BLACKROCK MUNIYIELD QUALITY FUND II, INC.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT

INVESTMENT COMPANIES

Investment Company Act file number: 811-06728

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: 04/30/2016

Date of reporting period: 04/30/2016


Item 1 – Report to Stockholders


APRIL 30, 2016

 

 

ANNUAL REPORT

 

    LOGO

 

BlackRock MuniYield Fund, Inc. (MYD)

BlackRock MuniYield Quality Fund, Inc. (MQY)

BlackRock MuniYield Quality Fund II, Inc. (MQT)

 

Not FDIC Insured • May Lose Value • No Bank Guarantee


Table of Contents     

 

     Page  

The Markets in Review

    3   

Annual Report:

 

Municipal Market Overview

    4   

The Benefits and Risks of Leveraging

    5   

Derivative Financial Instruments

    5   

Fund Summaries

    6   
Financial Statements:  

Schedules of Investments

    12   

Statements of Assets and Liabilities

    35   

Statements of Operations

    36   

Statements of Changes in Net Assets

    37   

Statements of Cash Flows

    38   

Financial Highlights

    39   

Notes to Financial Statements

    42   

Report of Independent Registered Public Accounting Firm

    53   

Automatic Dividend Reinvestment Plan

    54   

Officers and Directors

    55   

Additional Information

    58   

 

                
2    ANNUAL REPORT    APRIL 30, 2016   


The Markets in Review

 

Dear Shareholder,

Diverging monetary policies and shifting economic outlooks across regions have been the overarching themes driving financial markets over the past couple of years. Investors spent most of 2015 anticipating the end of the Federal Reserve’s (the “Fed”) near-zero interest rate policy as U.S. growth outpaced other developed markets. The Fed ultimately hiked rates in December, whereas the European Central Bank and the Bank of Japan took additional steps to stimulate growth, even introducing negative interest rates. The U.S. dollar had strengthened considerably ahead of these developments, causing profit challenges for U.S. companies that generate revenues overseas, and pressuring emerging market currencies and commodities prices.

Global market volatility increased in the latter part of 2015 and spilled over into early 2016. Oil prices were a key factor behind the instability after collapsing in mid-2015 due to excess global supply. China, one of the world’s largest consumers of oil, was another notable source of stress for financial markets. Signs of slowing economic growth, a depreciating yuan and declining confidence in the country’s policymakers stoked investors’ worries about the potential impact of China’s weakness on the global economy. Risk assets (such as equities and high yield bonds) suffered in this environment.

After a painful start to the new year, fears of a global recession began to fade as the first quarter wore on, allowing markets to calm and risk assets to rebound. Central bank stimulus in Europe and Japan, combined with a more tempered outlook for rate hikes in the United States, helped bolster financial markets. A softening in U.S. dollar strength offered some relief to U.S. exporters and emerging market economies. Oil prices found firmer footing as global supply showed signs of leveling off.

The selloff in risk assets at the turn of the year brought valuations to more reasonable levels, creating some appealing entry points for investors in 2016. Nonetheless, slow but relatively stable growth in the United States is countered by a less optimistic global economic outlook and uncertainties around the efficacy of China’s policy response, the potential consequences of negative interest rates in Europe and Japan, and a host of geopolitical risks.

For the 12 months ended April 30, 2016, higher-quality assets such as municipal bonds, U.S. Treasuries and investment grade corporate bonds generated positive returns, while riskier assets such as non-U.S. and small cap equities broadly declined.

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

Sincerely,

 

LOGO

Rob Kapito

President, BlackRock Advisors, LLC

 

LOGO

Rob Kapito

President, BlackRock Advisors, LLC

 

Total Returns as of April 30, 2016  
    6-month     12-month  

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

    0.43     1.21

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

    (1.90     (5.94

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

    (3.07     (9.32

Emerging market equities
(MSCI Emerging Markets Index)

    (0.13     (17.87

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

    0.14        0.15   

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

    3.76        3.74   

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

    2.82        2.72   

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

    3.52        5.16   

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

    2.38        (1.08
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 Reporting Period Ended April 30, 2016      

Municipal Market Conditions

Municipal bonds generated positive performance for the period, due to falling interest rates and a favorable supply-and-demand environment. Interest rates were volatile in 2015 (bond prices rise as rates fall) leading up to a long-awaited rate hike from the U.S. Federal Reserve (the “Fed”) that ultimately came in December. However, ongoing reassurance from the Fed that rates would be increased gradually and would likely remain low overall resulted in strong demand for fixed income investments, with municipal bonds being one of the strongest-performing sectors for the 12-month period. Investors favored the relative stability of municipal bonds amid bouts of volatility resulting from uneven U.S. economic data, falling oil prices, global growth concerns, geopolitical risks, and widening central bank divergence — i.e., policy easing outside the United States while the Fed was posturing to commence policy tightening. During the 12 months ended April 30, 2016, municipal bond funds garnered net inflows of approximately $27 billion (based on data from the Investment Company Institute).

For the same 12-month period, total new issuance remained relatively strong from a historical perspective at $380 billion (though lower than the $397 billion issued in the prior 12-month period). A noteworthy portion of new supply during this period was attributable to refinancing activity (roughly 58%) as issuers took advantage of low interest rates and a flatter yield curve to reduce their borrowing costs.

S&P Municipal Bond Index

Total Returns as of April 30, 2016

  6 months:  3.52%

12 months:  5.16%

 

A Closer Look at Yields

 

LOGO

From April 30, 2015 to April 30, 2016, yields on AAA-rated 30-year municipal bonds decreased by 47 basis points (“bps”) from 3.05% to 2.58%, while 10-year rates fell by 51 bps from 2.12% to 1.61% and 5-year rates decreased 32 bps from 1.30% to 0.98% (as measured by Thomson Municipal Market Data). The municipal yield curve experienced significant flattening over

the 12-month period with the spread between 2- and 30-year maturities flattening by 58 bps and the spread between 2-and 10-year maturities flattening by 62 bps.

During the same time period, on a relative basis, tax-exempt municipal bonds broadly outperformed U.S. Treasuries with the greatest outperformance experienced in longer-term issues. In absolute terms, the positive performance of municipal bonds was driven largely by falling interest rates as well as a supply/demand imbalance within the municipal market as investors sought income and incremental yield in an environment where opportunities became increasingly scarce. More broadly, municipal bonds benefited from the greater appeal of tax-exempt investing in light of the higher tax rates implemented in 2014. The asset class is known for its lower relative volatility and preservation of principal with an emphasis on income as tax rates rise.

Financial Conditions of Municipal Issuers

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

The opinions expressed are those of BlackRock as of April 30, 2016, and are subject to change at any time due to changes in market or economic conditions. The comments should not be construed as a recommendation of any individual holdings or market sectors. Investing involves risk including loss of principal. Bond values fluctuate in price so the value of your investment can go down depending on market conditions. Fixed income risks include interest-rate and credit risk. Typically, when interest rates rise, there is a corresponding decline in bond values. Credit risk refers to the possibility that the bond issuer will not be able to make principal and interest payments. There may be less information on the financial condition of municipal issuers than for public corporations. The market for municipal bonds may be less liquid than for taxable bonds. Some investors may be subject to Alternative Minimum Tax (AMT). Capital gains distributions, if any, are taxable.

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

 

                
4    ANNUAL REPORT    APRIL 30, 2016   


The Benefits and Risks of Leveraging     

 

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

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

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

However, in order to benefit Common Shareholders, the return on assets purchased with leverage proceeds must exceed the ongoing costs associated with the leverage. If interest and other costs of leverage exceed the Funds’ return on assets purchased with leverage proceeds, income to shareholders is lower than if the Funds had not used leverage. Furthermore, the value of the Funds’ portfolio investments generally varies inversely with the direction of long-term interest rates, although other factors can influence the value of portfolio investments. In contrast, the value of the Funds’ obligations under their respective leverage arrangements generally does not fluctuate in relation to interest rates. As a result, changes in interest rates can influence the Funds’ NAVs positively or

negatively. Changes in the future direction of interest rates are very difficult to predict accurately, and there is no assurance that a Fund’s intended leveraging strategy will be successful.

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

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

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

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

 

 

 

Derivative Financial Instruments     

 

The Funds may invest in various derivative financial instruments. These instruments are used to obtain exposure to a security, commodity, index, market, and/or other asset without owning or taking physical custody of securities, commodities and/or other referenced assets or to manage market, equity, credit, interest rate, foreign currency exchange rate, commodity and/or other risks. Derivative financial instruments may give rise to a form of economic leverage and involve risks, including the imperfect correlation between the value of a derivative financial instrument and the underlying asset, possible default of the counterparty to the

transaction or illiquidity of the instrument. The Funds’ successful use of a derivative financial instrument depends on the investment advisor’s ability to predict pertinent market movements accurately, which cannot be assured. The use of these instruments may result in losses greater than if they had not been used, may limit the amount of appreciation a Fund can realize on an investment and/or may result in lower distributions paid to shareholders. The Funds’ investments in these instruments, if any, are discussed in detail in the Notes to Financial Statements.

 

 

                
   ANNUAL REPORT    APRIL 30, 2016    5


Fund Summary as of April 30, 2016    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.

 

Fund Information     

Symbol on New York Stock Exchange (“NYSE”)

  MYD

Initial Offering Date

  November 29, 1991

Yield on Closing Market Price as of April 30, 2016 ($15.73)1

  5.87%

Tax Equivalent Yield2

  10.37%

Current Monthly Distribution per Common Share3

  $0.077

Current Annualized Distribution per Common Share3

  $0.924

Economic Leverage as of April 30, 20164

  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 marginal federal tax rate of 43.4%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields.

 

  3   

The monthly distribution per Common Share, declared on June 1, 2016, was decreased to $0.072 per share. The yield on closing market price, current monthly distribution per Common Share and current annualized distribution per Common Share do not reflect the new distribution rate. The new distribution rate is not constant and is subject to change in the future.

 

  4   

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

 

Performance

Returns for the 12 months ended April 30, 2016 were as follows:

 

    Returns Based On  
     Market Price     NAV  

MYD1,2

    12.36     8.81

Lipper General & Insured Municipal Debt Funds (Leveraged) 3

    13.64     8.61

 

  1   

All returns reflect reinvestment of dividends and/or distributions.

 

  2  

The Fund moved from a discount to NAV to a premium during the period, which accounts for the difference between performance based on price and performance based on NAV.

 

  3  

Average return.

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

 

 

A positive interest-rate backdrop helped fuel a robust gain for the U.S. municipal bond market during the annual period. U.S. Treasury yields fell (as prices rose) amid an environment of slow global growth, declining yields overseas, and an emerging consensus that the Fed would maintain a gradual approach to raising short-term interest rates. Municipals generally outperformed Treasuries, reflecting favorable supply-and-demand conditions in the market and the overall health of state and local finances outside of select areas such as Puerto Rico, Illinois and New Jersey. Longer-term municipal bonds outpaced their short-term counterparts, while lower-quality securities typically outperformed higher-quality issues.

 

 

Income in the form of coupon payments made up a meaningful portion of the Fund’s total return for the period. In addition, the Fund’s minimal cash position and use of leverage provided both incremental return and income.

 

 

The Fund’s duration positioning, highlighted by concentrations in longer-dated securities with maturities of 25 years and above, also aided results. (Duration is a measure of interest-rate sensitivity.) Positions in lower-rated investment-grade bonds, as well as holdings of below investment-grade and unrated bonds, further helped performance at a time of elevated demand for higher-risk, higher-yielding investments. Sector concentrations in transportation, health care and utilities also contributed strongly.

 

 

Despite offering generous yields in comparison to the broader market, the Fund’s more seasoned holdings detracted from performance due to the premium amortization that occurred as the bonds approached their first call dates. (When a bond’s price trades at a premium over its face value, the difference is amortized over time. A bond premium occurs when the price of the bond has increased due to a decline in interest rates.) The Fund’s yield curve positioning also detracted somewhat given the more substantive decline in intermediate term yields in relation to the longer maturities in which the portfolio’s holdings are largely concentrated.

 

 

The Fund’s use of U.S. Treasury futures contracts to manage interest rate risk had a slightly negative impact on performance due to the overall strength in the market.

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.

 

                
6    ANNUAL REPORT    APRIL 30, 2016   


     BlackRock MuniYield Fund, Inc.

 

 

Market Price and Net Asset Value Per Share Summary                              

 

      4/30/16      4/30/15      Change      High      Low  

Market Price

   $ 15.73       $ 14.91         5.50    $ 15.80       $ 13.75   

Net Asset Value

   $ 15.62 1      $ 15.29         2.16    $ 15.65       $ 14.85   

 

  1   

The net asset value does not reflect adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles and therefore differs from amounts reported in the Statements of Assets and Liabilities and the Financial Highlights.

 

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

 

LOGO

 

Overview of the Fund’s Total Investments*

 

Sector Allocation   4/30/16     4/30/15  

Transportation

    23     24

Health

    21        20   

Utilities

    11        11   

Education

    12        12   

State

    10        10   

County/City/Special District/School District

    9        11   

Corporate

    8        8   

Tobacco

    6        4   

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

 

   
Call/Maturity Schedule3       

Calendar Year Ended December 31,

 

2016

    5

2017

    3   

2018

    3   

2019

    15   

2020

    9   

 

  3   

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

 

  *   Excludes short-term securities.
Credit Quality Allocation1   4/30/16     4/30/15  

AAA/Aaa

    8     10

AA/Aa

    47        45   

A

    21        23   

BBB/Baa

    13        12   

BB/Ba

    4        3   

B

    1        2   

N/R2

    6        5   

 

  1   

For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either Standard & Poor’s (“S&P”) or Moody’s Investors Service (“Moody’s”) if ratings differ. These rating agencies are independent, nationally recognized statistical rating organizations and are widely used. Investment grade ratings are credit ratings of BBB/Baa or higher. Below investment grade ratings are credit ratings of BB/Ba or lower. Investments designated N/R are not rated by either rating agency. Unrated investments do not necessarily indicate low credit quality. Credit quality ratings are subject to change.

 

  2   

The investment advisor evaluates the credit quality of unrated investments based upon certain factors including, but not limited to, credit ratings for similar investments and financial analysis of sectors and individual investments. Using this approach, the investment advisor has deemed certain of these unrated securities as investment grade quality. As of April 30, 2016 and April 30, 2015, the market value of unrated securities deemed by the investment advisor to be investment grade each represents 1% of the Fund’s total investments.

 

 

                
   ANNUAL REPORT    APRIL 30, 2016    7


Fund Summary as of April 30, 2016    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.

 

Fund Information

Symbol on NYSE

  MQY

Initial Offering Date

  June 26, 1992

Yield on Closing Market Price as of April 30, 2016 ($16.56)1

  5.54%

Tax Equivalent Yield2

  9.79%

Current Monthly Distribution per Common Share3

  $0.0765

Current Annualized Distribution per Common Share3

  $0.9180

Economic Leverage as of April 30, 20164

  36%

 

  1   

Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.

 

  2   

Tax equivalent yield assumes the maximum marginal federal tax rate of 43.4%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields.

 

  3   

The monthly distribution per Common Share, declared on June 1, 2016, was decreased to $0.0725 per share. The yield on closing market price, current monthly distribution per Common Share and current annualized distribution per Common Share do not reflect the new distribution rate. The new distribution rate is not constant and is subject to change in the future.

 

  4   

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

 

Performance

Returns for the 12 months ended April 30, 2016 were as follows:

 

    Returns Based On  
     Market Price     NAV  

MQY1,2

    13.35     8.61

Lipper General & Insured Municipal Debt Funds (Leveraged) 3

    13.64     8.61

 

  1   

All returns reflect reinvestment of dividends and/or distributions.

 

  2  

The Fund moved from a discount to NAV to a premium during the period, which accounts for the difference between performance based on price and performance based on NAV.

 

  3  

Average return.

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

 

 

A positive interest-rate backdrop helped fuel a robust gain for the U.S. municipal bond market during the annual period. U.S. Treasury yields fell (as prices rose) amid an environment of slow global growth, declining yields overseas, and an emerging consensus that the Fed would maintain a gradual approach to raising short-term interest rates. Municipals generally outperformed Treasuries, reflecting favorable supply-and-demand conditions in the market and the overall health of state and local finances outside of select areas such as Puerto Rico, Illinois and New Jersey. Longer-term municipal bonds outpaced their short-term counterparts, while lower-quality securities typically outperformed higher-quality issues.

 

 

Given the decline in yields, the Fund’s duration exposure made a significant contribution to performance during the 12-month period. (Duration is a measure of interest-rate sensitivity.)

 

 

Income in the form of coupon payments made up a meaningful portion of the Fund’s total return. In addition, the Fund’s minimal cash position and use of leverage provided both incremental return and income.

 

 

The 5- to 10-year portion of the yield curve outpaced the broader market during the first half of the period, while longer-term bonds led during the second half. In this environment, the Fund benefited from its exposure to the longer end of the yield curve. The Fund’s performance was also helped by its allocations to the school district and transportation sectors. In addition, the Fund was aided by its positions in bonds with wider yield spreads at a time in which investors displayed a preference for higher-yielding securities.

 

 

The Fund’s positions in general obligation securities issued by the city of Chicago and the state of Illinois, which trailed the broader market due to investor concerns about budget issues and pension funding liabilities, had a negative impact on performance. Yield spreads on these issues widened significantly, especially during the first half of the reporting period, resulting in slightly lower prices for the full year.

 

 

The Fund’s use of U.S. Treasury futures contracts to manage interest rate risk had a slightly negative impact on performance due to the overall strength in the market.

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

 

                
8    ANNUAL REPORT    APRIL 30, 2016   


     BlackRock MuniYield Quality Fund, Inc.

 

 

Market Price and Net Asset Value Per Share Summary                              

 

      4/30/16      04/30/15      Change      High      Low  

Market Price

   $ 16.56       $ 15.52         6.70    $ 16.76       $ 14.38   

Net Asset Value

   $ 16.48 1      $ 16.12         2.23    $ 16.53       $ 15.65   

 

  1   

The net asset value does not reflect adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles and therefore differs from amounts reported in the Statements of Assets and Liabilities and the Financial Highlights.

 

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

 

LOGO

 

Overview of the Fund’s Total Investments*

 

Sector Allocation   4/30/16     4/30/15  

Transportation

    22     21

County/City/Special District/School District

    22        25   

Utilities

    17        17   

State

    16        16   

Health

    10        10   

Education

    6        6   

Corporate

    4        3   

Housing

    2        2   

Tobacco

    1          

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

 

   
Call/Maturity Schedule2       

Calendar Year Ended December 31,

 

2016

    6

2017

    9   

2018

    9   

2019

    9   

2020

    3   

 

  2   

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

 

  *   Excludes short-term securities.
Credit Quality Allocation1   4/30/16     4/30/15  

AAA/Aaa

    9     10

AA/Aa

    57        60   

A

    27        25   

BBB/Baa

    5        4   

N/R

    2        1   

 

  1  

For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either S&P’s or Moody’s if ratings differ. These rating agencies are independent, nationally recognized statistical rating organizations and are widely used. Investment grade ratings are credit ratings of BBB/Baa or higher. Below investment grade ratings are credit ratings of BB/Ba or lower. Investments designated N/R are not rated by either rating agency. Unrated investments do not necessarily indicate low credit quality. Credit quality ratings are subject to change.

 

 

                
   ANNUAL REPORT    APRIL 30, 2016    9


Fund Summary as of April 30, 2016    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.

 

Fund Information     

Symbol on NYSE

  MQT

Initial Offering Date

  August 28, 1992

Yield on Closing Market Price as of April 30, 2016 ($14.33)1

  5.61%

Tax Equivalent Yield2

  9.91%

Current Monthly Distribution per Common Share3

  $0.067

Current Annualized Distribution per Common Share3

  $0.804

Economic Leverage as of April 30, 20164

  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 marginal federal tax rate of 43.4%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields.

 

  3  

The monthly distribution per Common Share, declared on June 1, 2016, was decreased to $0.062 per share. The yield on closing market price, current monthly distribution per Common Share and current annualized distribution per Common Share do not reflect the new distribution rate. The new distribution rate is not constant and is subject to change in the future.

 

  4  

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

 

Performance

Returns for the 12 months ended April 30, 2016 were as follows:

 

    Returns Based On  
     Market Price     NAV  

MQT1,2

    13.42     8.48

Lipper General & Insured Municipal Debt Funds (Leveraged) 3

    13.64     8.61

 

  1   

All returns reflect reinvestment of dividends and/or distributions.

 

  2   

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.

 

  3  

Average return.

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

 

 

A positive interest-rate backdrop helped fuel a robust gain for the U.S. municipal bond market during the annual period. U.S. Treasury yields fell (as prices rose) amid an environment of slow global growth, declining yields overseas, and an emerging consensus that the Fed would maintain a gradual approach to raising short-term interest rates. Municipals generally outperformed Treasuries, reflecting favorable supply-and-demand conditions in the market and the overall health of state and local finances outside of select areas such as Puerto Rico, Illinois and New Jersey. Longer-term municipal bonds outpaced their short-term counterparts, while lower-quality securities typically outperformed higher-quality issues.

