Board meeting.

At an in-person meeting held on May 12–13, 2011, each Board, including the Independent Board Members, unanimously approved the continuation of the Advisory Agreement between the Manager and its Fund and the Sub-Advisory Agreement between the Manager and the Sub-Advisor with respect to its Fund, each for a one-year term ending June 30, 2012. In approving the continuation of the Agreements, the Boards considered: (a) the nature, extent and quality of the services provided by BlackRock; (b) the investment performance of the Funds and BlackRock; (c) the advisory fee and the cost of the services and profits to be realized by BlackRock and its affiliates from their relationship with the Funds; (d) economies of scale; (e) fall-out benefits to BlackRock as a result of its relationship with the Funds; and (f) other factors deemed relevant by the Board Members.

The Boards also considered other matters they deemed important to the approval process, such as services related to the valuation and pricing of Fund portfolio holdings, direct and indirect benefits to BlackRock and its affiliates and significant shareholders from their relationship with Funds and advice from independent legal counsel with respect to the review process and materials submitted for the Boards’ review. The Boards noted the willingness of BlackRock personnel to engage in open, candid discussions with the Boards. The Boards did not identify any particular information as controlling, and each Board Member may have attributed different weights to the various items considered.

A. Nature, Extent and Quality of the Services Provided by BlackRock:

The Boards, including the Independent Board Members, reviewed the nature, extent and quality of services provided by BlackRock, including the investment advisory services and the resulting performance of the Funds. Throughout the year, the Boards compared Fund performance to the performance of a comparable group of closed-end funds and/or the performance of a relevant benchmark, if any. The Boards met with BlackRock’s senior management personnel responsible for investment operations, including the senior investment officers. Each Board also reviewed the materials provided by its Fund’s portfolio management team discussing Fund performance and the Fund’s investment objective, strategies and outlook.

The Boards considered, among other factors, the number, education and experience of BlackRock’s investment personnel generally and their Funds’ portfolio management teams, investments by portfolio managers in the funds they manage, BlackRock’s portfolio trading capabilities, BlackRock’s use of technology, BlackRock’s commitment to compliance, BlackRock’s credit analysis capabilities, BlackRock’s risk analysis capabilities and BlackRock’s approach to training and retaining portfolio managers and other research, advisory and management personnel. The Boards engaged in a review of BlackRock’s compensation structure with respect to their Funds’ portfolio management teams and BlackRock’s ability to attract and retain high-quality talent and create performance incentives.

In addition to advisory services, the Boards considered the quality of the administrative and non-investment advisory services provided to the Funds. BlackRock and its affiliates provide the Funds with certain services (in addition to any such services provided to the Funds by third parties) and officers and other personnel as are necessary for the operations of the Funds. In addition to investment advisory services, BlackRock and its affiliates provide the Funds with other services, including (i) preparing disclosure documents, such as the prospectus and the statement of additional information in connection with the initial public offering and periodic shareholder reports; (ii) preparing communications with analysts to support secondary market trading of the Funds; (iii) assisting with daily accounting and pricing; (iv) preparing periodic filings with regulators and stock exchanges; (v) overseeing and coordinating the activities of other service providers; (vi) organizing Board meetings and preparing the materials for such Board meetings; (vii) providing legal and compliance support; and (viii) performing other administrative functions necessary for the operation of the Funds, such as tax reporting, fulfilling regulatory filing requirements and call center services. The Boards reviewed the structure and duties of BlackRock’s fund administration, accounting, legal and compliance departments and considered BlackRock’s policies and procedures for assuring compliance with applicable laws and regulations.