 

 

Given the decline in yields, the Fund’s duration exposure made a significant contribution to performance during the 12-month period. (Duration is a measure of interest-rate sensitivity.)

 

 

Income in the form of coupon payments made up a meaningful portion of the Fund’s total return. In addition, the Fund’s minimal cash position and use of leverage provided both incremental return and income.

 

 

The 5- to 10-year portion of the yield curve outpaced the broader market during the first half of the period, while longer-term bonds led during the second half. In this environment, the Fund benefited from its exposure to the longer end of the yield curve. The Fund’s performance was also helped by its allocations to the school district and transportation sectors. In addition, the Fund was aided by its positions in bonds with wider yield spreads at a time in which investors displayed a preference for higher-yielding securities.

 

 

The Fund’s positions in general obligation securities issued by the city of Chicago and the state of Illinois, which trailed the broader market due to investor concerns about budget issues and pension funding liabilities, had a negative impact on performance. Yield spreads on these issues widened significantly, especially during the first half of the reporting period, resulting in slightly lower prices for the full year.

 

 

The Fund’s use of U.S. Treasury futures contracts to manage interest rate risk had a slightly negative impact on performance due to the overall strength in the market.

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

 

                
10    ANNUAL REPORT    APRIL 30, 2016   


     BlackRock MuniYield Quality Fund II, Inc.

 

 

Market Price and Net Asset Value Per Share Summary                              

 

      4/30/16      4/30/15      Change      High      Low  

Market Price

   $ 14.33       $ 13.44         6.62    $ 14.37       $ 12.26   

Net Asset Value

   $ 14.46 1      $ 14.18         1.97    $ 14.50       $ 13.72   

 

  1   

The net asset value does not reflect adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles and therefore differs from amounts reported in the Statements of Assets and Liabilities and the Financial Highlights.

 

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

 

LOGO

 

Overview of the Fund’s Total Investments*

 

Sector Allocation   4/30/16     4/30/15  

County/City/Special District/School District

    25     25

Transportation

    23        23   

Utilities

    14        14   

State

    13        13   

Health

    12        12   

Education

    8        9   

Housing

    2        2   

Corporate

    2        2   

Tobacco

    1          

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

 

   
Call/Maturity Schedule3       

Calendar Year Ended December 31,

 

2016

    8

2017

    8   

2018

    9   

2019

    11   

2020

    4   

 

  3   

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

 

  *   Excludes short-term securities.
Credit Quality Allocation1   4/30/16     4/30/15  

AAA/Aaa

    8     6

AA/Aa

    61        65   

A

    24        24   

BBB/Baa

    5        4   

N/R2

    2        1   

 

  1   

For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either S&P’s or Moody’s if ratings differ. These rating agencies are independent, nationally recognized statistical rating organizations and are widely used. Investment grade ratings are credit ratings of BBB/Baa or higher. Below investment grade ratings are credit ratings of BB/Ba or lower. Investments designated N/R are not rated by either rating agency. Unrated investments do not necessarily indicate low credit quality. Credit quality ratings are subject to change.

 

  2   

The investment advisor evaluates the credit quality of unrated investments based upon certain factors including, but not limited to, credit ratings for similar investments and financial analysis of sectors and individual investments. Using this approach, the investment advisor has deemed certain of these unrated securities as investment grade quality. As of April 30, 2016 and April 30, 2015, the market value of unrated securities deemed by the investment advisor to be investment grade each represents 1% of the Fund’s total investments.

 

 

                
   ANNUAL REPORT    APRIL 30, 2016    11


Schedule of Investments April 30, 2016

  

BlackRock MuniYield Fund, Inc. (MYD)

(Percentages shown are based on Net Assets)

 

Municipal Bonds   

Par  

(000)

    Value  
Alabama — 2.7%             

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

   $ 5,250      $ 5,281,500   

County of Jefferson Alabama Sewer, Refunding RB:

    

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

     1,665        1,858,506   

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

     3,175        3,571,050   

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

     7,410        8,692,967   
    

 

 

 
               19,404,023   
Alaska — 0.2%             

Northern Tobacco Securitization Corp., Refunding RB, Tobacco Settlement, Asset-Backed, Series A, 4.63%, 6/01/23

     1,265        1,272,084   
Arizona — 2.2%             

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

     895        867,622   

Salt Verde Financial Corp., RB, Senior:

    

5.00%, 12/01/32

     7,365        9,018,148   

5.00%, 12/01/37

     5,000        6,234,000   
    

 

 

 
               16,119,770   
California — 9.6%             

California Health Facilities Financing Authority, RB:

    

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

     4,425        5,054,235   

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

     6,465        7,766,017   

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

    

Dignity Health, 6.00%, 7/01/34

     3,155        3,623,865   

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

     2,560        3,029,376   

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

    

5.25%, 8/15/39

     305        345,940   

5.25%, 8/15/49

     770        869,969   

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

     1,650        1,813,136   

California Statewide Communities Development Authority, RB, Series A:

    

John Muir Health, 5.13%, 7/01/39

     2,300        2,552,011   

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

     1,100        1,196,965   

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

     1,335        1,451,519   

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

     3,285        3,339,794   
Municipal Bonds   

Par  

(000)

    Value  
California (continued)             

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

   $ 1,605      $ 1,798,996   

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

    

6.25%, 10/01/38

     405        506,359   

6.25%, 10/01/40

     335        418,840   

Golden State Tobacco Securitization Corp., Refunding RB, Asset-Backed Bonds, Series A-1, 5.13%, 6/01/47

     6,205        6,050,247   

State of California, GO:

    

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

     10        10,037   

Various Purposes, 6.00%, 3/01/33

     5,085        6,044,336   

Various Purposes, 6.50%, 4/01/33

     14,075        16,400,894   

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

    

Series I, 5.00%, 11/01/38

     1,605        1,914,364   

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

     2,385        2,852,412   

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

    

4.75%, 6/01/25

     1,460        1,460,511   

5.00%, 6/01/37

     1,775        1,774,840   
    

 

 

 
               70,274,663   
Colorado — 0.9%             

County of Adams Colorado, COP, Refunding, 4.00%, 12/01/40

     1,720        1,856,413   

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

    

5.25%, 6/01/19

     2,250        2,551,410   

5.38%, 6/01/19

     1,250        1,422,213   

5.38%, 6/01/19

     830        944,349   
    

 

 

 
               6,774,385   
Connecticut — 1.6%             

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

     2,770        3,077,054   

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

    

5.00%, 7/01/35

     2,225        2,534,431   

5.00%, 7/01/39

     5,000        5,695,350   
    

 

 

 
               11,306,835   
Delaware — 1.9%             

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

     2,305        2,520,702   

Delaware Transportation Authority, RB, 5.00%, 6/01/55

     2,430        2,776,640   
 

 

Portfolio Abbreviations

 

AGC    Assured Guarantee Corp.      EDA    Economic Development Authority    IDA    Industrial Development Authority
AGM    Assured Guaranty Municipal Corp.      EDC    Economic Development Corp.    ISD    Independent School District
AMBAC    American Municipal Bond Assurance Corp.      ERB    Education Revenue Bonds    LRB    Lease Revenue Bonds
AMT    Alternative Minimum Tax (subject to)      GAB    Grant Anticipation Bonds    M/F    Multi-Family
ARB    Airport Revenue Bonds      GARB    General Airport Revenue Bonds    NPFGC    National Public Finance Guarantee Corp.
BARB    Building Aid Revenue Bonds      GO    General Obligation Bonds   

PSF

  

Public School Fund

BHAC    Berkshire Hathaway Assurance Corp.      GTD    Guaranteed   

RB

  

Revenue Bonds

CAB    Capital Appreciation Bonds      HDA    Housing Development Authority   

S/F

  

Single-Family

COP    Certificates of Participation      HFA    Housing Finance Agency      

 

See Notes to Financial Statements.

 

                
12    ANNUAL REPORT    APRIL 30, 2016   


Schedule of Investments (continued)

  

BlackRock MuniYield Fund, Inc. (MYD)

 

Municipal Bonds   

Par  

(000)

    Value  
Delaware (continued)             

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

   $ 8,275      $ 8,690,653   
    

 

 

 
               13,987,995   
District of Columbia — 3.8%             

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

     4,440        5,056,228   

Metropolitan Washington Airports Authority, Refunding RB:

    

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

     8,350        4,787,138   

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

     15,000        8,322,300   

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

     2,425        2,706,130   

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

     13,410        7,032,338   
    

 

 

 
               27,904,134   
Florida — 5.5%             

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

     2,805        3,207,181   

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

     6,900        7,765,191   

County of Alachua Florida Health Facilities Authority, RB, 5.00%, 12/01/44

     4,825        5,464,843   

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

     2,155        2,385,132   

County of Collier Florida Health Facilities Authority, Refunding RB, Series A, 5.00%, 5/01/45

     2,790        3,166,204   

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

     7,530        8,616,654   

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

     6,150        8,057,792   

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

     3,887        1,554,709   
    

 

 

 
               40,217,706   
Georgia — 2.5%             

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

     5,270        6,219,390   

County of Gainesville Georgia & Hall Hospital Authority, Refunding RB, Northeast Georgia Health System, Inc. Project, Series A, 5.50%, 8/15/54

     1,075        1,297,880   

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

     1,700        1,909,219   

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

     6,945        7,755,968   

Municipal Electric Authority of Georgia, RB, Plant Vogtle Units 3 & 4 Project, Series A, 5.00%, 7/01/60

     1,030        1,166,990   
    

 

 

 
               18,349,447   
Hawaii — 0.4%             

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

     2,760        3,148,774   
Idaho — 1.4%             

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

     10,000        10,022,000   
Municipal Bonds   

Par  

(000)

    Value  
Illinois — 16.0%             

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

   $ 1,000      $ 1,004,610   

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

    

Series A, 5.75%, 1/01/39

     3,500        4,080,860   

Series C, 6.50%, 1/01/41

     11,920        14,455,146   

City of Chicago Illinois, GO, Project, Series A, 5.00%, 1/01/34

     3,695        3,572,659   

City of Chicago Illinois, GO, Refunding, Project, Series A, 5.25%, 1/01/32

     6,390        6,335,621   

City of Chicago Illinois O’Hare International Airport, GARB, 3rd Lien, Series A, 5.63%, 1/01/35

     4,200        4,873,722   

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

     2,130        2,326,705   

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

     5,530        6,012,216   

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

     1,635        1,858,227   

Illinois Finance Authority, Refunding RB:

    

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

     1,970        2,251,986   

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

     3,235        3,691,976   

Illinois State Toll Highway Authority, RB:

    

Senior, Series C, 5.00%, 1/01/36

     5,435        6,349,765   

Senior, Series C, 5.00%, 1/01/37

     5,815        6,769,416   

Series A, 5.00%, 1/01/38

     4,720        5,369,330   

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

    

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

     27,225        7,024,322   

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

     12,435        13,298,611   

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

     5,085        5,327,758   

Railsplitter Tobacco Settlement Authority, RB:

    

5.50%, 6/01/23

     2,730        3,218,834   

6.00%, 6/01/28

     2,335        2,790,348   

State of Illinois, GO:

    

5.50%, 7/01/38

     4,000        4,370,680   

5.00%, 2/01/39

     3,195        3,371,140   

Series A, 5.00%, 4/01/38

     2,510        2,638,688   

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

     1,275        1,414,421   

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

    

5.00%, 4/01/39

     1,675        1,885,715   

5.00%, 4/01/44

     2,045        2,288,600   
    

 

 

 
               116,581,356   
Indiana — 4.8%             

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

    

6.75%, 1/01/34

     1,635        2,004,543   

7.00%, 1/01/44

     3,950        4,872,917   

Indiana Finance Authority, RB, Series A:

    

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

     6,665        7,868,499   

Private Activity Bond, Ohio River Bridges East End Crossing Project, AMT, 5.25%, 1/01/51

     840        919,103   

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

     910        988,060   

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

     3,015        3,259,788   
 

 

See Notes to Financial Statements.

 

                
   ANNUAL REPORT    APRIL 30, 2016    13


Schedule of Investments (continued)

  

BlackRock MuniYield Fund, Inc. (MYD)

 

Municipal Bonds   

Par  

(000)

    Value  
Indiana (continued)             

Indiana Finance Authority, RB, Series A: (continued):

    

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

   $ 1,690      $ 1,891,499   

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

     6,645        7,539,151   

Indiana Municipal Power Agency, RB, Series B, 6.00%, 1/01/19 (c)

     2,230        2,532,120   

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

     2,580        3,007,325   
    

 

 

 
               34,883,005   
Iowa — 2.0%             

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

    

5.00%, 12/01/19

     1,950        2,014,525   

5.50%, 12/01/22

     4,765        4,959,174   

5.25%, 12/01/25

     940        1,011,760   

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

     2,845        3,024,349   

Iowa Tobacco Settlement Authority, Refunding RB, Asset-Backed, CAB, Series B, 5.60%, 6/01/34

     3,500        3,507,490   
    

 

 

 
               14,517,298   
Kansas — 0.7%             

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

     4,380        5,031,656   
Kentucky — 0.6%             

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

     2,055        2,325,993   

Kentucky Public Transportation Infrastructure Authority, RB, Downtown Crossing Project, Convertible CAB, 1st Tier, Series C, 0.00%, 7/01/43 (g)

     2,485        1,997,890   
    

 

 

 
               4,323,883   
Louisiana — 3.2%             

East Baton Rouge Sewerage Commission, RB, Series A, 5.25%, 2/01/19 (c)

     1,610        1,801,880   

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

     9,000        9,751,500   

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

     1,260        1,389,200   

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

    

5.50%, 5/15/30

     2,055        2,308,916   

5.25%, 5/15/31

     1,750        1,966,580   

5.25%, 5/15/32

     2,240        2,550,128   

5.25%, 5/15/33

     2,430        2,723,738   

5.25%, 5/15/35

     1,025        1,154,642   
    

 

 

 
               23,646,584   
Maine — 0.5%             

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

     3,140        3,469,417   
Maryland — 0.5%             

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

     1,500        1,501,425   
Municipal Bonds   

Par  

(000)

    Value  
Maryland (continued)             

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

   $ 880      $ 963,116   

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

     1,545        1,489,550   
    

 

 

 
               3,954,091   
Massachusetts — 1.5%             

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

     3,250        4,353,862   

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

     4,565        4,587,323   

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

     1,640        1,827,698   
    

 

 

 
               10,768,883   
Michigan — 4.4%             

City of Detroit Michigan Sewage Disposal System, Refunding RB, Senior Lien, Series A, 5.25%, 7/01/39

     8,995        10,009,276   

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

     2,795        3,158,127   

Michigan Finance Authority, Refunding RB, Detroit Water & Sewage Department Project, Senior Lien, Series C-1, 5.00%, 7/01/44

     1,830        2,000,227   

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

     6,085        6,920,166   

Royal Oak Hospital Finance Authority, Refunding RB, William Beaumont Hospital, Series V, 8.00%, 9/01/18 (c)

     2,000        2,334,840   

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

     6,365        7,467,418   
    

 

 

 
               31,890,054   
Mississippi — 0.0%             

University of Southern Mississippi, RB, Campus Facilities Improvements Project, 5.38%, 9/01/19 (c)

     280        321,350   
Missouri — 0.2%             

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

     510        580,018   

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

     510        570,200   
    

 

 

 
               1,150,218   
Nebraska — 0.4%             

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

    

5.25%, 9/01/37

     1,670        1,876,145   

5.00%, 9/01/42

     925        1,016,464   
    

 

 

 
               2,892,609   
New Jersey — 6.0%             

Casino Reinvestment Development Authority, Refunding RB:

    

5.25%, 11/01/39

     2,125        2,201,649   

5.25%, 11/01/44

     3,180        3,276,736   

County of Essex New Jersey Improvement Authority, RB, AMT, 5.25%, 7/01/45 (a)

     2,250        2,295,472   
 

 

See Notes to Financial Statements.

 

                
14    ANNUAL REPORT    APRIL 30, 2016   


Schedule of Investments (continued)

  

BlackRock MuniYield Fund, Inc. (MYD)

 

Municipal Bonds   

Par  

(000)

    Value  
New Jersey (continued)             

New Jersey EDA, RB, AMT:

    

Continental Airlines, Inc. Project, 4.88%, 9/15/19

   $ 1,675      $ 1,775,115   

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

     975        1,079,198   

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

     2,500        3,019,850   

New Jersey State Turnpike Authority, RB:

    

Series A, 5.00%, 1/01/38

     1,355        1,568,575   

Series A, 5.00%, 1/01/43

     1,835        2,113,957   

Series E, 5.00%, 1/01/45

     5,425        6,265,821   

New Jersey Transportation Trust Fund Authority, RB:

    

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

     7,395        3,202,183   

Transportation Program, Series AA, 5.00%, 6/15/44

     7,135        7,569,664   

Transportation System, Series A, 5.50%, 6/15/41

     3,630        3,964,359   

Transportation System, Series B, 5.25%, 6/15/36

     4,990        5,372,184   
    

 

 

 
               43,704,763   
New York — 8.6%             

City of New York New York Transitional Finance Authority, RB:

    

Fiscal 2012, Sub-Series E-1, 5.00%, 2/01/42

     4,985        5,820,885   

Future Tax Secured Revenue, Fiscal 2015, Series B, Sub-Series B-1, 5.00%, 8/01/39

     5,055        6,021,314   

Counties of New York Tobacco Trust IV, Refunding RB, Settlement Pass-Through Turbo, Series A, 6.25%, 6/01/41 (a)

     3,800        4,003,338   

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

     473        536,865   

Erie Tobacco Asset Securitization Corp., Refunding RB, Asset-Backed, Series A, 5.00%, 6/01/45

     4,070        4,051,278   

Metropolitan Transportation Authority, RB, Series B:

    

5.25%, 11/15/38

     4,960        6,012,710   

5.25%, 11/15/39

     1,765        2,135,297   

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

     4,910        5,614,192   

New York Liberty Development Corp., Refunding RB:

    

2nd Priority, Bank of America Tower at One Bryant Park Project, Class 3, 6.38%, 7/15/49

     2,480        2,790,794   

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

     8,145        8,821,361   

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

     705        773,871   

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

     1,760        1,939,010   

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

     3,595        4,328,056   

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

    

6.00%, 12/01/36

     2,625        3,084,401   

6.00%, 12/01/42

     1,485        1,742,900   
Municipal Bonds   

Par  

(000)

    Value  
New York (continued)             

Westchester Tobacco Asset Securitization, Refunding RB, 5.13%, 6/01/45

   $ 4,900      $ 4,900,049   
    

 

 

 
               62,576,321   
North Carolina — 1.9%             

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

     1,140        1,229,741   

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

     2,805        3,121,600   

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

    

Aldersgate, 6.25%, 7/01/35

     2,970        3,318,144   

Presbyterian Homes, 5.40%, 10/01/27

     5,000        5,067,200   

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

     1,210        1,385,970   
    

 

 

 
               14,122,655   
Ohio — 2.1%             

Buckeye Tobacco Settlement Financing Authority, RB, Asset-Backed, Senior Turbo Term, Series A-2, 5.88%, 6/01/47

     4,575        4,426,450   

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

     4,320        4,513,320   

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

     1,380        1,527,770   

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

     2,840        3,061,435   

State of Ohio, RB, Portsmouth Bypass Project, AMT, 5.00%, 6/30/53

     1,685        1,848,125   
    

 

 

 
               15,377,100   
Pennsylvania — 2.7%             

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

     5,250        5,608,680   

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

     1,325        1,453,803   

Pennsylvania Economic Development Financing Authority, RB:

    

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

     3,805        4,244,706   

Pennsylvania Bridge Finco LP, AMT, 5.00%, 6/30/42

     1,765        1,980,171   

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

     3,210        3,369,987   

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

     2,305        2,649,828   
    

 

 

 
               19,307,175   
Rhode Island — 2.7%             

Central Falls Detention Facility Corp., Refunding RB, 7.25%, 7/15/35 (e)(f)

     4,155        1,031,894   

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

    

4.50%, 6/01/45

     8,215        8,518,791   

5.00%, 6/01/50

     9,875        10,474,116   
    

 

 

 
               20,024,801   
 

 

See Notes to Financial Statements.

 

                
   ANNUAL REPORT    APRIL 30, 2016    15


Schedule of Investments (continued)

  

BlackRock MuniYield Fund, Inc. (MYD)

 

Municipal Bonds   

Par  

(000)

    Value  
South Carolina — 4.3%             

State of South Carolina Ports Authority, RB:

    

5.25%, 7/01/40

   $ 6,695      $ 7,564,547   

AMT, 5.25%, 7/01/55

     2,690        3,049,007   

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

     8,090        9,501,058   

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

     9,550        11,198,425   
    

 

 

 
               31,313,037   
Tennessee — 2.4%             

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

     2,855        3,231,489   

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

     1,125        1,125,045   

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

     11,250        11,339,100   

Metropolitan Government Nashville & Davidson County Health & Educational Facilities Board, RB, Vanderbilt University Medical Center, Series A, 5.00%, 7/01/46

     1,440        1,662,120   
    

 

 

 
               17,357,754   
Texas — 6.6%             

Central Texas Regional Mobility Authority, Refunding RB:

    

Senior Lien, 6.25%, 1/01/46

     4,365        5,212,072   

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

     725        806,033   

Central Texas Turnpike System, Refunding RB, Series C, 5.00%, 8/15/42

     1,225        1,381,604   

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

     3,060        3,534,637   

City of Houston Texas Airport System, RB, AMT, Series B-1, 5.00%, 7/15/30

     3,600        4,053,888   

City of Houston Texas Airport System, Refunding ARB:

    

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

     3,100        3,393,353   

United Airlines, Inc. Terminal E Project, AMT, 5.00%, 7/01/29

     2,200        2,449,216   

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

     1,525        1,823,763   

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

    

6.38%, 1/01/33

     460        535,679   

7.00%, 1/01/43

     485        577,441   

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

     4,320        4,912,531   

La Vernia Higher Education Finance Corp., RB, Kipp, Inc., Series A, 6.38%, 8/15/19 (c)

     1,000        1,175,090   

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

     4,110        1,758,176   

North Texas Tollway Authority, Refunding RB, Series A, 5.00%, 1/01/38

     1,910        2,202,860   

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

    

LBJ Infrastructure Group LLC, 7.00%, 6/30/40

     6,000        7,191,480   

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

     6,255        7,372,206   
    

 

 

 
               48,380,029   
Municipal Bonds   

Par  

(000)

    Value  
Virginia — 1.3%             

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

    

5.25%, 1/01/32

   $ 3,270      $ 3,685,519   

6.00%, 1/01/37

     4,750        5,622,717   
    

 

 

 
               9,308,236   
Washington — 1.0%             

Port of Seattle Washington, RB, Series C, AMT, 5.00%, 4/01/40

     1,565        1,786,385   

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

     4,745        5,658,175   
    

 

 

 
               7,444,560   
Wisconsin — 3.6%             

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

     14,300        16,444,285   

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

     4,970        5,634,092   

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

     3,790        3,975,293   
    

 

 

 
               26,053,670   
Wyoming — 1.1%             

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

     6,195        7,008,899   

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

     595        645,420   
    

 

 

 
               7,654,319   
Total Municipal Bonds — 111.8%              814,836,640   
    
                  
Municipal Bonds Transferred to
Tender Option Bond Trusts (h)
 
Alabama — 0.6%             

City of Birmingham Alabama Special Care Facilities Financing Authority, Refunding RB, Ascension Health, Senior Credit, Series C-2, 5.00%, 11/15/16 (c)

     4,538        4,647,078   
California — 7.7%             

Bay Area Toll Authority, Refunding RB, San Francisco Bay Area, Series F-1, 5.63%, 4/01/19 (c)

     6,582        7,490,429   

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

     5,310        5,865,532   

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

     19,080        21,536,932   

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

     11,973        13,604,609   

Los Angeles Community College District California, GO, Election of 2001, Series A (AGM), 5.00%, 8/01/17 (c)

     4,650        4,906,308   

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

     2,154        2,448,585   
    

 

 

 
               55,852,395   
 

 

See Notes to Financial Statements.

 

                
16    ANNUAL REPORT    APRIL 30, 2016   


Schedule of Investments (continued)

  

BlackRock MuniYield Fund, Inc. (MYD)

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (h)
  

Par  

(000)

    Value  
Colorado — 3.6%             

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

    

Series C-3, 5.10%, 4/29/18

   $ 7,490      $ 8,139,308   

Series C-7, 5.00%, 5/01/18

     4,800        5,207,664   

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

     4,299        4,835,866   

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

     7,820        8,319,620   
    

 

 

 
               26,502,458   
Connecticut — 2.6%             

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

    

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

     9,117        9,522,265   

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

     9,266        9,709,728   
    

 

 

 
               19,231,993   
Florida — 1.8%             

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

     11,448        13,096,945   

Georgia — 1.0%

    

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

     6,398        6,993,539   

Massachusetts — 0.8%

    

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

     4,607        5,409,991   
New Hampshire — 0.6%             

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

     4,048        4,572,396   
New York — 7.6%             

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

     3,194        3,621,510   

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

     3,260        3,832,528   

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

     21,629        25,695,041   

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

     13,081        15,612,478   

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

     5,400        6,507,324   
    

 

 

 
               55,268,881   
North Carolina — 4.0%             

North Carolina Capital Facilities Finance Agency, Refunding RB:

    

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

     18,897        19,227,301   

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

     5,290        6,243,046   

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

     3,120        3,436,025   
    

 

 

 
               28,906,372   
Ohio — 4.3%             

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

     27,896        31,283,880   
Municipal Bonds Transferred to
Tender Option Bond Trusts (h)
  

Par  

(000)

    Value  
Texas — 2.9%             

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

   $ 5,060      $ 5,882,604   

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

     6,920        8,044,154   

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

     6,243        7,383,790   
    

 

 

 
               21,310,548   
Utah — 1.1%             

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

     7,303        7,985,721   
Virginia — 3.5%             

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

     6,266        7,074,886   

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

     10,618        11,519,776   

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

     6,075        6,815,862   
    

 

 

 
               25,410,524   
Washington — 0.8%             

Central Puget Sound Regional Transit Authority, RB, Series A (AGM), 5.00%, 11/01/17 (c)

     5,384        5,729,525   
Wisconsin — 1.7%             

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

     11,456        12,429,665   
Total Municipal Bonds Transferred to
Tender Option Bond Trusts — 44.6%
        324,631,911   
Total Long-Term Investments
(Cost — $1,023,728,492) — 156.4%
        1,139,468,551   
    
                  
Short-Term Securities    Shares         

BlackRock Liquidity Funds, MuniCash, 0.19% (j)(k)

     6,922,502        6,922,502   
Total Short-Term Securities
(Cost — $6,922,502) — 0.9%
             6,922,502   
Total Investments (Cost — $1,030,650,994) — 157.3%        1,146,391,053   
Other Assets Less Liabilities — 1.1%        7,489,179   

Liability for TOB Trust Certificates, Including Interest
Expense and Fees Payable — (23.9)%

   

    (173,858,949
VRDP Shares, at Liquidation Value — (34.5)%        (251,400,000
    

 

 

 
Net Assets Applicable to Common Shares — 100.0%      $ 728,621,283   
    

 

 

 
 

 

See Notes to Financial Statements.

 

                
   ANNUAL REPORT    APRIL 30, 2016    17


Schedule of Investments (continued)

  

BlackRock MuniYield Fund, Inc. (MYD)

 

 

Notes to Schedule of Investments

 

(a)   Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

 

(b)   When-issued security.

 

(c)   U.S. Government securities, held in escrow, are used to pay interest on this security, as well as to retire the bond in full at the date indicated, typically at a premium to par.

 

(d)   Zero-coupon bond.

 

(e)   Non-income producing security.

 

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

 

(g)   Step-up bond that pays an initial coupon rate for the first period and then a higher coupon rate for the following periods. Rate as of period end.

 

(h)   Represent bonds transferred to a TOB Trust in exchange of cash and residual certificates received by the Fund. These bonds serve as collateral in a secured borrowing. See Note 4 of the Notes to Financial Statements for details.

 

(i)   All or a portion of security is subject to a recourse agreement. The aggregate maximum potential amount the Fund could ultimately be required to pay under the agreements, which expire between October 1, 2016 to November 15, 2019, is $23,450,890. See Note 4 of the Notes to Financial Statements for details.

 

(j)   During the year ended April 30, 2016, investments in issuers considered to be affiliates of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliate      Shares Held
at April 30,
2015
       Net
Activity
    Shares Held
at April 30,
2016
       Income       

BlackRock Liquidity Funds, MuniCash

                 6,922,502        6,922,502         $ 1,179     

FFI Institutional Tax-Exempt Fund

       4,603,069           (4,603,069               1,862       

Total

              6,922,502         $ 3,041     
           

 

 

 

(k)   Current yield as of period end.

 

Derivative Financial Instruments Outstanding as of Period End      

Futures Contracts

 

Contracts
Short
  Issue   Expiration   Notional
Value
    Unrealized
Appreciation
      
(55)   5-Year U.S. Treasury Note   June 2016   $   6,650,273      $ 23,134     
(134)   10-Year U.S. Treasury Note   June 2016   $ 17,428,375        114,574     
(64)   Long U.S. Treasury Bond   June 2016   $ 10,452,000        158,481     
(22)   Ultra U.S. Treasury Bond   June 2016   $   3,769,563        66,204       
Total         $ 362,393     
       

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

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

 

Assets — Derivative Financial Instruments      Commodity
Contracts
     Credit
Contracts
     Equity
Contracts
     Foreign
Currency
Exchange
Contracts
     Interest
Rate
Contracts
     Other
Contracts
     Total  

Futures contracts

    Net unrealized appreciation 1                                     $ 362,393               $ 362,393   

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

        

For the year ended April 30, 2016, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

Net Realized Gain (Loss) from:   Commodity
Contracts
     Credit
Contracts
     Equity
Contracts
     Foreign
Currency
Exchange
Contracts
     Interest
Rate
Contracts
     Other
Contracts
     Total  

Futures contracts

                                  $ (1,918,554            $ (1,918,554
                   
Net Change in Unrealized Appreciation (Depreciation) on:                                                       

Futures contracts

                                  $ 996,838               $ 996,838   

 

See Notes to Financial Statements.

 

                
18    ANNUAL REPORT    APRIL 30, 2016   


Schedule of Investments (concluded)

  

BlackRock MuniYield Fund, Inc. (MYD)

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments      
Futures contracts:  

Average notional value of contracts — short

  $ 33,370,770   

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

 

Fair Value Hierarchy as of Period End      

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

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

 

     Level 1        Level 2        Level 3        Total  

Assets:

                
Investments:                 

Long-Term Investments1

            $ 1,139,468,551                   $ 1,139,468,551   

Short-Term Securities

  $ 6,922,502                               6,922,502   
 

 

 

      

 

 

      

 

 

      

 

 

 

Total

  $ 6,922,502         $ 1,139,468,551                   $ 1,146,391,053   
 

 

 

      

 

 

      

 

 

      

 

 

 
                                          
Derivative Financial Instruments2                 

Assets:

                

Interest rate contracts

  $ 362,393                             $ 362,393   

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

 

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

       

       

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

 

     Level 1        Level 2        Level 3        Total  

Assets:

                

Cash pledged for futures contracts

  $ 542,850                             $ 542,850   

Liabilities:

                

Bank overdraft

            $ (272,831                  (272,831

TOB Trust Certificates

              (173,776,366                  (173,776,366

VRDP Shares

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

 

 

      

 

 

      

 

 

      

 

 

 

Total

  $ 542,850         $ (425,449,197                $ (424,906,347
 

 

 

      

 

 

      

 

 

      

 

 

 

During the year ended April 30, 2016, there were no transfers between levels.

 

See Notes to Financial Statements.

 

                
   ANNUAL REPORT    APRIL 30, 2016    19


Schedule of Investments April 30, 2016

  

BlackRock MuniYield Quality Fund, Inc. (MQY)

(Percentages shown are based on Net Assets)

 

Municipal Bonds   

Par  

(000)

    Value  
Alabama — 0.6%             

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

   $ 3,000      $ 3,018,000   
Alaska — 1.3%             

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

     1,400        1,611,708   

Borough of Matanuska-Susitna Alaska, RB, Goose Creek Correctional Center (AGC), 6.00%, 9/01/19 (a)

     4,425        5,169,285   
    

 

 

 
               6,780,993   
Arizona — 0.4%             

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

    

5.00%, 10/01/27

     1,525        1,691,606   

5.25%, 10/01/28

     250        279,380   
    

 

 

 
               1,970,986   
California — 21.1%             

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

     4,150        4,397,008   

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

    

0.00%, 8/01/37

     3,250        1,208,382   

0.00%, 8/01/38

     7,405        2,618,186   

California Health Facilities Financing Authority, RB:

    

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

     775        885,205   

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

     1,500        1,812,240   

California State University, Refunding RB, Systemwide, Series A, (AGM):

    

5.00%, 5/01/17 (a)

     2,660        2,777,173   

5.00%, 11/01/32

     4,340        4,505,528   

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

     2,000        2,309,320   

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

     5,000        5,242,750   

City of San Jose California, Refunding ARB, AMT:

    

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

     5,100        5,287,578   

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

     1,150        1,354,332   

Coast Community College District, GO, CAB, Election of 2002, Series C (AGM), 5.00%, 8/01/18 (a)

     2,800        3,069,808   

County of Orange California Sanitation District, COP, Series B (AGM), 5.00%, 2/01/17 (a)

     3,500        3,617,775   

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

     3,000        3,243,930   

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

     900        1,093,509   

El Monte Union High School District, GO, Series C (AGM), 5.25%, 6/01/18 (a)

     6,110        6,686,356   

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

     5,000        3,188,900   

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

     10,030        6,620,101   

Hartnell Community College District California, GO, CAB, Election of 2002, Series D, 7.00%, 8/01/34 (b)

     4,125        3,856,999   

Los Angeles Community College District California, GO, Election of 2001, Series A (NPFGC), 5.00%, 8/01/17 (a)

     6,890        7,269,777   
Municipal Bonds   

Par  

(000)

    Value  
California (continued)             

Mount San Antonio Community College District, GO, Refunding, CAB, Election of 2008, Series A, 6.25%, 8/01/43 (b)

   $ 1,945      $ 1,524,258   

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

     5,000        2,412,700   

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

     4,005        1,951,316   

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

     10,000        10,819,000   

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

    

CAB, Series C, 0.00%, 7/01/38

     2,200        1,001,704   

CAB, Series G, 0.00%, 7/01/34

     900        414,279   

CAB, Series G, 0.00%, 7/01/35

     950        411,207   

CAB, Series G, 0.00%, 7/01/36

     1,430        581,638   

CAB, Series G, 0.00%, 7/01/37

     950        363,499   

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

     1,725        1,068,810   

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

    

5.00%, 8/01/34

     900        1,045,503   

5.00%, 8/01/38

     760        880,794   

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

     5        5,022   

State of California, GO, Refunding, Various Purposes:

    

5.00%, 9/01/41

     2,300        2,680,650   

5.00%, 10/01/41

     1,300        1,518,361   

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

     1,500        1,746,480   

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

     15,000        7,238,100   
    

 

 

 
               106,708,178   
Colorado — 0.6%             

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

     1,885        2,165,073   

Regional Transportation District, COP, Series A, 5.00%, 6/01/39

     540        619,256   
    

 

 

 
               2,784,329   
Florida — 14.3%             

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

    

5.00%, 10/01/32

     2,700        2,854,386   

5.00%, 10/01/37

     6,000        6,331,680   

County of Brevard Florida Health Facilities Authority, Refunding RB, Health First, Inc. Project, 5.00%, 4/01/39

     2,175        2,474,715   

County of Duval Florida School Board, COP, Master Lease Program (AGM), 5.00%, 7/01/17 (a)

     4,765        5,008,349   

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

     1,250        1,442,937   

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

     2,700        2,938,815   

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

    

5.63%, 10/01/26

     1,280        1,504,218   

5.38%, 10/01/32

     1,700        1,955,714   

County of Miami-Dade Florida, GO, Building Better Communities Program, Series B, 6.38%, 7/01/18 (a)

     3,300        3,691,974   
 

 

See Notes to Financial Statements.

 

                
20    ANNUAL REPORT    APRIL 30, 2016   


Schedule of Investments (continued)

  

BlackRock MuniYield Quality Fund, Inc. (MQY)

 

Municipal Bonds   

Par  

(000)

    Value  
Florida (continued)             

County of Miami-Dade Florida, RB, Seaport:

    

Series A, 6.00%, 10/01/38

   $ 2,755      $ 3,393,967   

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

     870        1,086,117   

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

     560        701,014   

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

     895        1,077,732   

County of Miami-Dade Florida Aviation, Refunding ARB:

    

AMT, 5.00%, 10/01/34

     260        299,068   

Series A, 5.50%, 10/01/36

     6,490        7,408,205   

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

     3,550        4,071,495   

County of Miami-Dade Florida Educational Facilities Authority, RB, University Miami, Series A, 5.00%, 4/01/40

     4,740        5,513,426   

County of Orange Florida School Board, COP, Series A (a):

    

5.00%, 8/01/16

     5,000        5,057,500   

5.00%, 8/01/16

     2,000        2,023,000   

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

     2,825        3,297,142   

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

     375        416,081   

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

    

5.13%, 6/01/27

     1,395        1,641,231   

5.38%, 10/01/29

     1,900        2,249,372   

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

     1,350        1,423,818   

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

     1,620        1,935,608   

South Florida Water Management District, COP (a):

    

(AGC), 5.00%, 10/01/16

     700        713,202   

(AMBAC), 5.00%, 10/01/16

     1,500        1,528,290   
    

 

 

 
               72,039,056   
Georgia — 1.1%             

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

     3,150        3,371,288   

County of Gainesville Georgia & Hall Hospital Authority, Refunding RB, Northeast Georgia Health System, Inc. Project, Series A, 5.50%, 8/15/54

     680        820,984   

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

    

5.00%, 4/01/33

     190        218,202   

5.00%, 4/01/44

     855        961,926   
    

 

 

 
               5,372,400   
Illinois — 14.5%             

City of Chicago Illinois, GARB, O’Hare International Airport, 3rd Lien, Series A, 5.75%, 1/01/39

     5,500        6,412,780   

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

     1,615        1,595,458   

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

     1,250        1,229,462   

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

    

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

     5,000        5,603,650   

Senior Lien, Series C, 5.38%, 1/01/39

     4,090        4,654,706   

City of Chicago Illinois, Refunding RB, Series A:

    

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

     1,140        1,196,692   

Waterworks, 2nd Lien (AMBAC), 5.00%, 11/01/36

     1,500        1,529,610   
Municipal Bonds   

Par  

(000)

    Value  
Illinois (continued)             

City of Chicago Illinois Midway International Airport, Refunding RB, 2nd Lien, Series A, AMT, 5.00%, 1/01/34

   $ 1,460      $ 1,658,735   

City of Chicago Illinois Transit Authority, RB:

    

5.25%, 12/01/49

     710        805,410   

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

     840        924,756   

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

     380        419,106   

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

     850        1,004,658   

Illinois Finance Authority, Refunding RB, Silver Cross Hospital and Medical Centers:

    

4.13%, 8/15/37

     1,690        1,759,493   

5.00%, 8/15/44

     470        526,292   

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

     2,680        2,683,806   

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

     18,800        18,911,108   

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

     15,000        8,448,900   

Metropolitan Pier & Exposition Authority, Refunding RB, CAB, McCormick Place Expansion Project, Series B (AGM), 0.00%, 6/15/44 (c)

     4,625        1,367,196   

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

     900        1,075,509   

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

     3,200        4,269,248   

State of Illinois, GO:

    

5.25%, 2/01/33

     1,140        1,244,470   

5.50%, 7/01/33

     1,100        1,213,465   

5.25%, 2/01/34

     1,140        1,238,895   

5.50%, 7/01/38

     1,840        2,010,513   

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

     1,245        1,401,621   
    

 

 

 
               73,185,539   
Indiana — 1.8%             

Indiana Finance Authority, RB, Series A:

    

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

     1,400        1,652,798   

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

     690        749,188   

Private Activity Bond, Ohio River Bridges, AMT, 5.00%, 7/01/40

     1,190        1,299,932   

Indiana Municipal Power Agency, RB, Series A (NPFGC), 5.00%, 1/01/17 (a)

     1,150        1,183,730   

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

    

5.75%, 1/01/38

     1,300        1,466,829   

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

     2,350        2,614,657   
    

 

 

 
               8,967,134   
Iowa — 2.9%             

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

     7,700        8,672,818   

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

    

5.60%, 12/01/26

     1,590        1,714,831   

5.70%, 12/01/27

     1,585        1,699,231   

5.80%, 12/01/29

     1,075        1,151,110   

5.85%, 12/01/30

     1,445        1,548,476   
    

 

 

 
               14,786,466   
 

 

See Notes to Financial Statements.