B. The Investment Performance of the Funds and BlackRock: The Boards, including the Independent Board Members, also reviewed and considered the performance history of their Funds. In preparation for the April 14, 2011 meeting, the Boards worked with BlackRock and Lipper to develop a template for, and was provided with reports independently prepared by Lipper, which included a comprehensive analysis of each Fund’s performance. The Boards also reviewed a narrative and statistical analysis of the Lipper data that was prepared by BlackRock, which analyzed various factors that affect Lipper’s rankings. In connection with its review, each Board received and reviewed information regarding the investment performance, based on net asset value (NAV), of its Fund as compared to funds in that Fund’s applicable Lipper category and a customized peer group selected by BlackRock. The Boards were provided with a description of the methodology used by Lipper to select peer funds. The Boards and each Board’s Performance Oversight Committee regularly review, and

 

 

 

 

 

 

 

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2011

43




 

 

 

Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements (continued)

meet with Fund management to discuss, the performance of the Funds throughout the year.

The Board of MYD noted that, in general, MYD performed better than its Peers in that MYD’s performance was at or above the median of its Customized Lipper Peer Group Composite in each of the one-, three- and five-year periods reported.

The Board of MQY noted that, in general, MQY performed better than its Peers in that MQY’s performance was at or above the median of its Customized Lipper Peer Group Composite in two of the one-, three- and five-year periods reported.

The Board of MQT noted that MQT performed below the median of its Customized Lipper Peer Group Composite in each of the one-, three- and five-year periods reported. The Board of MQT and BlackRock reviewed and discussed the reasons for MQT’s underperformance during these periods compared with its Peers. The Board of MQT was informed that, among other things, there were three primary factors that impacted performance: exposure to the long-end of the municipal curve, which underperformed as the yield curve steepened out; an overweight of spread product during a period of significant widening of credit spreads; and the underperformance of municipal cash relative to MQT’s Bond Market Association hedges (which were completely unwound in the 4th quarter of 2008). The Board of MQT and BlackRock discussed BlackRock’s strategy for improving MQT’s performance and BlackRock’s commitment to providing the resources necessary to assist MQT’s portfolio managers and to improve MQT’s performance.

The Boards noted that BlackRock has made changes to the organization of the overall fixed income group management structure designed to result in a strengthened leadership team.

C. Consideration of the Advisory/Management Fees and the Cost of the Services and Profits to be Realized by BlackRock and its Affiliates from their Relationship with the Funds: Each Board, including the Independent Board Members, reviewed its Fund’s contractual management fee ratio compared with the other funds in its Lipper category. It also compared the Fund’s total expense ratio, as well as actual management fee ratio, to those of other funds in its Lipper category. Each Board considered the services provided and the fees charged by BlackRock to other types of clients with similar investment mandates, including separately managed institutional accounts.

The Boards received and reviewed statements relating to BlackRock’s financial condition and profitability with respect to the services it provided the Funds. The Boards were also provided with a profitability analysis that detailed the revenues earned and the expenses incurred by BlackRock for services provided to the Funds. The Boards reviewed BlackRock’s profitability with respect to the Funds and other funds the Boards currently oversee for the year ended December 31, 2010 compared to available aggregate profitability data provided for the years ended December 31, 2009, and December 31, 2008. The Boards reviewed BlackRock’s profitability with respect to other fund complexes managed by the Manager and/or its affiliates. The Boards reviewed BlackRock’s assumptions and methodology of allocating expenses in the profitability analysis, noting the inherent limitations in allocating costs among various advisory products. The Boards recognized that profitability may be affected by numerous factors including, among other things, fee waivers and expense reimbursements by the Manager, the types of funds managed, expense allocations and business mix, and the difficulty of comparing profitability as a result of those factors.

The Boards noted that, in general, individual fund or product line profitability of other advisors is not publicly available. The Boards considered BlackRock’s overall operating margin, in general, compared to the operating margin for leading investment management firms whose operations include advising closed-end funds, among other product types. That data indicates that operating margins for BlackRock, in general and with respect to its registered funds, are generally consistent with margins earned by similarly situated publicly traded competitors. In addition, the Boards considered, among other things, certain third party data comparing BlackRock’s operating margin with that of other publicly-traded asset management firms. That third party data indicates that larger asset bases do not, in themselves, translate to higher profit margins.