 

                
   ANNUAL REPORT    APRIL 30, 2016    21


Schedule of Investments (continued)

  

BlackRock MuniYield Quality Fund, Inc. (MQY)

 

Municipal Bonds   

Par  

(000)

    Value  
Louisiana — 1.4%             

City of New Orleans Louisiana Aviation Board, RB, Series B, AMT, 5.00%, 1/01/40

   $ 4,460      $ 5,020,399   

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

     1,800        2,030,526   
    

 

 

 
               7,050,925   
Massachusetts — 1.7%             

Massachusetts HFA, Refunding RB, Series C, AMT:

    

5.00%, 12/01/30

     3,000        3,166,560   

5.35%, 12/01/42

     1,525        1,601,113   

Massachusetts School Building Authority, RB, Dedicated Sales Tax, Senior Series A, 5.00%, 5/15/43

     1,720        2,009,442   

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

     1,685        1,771,238   
    

 

 

 
               8,548,353   
Michigan — 6.2%             

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

     8,300        9,026,665   

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

     1,000        1,006,830   

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

     2,500        2,953,475   

Michigan Finance Authority, Refunding RB, Trinity Health Credit Group, 5.00%, 12/01/21 (a)

     25        30,203   

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

    

Series D, 5.00%, 9/01/39

     1,470        1,668,465   

Series V, 8.25%, 9/01/18 (a)

     3,510        4,117,932   

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

     3,350        3,552,038   

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

    

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

     1,200        1,395,816   

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

     1,000        1,163,180   

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

     4,270        4,955,676   

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

     1,040        1,115,494   

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

     520        591,245   
    

 

 

 
               31,577,019   
Minnesota — 0.6%             

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

    

6.50%, 11/15/18 (a)

     415        473,781   

6.50%, 11/15/38

     2,285        2,574,509   
    

 

 

 
               3,048,290   
Nebraska — 0.2%             

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

     1,000        1,123,440   
Nevada — 0.6%             

City of Las Vegas Nevada, GO, Limited Tax, Performing Arts Center, 6.00%, 4/01/19 (a)

     1,150        1,320,568   

County of Clark Nevada, ARB, Las Vegas-McCarran International Airport, Series A, 5.25%, 7/01/42

     1,500        1,685,895   
    

 

 

 
               3,006,463   
Municipal Bonds   

Par  

(000)

    Value  
New Jersey — 9.3%             

County of Hudson New Jersey Improvement Authority, RB, 5.25%, 5/01/51 (d)

   $ 1,115      $ 1,328,456   

New Jersey EDA, RB:

    

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

     12,375        12,502,710   

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

     935        1,057,223   

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

     1,220        1,373,561   

Series WW, 5.25%, 6/15/33

     215        237,102   

Series WW, 5.00%, 6/15/34

     280        300,115   

Series WW, 5.00%, 6/15/36

     1,280        1,362,905   

Series WW, 5.25%, 6/15/40

     490        536,035   

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

    

5.50%, 12/01/25

     730        828,397   

5.75%, 12/01/27

     340        385,835   

5.75%, 12/01/28

     365        411,808   

5.88%, 12/01/33

     1,980        2,238,212   

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

     1,360        1,437,275   

New Jersey Transportation Trust Fund Authority, RB:

    

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

     2,000        2,186,020   

Transportation Program, Series AA, 5.00%, 6/15/38

     2,405        2,558,343   

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

     7,500        4,123,200   

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

     2,000        2,437,080   

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

     3,565        3,944,851   

Transportation System, Series B, 5.50%, 6/15/31

     2,750        3,063,335   

Transportation System, Series B, 5.00%, 6/15/42

     3,500        3,685,535   

Transportation System, Series D, 5.00%, 6/15/32

     825        895,315   
    

 

 

 
               46,893,313   
New Mexico — 0.1%             

New Mexico Hospital Equipment Loan Council, Refunding RB, Presbyterian Healthcare Services, 5.00%, 8/01/44

     500        581,590   
New York — 3.1%             

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

     5,520        6,671,417   

County of Erie New York Industrial Development Agency, RB, City School District of Buffalo, Series A (AGM), 5.75%, 5/01/17 (a)

     2,000        2,103,660   

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

     1,000        1,175,730   

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

     2,000        2,280,440   

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

     3,350        3,433,214   
    

 

 

 
               15,664,461   
Ohio — 0.7%             

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

     725        901,436   
 

 

See Notes to Financial Statements.

 

                
22    ANNUAL REPORT    APRIL 30, 2016   


Schedule of Investments (continued)

  

BlackRock MuniYield Quality Fund, Inc. (MQY)

 

Municipal Bonds   

Par  

(000)

    Value  
Ohio (continued)             

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

    

5.25%, 2/15/32

   $ 950      $ 1,143,867   

5.25%, 2/15/33

     1,325        1,589,814   
    

 

 

 
               3,635,117   
Pennsylvania — 6.8%             

Pennsylvania Economic Development Financing Authority, RB, AMT:

    

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

     11,890        13,404,429   

Pennsylvania Rapid Bridge Replacement Project, 5.00%, 12/31/34

     3,420        3,918,670   

Pennsylvania Higher Educational Facilities Authority, Refunding RB, Thomas Jefferson University, Series A, 5.25%, 9/01/50

     4,575        5,318,666   

Pennsylvania Turnpike Commission, RB:

    

Series A, 5.00%, 12/01/38

     860        997,832   

Series C, 5.50%, 12/01/33

     760        930,225   

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

     775        914,826   

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

     6,700        7,679,071   

Pennsylvania Turnpike Commission, Refunding RB, Series A-1, 5.00%, 12/01/40

     1,040        1,202,573   
    

 

 

 
               34,366,292   
Rhode Island — 1.5%             

Tobacco Settlement Financing Corp., Refunding RB, Series B, 4.50%, 6/01/45

     7,180        7,445,516   
South Carolina — 5.8%             

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

    

5.50%, 7/01/38

     1,500        1,730,895   

5.50%, 7/01/41

     2,725        3,140,672   

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

     320        390,771   

South Carolina Ports Authority, RB, AMT, 5.25%, 7/01/50

     3,160        3,595,859   

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

     2,500        2,799,775   

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

    

Series A, 5.50%, 12/01/54

     9,985        11,726,584   

Series E, 5.50%, 12/01/53

     985        1,147,446   

State of South Carolina Public Service Authority, Refunding RB:

    

Santee Cooper, Series B, 5.00%, 12/01/38

     2,850        3,288,558   

Series E, 5.25%, 12/01/55

     1,440        1,688,558   
    

 

 

 
               29,509,118   
Tennessee — 0.1%             

Metropolitan Government of Nashville & Davidson County Health & Educational Facilities Board, Refunding RB, Lipscomb University Project, Series A, 5.00%, 10/01/45

     345        391,796   
Texas — 12.8%             

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

     1,000        1,091,010   

Central Texas Turnpike System, Refunding RB, CAB, Series B, 0.00%, 8/15/37 (c)

     2,475        1,057,766   

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

    

6.00%, 5/15/19 (a)

     2,700        3,116,583   

6.00%, 11/15/35

     150        174,027   
Municipal Bonds   

Par  

(000)

    Value  
Texas (continued)             

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

   $ 760      $ 888,721   

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

     2,870        1,276,117   

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

     1,100        1,293,765   

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

    

5.00%, 11/01/38

     8,550        9,535,900   

5.00%, 11/01/42

     1,500        1,665,675   

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

     1,325        1,580,950   

Leander ISD, GO, Refunding, CAB, Series D, 0.00%, 8/15/38 (c)

     4,665        1,958,414   

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

     4,800        5,233,536   

Mansfield Texas ISD, GO, School Building (PSF-GTD), 5.00%, 2/15/17 (a)

     2,300        2,379,419   

North Texas Tollway Authority, Refunding RB:

    

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

     3,380        3,822,543   

1st Tier System, Series S,
5.75%, 1/01/18 (a)

     6,200        6,709,764   

1st Tier System, Series SE, 5.75%, 1/01/40

     6,100        6,546,398   

Series B, 5.00%, 1/01/40

     2,755        3,155,715   

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

    

0.00%, 9/15/35

     3,180        1,373,665   

0.00%, 9/15/36

     6,015        2,445,819   

0.00%, 9/15/37

     4,305        1,646,663   

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

    

5.00%, 12/15/32

     1,060        1,186,532   

Natural Gas Utility Improvements,
5.00%, 12/15/31

     1,600        1,800,192   

Texas Private Activity Bond Surface Transportation Corp., RB, Senior Lien, AMT, Blueridge Transportation Group (d):

    

5.00%, 12/31/45

     1,120        1,236,166   

5.00%, 12/31/50

     625        683,988   

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

     2,330        2,659,928   
    

 

 

 
               64,519,256   
Washington — 2.1%             

Central Puget Sound Regional Transit Authority, RB, Series A, 5.00%, 11/01/17 (a)

     2,000        2,128,360   

Port of Seattle Washington, RB, Series C, AMT, 5.00%, 4/01/40

     1,380        1,575,215   

Washington Health Care Facilities Authority, RB:

    

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

     4,000        4,453,160   

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

     1,525        1,677,347   

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

     850        946,560   
    

 

 

 
               10,780,642   
Wisconsin — 0.4%             

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

     1,850        2,097,197   
Total Municipal Bonds — 112.0%              565,851,869   
 

 

See Notes to Financial Statements.

 

                
   ANNUAL REPORT    APRIL 30, 2016    23


Schedule of Investments (continued)

  

BlackRock MuniYield Quality Fund, Inc. (MQY)

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (f)
  

Par  

(000)

    Value  
Arizona — 0.6%             

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

   $ 2,750      $ 2,925,209   
California — 1.8%             

Los Angeles Community College District California, GO, Refunding, Election of 2008, Series A, 6.00%, 8/01/19 (a)

     2,639        3,079,035   

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

     509        578,138   

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

    

5.00%, 5/01/18 (a)

     858        928,570   

5.00%, 5/01/33

     4,312        4,667,231   
    

 

 

 
               9,252,974   
Colorado — 0.3%             

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

     1,220        1,372,036   
Connecticut — 0.4%             

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

     1,891        2,219,633   
District of Columbia — 1.1%             

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

     1,320        1,530,170   

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

     3,400        3,908,436   
    

 

 

 
               5,438,606   
Florida — 11.0%             

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

     5,990        6,127,830   

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

     2,390        2,779,737   

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

     12,729        14,509,156   

County of Miami-Dade School Board, COP, Refunding, 5.25%, 5/01/18 (a)

     11,350        12,367,187   

County of Orange Florida School Board, COP, Series A (AGC), 5.50%, 8/01/19 (a)

     3,544        4,069,385   

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

     6,300        8,428,896   

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

     4,315        4,708,309   

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

     2,399        2,531,196   
    

 

 

 
               55,521,696   
Illinois — 7.5%             

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

     4,000        4,099,720   

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

     14,427        15,323,502   

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

     360        381,801   

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

     6,198        6,875,887   

State of Illinois Toll Highway Authority, RB:

    

Senior Priority, Series A, 5.00%, 1/01/40

     3,721        4,345,777   

Senior Priority, Series B, 5.50%, 1/01/18 (a)

     2,000        2,158,250   

Senior, Series B, 5.00%, 1/01/40

     1,409        1,649,741   

Series A, 5.00%, 1/01/38

     2,878        3,273,792   
    

 

 

 
               38,108,470   
Municipal Bonds Transferred to
Tender Option Bond Trusts (f)
  

Par  

(000)

    Value  
Massachusetts — 0.5%             

Commonwealth of Massachusetts, GO, Series A, 5.00%, 3/01/46

   $ 2,022      $ 2,368,455   
Michigan — 2.9%             

Michigan Finance Authority, RB:

    

Beaumont Health Credit Group, 5.00%, 11/01/44

     2,701        3,110,605   

Hospital, Trinity Health Credit Group, 5.00%, 12/01/39

     9,055        10,183,525   

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

     1,180        1,364,705   
    

 

 

 
               14,658,835   
Nevada — 2.8%             

City of Las Vegas Nevada, GO, Limited Tax, Performing Arts Center, 6.00%, 4/01/19 (a)(g)

     5,007        5,750,007   

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

     2,429        2,789,904   

Las Vegas Valley Water District Nevada, GO, Refunding, Water Improvement, Series A, 5.00%, 6/01/46

     4,720        5,581,495   
    

 

 

 
               14,121,406   
New Jersey — 0.5%             

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

     2,581        2,778,243   
New York — 7.3%             

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

     3,509        3,876,720   

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

     7,641        8,994,860   

City of New York New York Water & Sewer System, Refunding RB, 2nd General Resolution, Fiscal 2014, Series DD, 5.00%, 6/15/35

     2,280        2,747,058   

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

     4,750        5,802,458   

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

     10,830        12,280,895   

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

     1,534        1,749,025   

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

     1,500        1,661,670   
    

 

 

 
               37,112,686   
North Carolina — 0.3%             

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

     1,500        1,528,590   
Ohio — 0.2%             

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

     780        878,272   
South Carolina — 1.0%             

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

     4,695        5,279,856   
Texas — 3.4%             

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

     5,900        6,096,293   

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

     879        1,008,819   
 

 

See Notes to Financial Statements.

 

                
24    ANNUAL REPORT    APRIL 30, 2016   


Schedule of Investments (continued)

  

BlackRock MuniYield Quality Fund, Inc. (MQY)

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (f)
  

Par  

(000)

    Value  
Texas (continued)             

Cypress-Fairbanks ISD, GO, Refunding, Schoolhouse (PSF-GTD):

    

5.00%, 2/15/17 (a)

   $ 4,584      $ 4,738,726   

5.00%, 2/15/32

     166        171,871   

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

     4,501        5,027,814   
    

 

 

 
               17,043,523   
Virginia — 0.1%             

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

     450        507,767   
Washington — 1.5%             

Central Puget Sound Regional Transit Authority, RB, Series A (AGM), 5.00%, 11/01/17 (a)

     2,504        2,665,267   

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

     3,930        4,921,067   
    

 

 

 
               7,586,334   
Wisconsin — 0.6%             

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

    

Series A, 5.00%, 4/01/42

     640        716,237   

Series C, 5.25%, 4/01/39

     2,000        2,169,920   
    

 

 

 
               2,886,157   
Total Municipal Bonds Transferred to
Tender Option Bond Trusts — 43.8%
        221,588,748   

Total Long-Term Investments

(Cost — $710,244,420) — 155.8%

  

  

    787,440,617   
Short-Term Securities        
Shares
    Value  

BlackRock Liquidity Funds, MuniCash, 0.19% (h)(i)

     2,644,850      $ 2,644,850   

Total Short-Term Securities

(Cost — $2,644,850) — 0.5%

             2,644,850   
Total Investments (Cost — $712,889,270) — 156.3%        790,085,467   
Other Assets Less Liabilities — 0.8%        4,065,854   

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

   

    (112,184,430
VRDP Shares, at Liquidation Value — (34.9)%        (176,600,000
    

 

 

 
Net Assets Applicable to Common Shares — 100.0%      $ 505,366,891   
    

 

 

 
 
Notes to Schedule of investments

 

(a)   U.S. Government securities, held in escrow, are used to pay interest on this security, as well as to retire the bond in full at the date indicated, typically at a premium to par.

 

(b)   Step-up bond that pays an initial coupon rate for the first period and then a higher coupon rate for the following periods. Rate as of period end.

 

(c)   Zero-coupon bond.

 

(d)   When-issued security.

 

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

 

(f)   Represent bonds transferred to a TOB Trust in exchange of cash and residual certificates received by the Fund. These bonds serve as collateral in a secured borrowing. See Note 4 of the Notes to Financial Statements for details.

 

(g)   All or a portion of security is subject to a recourse agreement. The aggregate maximum potential amount the Fund could ultimately be required to pay under the agreements, which expire between November 16, 2016 to December 1, 2029, is $18,768,473. See Note 4 of the Notes to Financial Statements for details.

 

(h)   During the year ended April 30, 2016, investments in issuers considered to be affiliates of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliate      Shares Held
at April 30,
2015
       Net
Activity
    Shares Held
at April 30,
2016
       Income  

BlackRock Liquidity Funds, MuniCash

                 2,644,850        2,644,850         $ 440   

FFI Institutional Tax-Exempt Fund

       2,768,314           (2,768,314               495   

Total

              2,644,850         $ 935   
           

 

 

 

 

(i)   Current yield as of period end.

 

See Notes to Financial Statements.

 

                
   ANNUAL REPORT    APRIL 30, 2016    25


Schedule of Investments (continued)

  

BlackRock MuniYield Quality Fund, Inc. (MQY)

 

 

Derivative Financial Instruments Outstanding as of Period End      

Futures Contracts

 

Contracts
Short
    Issue    Expiration    Notional
Value
  Unrealized
Appreciation
      
  (9   5-Year U.S. Treasury Note    June 2016    $1,088,227   $ 3,856     
  (69   10-Year U.S. Treasury Note    June 2016    $8,974,313     39,480     
  (39   Long U.S. Treasury Bond    June 2016    $6,369,188     87,081     
  (6   Ultra U.S. Treasury Bond    June 2016    $1,028,063     16,182       
  Total              $ 146,599     
         

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure      

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

 

Assets — Derivative Financial Instruments      Commodity
Contracts
     Credit
Contracts
     Equity
Contracts
     Foreign
Currency
Exchange
Contracts
     Interest
Rate
Contracts
     Other
Contracts
     Total  

Futures contracts

    Net unrealized appreciation 1                                     $ 146,599               $ 146,599   

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

        

For the year ended April 30, 2016, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

Net Realized Gain (Loss) from:   Commodity
Contracts
     Credit
Contracts
     Equity
Contracts
     Foreign
Currency
Exchange
Contracts
     Interest
Rate
Contracts
     Other
Contracts
     Total  

Futures contracts

                                  $ (1,206,443            $ (1,206,443
                   
Net Change in Unrealized Appreciation (Depreciation) on:                                                       

Futures contracts

                                  $ 696,351               $ 696,351   

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments      
Futures contracts:  

Average notional value of contracts — short

  $ 23,269,607   

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

 

Fair Value Hierarchy as of Period End      

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

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

 

     Level 1        Level 2        Level 3        Total  

Assets:

                
Investments:                 

Long-Term Investments1

            $ 787,440,617                   $ 787,440,617   

Short-Term Securities

  $ 2,644,850                               2,644,850   
 

 

 

 

Total

  $ 2,644,850         $ 787,440,617                   $ 790,085,467   
 

 

 

 
                
Derivative Financial Instruments2                                         

Assets:

                

Interest rate contracts

  $ 146,599                             $ 146,599   

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

 

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

      

       

 

See Notes to Financial Statements.

 

                
26    ANNUAL REPORT    APRIL 30, 2016   


Schedule of Investments (concluded)

  

BlackRock MuniYield Quality Fund, Inc. (MQY)

 

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

 

     Level 1        Level 2        Level 3        Total  

Assets:

                

Cash pledged for futures contracts

  $ 262,650                             $ 262,650   

Liabilities:

                

Bank overdraft

            $ (194,646                  (194,646

TOB Trust Certificates

              (112,111,483                  (112,111,483

VRDP Shares

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

 

 

 

Total

  $ 262,650         $ (288,906,129                $ (288,643,479
 

 

 

 

During the year ended April 30, 2016, there were no transfers between levels.

 

See Notes to Financial Statements.

 

                
   ANNUAL REPORT    APRIL 30, 2016    27


Schedule of Investments April 30, 2016

  

BlackRock MuniYield Quality Fund II, Inc. (MQT)

(Percentages shown are based on Net Assets)

 

Municipal Bonds   

Par  

(000)

    Value  
Alabama — 1.1%             

City of Birmingham Alabama Special Care Facilities Financing Authority, RB, Children’s Hospital (AGC), 6.00%, 6/01/19 (a)

   $ 650      $ 749,749   

City of Birmingham Albama, GO, Convertible CAB, Series A1, 5.00%, 3/01/45 (b)

     915        919,978   

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

     2,000        2,012,000   
    

 

 

 
               3,681,727   
Alaska — 0.3%             

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

     850        978,537   
Arizona — 1.0%             

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

     1,000        1,156,080   

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

    

5.00%, 10/01/27

     1,075        1,192,444   

5.00%, 10/01/29

     925        1,026,056   
    

 

 

 
               3,374,580   
California — 17.4%             

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

     7,150        7,575,568   

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

    

0.00%, 8/01/37

     2,100        780,801   

0.00%, 8/01/38

     4,800        1,697,136   

California Health Facilities Financing Authority, RB:

    

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

     500        571,100   

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

     1,000        1,208,160   

California Health Facilities Financing Authority, Refunding RB, St. Joseph Health System, Series A, 5.00%, 7/01/37

     945        1,103,939   

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

    

5.50%, 5/01/19

     1,000        1,139,840   

(AGC), 5.25%, 5/01/19

     3,000        3,397,290   

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

     1,290        1,489,511   

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

     700        824,376   

Coast Community College District, GO, CAB, Election of 2002, Series C (AGM), 5.00%, 8/01/18 (a)(b)

     1,800        1,973,448   

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

     2,015        2,178,840   

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

     575        698,631   

El Monte Union High School District, GO, Series C (AGM), 5.25%, 6/01/18 (a)

     4,000        4,377,320   

Los Angeles Community College District California, GO, Election of 2001, Series A (a):

    

(AGM), 5.00%, 8/01/17

     2,200        2,321,264   

(NPFGC), 5.00%, 8/01/17

     4,330        4,568,669   

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

     11,975        6,896,522   
Municipal Bonds   

Par  

(000)

    Value  
California (continued)             

Mount San Antonio Community College District, GO, Refunding, CAB, Election of 2008, Series A, 6.25%, 8/01/43 (b)

   $ 5,000      $ 3,918,400   

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

    

CAB, Series C, 0.00%, 7/01/38

     1,400        637,448   

CAB, Series G, 0.00%, 7/01/34

     580        266,980   

CAB, Series G, 0.00%, 7/01/35

     615        266,203   

CAB, Series G, 0.00%, 7/01/36

     920        374,201   

CAB, Series G, 0.00%, 7/01/37

     615        235,317   

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

     1,110        687,756   

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

    

0.00%, 8/01/31

     1,855        986,526   

0.00%, 8/01/32

     2,320        1,157,054   

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

    

5.00%, 8/01/34

     600        697,002   

5.00%, 8/01/38

     490        567,881   

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

     1,500        1,746,480   

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

    

0.00%, 8/01/36

     2,000        965,080   

0.00%, 8/01/37

     2,790        1,274,556   
    

 

 

 
               56,583,299   
Colorado — 2.0%             

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

     5,500        2,395,470   

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

     1,000        1,148,580   

Regional Transportation District, COP, Series A, 5.00%, 6/01/39

     2,500        2,866,925   
    

 

 

 
               6,410,975   
Florida — 15.3%             

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

     4,000        4,221,120   

County of Brevard Florida Health Facilities Authority, Refunding RB, Health First, Inc. Project, 5.00%, 4/01/39

     1,420        1,615,676   

County of Broward Florida School Board, COP, Series A (AGM), 5.25%, 7/01/18 (a)

     1,000        1,097,220   

County of Duval Florida School Board, COP, Master Lease Program (AGM), 5.00%, 7/01/17 (a)

     7,875        8,277,176   

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

     550        634,892   

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

     3,250        3,537,462   

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

    

5.63%, 10/01/26

     825        969,515   

5.38%, 10/01/32

     1,100        1,265,462   

County of Miami-Dade Florida, RB:

    

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

     900        1,013,670   

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

     1,780        2,192,835   

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

     570        711,594   

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

     360        450,652   

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

     580        698,419   
 

 

See Notes to Financial Statements.