In addition, the Boards considered the cost of the services provided to the Funds by BlackRock, and BlackRock’s and its affiliates’ profits relating to the management of the Funds and the other funds advised by BlackRock and its affiliates. As part of its analysis, the Boards reviewed BlackRock’s methodology in allocating its costs to the management of the Funds. The Boards also considered whether BlackRock has the financial resources necessary to attract and retain high quality investment management personnel to perform its obligations under the Agreements and to continue to provide the high quality of services that is expected by the Boards.

The Board of each Fund noted that its respective Fund’s contractual management fee ratio (a combination of the advisory fee and the administration fee, if any) was lower than or equal to the median contractual management fee ratio paid by the Fund’s Peers, in each case before taking into account any expense reimbursements or fee waivers.

D. Economies of Scale: Each Board, including the Independent Board Members, considered the extent to which economies of scale might be realized as the assets of its Fund increase. Each Board also considered the extent to which its Fund benefits from such economies and whether there should be changes in the advisory fee rate or structure in order to enable the Fund to participate in these economies of scale, for example through the use of breakpoints in the advisory fee based upon the asset level of the Fund. Based on the ad hoc Joint Product Pricing Committee’s and each

 

 

 

 

 

 

 

44

SEMI-ANNUAL REPORT

OCTOBER 31, 2011




 

 

 

Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements (concluded)

Board’s review and consideration of this issue, each Board concluded that closed-end funds are typically priced at scale at a fund’s inception; therefore, the implementation of breakpoints was not necessary.

The Boards noted that most closed-end funds do not have fund level breakpoints because closed-end funds generally do not experience substantial growth after the initial public offering. The Boards noted that only one closed-end fund in the Fund Complex has breakpoints in its advisory fee structure.

E. Other Factors Deemed Relevant by the Board Members: The Boards, including the Independent Board Members, also took into account other ancillary or “fall-out” benefits that BlackRock or its affiliates and significant shareholders may derive from their respective relationships with the Funds, both tangible and intangible, such as BlackRock’s ability to leverage its investment professionals who manage other portfolios and risk management personnel, an increase in BlackRock’s profile in the investment advisory community, and the engagement of BlackRock’s affiliates as service providers to the Funds, including securities lending services. The Boards also considered BlackRock’s overall operations and its efforts to expand the scale of, and improve the quality of, its operations. The Boards also noted that BlackRock may use and benefit from third party research obtained by soft dollars generated by certain registered fund transactions to assist in managing all or a number of its other client accounts. The Boards further noted that BlackRock’s funds may invest in affiliated ETFs without any offset against the management fees payable by the funds to BlackRock.

In connection with its consideration of the Agreements, the Boards also received information regarding BlackRock’s brokerage and soft dollar practices. The Boards received reports from BlackRock which included information on brokerage commissions and trade execution practices throughout the year.

The Boards noted the competitive nature of the closed-end fund marketplace and that shareholders are able to sell their Fund shares in the secondary market if they believe that the Fund’s fees and expenses are too high or if they are dissatisfied with the performance of the Fund.

Conclusion

Each Board, including the Independent Board Members, unanimously approved the continuation of the Advisory Agreement between the Manager and its Fund for a one-year term ending June 30, 2012 and the Sub-Advisory Agreement between the Manager and the Sub-Advisor, with respect to its Fund, for a one-year term ending June 30, 2012. As part of its approval, each Board considered the detailed review of BlackRock’s fee structure, as it applies to its Fund, conducted by the ad hoc Joint Product Pricing Committee. Based upon its evaluation of all of the aforementioned factors in their totality, each Board, including the Independent Board Members, was satisfied that the terms of the Agreements were fair and reasonable and in the best interest of its Fund and its shareholders. In arriving at its decision to approve the Agreements, no Board identified any single factor or group of factors as all-important or controlling, but considered all factors together, and different Board Members may have attributed different weights to the various factors considered. The Independent Board Members were also assisted by the advice of independent legal counsel in making these determinations. The contractual fee arrangements for the Funds reflect the results of several years of review by the Board Members and predecessor Board Members, and discussions between such Board Members (and predecessor Board Members) and BlackRock. As a result, the Board Members’ conclusions may be based in part on their consideration of these arrangements in prior years.

 

 

 

 

 

 

 

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2011

45




 

 

Officers and Directors


 

Richard E. Cavanagh, Chairman of the Board and Director

Karen P. Robards, Vice Chairperson of the Board,
Chairperson of the Audit Committee and Director

Paul L. Audet, Director

Michael Castellano, Director and Member of the Audit Committee

Frank J. Fabozzi, Director and Member of the Audit Committee

Kathleen F. Feldstein, Director

James T. Flynn, Director and Member of the Audit Committee

Henry Gabbay, Director

Jerold B. Harris, Director

R. Glenn Hubbard, Director

W. Carl Kester, Director and Member of the Audit Committee

John M. Perlowski, President and Chief Executive Officer

Anne Ackerley, Vice President

Brendan Kyne, Vice President

Neal Andrews, Chief Financial Officer

Jay Fife, Treasurer

Brian Kindelan, Chief Compliance Officer and
Anti-Money Laundering Officer

Ira P. Shapiro, Secretary


 

Effective July 28, 2011, Richard S. Davis resigned as Director of the Funds, and Paul L. Audet became Director of the Funds.


 

Investment Advisor

BlackRock Advisors, LLC

Wilmington, DE 19809

 

Sub-Advisor

BlackRock Investment Management, LLC

Princeton, NJ 08540

 

Custodians

The Bank of New York Mellon1

New York, NY 10286

 

State Street Bank and Trust Company2

Boston, MA 02110

 

Transfer Agent

Common Shares:

BNY Mellon Shareowner Services1

Jersey City, NJ 07310

 

Computershare Trust Company, N.A.2

Providence, RI 02940

 

AMPS Auction Agent

BNY Mellon Shareowner Services3

Jersey City, NJ 07310

 

VRDP Tender and Paying Agent4

The Bank of New York Mellon

New York, NY 10289

 

VRDP Remarketing Agents

Merrill Lynch, Pierce, Fenner & Smith Incorporated5

New York, NY 10036

 

Morgan Stanley & Co. LLC2

New York, NY 10036

 

Accounting Agent

State Street Bank and Trust Company

Boston, MA 02110

 

Independent Registered Public Accounting Firm

Deloitte & Touche LLP

Boston, MA 02116

 

Legal Counsel

Skadden, Arps, Slate, Meagher & Flom LLP

New York, NY 10036

 

Address of the Funds

100 Bellevue Parkway

Wilmington, DE 19809


 

 

 

 

1

For MYD and MQT.

 

2

For MQY.

 

3

For MQT.

 

4

For MYD and MQY.

 

5

For MYD.


 

 

 

 

 

 

46

SEMI-ANNUAL REPORT

OCTOBER 31, 2011




 

 

Additional Information

 

Proxy Results

The Annual Meeting of Shareholders was held on July 28, 2011, for shareholders of record on May 31, 2011, to elect director nominees for each Fund. There were no broker non-votes with regard to any of the Funds.