 

                
28    ANNUAL REPORT    APRIL 30, 2016   


Schedule of Investments (continued)

  

BlackRock MuniYield Quality Fund II, Inc. (MQT)

 

Municipal Bonds   

Par  

(000)

    Value  
Florida (continued)             

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

    

5.00%, 10/01/34

   $ 160      $ 184,042   

Series A, 5.00%, 10/01/32

     1,730        1,984,137   

County of Miami-Dade Florida Educational Facilities Authority, RB, University Miami, Series A, 5.00%, 4/01/40

     3,065        3,565,116   

County of Orange Florida School Board, COP, Series A, 5.00%, 8/01/16 (a)

     9,000        9,103,500   

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

     1,900        2,217,547   

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

     250        277,388   

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

     2,400        2,841,312   

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

     1,040        1,242,613   

South Florida Water Management District, COP, (AGC), 5.00%, 10/01/16 (a)

     1,800        1,833,948   
    

 

 

 
               49,935,296   
Georgia — 0.7%             

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

     1,000        1,070,250   

County of Gainesville Georgia & Hall Hospital Authority, Refunding RB, Northeast Georgia Health System, Inc. Project, Series A, 5.50%, 8/15/54

     440        531,225   

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

    

5.00%, 4/01/33

     120        137,812   

5.00%, 4/01/44

     550        618,783   
    

 

 

 
               2,358,070   
Illinois — 12.1%             

City of Chicago Illinois, GARB, O’Hare International Airport, 3rd Lien, Series A, 5.75%, 1/01/39

     2,000        2,331,920   

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

     1,045        1,032,355   

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

     2,000        1,967,140   

City of Chicago Illinois, Refunding GARB, O’Hare International Airport, Senior Lien, Series C, AMT, 5.38%, 1/01/39

     3,235        3,681,656   

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

     600        629,838   

City of Chicago Illinois Midway International Airport, Refunding RB, 2nd Lien, Series A, AMT, 5.00%, 1/01/34

     505        573,741   

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

     515        566,964   

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

     400        472,780   

Illinois Finance Authority, Refunding RB:

    

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

     2,070        2,362,408   

Silver Cross Hospital and Medical Centers, 4.13%, 8/15/37

     615        640,289   

Silver Cross Hospital and Medical Centers, 5.00%, 8/15/44

     305        341,530   

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

     12,865        12,941,032   
Municipal Bonds   

Par  

(000)

    Value  
Illinois (continued)             

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

   $ 10,000      $ 4,017,600   

Metropolitan Pier & Exposition Authority, Refunding RB, CAB, McCormick Place Expansion Project, Series B (AGM), 0.00%, 6/15/44 (c)

     2,980        880,918   

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

     575        687,131   

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

     2,000        2,668,280   

State of Illinois, GO:

    

5.25%, 2/01/33

     735        802,355   

5.50%, 7/01/33

     710        783,236   

5.25%, 2/01/34

     735        798,761   

5.50%, 7/01/38

     380        415,215   

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

     805        906,269   
    

 

 

 
               39,501,418   
Indiana — 2.0%             

Indiana Finance Authority, RB, Series A:

    

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

     1,000        1,180,570   

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

     445        483,172   

Private Activity Bond, Ohio River Bridges, AMT, 5.00%, 7/01/40

     770        841,133   

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

    

5.75%, 1/01/38

     2,000        2,256,660   

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

     1,575        1,768,079   
    

 

 

 
               6,529,614   
Iowa — 2.8%             

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

     4,925        5,547,224   

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

    

5.60%, 12/01/26

     960        1,035,370   

5.70%, 12/01/27

     965        1,034,547   

5.80%, 12/01/29

     655        701,374   

5.85%, 12/01/30

     680        728,695   
    

 

 

 
               9,047,210   
Kentucky — 0.7%             

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

    

5.25%, 2/01/19 (a)

     1,775        1,982,923   

5.25%, 2/01/29

     225        249,449   
    

 

 

 
               2,232,372   
Louisiana — 1.3%             

City of New Orleans Louisiana Aviation Board, RB, Series B, AMT, 5.00%, 1/01/40

     2,620        2,949,203   

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

     1,150        1,297,281   
    

 

 

 
               4,246,484   
Massachusetts — 3.2%             

Massachusetts HFA, Refunding RB, Series C, AMT:

    

5.00%, 12/01/30

     5,000        5,277,600   

5.35%, 12/01/42

     975        1,023,662   

Massachusetts School Building Authority, RB, Dedicated Sales Tax, Senior Series A, 5.00%, 5/15/43

     1,110        1,296,791   
 

 

See Notes to Financial Statements.

 

                
   ANNUAL REPORT    APRIL 30, 2016    29


Schedule of Investments (continued)

  

BlackRock MuniYield Quality Fund II, Inc. (MQT)

 

Municipal Bonds   

Par  

(000)

    Value  
Massachusetts (continued)             

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

   $ 2,530      $ 2,659,485   
    

 

 

 
               10,257,538   
Michigan — 4.8%             

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

     4,500        4,846,005   

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

     2,200        2,392,610   

City of Detroit Michigan Water Supply System, RB, 2nd Lien, Series B (AGM), 6.25%, 7/01/36

     350        393,879   

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

     1,700        2,008,363   

Michigan Finance Authority, RB, Beaumont Health Credit Group, 4.00%, 11/01/46

     50        52,130   

Michigan Finance Authority, Refunding RB, Trinity Health Credit Group, 5.00%, 12/01/21 (a)

     15        18,122   

Royal Oak Hospital Finance Authority Michigan, Refunding RB, William Beaumont Hospital, Series D, 5.00%, 9/01/39

     720        817,207   

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

    

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

     600        697,908   

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

     1,000        1,163,180   

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

     1,900        2,205,102   

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

     630        675,732   

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

     340        386,583   
    

 

 

 
               15,656,821   
Minnesota — 0.6%             

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

    

6.50%, 11/15/18 (a)

     275        313,951   

6.50%, 11/15/38

     1,525        1,718,218   
    

 

 

 
               2,032,169   
Nebraska — 0.9%             

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

     2,650        2,977,116   
Nevada — 0.9%             

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

    

5.25%, 7/01/42

     1,000        1,123,930   

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

     1,700        1,911,327   
    

 

 

 
               3,035,257   
New Jersey — 10.2%             

County of Hudson New Jersey Improvement Authority, RB, 5.25%, 5/01/51 (d)

     730        869,751   

New Jersey EDA, RB:

    

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

     6,700        6,769,144   

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

     610        689,739   

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

     790        889,437   

Series WW, 5.25%, 6/15/33

     135        148,878   

Series WW, 5.00%, 6/15/34

     180        192,931   

Series WW, 5.00%, 6/15/36

     800        851,816   

Series WW, 5.25%, 6/15/40

     320        350,064   
Municipal Bonds   

Par  

(000)

    Value  
New Jersey (continued)             

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

    

5.50%, 12/01/25

   $ 455      $ 516,329   

5.50%, 12/01/26

     320        361,635   

5.75%, 12/01/28

     180        203,083   

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

     935        988,127   

New Jersey Transportation Trust Fund Authority, RB:

    

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

     1,290        1,409,983   

Transportation Program, Series AA, 5.00%, 6/15/38

     1,560        1,659,466   

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

     1,400        1,705,956   

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

     4,650        5,145,458   

Transportation System, Series B, 5.00%, 6/15/42

     9,300        9,792,993   

Transportation System, Series D, 5.00%, 6/15/32

     525        569,746   
    

 

 

 
               33,114,536   
New Mexico — 0.1%             

New Mexico Hospital Equipment Loan Council, Refunding RB, Presbyterian Healthcare Services, 5.00%, 8/01/44

     325        378,034   
New York — 3.4%             

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

     1,250        1,488,113   

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

     3,035        3,412,767   

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

     2,200        2,658,898   

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

     610        717,195   

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

     2,835        2,905,421   
    

 

 

 
               11,182,394   
Ohio — 0.7%             

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

     460        571,945   

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

    

5.25%, 2/15/32

     610        734,483   

5.25%, 2/15/33

     850        1,019,881   
    

 

 

 
               2,326,309   
Pennsylvania — 5.2%             

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

     2,110        2,389,617   

Pennsylvania Economic Development Financing Authority, RB, Pennsylvania Bridge Finco LP, AMT:

    

5.00%, 12/31/34

     2,220        2,543,698   

5.00%, 12/31/38

     1,155        1,302,112   

Pennsylvania Higher Educational Facilities Authority, Refunding RB, Thomas Jefferson University, Series A, 5.25%, 9/01/50

     3,625        4,214,244   

Pennsylvania Turnpike Commission, RB:

    

Series A, 5.00%, 12/01/38

     550        638,148   

Series C, 5.50%, 12/01/33

     490        599,750   

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

     500        590,210   

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

     2,245        2,573,062   
 

 

See Notes to Financial Statements.

 

                
30    ANNUAL REPORT    APRIL 30, 2016   


Schedule of Investments (continued)

  

BlackRock MuniYield Quality Fund II, Inc. (MQT)

 

Municipal Bonds   

Par  

(000)

    Value  
Pennsylvania (continued)             

Pennsylvania Turnpike Commission, Refunding RB, Series A-1, 5.00%, 12/01/40

   $ 680      $ 786,298   

Philadelphia School District, GO, Series E:

    

6.00%, 9/01/18 (a)

     15        16,810   

6.00%, 9/01/38

     1,285        1,363,308   
    

 

 

 
               17,017,257   
Rhode Island — 1.1%             

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

    

4.50%, 6/01/45

     945        979,946   

5.00%, 6/01/50

     2,340        2,481,968   
    

 

 

 
               3,461,914   
South Carolina — 6.7%             

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

     1,360        1,567,454   

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

     100        122,116   

South Carolina Ports Authority, RB, AMT, 5.25%, 7/01/50

     2,040        2,321,377   

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

     3,420        3,830,092   

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

    

Series A, 5.50%, 12/01/54

     6,435        7,557,393   

Series E, 5.50%, 12/01/53

     2,820        3,285,075   

State of South Carolina Public Service Authority, Refunding RB:

    

Santee Cooper, Series B, 5.00%, 12/01/38

     1,840        2,123,139   

Series E, 5.25%, 12/01/55

     940        1,102,253   
    

 

 

 
               21,908,899   
Tennessee — 0.1%             

Metropolitan Government of Nashville & Davidson County Health & Educational Facilities Board, Refunding RB, Lipscomb University Project, Series A, 5.00%, 10/01/45

     225        255,519   
Texas — 16.1%             

Central Texas Turnpike System, Refunding RB, CAB, Series B, 0.00%, 8/15/37 (c)

     1,595        681,671   

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

     500        584,685   

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

     1,850        822,584   

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

     750        882,113   

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

    

Series D, 5.00%, 11/01/38

     1,800        2,007,558   

Series D, 5.00%, 11/01/42

     1,140        1,265,913   

Series H, 5.00%, 11/01/32

     2,715        3,077,018   

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

     865        1,032,092   

Leander ISD, GO, Refunding, CAB, Series D, 0.00%, 8/15/38 (c)

     3,020        1,267,826   

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

     3,000        3,270,960   

Mansfield Texas ISD, GO, School Building (PSF-GTD), 5.00%, 2/15/17 (a)

     1,065        1,101,774   

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

     10,000        11,016,500   

North Texas Tollway Authority, Refunding RB:

    

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

     2,415        2,731,196   

1st Tier System, Series S, 5.75%, 1/01/18 (a)

     1,815        1,964,229   

1st Tier System, Series SE, 5.75%, 1/01/40

     1,785        1,915,626   

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

     3,400        3,789,368   

Series B, 5.00%, 1/01/40

     1,060        1,214,177   
Municipal Bonds   

Par  

(000)

    Value  
Texas (continued)             

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

    

0.00%, 9/15/35

   $ 1,150      $ 496,766   

0.00%, 9/15/36

     3,875        1,575,653   

0.00%, 9/15/37

     17,775        6,798,937   

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

    

5.00%, 12/15/32

     1,765        1,975,688   

Natural Gas Utility Improvements, 5.00%, 12/15/31

     1,030        1,158,874   

Texas Private Activity Bond Surface Transportation Corp., RB, Senior Lien, AMT, Blueridge Transportation Group (d):

    

5.00%, 12/31/45

     730        805,716   

5.00%, 12/31/50

     405        443,224   

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

     605        690,668   
    

 

 

 
               52,570,816   
Vermont — 0.0%             

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

     80        80,022   
Washington — 1.9%             

Port of Seattle Washington, RB, Series C, AMT, 5.00%, 4/01/40

     900        1,027,314   

Washington Health Care Facilities Authority, RB:

    

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

     3,000        3,339,870   

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

     1,000        1,099,900   

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

     550        612,480   
    

 

 

 
               6,079,564   
Wisconsin — 0.4%             

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

     1,200        1,360,344   
Total Municipal Bonds — 113.0%              368,574,091   
    
   
Municipal Bonds Transferred to
Tender Option Bond Trusts (e)
 
Arizona — 0.9%             

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

     1,000        1,114,120   

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

     1,750        1,861,545   
    

 

 

 
               2,975,665   
California — 1.7%             

Los Angeles Community College District California, GO, Refunding, Election of 2008, Series A, 6.00%, 8/01/19 (a)

     1,699        1,982,712   

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

     359        408,097   

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

    

5.00%, 5/01/18 (a)

     503        544,211   

5.00%, 5/01/33

     2,527        2,735,340   
    

 

 

 
               5,670,360   
 

 

See Notes to Financial Statements.

 

                
   ANNUAL REPORT    APRIL 30, 2016    31


Schedule of Investments (continued)

  

BlackRock MuniYield Quality Fund II, Inc. (MQT)

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (e)
  

Par  

(000)

    Value  
Colorado — 1.3%             

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

    

5.50%, 7/01/34 (f)

   $ 780      $ 877,204   

5.00%, 2/01/41

     3,000        3,269,490   
    

 

 

 
               4,146,694   
Connecticut — 0.5%             

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

     1,231        1,444,523   
District of Columbia — 1.6%             

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

     855        991,133   

District of Columbia Water & Sewer Authority, Refunding RB, Senior Lien, Series A, 6.00%, 10/01/18 (a)(f)

     1,579        1,777,616   

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

     2,190        2,517,492   
    

 

 

 
               5,286,241   
Florida — 9.2%             

City of Miami Beach Florida, RB, 5.00%, 9/01/45

     2,740        3,193,059   

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

     4,000        4,092,040   

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

     1,540        1,791,128   

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

     2,100        2,392,047   

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

     6,901        7,866,216   

County of Orange Florida School Board, COP, Series A (AGC), 5.50%, 8/01/19 (a)

     3,394        3,896,953   

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

     4,200        5,619,264   

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

     1,189        1,255,051   
    

 

 

 
               30,105,758   
Illinois — 9.2%             

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

     4,000        4,099,720   

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

     2,548        2,706,463   

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

     1,638        1,739,314   

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

     10,000        13,298,579   

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

     1,130        1,253,186   

State of Illinois Toll Highway Authority, RB:

    

Senior Priority, Series B, 5.50%, 1/01/18 (a)

     3,499        3,776,938   

Senior, Series B, 5.00%, 1/01/40

     930        1,088,127   

Series A, 5.00%, 1/01/38

     1,859        2,114,324   
    

 

 

 
               30,076,651   

Louisiana — 1.4%

    

State of Louisiana Gas & Fuels, RB, Series A (AGM), 5.00%, 5/01/16 (a)

     4,600        4,601,150   

Massachusetts — 0.5%

    

Commonwealth of Massachusetts, GO, Series A, 5.00%, 3/01/46

     1,321        1,547,703   
Municipal Bonds Transferred to
Tender Option Bond Trusts (e)
  

Par  

(000)

    Value  
Michigan — 2.5%             

Michigan Finance Authority, RB:

    

Beaumont Health Credit Group, 5.00%, 11/01/44

   $ 1,750      $ 2,016,133   

Hospital, Trinity Health Credit Group, 5.00%, 12/01/39

     4,675        5,257,645   

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

     760        878,963   
    

 

 

 
               8,152,741   
Nevada — 2.8%             

City of Las Vegas Nevada, GO, Limited Tax, Performing Arts Center, 6.00%, 4/01/19 (a)(f)

     3,298        3,787,430   

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

     1,574        1,808,271   

Las Vegas Valley Water District Nevada, GO, Refunding, Water Improvement, Series A, 5.00%, 6/01/46

     3,080        3,642,162   
    

 

 

 
               9,237,863   
New Jersey — 0.5%             

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

     1,580        1,701,404   
New York — 4.6%             

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

     1,050        1,159,703   

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

     4,920        5,792,502   

City of New York New York Water & Sewer System, Refunding RB, 2nd General Resolution, Fiscal 2014, Series DD, 5.00%, 6/15/35

     1,470        1,771,129   

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

     3,080        3,762,436   

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

     996        1,135,730   

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

     1,200        1,329,336   
    

 

 

 
               14,950,836   
Ohio — 0.2%             

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

     500        562,995   
South Carolina — 0.4%             

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

     1,125        1,265,141   
Texas — 4.4%             

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

     1,900        1,963,213   

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

     4,000        4,540,000   

Cypress-Fairbanks ISD, GO, Refunding, Schoolhouse (PSF-GTD):

    

5.00%, 2/15/17 (a)

     5,066        5,237,540   

5.00%, 2/15/32

     184        189,963   

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

     1,996        2,228,997   
    

 

 

 
               14,159,713   
Virginia — 0.1%             

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

     300        338,511   
 

 

See Notes to Financial Statements.

 

                
32    ANNUAL REPORT    APRIL 30, 2016   


Schedule of Investments (continued)

  

BlackRock MuniYield Quality Fund II, Inc. (MQT)

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (e)
  

Par  

(000)

    Value  
Washington — 1.0%             

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

   $ 2,565      $ 3,211,842   
Wisconsin — 1.7%             

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

    

Series A, 5.00%, 4/01/42

     1,920        2,148,711   

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

     1,250        3,525,686   
    

 

 

 
               5,674,397   
Total Municipal Bonds Transferred to
Tender Option Bond Trusts — 44.5%
        145,110,188   
Total Long-Term Investments
(Cost — $465,074,399) — 157.5%
        513,684,279   
Short-Term Securities   

Shares

    Value  

BlackRock Liquidity Funds, MuniCash, 0.19% (g)(h)

     1,841,543      $ 1,841,543   
Total Short-Term Securities
(Cost — $1,841,543) — 0.6%
             1,841,543   
Total Investments (Cost — $466,915,942) — 158.1%        515,525,822   
Other Assets Less Liabilities — 0.7%        2,363,233   

Liability for TOB Trust Certificates, Including Interest
Expense and Fees Payable — (23.1)%

   

    (75,317,260
VMTP Shares, at Liquidation Value — (35.7)%        (116,500,000
    

 

 

 
Net Assets Applicable to Common Shares — 100.0%      $ 326,071,795   
    

 

 

 
 
Notes to Schedule of Investments      

 

(a)   U.S. Government securities, held in escrow, are used to pay interest on this security, as well as to retire the bond in full at the date indicated, typically at a premium to par.

 

(b)   Step-up bond that pays an initial coupon rate for the first period and then a higher coupon rate for the following periods. Rate as of period end.

 

(c)   Zero-coupon bond.

 

(d)   When-issued security.

 

(e)   Represent bonds transferred to a TOB Trust in exchange of cash and residual certificates received by the Fund. These bonds serve as collateral in a secured borrowing. See Note 4 of the Notes to Financial Statements for details.

 

(f)   All or a portion of security is subject to a recourse agreement. The aggregate maximum potential amount the Fund could ultimately be required to pay under the agreements, which expire between October 1, 2016 to December 1, 2029, is $10,434,418. See Note 4 of the Notes to Financial Statements for details.

 

(g)   During the year ended April 30, 2016, investments in issuers considered to be affiliates of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliate      Shares Held
at April 30,
2015
       Net
Activity
    Shares Held
at April 30,
2016
       Income       

BlackRock Liquidity Funds, MuniCash

                 1,841,543        1,841,543         $ 363     

FFI Institutional Tax-Exempt Fund

       1,895,822           (1,895,822               420       

Total

              1,841,543         $ 783     
           

 

 

 

(h)   Current yield as of period end.

 

Derivative Financial Instruments Outstanding as of Period End      

Futures Contracts

 

Contracts
Short
  Issue   Expiration   Notional Value     Unrealized
Appreciation
      
(6)   5-Year U.S. Treasury Note   June 2016   $ 725,484      $ 2,571     
(51)   10-Year U.S. Treasury Note   June 2016   $ 6,633,188        29,146     
(22)   Long U.S. Treasury Bond   June 2016   $ 3,592,875        49,197     
(5)   Ultra U.S. Treasury Bond   June 2016   $ 856,719        13,582       
Total         $ 94,496     
       

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

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

 

Assets — Derivative Financial Instruments      Commodity
Contracts
     Credit
Contracts
     Equity
Contracts
     Foreign
Currency
Exchange
Contracts
     Interest
Rate
Contracts
     Other
Contracts
     Total  

Futures contracts

    Net unrealized appreciation 1                                     $ 94,496               $ 94,496   

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

        

 

See Notes to Financial Statements.

 

                
   ANNUAL REPORT    APRIL 30, 2016    33


Schedule of Investments (concluded)

  

BlackRock MuniYield Quality Fund II, Inc. (MQT)

 

For the year ended April 30, 2016, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

Net Realized Gain (Loss) from:   Commodity
Contracts
     Credit
Contracts
     Equity
Contracts
     Foreign
Currency
Exchange
Contracts
     Interest
Rate
Contracts
     Other
Contracts
     Total  

Futures contracts

                                  $ (780,305            $ (780,305
                   
Net Change in Unrealized Appreciation (Depreciation) on:                                                       

Futures contracts

                                  $ 453,982               $ 453,982   

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments      
Futures contracts:  

Average notional value of contracts — short

  $ 15,228,902   

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

 

Fair Value Hierarchy as of Period End      

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

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

 

     Level 1        Level 2        Level 3        Total  

Assets:

                
Investments:                 

Long-Term Investments1

            $ 513,684,279                   $ 513,684,279   

Short-Term Securities

  $ 1,841,543                               1,841,543   
 

 

 

 

Total

  $ 1,841,543         $ 513,684,279                   $ 515,525,822   
 

 

 

 
                                          
Derivative Financial Instruments2                 

Assets:

                

Interest rate contracts

  $ 94,496                             $ 94,496   

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

 

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

       

       

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

 

     Level 1        Level 2        Level 3        Total  

Assets:

                

Cash pledged for futures contracts

  $ 171,550                             $ 171,550   

Liabilities:

                

Bank overdraft

            $ (281,146                  (281,146

TOB Trust Certificates

              (75,273,164                  (75,273,164

VMTP Shares

              (116,500,000                  (116,500,000
 

 

 

 

Total

  $ 171,550         $ (192,054,310                $ (191,882,760
 

 

 

 

During the year ended April 30, 2016, there were no transfers between levels.

 

See Notes to Financial Statements.

 

                
34    ANNUAL REPORT    APRIL 30, 2016   


Statements of Assets and Liabilities     

 

April 30, 2016   BlackRock
MuniYield
Fund, Inc.
(MYD)
    BlackRock
MuniYield Quality
Fund, Inc.
(MQY)
    BlackRock
MuniYield Quality
Fund II, Inc.
(MQT)
 
     
Assets                        

Investments at value — unaffiliated1

  $ 1,139,468,551      $ 787,440,617      $ 513,684,279   

Investments at value — affiliated2

    6,922,502        2,644,850        1,841,543   

Cash pledged for futures contracts

    542,850        262,650        171,550   
Receivables:      

Interest

    16,886,031        10,051,932        6,320,006   

Investments sold

    1,078,165               147,363   

Dividends — affiliated

    814        218        148   

Deferred offering costs

    399,339        255,788          

Prepaid expenses

    53,715        36,307        32,005   
 

 

 

 

Total assets

    1,165,351,967        800,692,362        522,196,894   
 

 

 

 
     
Accrued Liabilities                        

Bank overdraft

    272,831        194,646        281,146   
Payables:      

Income dividends — Common Shares

    3,593,124        2,346,782        1,511,387   

Investments purchased

    6,507,423        3,232,408        2,108,090   

Investment advisory fees

    471,981        325,077        211,951   

Officer’s and Directors’ fees

    288,513        204,635        3,760   

Interest expense and fees

    82,583        72,947        44,096   

Variation margin on futures contracts

    75,749        35,765        23,047   

Other accrued expenses

    262,114        201,728        168,458   
 

 

 

 

Total accrued liabilities

    11,554,318        6,613,988        4,351,935   
 

 

 

 
     
Other Liabilities                        

TOB Trust Certificates

    173,776,366        112,111,483        75,273,164   

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

    251,400,000        176,600,000          

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

                  116,500,000   
 

 

 

 

Total other liabilities

    425,176,366        288,711,483        191,773,164   
 

 

 

 

Total liabilities

    436,730,684        295,325,471        196,125,099   
 

 

 

 

Net Assets Applicable to Common Shareholders

  $ 728,621,283      $ 505,366,891      $ 326,071,795   
 

 

 

 
     
Net Assets Applicable to Common Shareholders Consist of                        

Paid-in capital5,6,7

  $ 628,439,433      $ 430,025,518      $ 283,503,510   

Undistributed net investment income

    4,872,517        4,911,708        4,306,248   

Accumulated net realized loss

    (20,793,119     (6,913,131     (10,442,339

Net unrealized appreciation (depreciation)

    116,102,452        77,342,796        48,704,376   
 

 

 

 

Net Assets Applicable to Common Shareholders

  $ 728,621,283      $ 505,366,891      $ 326,071,795   
 

 

 

 

Net asset value, per Common Share

  $ 15.61      $ 16.47      $ 14.45   
 

 

 

 

1    Investments at cost — unaffiliated

  $ 1,023,728,492      $ 710,244,420      $ 465,074,399   

2    Investments at cost — affiliated

  $ 6,922,502      $ 2,644,850      $ 1,841,543   

3    Preferred Shares outstanding, par value $0.10 per share

    2,514        1,766        1,165   

4    Preferred Shares authorized, including Auction Market Preferred Shares (“AMPS”)

    16,234        11,766        7,565   

5    Par value per Common Share

  $ 0.10      $ 0.10      $ 0.10   

6    Common Shares outstanding

    46,663,953        30,676,888        22,558,009   

7    Common Shares authorized

    199,983,766        199,988,234        199,992,435   

 

See Notes to Financial Statements.      
                
   ANNUAL REPORT    APRIL 30, 2016    35


Statements of Operations     

 

Year Ended April 30, 2016   BlackRock
MuniYield
Fund, Inc.
(MYD)
    BlackRock
MuniYield Quality
Fund, Inc.
(MQY)
    BlackRock
MuniYield Quality
Fund II, Inc.
(MQT)
 
     
Investment Income                        

Interest

  $ 51,760,983      $ 34,899,349      $ 22,483,593   

Dividends — affiliated

    3,041        935        783   
 

 

 

 

Total income

    51,764,024        34,900,284        22,484,376   
 

 

 

 
     
Expenses                        

Investment advisory

    5,641,989        3,906,483        2,539,036   

Professional

    141,638        264,824        89,225   

Accounting services

    135,063        104,260        77,154   

Transfer agent

    56,434        45,544        31,308   

Officer and Directors

    55,156        38,042        30,099   

Custodian

    45,355        33,993        24,959   

Liquidity fees

    25,675        738,954          

Printing

    17,340        14,723        12,608   

Registration

    14,601        9,663        7,628   

Remarketing fees on Preferred Shares

    25,210        85,357          

Rating agency

    36,205        44,784        35,980   

Miscellaneous

    69,156        60,663        50,433   
 

 

 

 

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

    6,263,822        5,347,290        2,898,430   

Interest expense, fees and amortization of offering costs1

    3,622,000        1,902,196        1,794,364   
 

 

 

 

Total expenses

    9,885,822        7,249,486        4,692,794   

Less fees waived by the Manager

    (419     (141     (109
 

 

 

 

Total expenses after fees waived

    9,885,403        7,249,345        4,692,685   
 

 

 

 

Net investment income

    41,878,621        27,650,939        17,791,691   
 

 

 

 
     
Realized and Unrealized Gain (Loss)                        
Net realized gain (loss) from:      

Investments

    2,003,117        476,635        742,654   

Futures contracts

    (1,918,554     (1,206,443     (780,305
 

 

 

 
    84,563        (729,808     (37,651
 

 

 

 
Net change in unrealized appreciation (depreciation) on:      

Investments

    15,471,948        12,509,937        6,547,225   

Futures contracts

    996,838        696,351        453,982   
 

 

 

 
    16,468,786        13,206,288        7,001,207   
 

 

 

 

Net realized and unrealized gain

    16,553,349        12,476,480        6,963,556   
 

 

 

 

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

  $ 58,431,970      $ 40,127,419      $ 24,755,247   
 

 

 

 

1    Related to TOB Trusts, VRDP Shares and/or VMTP Shares.

       

 

 

See Notes to Financial Statements.      
                
36    ANNUAL REPORT    APRIL 30, 2016   


Statements of Changes in Net Assets     

 

    BlackRock MuniYield Fund,
Inc. (MYD)
 
    Year Ended April 30,  
Increase (Decrease) in Net Assets Applicable to Common Shareholders:   2016     2015  
   
Operations                

Net investment income

  $ 41,878,621      $ 42,356,776   

Net realized gain

    84,563        1,173,491   

Net change in unrealized appreciation (depreciation)

    16,468,786        27,967,571   
 

 

 

 

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

    58,431,970        71,497,838   
 

 

 

 
   
Distributions to Common Shareholders1                

From net investment income

    (43,465,516     (44,472,999
 

 

 

 
   
Capital Share Transactions                

Reinvestment of common distributions

    417,367          
 

 

 

 
   
Net Assets Applicable to Common Shareholders                

Total increase in net assets applicable to Common Shareholders

    15,383,821        27,024,839   

Beginning of year

    713,237,462        686,212,623   
 

 

 

 

End of year

  $ 728,621,283      $ 713,237,462   
 

 

 

 

Undistributed net investment income, end of year

  $ 4,872,517      $ 6,443,580   
 

 

 

 

 

    BlackRock MuniYield Quality
Fund, Inc. (MQY)
        BlackRock MuniYield Quality
Fund II, Inc. (MQT)
 
    Year Ended April 30,         Year Ended April 30,  
Increase (Decrease) in Net Assets Applicable to Common Shareholders:   2016     2015         2016     2015  
         
Operations                                    

Net investment income

  $ 27,650,939      $ 28,125,437        $ 17,791,691      $ 18,144,100   

Net realized gain (loss)

    (729,808     595,484          (37,651     168,097   

Net change in unrealized appreciation (depreciation)

    13,206,288        12,537,879          7,001,207        9,733,479   
 

 

 

     

 

 

   

 

 

 

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

    40,127,419        41,258,800          24,755,247        28,045,676   
 

 

 

     

 

 

   

 

 

 
         
Distributions to Common Shareholders1                                    

From net investment income

    (29,235,074     (29,449,811       (18,531,404     (19,084,076
 

 

 

   

 

 

     

 

 

   

 

 

 
         
Net Assets Applicable to Common Shareholders                                    

Total increase in net assets applicable to Common Shareholders

    10,892,345        11,808,989          6,223,843        8,961,600   

Beginning of year

    494,474,546        482,665,557          319,847,952        310,886,352   
 

 

 

     

 

 

   

 

 

 

End of year

  $ 505,366,891      $ 494,474,546        $ 326,071,795      $ 319,847,952   
 

 

 

     

 

 

   

 

 

 

Undistributed net investment income, end of year

  $ 4,911,708      $ 6,492,814        $ 4,306,248      $ 5,069,264   
 

 

 

     

 

 

   

 

 

 

1   Distributions for annual periods determined in accordance with federal income tax regulations.

         

 

See Notes to Financial Statements.      
                
   ANNUAL REPORT    APRIL 30, 2016    37


Statements of Cash Flows     

 

Year Ended April 30, 2016   BlackRock
MuniYield
Fund, Inc.
(MYD)
    BlackRock
MuniYield Quality
Fund, Inc.
(MQY)
    BlackRock
MuniYield Quality
Fund II, Inc.
(MQT)
 
     
Cash Provided by (Used for) Operating Activities                        

Net increase in net assets resulting from operations

  $ 58,431,970      $ 40,127,419      $ 24,755,247   

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

     

Proceeds from sales of long-term investments

    100,589,318        83,269,976        53,079,874   

Purchases of long-term investments

    (107,650,955     (80,085,653     (48,520,524

Net proceeds from sales (purchases) of short-term securities

    (2,319,433     123,464        54,279   

Amortization of premium and accretion of discount on investments

    932,973        (1,127,948     (707,914

Net realized gain on investments

    (2,003,117     (476,635     (742,654

Net unrealized gain on investments

    (15,471,948     (12,509,937     (6,547,225

(Increase) decrease in assets:

 

Cash pledged for futures contracts

    (16,850     343,350        225,450   

Receivables:

     

Interest

    (145,278     (82,157     174,503   

Variation margin on futures contracts

    52,174        61,659        40,346   

Dividends — affiliated

    (814     (218     (148

Prepaid expenses

    (8,730     (739     (1,083

Increase (decrease) in liabilities:

 

Payables:

 

Investment advisory fees

    4,822        (1,024     (1,562

Interest expense and fees

    51,309        40,853        27,319   

Other accrued expenses

    76,369        163,929        48,807   

Variation margin on futures contracts

    75,749        35,765        23,047   

Officer’s and Directors’ fees

    4,226        2,458        (309
 

 

 

 

Net cash provided by operating activities

    32,601,785        29,884,562        21,907,453   
 

 

 

 
     
Cash Provided by (Used for) Financing Activities                        

Cash distributions paid to Common Shareholders

    (43,046,071     (29,342,443     (18,610,357

Repayments of TOB Trust Certificates

    (4,393     (14,533,566     (11,629,943

Proceeds from TOB Trust Certificates

    10,159,945        11,683,222        8,051,701   

Increase in bank overdraft

    272,831        194,646        281,146   

Amortization of deferred offering costs

    15,903        10,098          
 

 

 

 

Net cash used for financing activities

    (32,601,785     (31,988,043     (21,907,453
 

 

 

 
     
Cash                        

Net decrease in cash

           (2,103,481       

Cash at beginning of year

           2,103,481          
 

 

 

 

Cash at end of year

                    
 

 

 

 
     
Supplemental Disclosure of Cash Flow Information                        

Cash paid during the year for interest expense

  $ 3,554,788      $ 1,851,245      $ 1,767,045   
 

 

 

 
     
Non-Cash Financing Activities                        

Capital shares issued in reinvestment of distributions paid to Common Shareholders

  $ 417,367                 
 

 

 

 

 

 

See Notes to Financial Statements.      
                
38    ANNUAL REPORT    APRIL 30, 2016   


Financial Highlights    BlackRock MuniYield Fund, Inc. (MYD)

 

    Year Ended April 30,  
    2016     2015     2014     2013     2012  
         
Per Share Operating Performance                                        

Net asset value, beginning of year

  $ 15.29      $ 14.71      $ 16.01      $ 15.19      $ 13.05   
 

 

 

 

Net investment income1

    0.90        0.91        0.94        0.95        0.99   

Net realized and unrealized gain (loss)

    0.35        0.62        (1.25     0.89        2.15   

Distributions to AMPS Shareholders from net investment income

                                (0.01
 

 

 

 

Net increase (decrease) from investment operations

    1.25        1.53        (0.31     1.84        3.13   
 

 

 

 

Distributions to Common Shareholders from net investment income2

    (0.93     (0.95     (0.99     (1.02     (0.99
 

 

 

 

Net asset value, end of year

  $ 15.61      $ 15.29      $ 14.71      $ 16.01      $ 15.19   
 

 

 

 

Market price, end of year

  $ 15.73      $ 14.91      $ 14.14      $ 16.24      $ 15.49   
 

 

 

 
         
Total Return Applicable to Common Shareholders3                                        

Based on net asset value

    8.81%        10.91%        (1.21)%        12.32%        24.76%   
 

 

 

 

Based on market price

    12.36%        12.51%        (6.38)%        11.73%        26.06%   
 

 

 

 
         
Ratios to Average Net Assets Applicable to Common Shareholders                                        

Total expenses

    1.39%        1.37%        1.49%        1.52%        1.53% 4 
 

 

 

 

Total expenses after fees waived and paid indirectly

    1.39%        1.36%        1.49%        1.52%        1.53% 4 
 

 

 

 

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

    0.88% 6      0.89% 6      1.20% 6      1.17% 6      1.20% 4,6 
 

 

 

 

Net investment income

    5.91%        5.94%        6.70%        6.02%        6.95% 4 
 

 

 

 

Distributions to AMPS Shareholders

                                0.04%   
 

 

 

 

Net investment income to Common Shareholders

    5.91%        5.94%        6.70%        6.02%        6.91%   
 

 

 

 
         
Supplemental Data                                        

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

  $ 728,621      $ 713,237      $ 686,213      $ 745,575      $ 703,290   
 

 

 

 

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

  $  251,400      $  251,400      $  251,400      $  251,400      $  251,400   
 

 

 

 

Asset coverage per VRDP Shares at $100,000 liquidation value, end of year

  $ 389,825      $ 383,706      $ 372,956      $ 396,569      $ 379,749   
 

 

 

 

Borrowings outstanding, end of year (000)

  $ 173,776      $ 163,621      $ 169,241      $ 207,943      $ 178,408   
 

 

 

 

Portfolio turnover rate

    9%        11%        17%        16%        19%   
 

 

 

 

 

  1  

Based on average Common Shares outstanding.

 

  2  

Distributions for annual periods determined in accordance with federal income tax regulations.

 

  3  

Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

 

  4  

Does not reflect the effect of distributions to AMPS Shareholders.

 

  5  

Interest expense, fees and amortization of offering costs related to TOB Trusts and/or VRDP Shares. See Note 4 and Note 10 of the Notes to Financial Statements for details.

 

  6  

The total expense ratio after fees waived and paid indirectly and excluding interest expense, fees, amortization of offering costs, liquidity and remarketing fees as follows:

 

Year Ended April 30,
2016    2015    2014    2013    2012
           

0.88%

   0.88%    0.92%    0.90%    0.92%

 

See Notes to Financial Statements.      
                
   ANNUAL REPORT    APRIL 30, 2016    39


Financial Highlights    BlackRock MuniYield Quality Fund, Inc. (MQY)

 

    Year Ended April 30,  
    2016     2015     2014     2013     2012  
         
Per Share Operating Performance                                        

Net asset value, beginning of year

  $ 16.12      $ 15.73      $ 16.83      $ 16.22      $ 13.72   
 

 

 

 

Net investment income1

    0.90        0.92        0.95        0.93        0.95   

Net realized and unrealized gain (loss)

    0.40        0.43        (1.07     0.64        2.49   

Distributions to AMPS Shareholders from net investment income

                                (0.01
 

 

 

 

Net increase (decrease) from investment operations

    1.30        1.35        (0.12     1.57        3.43   
 

 

 

 
Distributions to Common Shareholders:2          

From net investment income

    (0.95     (0.96     (0.96     (0.96     (0.93

From net realized gain

                  (0.02              
 

 

 

 

Total distributions to Common Shareholders

    (0.95     (0.96     (0.98     (0.96     (0.93
 

 

 

 

Net asset value, end of year

  $ 16.47      $ 16.12      $ 15.73      $ 16.83      $ 16.22   
 

 

 

 

Market price, end of year

  $ 16.56      $ 15.52      $ 14.84      $ 16.94      $ 16.05   
 

 

 

 
         
Total Return Applicable to Common Shareholders3                                        

Based on net asset value

    8.61%        9.09%        0.04%        9.86%        25.78%   
 

 

 

 

Based on market price

    13.35%        11.32%        (6.23)%        11.75%        29.85%   
 

 

 

 
         
Ratios to Average Net Assets Applicable to Common Shareholders                                        

Total expenses

    1.47%        1.46%        1.58%        1.53%        1.46% 4 
 

 

 

 

Total expenses after fees waived and paid indirectly

    1.47%        1.46%        1.58%        1.53%        1.46% 4 
 

 

 

 

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

    1.09% 6      1.25% 6      1.32% 6      1.23% 6      1.19% 4,6 
 

 

 

 

Net investment income

    5.62%        5.65%        6.28%        5.57%        6.29% 4 
 

 

 

 

Distributions to AMPS Shareholders

                                0.08%   
 

 

 

 

Net investment income to Common Shareholders

    5.62%        5.65%        6.28%        5.57%        6.21%   
 

 

 

 
         
Supplemental Data                                        

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

  $ 505,367      $ 494,475      $ 482,666      $ 515,995      $ 495,260   
 

 

 

 

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

  $ 176,600      $ 176,600      $ 176,600      $ 176,600      $ 176,600   
 

 

 

 

Asset coverage per VRDP Shares at $100,000 liquidation value, end of year

  $ 386,165      $ 379,997      $ 373,310      $ 392,183      $ 380,442   
 

 

 

 

Borrowings outstanding, end of year (000)

  $  112,111      $  114,962      $  121,321      $  129,431      $  110,155   
 

 

 

 

Portfolio turnover rate

    10%        14%        12%        15%        25%   
 

 

 

 

 

1  

Based on average Common Shares outstanding.