Approved the Directors as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Paul L. Audet

 

Michael J. Castellano

 

Richard E. Cavanagh

 

 

 

Votes For

 

Votes
Withheld

 

Abstain

 

Votes For

 

Votes
Withheld

 

Abstain

 

Votes For

 

Votes
Withheld

 

Abstain

 

MYD

 

 

41,512,142

 

 

1,121,602

 

 

0

 

 

41,599,940

 

 

1,033,805

 

 

0

 

 

41,588,418

 

 

1,045,326

 

 

0

 

MQY

 

 

25,954,108

 

 

880,156

 

 

0

 

 

26,071,558

 

 

762,706

 

 

0

 

 

26,129,099

 

 

705,165

 

 

0

 

MQT

 

 

17,613,077

 

 

679,737

 

 

0

 

 

17,598,665

 

 

694,150

 

 

0

 

 

17,603,449

 

 

689,365

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Frank J. Fabozzi1

 

Kathleen F. Feldstein

 

James T. Flynn

 

 

 

Votes For

 

Votes
Withheld

 

Abstain

 

Votes For

 

Votes
Withheld

 

Abstain

 

Votes For

 

Votes
Withheld

 

Abstain

 

MYD

 

 

7,887

 

 

1,034

 

 

0

 

 

41,388,412

 

 

1,245,333

 

 

0

 

 

41,550,596

 

 

1,083,148

 

 

0

 

MQY

 

 

5,874

 

 

145

 

 

0

 

 

26,024,761

 

 

809,503

 

 

0

 

 

26,023,417

 

 

810,847

 

 

0

 

MQT

 

 

3,758

 

 

85

 

 

0

 

 

17,540,392

 

 

752,422

 

 

0

 

 

17,556,206

 

 

736,608

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Henry Gabbay

 

Jerrold B. Harris

 

R. Glenn Hubbard

 

 

 

Votes For

 

Votes
Withheld

 

Abstain

 

Votes For

 

Votes
Withheld

 

Abstain

 

Votes For

 

Votes
Withheld

 

Abstain

 

MYD

 

 

41,523,819

 

 

1,109,925

 

 

0

 

 

41,540,216

 

 

1,093,528

 

 

0

 

 

41,530,678

 

 

1,103,066

 

 

0

 

MQY

 

 

26,073,767

 

 

760,497

 

 

0

 

 

26,032,990

 

 

801,274

 

 

0

 

 

26,010,206

 

 

824,058

 

 

0

 

MQT

 

 

17,612,020

 

 

680,794

 

 

0

 

 

17,570,320

 

 

722,494

 

 

0

 

 

17,635,876

 

 

656,938

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

W. Carl Kester1

 

Karen P. Robards

 

 

 

 

 

 

 

 

 

 

 

 

Votes For

 

Votes
Withheld

 

Abstain

 

Votes For

 

Votes
Withheld

 

Abstain

 

 

 

 

 

 

 

 

 

 

MYD

 

 

7,887

 

 

1,034

 

 

0

 

 

41,520,365

 

 

1,113,380

 

 

0

 

 

 

 

 

 

 

 

 

 

MQY

 

 

5,874

 

 

145

 

 

0

 

 

26,126,490

 

 

707,774

 

 

0

 

 

 

 

 

 

 

 

 

 

MQT

 

 

3,758

 

 

85

 

 

0

 

 

17,610,971

 

 

681,843

 

 

0

 

 

 

 

 

 

 

 

 

 


 

 

 

 

1

Voted on by holders of AMPS only.


 

 

 

 

 

 

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2011

47




 

 

Additional Information (continued)


 

Dividend Policy

The Funds’ dividend policy is to distribute all or a portion of their net investment income to their 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

On August 11, 2010, the Manager announced that a derivative complaint had been filed by shareholders of MYD, on August 4, 2010 in the Supreme Court of the State of New York, New York County. The complaint names the Manager, BlackRock, Inc., and certain of the directors, officers and portfolio managers of MYD (collectively, the “Defendants”) as defendants. The complaint alleges, among other things, that the Defendants breached fiduciary duties owed to MYD and its Common Shareholders by redeeming AMPS at their liquidation preference. The complaint seeks unspecified damages for losses purportedly suffered by MYD as a result of the prior redemptions and injunctive relief preventing MYD from redeeming AMPS at their liquidation preference in the future. The Defendants believe that the claims asserted in the complaint are without merit and intend to vigorously defend themselves in the litigation.

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 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 into 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.

To enroll:

Shareholders Who Hold Accounts with Investment Advisors, Banks or Brokerages:

Please contact your financial advisor. Please note that not all investment advisors, banks or brokerages may offer this service.

     

 

 

 

48

SEMI-ANNUAL REPORT

OCTOBER 31, 2011




 

 

Additional Information (continued)


 

General Information (concluded)

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) 441-7762.

Availability of Quarterly Schedule of Investments

The Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the SEC’s website at http://www.sec.gov and may also be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on 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) 441-7762.

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) 441-7762; (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) 441-7762 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. Investors and others are advised to periodically check the website for updated performance information and the release of other material information about the Funds.

       

 

 

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2011

49




 

 

Additional Information (concluded)


 

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.

     

 

 

 

50

SEMI-ANNUAL REPORT

OCTOBER 31, 2011



This report is transmitted to shareholders only. It is not a prospectus. Past performance results shown in this report should not be considered a representation of future performance. The Funds have leveraged their Common Shares, which creates risks for Common Shareholders, including the likelihood of greater volatility of net asset value and market price of the Common Shares, and the risk that fluctuations in the short-term dividend rates of the Preferred Shares, including AMPS, which are currently set at the maximum reset rate as a result of failed auctions, may reduce the Common Shares’ yield. Statements and other information herein are as dated and are subject to change.

(GO PAPERLESS LOGO)

 

 

#MYQII-10/11-SAR

(BLACKROCK LOGO)

Item 2 –

Code of Ethics – Not Applicable to this semi-annual report

 

 

Item 3 –

Audit Committee Financial Expert – Not Applicable to this semi-annual report

 

 

Item 4 –

Principal Accountant Fees and Services – Not Applicable to this semi-annual report

 

 

Item 5 –

Audit Committee of Listed Registrants – Not Applicable to this semi-annual report

 

 

Item 6 –

Investments

 

(a) The registrant’s Schedule of Investments is included as part of the Report to Stockholders filed under Item 1 of this form.

 

(b) Not Applicable due to no such divestments during the semi-annual period covered since the previous Form N-CSR filing.

 

 

Item 7 –

Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies – Not Applicable to this semi-annual report

 

 

Item 8 –

Portfolio Managers of Closed-End Management Investment Companies

 

(a) Not Applicable to this semi-annual report

 

(b) As of the date of this filing, there have been no changes in any of the portfolio managers identified in the most recent annual report on Form N-CSR.

 

 

Item 9 –

Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers – Not Applicable

 

 

Item 10 –

Submission of Matters to a Vote of Security Holders – There have been no material changes to these procedures.

 

 

Item 11 –

Controls and Procedures

 

 

 

(a) – The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing of this report based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended.

 

 

 

(b) – There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

 

Item 12 –

Exhibits attached hereto

 

 

 

(a)(1) – Code of Ethics – Not Applicable to this semi-annual report

 

 

 

(a)(2) – Certifications – Attached hereto

 

 

 

(a)(3) – Not Applicable

 

 

 

(b) – Certifications – Attached hereto

 


 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

BlackRock MuniYield Quality Fund II, Inc.

 

 

 

By: /s/ John M. Perlowski

 

 

 

John M. Perlowski

 

 

Chief Executive Officer (principal executive officer) of

 

 

BlackRock MuniYield Quality Fund II, Inc.

 

 

 

Date: January 03, 2012

 

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

 

 

By: /s/ John M. Perlowski

 

 

 

John M. Perlowski

 

 

Chief Executive Officer (principal executive officer) of

 

 

BlackRock MuniYield Quality Fund II, Inc.

 

 

 

Date: January 03, 2012

 

 

 

By: /s/ Neal J. Andrews

 

 

 

Neal J. Andrews

 

 

Chief Financial Officer (principal financial officer) of

 

 

BlackRock MuniYield Quality Fund II, Inc.

 

 

 

 

Date: January 03, 2012