 

2  

Distributions for annual periods determined in accordance with federal income tax regulations.

 

3  

Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

 

4  

Does not reflect the effect of distributions to AMPS Shareholders.

 

5  

Interest expense, fees and amortization of offering costs related to TOB Trusts and/or VRDP Shares. See Note 4 and Note 10 of the Notes to Financial Statements for details.

 

6  

The total expense ratio after fees waived and paid indirectly and excluding interest expense, fees, amortization of offering costs, liquidity and remarketing fees as follows:

 

Year Ended April 30,
2016    2015    2014    2013    2012
           
0.92%    0.89%    0.93%    0.90%    0.95%

 

 

 

See Notes to Financial Statements.      
                
40    ANNUAL REPORT    APRIL 30, 2016   


Financial Highlights    BlackRock MuniYield Quality Fund II, Inc. (MQT)

 

    Year Ended April 30,  
    2016     2015     2014     2013     2012  
         
Per Share Operating Performance                                        

Net asset value, beginning of year

  $ 14.18      $ 13.78      $ 14.68      $ 14.11      $ 11.85   
 

 

 

 

Net investment income1

    0.79        0.80        0.83        0.82        0.85   

Net realized and unrealized gain (loss)

    0.30        0.45        (0.88     0.58        2.24   

Distributions to AMPS Shareholders:

         

From net investment income

                                (0.01

From net realized gain

                                (0.00 )2 
 

 

 

 

Net increase (decrease) from investment operations

    1.09        1.25        (0.05     1.40        3.08   
 

 

 

 

Distributions to Common Shareholders from net investment income3

    (0.82     (0.85     (0.85     (0.83     (0.82
 

 

 

 

Net asset value, end of year

  $ 14.45      $ 14.18      $ 13.78      $ 14.68      $ 14.11   
 

 

 

 

Market price, end of year

  $ 14.33      $ 13.44      $ 12.91      $ 14.41      $ 13.93   
 

 

 

 
         
Total Return Applicable to Common Shareholders4                                        

Based on net asset value

    8.48%        9.70%        0.55%        10.17%        26.85%   
 

 

 

 

Based on market price

    13.42%        10.98%        (4.04 )%      9.55%        28.04%   
 

 

 

 
         
Ratios to Average Net Assets Applicable to Common Shareholders                                        

Total expenses

    1.48%        1.47%        1.56%        1.49%        1.31% 5 
 

 

 

 

Total expenses after fees waived and paid indirectly

    1.48%        1.47%        1.56%        1.49%        1.31% 5 
 

 

 

 

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

    0.91%        0.92%        0.95%        0.90%        0.99% 5,7 
 

 

 

 

Net investment income

    5.60%        5.65%        6.32%        5.62%        6.46% 5 
 

 

 

 

Distributions to AMPS Shareholders

                                0.08%   
 

 

 

 

Net investment income to Common Shareholders

    5.60%        5.65%        6.32%        5.62%        6.38%   
 

 

 

 
         
Supplemental Data                                        

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

  $ 326,072      $ 319,848      $ 310,886      $ 331,171      $ 317,278   
 

 

 

 

VMTP Shares outstanding at $100,000 liquidation value, end of year (000)

  $ 116,500      $ 116,500      $ 116,500      $ 116,500      $ 116,500   
 

 

 

 

Asset coverage per VMTP Shares at $100,000 liquidation value, end of year

  $  379,890      $  374,548      $  366,855      $  384,267      $  372,342   
 

 

 

 

Borrowings outstanding, end of year (000)

  $ 75,273      $ 78,851      $ 75,189      $ 82,257      $ 68,821   
 

 

 

 

Portfolio turnover rate

    10%        13%        16%        15%        20%   
 

 

 

 

 

  1  

Based on average Common Shares outstanding.

 

  2  

Amount is greater than $(0.005) per share.

 

  3  

Distributions for annual periods determined in accordance with federal income tax regulations.

 

  4  

Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

 

  5  

Does not reflect the effect of distributions to AMPS Shareholders.

 

  6  

Interest expense, fees and amortization of offering costs related to TOB Trusts and/or VMTP Shares. See Note 4 and Note 10 of the Notes to Financial Statements for details.

 

  7  

For the year ended April 30, 2012, the total expense ratio after fees waived and paid indirectly and excluding interest expense, fees, amortization of offering costs, liquidity and remarketing fees was 0.95%.

 

See Notes to Financial Statements.      
                
   ANNUAL REPORT    APRIL 30, 2016    41


Notes to Financial Statements     

 

1. Organization:

The following are registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as closed-end management investment companies and are referred to herein collectively as the “Funds”, or individually, a “Fund”:

 

Fund Name  

Herein

Referred
To As

     Organized      Diversification
Classification
 

BlackRock MuniYield Fund, Inc.

    MYD         Maryland         Non-diversified   

BlackRock MuniYield Quality Fund, Inc.

    MQY         Maryland         Non-diversified   

BlackRock MuniYield Quality Fund II, Inc.

    MQT         Maryland         Non-diversified   

The Boards of Directors of the Funds are collectively referred to throughout this report as the “Board of Directors” or the “Board,” and the directors thereof are collectively referred to throughout this report as “Directors.” The Funds determine and make available for publication the net asset values (“NAVs”) of their Common Shares on a daily basis.

The Funds, together with certain other registered investment companies advised by BlackRock Advisors, LLC (the “Manager”) or its affiliates, are included in a complex of closed-end funds referred to as the Closed-End Complex.

2. Significant Accounting Policies:

The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. Each Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. Below is a summary of significant accounting policies:

Segregation and Collateralization: In cases where a Fund enters into certain investments (e.g., futures contracts) or certain borrowings (e.g., TOB transactions) that would be treated as “senior securities” for 1940 Act purposes, a Fund may segregate or designate on its books and records cash or liquid assets having a market value at least equal to the amount of its future obligations under such investments or borrowings. Doing so allows the investment or borrowing to be excluded from treatment as a “senior security.” Furthermore, if required by an exchange or counterparty agreement, the Funds may be required to deliver/deposit cash and/or securities to/with an exchange, or broker-dealer or custodian as collateral for certain investments or obligations.

Investment Transactions and Investment Income: For financial reporting purposes, investment transactions are recorded on the dates the transactions are entered into (the trade dates). Realized gains and losses on investment transactions are determined on the identified cost basis. Interest income, including amortization and accretion of premiums and discounts on debt securities, is recognized on the accrual basis.

Distributions: Distributions from net investment income are declared and paid monthly. Distributions of capital gains are recorded on the ex-dividend date and made at least annually. The character and timing of distributions are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP. Distributions to Preferred Shareholders are accrued and determined as described in Note 10.

Deferred Compensation Plan: Under the Deferred Compensation Plan (the “Plan”) approved by each Fund’s Board, the independent Directors (“Independent Directors”) may defer a portion of their annual complex-wide compensation. Deferred amounts earn an approximate return as though equivalent dollar amounts had been invested in common shares of certain other BlackRock Closed-End Funds selected by the Independent Directors. This has the same economic effect for the Independent Directors as if the Independent Directors had invested the deferred amounts directly in certain other BlackRock Closed-End Funds.

The Plan is not funded and obligations thereunder represent general unsecured claims against the general assets of each Fund, if applicable. Deferred compensation liabilities are included in officer’s and directors’ fees payable in the Statements of Assets and Liabilities and will remain as a liability of the Funds until such amounts are distributed in accordance with the Plan.

Recent Accounting Standard: In April 2015, the Financial Accounting Standards Board issued guidance to simplify the presentation of debt issuance costs in financial statements. Under the new guidance, a Fund is required to present such costs in the Statements of Assets and Liabilities as a direct deduction from the carrying value of the related debt liability rather than as an asset.

The standard is effective for financial statements with fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. Although the Manager is still evaluating the potential impacts of this new guidance, the Funds’ adoption will be limited to the reclassification of any unamortized debt issuance costs on the Statements of Assets and Liabilities and modification to disclosures in the Notes to Financial Statements.

 

                
42    ANNUAL REPORT    APRIL 30, 2016   


Notes to Financial Statements (continued)     

 

Indemnifications: In the normal course of business, a Fund enters into contracts that contain a variety of representations that provide general indemnification. A Fund’s maximum exposure under these arrangements is unknown because it involves future potential claims against a Fund, which cannot be predicted with any certainty.

Other: Expenses directly related to a Fund are charged to that Fund. Other operating expenses shared by several funds, including other funds managed by the Manager, are prorated among those funds on the basis of relative net assets or other appropriate methods.

The Funds have an arrangement with their custodian 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 custodian imposes fees on overdrawn cash balances, which can be offset by accumulated credits earned or may result in additional custody charges. Effective October 2015, the custodian is imposing fees on certain uninvested cash balances.

3. Investment Valuation and Fair Value Measurements:

Investment Valuation Policies: The Funds’ investments are valued at fair value (also referred to as “market value” within the financial statements) as of the close of trading on the New York Stock Exchange (“NYSE”) (generally 4:00 p.m., Eastern time) (or if the reporting date falls on a day the NYSE is closed, investments are valued at fair value as of the report date). U.S. GAAP defines fair value as the price the Funds would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Funds determine the fair values of their financial instruments using various independent dealers or pricing services under policies approved by the Board. The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to oversee the pricing function for all financial instruments.

Fair Value Inputs and Methodologies: The following methods (or “techniques”) and inputs are used to establish the fair value of each Fund’s assets and liabilities:

 

 

Municipal investments (including commitments to purchase such investments on a “when-issued” basis) are valued on the basis of prices provided by dealers or pricing services. In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from dealers, pricing matrixes, market transactions in comparable investments and information with respect to various relationships between investments.

 

 

Investments in open-end U.S. mutual funds are valued at NAV each business day.

 

 

Futures contracts traded on exchanges are valued at their last sale price.

If events (e.g., a company announcement, market volatility or a natural disaster) occur that are expected to materially affect the value of such instruments, or in the event that the application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued by the Global Valuation Committee, or its delegate, in accordance with a policy approved by the Board as reflecting fair value (“Fair Valued Investments”). When determining the price for Fair Valued Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that each Fund might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant consistent with the principles of fair value measurement. The pricing of all Fair Valued Investments is subsequently reported to the Board or a committee thereof on a quarterly basis.

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

 

 

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

 

 

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

 

 

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

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The significant unobservable inputs used by the Global Valuation Committee in determining the price for Fair Valued Investments are typically categorized as Level 3. The fair value hierarchy for each Fund’s investments and derivative financial instruments have been included in the Schedules of Investments.

 

                
   ANNUAL REPORT    APRIL 30, 2016    43


Notes to Financial Statements (continued)     

 

Changes in valuation techniques may result in transfers into or out of an assigned level within the hierarchy. In accordance with each Fund’s policy, transfers between different levels of the fair value hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investments and derivative financial instruments and is not necessarily an indication of the risks associated with investing in those securities.

4. Securities and Other Investments:

Zero-Coupon Bonds: Zero-coupon bonds are normally issued at a significant discount from face value and do not provide for periodic interest payments. These bonds may experience greater volatility in market value than other debt obligations of similar maturity which provide for regular interest payments.

Forward Commitments and When-Issued Delayed Delivery Securities: Certain Funds may purchase securities on a when-issued basis and may purchase or sell securities on a forward commitment basis. Settlement of such transactions normally occurs within a month or more after the purchase or sale commitment is made. A Fund may purchase securities under such conditions with the intention of actually acquiring them, but may enter into a separate agreement to sell the securities before the settlement date. Since the value of securities purchased may fluctuate prior to settlement, a Fund may be required to pay more at settlement than the security is worth. In addition, a Fund is not entitled to any of the interest earned prior to settlement. When purchasing a security on a delayed delivery basis, a Fund assumes the rights and risks of ownership of the security, including the risk of price and yield fluctuations. In the event of default by the counterparty, a Fund’s maximum amount of loss is the unrealized appreciation of unsettled when-issued transactions.

Municipal Bonds Transferred to TOB Trusts: Certain Funds leverage their assets through the use of TOB transactions. The Funds transfer municipal bonds into a special purpose trust (a “TOB Trust”). A TOB Trust generally issues two classes of beneficial interests: short-term floating rate interests (“TOB Trust Certificates”), which are sold to third party investors, and residual inverse floating rate interests (“TOB Residuals”), which are generally issued to the participating funds that contributed the municipal bonds to the TOB Trust. The TOB Trust Certificates have interest rates that generally reset weekly and their holders have the option to tender such certificates to the TOB Trust for redemption at par and any accrued interest at each reset date. The TOB Residuals held by a Fund generally provide the Fund with the right to cause the holders of a proportional share of the TOB Trust Certificates to tender their certificates to the TOB Trust at par plus accrued interest. The Funds may withdraw a corresponding share of the municipal bonds from the TOB Trust. Other funds managed by the investment advisor may also contribute municipal bonds to a TOB Trust into which each Fund has contributed bonds. If multiple BlackRock advised funds participate in the same TOB Trust, the economic rights and obligations under the TOB Residuals will be shared among the funds ratably in proportion to their participation in the TOB Trust.

TOB Trusts are generally supported by a liquidity facility provided by a third party bank or other financial institution (the “Liquidity Provider”) that allows the holders of the TOB Trust Certificates to tender their certificates in exchange for payment of par plus accrued interest on any business day. The tendered TOB Trust Certificates may be purchased by the Liquidity Provider and are usually remarketed by a Remarketing Agent, which is typically an affiliated entity of the Liquidity Provider. The Remarketing Agent may also purchase the tendered TOB Trust Certificates for its own account in the event of a failed remarketing.

The TOB Trust may be collapsed without the consent of a Fund, upon the occurrence of tender option termination events (“TOTEs”) or mandatory termination events (“MTEs”), as defined in the TOB Trust agreements. TOTEs include the bankruptcy or default of the issuer of the municipal bonds held in the TOB Trust, a substantial downgrade in the credit quality of the issuer of the municipal bonds held in the TOB Trust, failure of any scheduled payment of principal or interest on the municipal bonds, and/or a judgment or ruling that interest on the municipal bond is subject to federal income taxation. MTEs may include, among other things, a failed remarketing of the TOB Trust Certificates, the inability of the TOB Trust to obtain renewal of the liquidity support agreement and a substantial decline in the market value of the municipal bonds held in the TOB Trust. Upon the occurrence of a TOTE or an MTE, the TOB Trust would be liquidated with the proceeds applied first to any accrued fees owed to the trustee of the TOB Trust, the Remarketing Agent and the Liquidity Provider. In the case of an MTE, after the payment of fees, the TOB Trust Certificates holders would be paid before the TOB Residuals holders (i.e., the Funds). In contrast, in the case of a TOTE, after payment of fees, the TOB Trust Certificates holders and the TOB Residuals holders would be paid pro rata in proportion to the respective face values of their certificates. During the year ended April 30, 2016, no TOB Trusts in which a Fund participated were terminated without the consent of a Fund.

While a Fund’s investment policies and restrictions expressly permit investments in inverse floating rate securities, such as TOB Residuals, they generally do not allow a Fund to borrow money for purposes of making investments. The Funds’ management believes that a Fund’s restrictions on borrowings do not apply to the secured borrowings. Each Fund’s transfer of the municipal bonds to a TOB Trust is considered a secured borrowing for financial reporting purposes. The cash received by the TOB Trust from the sale of the TOB Trust Certificates, less certain transaction expenses, is paid to a Fund. A Fund typically invests the cash received in additional municipal bonds. The municipal bonds deposited into a TOB Trust are presented in a Fund’s Schedule of Investments and the TOB Trust Certificates are shown in Other Liabilities in the Statements of Assets and Liabilities. Any loans drawn by the TOB Trust to purchase tendered TOB Trust Certificates would be shown as Loan for TOB Trust Certificates.

 

                
44    ANNUAL REPORT    APRIL 30, 2016   


Notes to Financial Statements (continued)     

 

Volcker Rule Impact: On December 10, 2013, regulators published final rules implementing section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Volcker Rule”), which precludes banking entities and their affiliates from sponsoring and investing in TOB Trusts. Banking entities subject to the Volcker Rule were required to fully comply by July 21, 2015, with respect to investments in and relationships with TOB Trusts established after December 31, 2013 (“Non-Legacy TOB Trusts”), and by July 21, 2016, with respect to investments in and relationships with TOB Trusts established prior to December 31, 2013 (“Legacy TOB Trusts”).

As a result, a new structure for TOB Trusts has been designed to ensure that no banking entity is sponsoring the TOB Trust. Specifically, a Fund will establish, structure and “sponsor” the TOB Trusts in which it holds TOB Residuals. In such a structure, certain responsibilities that previously belonged to a third party bank will be performed by, or on behalf of, the Funds. The Funds have restructured any Non-Legacy TOB Trusts and are in the process of restructuring Legacy TOB Trusts in conformity with regulatory guidelines. Until all restructurings are completed, a Fund may, for a period of time, hold TOB Residuals in both Legacy TOB Trusts and non-bank sponsored restructured TOB Trusts.

Under the new TOB Trust structure, the Liquidity Provider or Remarketing Agent will no longer purchase the tendered TOB Trust Certificates even in the event of failed remarketing. This may increase the likelihood that a TOB Trust will need to be collapsed and liquidated in order to purchase the tendered TOB Trust Certificates. The TOB Trust may draw upon a loan from the Liquidity Provider to purchase the tendered TOB Trust Certificates. Any loans made by the Liquidity Provider will be secured by the purchased TOB Trust Certificates held by the TOB Trust and will be subject to an increased interest rate based on the number of days the loan is outstanding.

Accounting for TOB Trusts: The municipal bonds deposited into a TOB Trust are presented in a Fund’s Schedule of Investments and the TOB Trust Certificates are shown in Other Liabilities in the Statements of Assets and Liabilities. Any loans drawn by the TOB Trust to purchase tendered TOB Trust Certificates are shown as Loan for TOB Trust Certificates. The carrying amount of a Fund’s payable to the holder of the TOB Trust Certificates, as reported in the Statements of Assets and Liabilities as TOB Trust Certificates, approximates its fair value.

Interest income, including amortization and accretion of premiums and discounts, from the underlying municipal bonds is recorded by a Fund on an accrual basis. Interest expense incurred on the TOB transaction and other expenses related to remarketing, administration, trustee, liquidity and other services to a TOB Trust are shown as interest expense, fees and amortization of offering costs in the Statements of Operations. Fees paid upon creation of the TOB Trust are recorded as debt issuance costs and are amortized to interest expense, fees and amortization of offering costs in the Statements of Operations to the expected maturity of the TOB Trust. In connection with the restructurings of the TOB Trusts to comply with the Volcker Rule, a Fund incurred non-recurring, legal and restructuring fees, which are recorded as interest expense, fees and amortization of deferred offering costs in the Statements of Operations.

For the year ended April 30, 2016, the following table is a summary of the Funds’ TOB Trusts:

 

     Underlying
Municipal
Bonds
Transferred to
TOB Trusts1
     Liability for
TOB Trust
Certificates2
     Range of
Interest Rates
     Average TOB
Trust
Certificates
Outstanding
     Daily
Weighted
Average
Interest Rate
 

MYD

  $ 324,631,911       $ 173,776,366         0.31% - 0.61%       $ 168,284,670         0.67%   

MQY

  $ 221,588,748       $ 112,111,483         0.31% - 0.88%       $ 112,478,878         0.71%   

MQT

  $ 145,110,188       $ 75,273,164         0.29% - 0.88%       $ 73,583,302         0.70%   

 

  1   

The municipal bonds transferred to a TOB Trust are generally high grade municipal bonds. In certain cases, when municipal bonds transferred are lower grade municipal bonds, the TOB transaction may include a credit enhancement feature that provides for the timely payment of principal and interest on the bonds to the TOB Trust by a credit enhancement provider in the event of default of the municipal bond. The TOB Trust would be responsible for the payment of the credit enhancement fee and the Funds, as TOB Residuals holders, would be responsible for reimbursement of any payments of principal and interest made by the credit enhancement provider. The municipal bonds transferred to TOB Trusts with a credit enhancement are identified in the Schedules of Investments including the maximum potential amounts owed by the Funds.

 

  2   

The Funds may invest in TOB Trusts on either a non-recourse or recourse basis. When a Fund invests in TOB Trusts on a non-recourse basis, and the Liquidity Provider is required to make a payment under the liquidity facility, the Liquidity Provider will typically liquidate all or a portion of the municipal bonds held in the TOB Trust and then fund the balance, if any, of the amount owed under the liquidity facility over the liquidation proceeds (the “Liquidation Shortfall”). If a Fund invests in a TOB Trust on a recourse basis, a Fund will usually enter into a reimbursement agreement with the Liquidity Provider where a Fund is required to reimburse the Liquidity Provider the amount of any Liquidation Shortfall. As a result, if a Fund invests in a recourse TOB Trust, a Fund will bear the risk of loss with respect to any Liquidation Shortfall. If multiple funds participate in any such TOB Trust, these losses will be shared ratably, including the maximum potential amounts owed by a Fund at April 30, 2016, in proportion to their participation in the TOB Trust. The recourse TOB Trusts are identified in the Schedules of Investments including the maximum potential amounts owed by a Fund at April 30, 2016.

5. Derivative Financial Instruments:

The Funds engage in various portfolio investment strategies using derivative contracts both to increase the returns of the Funds and/or to manage their exposure to certain risks such as credit risk, equity risk, interest rate risk, foreign currency exchange rate risk, commodity price risk or other risk (e.g., inflation risk). Derivative financial instruments categorized by risk exposure are included in the Schedules of Investments. These contracts may be transacted on an exchange or over-the-counter (“OTC”).

 

 

                
   ANNUAL REPORT    APRIL 30, 2016    45


Notes to Financial Statements (continued)     

 

Futures Contracts: Certain Funds invest in long and/or short positions in futures and options on futures contracts to gain exposure to, or manage exposure to, changes in interest rates (interest rate risk), changes in the value of equity securities (equity risk) or foreign currencies (foreign currency exchange rate risk).

Futures contracts are agreements between the Funds and a counterparty to buy or sell a specific quantity of an underlying instrument at a specified price and on a specified date. Depending on the terms of a contract, it is settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash amount on the settlement date. Upon entering into a futures contract, the Funds are required to deposit initial margin with the broker in the form of cash or securities in an amount that varies depending on a contract’s size and risk profile. The initial margin deposit must then be maintained at an established level over the life of the contract.

Securities deposited as initial margin are designated in the Schedules of Investments and cash deposited, if any, is shown as cash pledged for futures contracts in the Statements of Assets and Liabilities. Pursuant to the contract, the Funds agree to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”). Variation margin is recorded as unrealized appreciation (depreciation) and, if any, shown as variation margin receivable (or payable) on futures contracts in the Statements of Assets and Liabilities. When the contract is closed, a realized gain or loss is recorded in the Statements of Operations equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The use of futures contracts involves the risk of an imperfect correlation in the movements in the price of futures contracts and interest, foreign currency exchange rates or underlying assets.

6. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. is the largest stockholder and an affiliate of BlackRock, Inc. (“BlackRock”) for 1940 Act purposes.

Investment Advisory

Each Fund entered into an Investment Advisory Agreement with the Manager, the Funds’ investment 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 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, which is determined by calculating a percentage of each Fund’s average daily net assets, based on the following annual rates:

 

     MYD      MQY      MQT  

Investment advisory fee

    0.50%         0.50%         0.50%   

Average daily net assets are the average daily value of each Fund’s total assets minus its total accrued liabilities (which does not include liabilities represented by TOB Trusts and the liquidation preference of preferred shares (other than accumulated dividends)).

Waivers

The Manager, with respect to the Funds, 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. These amounts are shown as fees waived by the Manager in the Statements of Operations. However, the Manager does not waive its investment advisory fees by the amount of investment advisory fees paid in connection with each Fund’s investments in other affiliated investment companies, if any.

For the year ended April 30, 2016, the amounts waived were as follows:

 

     MYD      MQY      MQT  

Amount waived

  $ 419       $ 141       $ 109   

Officers and Directors

Certain officers and/or directors of the Funds are officers and/or directors of BlackRock or its affiliates. The Funds reimburse the Manager for a portion of the compensation paid to the Funds’ Chief Compliance Officer, which is included in Officer and Directors in the Statements of Operations.

7. Purchases and Sales:

For the year ended April 30, 2016, purchases and sales of investments, excluding short-term securities, were as follows:

 

     MYD      MQY      MQT  

Purchases

  $ 114,158,378       $ 79,685,392       $ 49,645,565   

Sales

  $ 101,512,483       $ 81,603,511       $ 52,704,150   

8. Income Tax Information:

It is the Funds’ 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 their taxable income to their shareholders. Therefore, no federal income tax provision is required.

 

 

                
46    ANNUAL REPORT    APRIL 30, 2016   


Notes to Financial Statements (continued)     

 

Each Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on each Fund’s U.S. federal tax returns remains open for each of the four years ended April 30, 2016. The statutes of limitations on each Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

Management has analyzed tax laws and regulations and their application to the Funds as of April 30, 2016, inclusive of the open tax return years, and does not believe there are any uncertain tax positions that require recognition of a tax liability in the Funds’ financial statements.

U.S. GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or net asset values per share. As of period end, the following permanent differences attributable to amortization methods on fixed income securities, expenses characterized as distributions, non-deductible expenses, the expiration of capital loss carryforwards, and the sale of bonds received from TOB Trusts were reclassified to the following accounts:

 

     MYD      MQY      MQT  

Paid-in capital

  $ (11,759,827    $ (10,098        

Undistributed net investment income

  $ 15,832       $ 3,029       $ (23,303

Accumulated net realized loss

  $ 11,743,995       $ 7,069       $ 23,303   

The tax character of distributions paid was as follows:

 

             MYD      MQY      MQT  

Tax-exempt income1

    4/30/2016       $ 45,476,704       $ 30,269,448       $ 19,780,167   
    4/30/2015       $ 46,719,911       $ 29,683,874       $ 20,298,757   

Ordinary income2

    4/30/2016         389,796         5,182         2   
    4/30/2015         73,784         259         47   
 

 

 

    

 

 

    

 

 

    

 

 

 

Total

    4/30/2016       $ 45,866,500       $ 30,274,630       $ 19,780,169   
 

 

 

    

 

 

    

 

 

    

 

 

 
    4/30/2015       $ 46,793,695       $ 29,684,133       $ 20,298,804   
 

 

 

    

 

 

    

 

 

    

 

 

 

 

  1   

The Funds designate these amounts paid during the fiscal year ended April 30, 2016, as exempt-interest dividends.

 

  2   

Ordinary income consists primarily of taxable income recognized from market discount. Additionally, all ordinary income distributions are comprised of interest related dividends for non-U.S. residents and are eligible for exemption from U.S. withholding tax for nonresident aliens and foreign corporations.

As of period end, the tax components of accumulated net earnings (losses) were as follows:

 

     MYD      MQY      MQT  

Undistributed tax-exempt income

  $ 3,514,107       $ 3,565,336       $ 2,179,318   

Undistributed ordinary income

    74,529         187           

Capital loss carryforwards

    (17,772,751      (4,301,557      (6,680,824

Net unrealized gains1

    114,440,270         76,150,852         47,069,791   

Qualified late-year losses2

    (74,305      (73,445        
 

 

 

    

 

 

    

 

 

 

Total

  $ 100,181,850       $ 75,341,373       $ 42,568,285   
 

 

 

    

 

 

    

 

 

 

 

  1   

The differences between book-basis and tax-basis net unrealized gains were attributable primarily to the tax deferral of losses on wash sales and straddles, amortization and accretion methods of premiums and discounts on fixed income securities, the realization for tax purposes of unrealized losses on certain futures contracts, the deferral of compensation to directors and the treatment of residual interests in TOB Trusts.

 

  2   

The Funds have elected to defer certain qualified late-year losses and recognize such losses in the next taxable year.

As of April 30, 2016, 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  

No expiration date1

  $ 12,030,859       $ 4,301,557       $ 2,215,289   

2017

    4,065,755                 2,624,082   

2018

    1,196,450                 66,689   

2019

    479,687                 1,774,764   
 

 

 

    

 

 

    

 

 

 

Total

  $ 17,772,751       $ 4,301,557       $ 6,680,824   
 

 

 

    

 

 

    

 

 

 

 

  1   

Must be utilized prior to losses subject to expiration.

During the year ended April 30, 2016, the Funds utilized the following amounts of their respective capital loss carryforward:

 

MYD

  $ 1,115,331   

MQY

  $ 72,664   

MQT

  $ 478,871   

 

                
   ANNUAL REPORT    APRIL 30, 2016    47


Notes to Financial Statements (continued)     

 

As of April 30, 2016, gross unrealized appreciation and depreciation based on cost for federal income tax purposes were as follows:

 

     MYD      MQY      MQT  

Tax cost

  $ 857,565,588       $ 601,623,977       $ 393,182,866   
 

 

 

 

Gross unrealized appreciation

  $ 121,369,822       $ 77,462,993       $ 48,744,056   

Gross unrealized depreciation

    (6,320,723      (1,112,986      (1,674,264
 

 

 

 

Net unrealized appreciation

  $ 115,049,099       $ 76,350,007       $ 47,069,792   
 

 

 

 

9. Principal Risks:

Many municipalities insure repayment of their bonds, which may reduce the potential for loss due to credit risk. The market value of these bonds may fluctuate for other reasons, including market perception of the value of such insurance, and there is no guarantee that the insurer will meet its obligation.

Inventories of municipal bonds held by brokers and dealers may decrease, which would lessen their ability to make a market in these securities. Such a reduction in market making capacity could potentially decrease a Fund’s ability to buy or sell bonds. As a result, a Fund may sell a security at a lower price, sell other securities to raise cash, or give up an investment opportunity, any of which could have a negative impact on performance. If a Fund needed to sell large blocks of bonds, those sales could further reduce the bonds’ prices and impact performance.

In the normal course of business, certain Funds invest in securities and enter into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer to meet all its obligations, including the ability to pay principal and interest when due (issuer credit risk). The value of securities held by the Funds may decline in response to certain events, including those directly involving the issuers of securities owned by the Funds. Changes arising from the general economy, the overall market and local, regional or global political and/or social instability, as well as currency, interest rate and price fluctuations, may also affect the securities’ value.

Each Fund may be exposed to prepayment risk, which is the risk that borrowers may exercise their option to prepay principal earlier than scheduled during periods of declining interest rates, which would force each Fund to reinvest in lower yielding securities. Each Fund may also be exposed to reinvestment risk, which is the risk that income from each Fund’s portfolio will decline if each Fund invests the proceeds from matured, traded or called fixed income securities at market interest rates that are below each Fund portfolio’s current earnings rate.

The new TOB Trust structure resulting from the compliance with Volcker Rule remains untested. It is possible that regulators could take positions that could limit the market for such newly structured TOB Trust transactions or the Funds’ ability to hold TOB Residuals. Under the new TOB Trust structure, the Funds will have certain additional duties and responsibilities, which may give rise to certain additional risks including, but not limited to, compliance, securities law and operational risks.

There can be no assurance that the Funds can successfully enter into restructured TOB Trust transactions in order to refinance their existing TOB Residuals holdings prior to the compliance date for the Volcker Rule, which may require that the Funds unwind existing TOB Trusts. There can be no assurance that alternative forms of leverage will be available to the Funds and any alternative forms of leverage may be more or less advantageous to the Funds than existing TOB leverage.

Should short-term interest rates rise, the Funds’ investments in TOB transactions may adversely affect the Funds’ net investment income and dividends to Common Shareholders. Also, fluctuations in the market value of municipal bonds deposited into the TOB Trust may adversely affect the Funds’ NAV per share.

The SEC and various federal banking and housing agencies have adopted credit risk retention rules for securitizations (the “Risk Retention Rules”), which take effect in December 2016. The Risk Retention Rules would require the sponsor of a TOB Trust to retain at least 5% of the credit risk of the underlying assets supporting the TOB Trust’s municipal bonds. The Risk Retention Rules may adversely affect the Funds’ ability to engage in TOB Trust transactions or increase the costs of such transactions in certain circumstances.

TOB Trust transactions constitute an important component of the municipal bond market. Accordingly, implementation of the Volcker Rule may adversely impact the municipal market, including through reduced demand for and liquidity of municipal bonds and increased financing costs for municipal issuers. Any such developments could adversely affect the Funds. The ultimate impact of these rules on the TOB market and the overall municipal market is not yet certain.

Counterparty Credit Risk: Similar to issuer credit risk, the Funds may be exposed to counterparty credit risk, or the risk that an entity may fail to or be unable to perform on its commitments related to unsettled or open transactions. The Funds manage counterparty credit risk by entering into transactions only with counterparties that the Manager believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Funds’ exposure to market, issuer and counterparty credit risks with respect to these financial assets is approximately their value recorded in the Statements of Assets and Liabilities, less any collateral held by the Funds.

 

                
48    ANNUAL REPORT    APRIL 30, 2016   


Notes to Financial Statements (continued)     

 

A derivative contract may suffer a mark-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.

With exchange-traded futures, there is less counterparty credit risk to the Funds since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, a Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency). Additionally, credit risk exists in exchange-traded futures with respect to initial and variation margin that is held in a clearing broker’s customer accounts. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be allocated on a pro rata basis across all the clearing broker’s customers, potentially resulting in losses to the Funds.

Concentration Risk: As of period end, certain Funds invested a significant portion of their assets in securities in the transportation and health sectors, and the county, city, special district, school district sectors. Changes in economic conditions affecting such sectors would have a greater impact on the Funds and could affect the value, income and/or liquidity of positions in such securities.

Certain Funds invest a significant portion of their assets in fixed-income securities and/or use derivatives tied to the fixed-income markets. Changes in market interest rates or economic conditions may affect the value and/or liquidity of such investments. Interest rate risk is the risk that prices of bonds and other fixed-income securities will increase as interest rates fall and decrease as interest rates rise. The Funds may be subject to a greater risk of rising interest rates due to the current period of historically low rates.

10. Capital Share Transactions:

Each Fund is authorized to issue 200 million shares, all of which were initially classified as Common Shares. The par value for each Fund’s Common Shares is $0.10. The par value for each Fund’s Preferred Shares outstanding is $0.10. The Board is authorized, however, to reclassify any unissued Common Shares to Preferred Shares without approval of Common Shareholders.

Common Shares

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

 

Year Ended April 30,   MYD  

2016

    26,999   

2015

     

For the year ended April 30, 2016 and the year ended April 30, 2015 for MQY and MQT, shares issued and outstanding remained constant.

Preferred Shares

Each Fund’s Preferred Shares rank prior to the Fund’s Common Shares as to the payment of dividends by a Fund and distribution of assets upon dissolution or liquidation of a Fund. The 1940 Act prohibits the declaration of any dividend on a Fund’s Common Shares or the repurchase of a Fund’s Common Shares if a Fund fails to maintain asset coverage of at least 200% of the liquidation preference of the Fund’s outstanding Preferred Shares. In addition, pursuant to the Preferred Shares’ governing instruments, a Fund is restricted from declaring and paying dividends on classes of shares ranking junior to or on parity with the Fund’s Preferred Shares or repurchasing such shares if a Fund fails to declare and pay dividends on the Preferred Shares, redeem any Preferred Shares required to be redeemed under the Preferred Shares’ governing instruments or comply with the basic maintenance amount requirement of the ratings agencies rating the Preferred Shares.

The holders of Preferred Shares have voting rights equal to the voting rights of the holders of Common Shares (one vote per share) and will vote together with holders of Common Shares (one vote per share) as a single class on certain matters. However, the holders of Preferred Shares, voting as a separate class, are also entitled to elect two Directors for each Fund. The holders of Preferred Shares are also entitled to elect the full Board of Directors if dividends on the Preferred Shares are not paid for a period of two years. The holders of Preferred Shares are also generally entitled to a separate class vote to amend the Preferred Share governing documents. In addition, the 1940 Act requires the approval of the holders of a majority of any outstanding Preferred Shares, voting as a separate class, to (a) adopt any plan of reorganization that would adversely affect the Preferred Shares, (b) change a Fund’s sub-classification as a closed-end investment company or change its fundamental investment restrictions or (c) change its business so as to cease to be an investment company.

VRDP Shares

MYD and MQY (collectively, the “VRDP Funds”), have issued Series W-7 VRDP Shares, $100,000 liquidation value per share, in a privately negotiated offerings. The VRDP Shares were offered to qualified institutional buyers as defined pursuant to Rule 144A under the Securities Act of 1933, as amended, (the “Securities Act”). The VRDP Shares include a liquidity feature and are currently in a special rate period, each as described below.

 

                
   ANNUAL REPORT    APRIL 30, 2016    49


Notes to Financial Statements (continued)     

 

As of the period end, the VRDP Shares outstanding of each Fund were as follows:

 

     Issue Date      Shares Issued      Aggregate Principal      Maturity Date  

MYD

    6/30/11         2,514       $ 251,400,000         7/01/41   

MQY

    9/15/11         1,766       $ 176,600,000         10/01/41   

Redemption Terms: Each VRDP Fund is required to redeem its VRDP Shares on the maturity date, unless earlier redeemed or repurchased. Six months prior to the maturity date, each VRDP Fund is required to begin to segregate liquid assets with the Fund’s custodian to fund the redemption. In addition, VRDP Funds are required to redeem certain of their outstanding VRDP Shares if they fail to maintain certain asset coverage, basic maintenance amount or leverage requirements.

Subject to certain conditions, the VRDP Shares may also be redeemed, in whole or in part, at any time at the option of VRDP Funds. The redemption price per VRDP Share is equal to the liquidation value per share plus any outstanding unpaid dividends.

Liquidity Feature: The VRDP Funds entered into a fee agreement with the liquidity provider that may require an upfront commitment and a per annum liquidity fee payable to the liquidity provider. These fees, if applicable, are shown as liquidity fees in the Statements of Operations.

The fee agreement between MYD and the liquidity provider is scheduled to expire on April 19, 2017. The fee agreement between MQY and the liquidity provider is scheduled to expire on October 22, 2018.

In the event the fee agreement for a VRDP Fund is not renewed or is terminated in advance, and the VRDP Fund does not enter into a fee agreement with an alternate liquidity provider, the VRDP Shares of the VRDP Fund will be subject to mandatory purchase by the liquidity provider prior to the termination of the fee agreement. In the event of such mandatory purchase, the VRDP Fund is required to redeem the VRDP Shares six months after the purchase date. Immediately after such mandatory purchase, the VRDP Fund is required to begin to segregate liquid assets with its custodian to fund the redemption. There is no assurance the VRDP Fund will replace such redeemed VRDP Shares with any other preferred shares or other form of leverage.

Remarketing: The VRDP Funds may incur remarketing fees of 0.10% on the aggregate principal amount of all the VRDP Shares, which, if any, are included in remarketing fees on Preferred Shares in the Statements of Operations. During a special rate period (as described below), MQY incurs no remarketing fees and MYD incurs nominal remarketing fees.

Dividends: Dividends on the VRDP Shares are payable monthly at a variable rate set weekly by the remarketing agent. Such dividend rates are generally based upon a spread over a base rate and cannot exceed a maximum rate. In the event of a failed remarketing, the dividend rate of the VRDP Shares will be reset to a maximum rate. The maximum rate is determined based on, among other things, the long-term preferred share rating assigned to the VRDP Shares and the length of time that the VRDP Shares fail to be remarketed. At the date of issuance, the VRDP Shares were assigned long-term ratings of Aaa from Moody’s and AAA from Fitch. Subsequent to the issuance of the VRDP Shares, Moody’s completed a review of its methodology for rating securities issued by registered closed-end funds. As of period end, the VRDP Shares were assigned a long-term rating of Aa1 from Moody’s under its new ratings methodology. The VRDP Shares continue to be assigned a long-term rating of AAA from Fitch.

For the year ended April 30, 2016, the annualized dividend rates for the VRDP Shares were as follows:

 

     MYD      MQY  

Rate

    0.96%         0.59%   

Special Rate Period: On April 17, 2014, MYD commenced a special rate period with respect to its VRDP Shares that will terminate on April 19, 2017. On October 22, 2015, MQY commenced a special rate period with respect to its VRDP Shares that will terminate on April 18, 2018. During each VRDP Fund’s special rate period, the VRDP Shares of the Fund will not be subject to any remarketing and the dividend rate will be based on a predetermined methodology.

The implementation of the special rate period resulted in a mandatory tender of the VRDP Shares prior to the commencement of the special rate period. The mandatory tender event was not the result of a failed remarketing. The short-term ratings on the VRDP Shares for each VRDP Fund were withdrawn by the rating agencies then rating the VRDP Shares at the commencement of the special rate period. Prior to the termination date of a special rate period, the holder of the VRDP Shares and the VRDP Fund may mutually agree to extend the special rate period. If the special rate period is not extended, the VRDP Shares will revert to remarketable securities upon the termination of the special rate period and will be remarketed and available for purchase by qualified institutional investors.

During the special rate period, the liquidity and fee agreements remain in effect and the VRDP Shares remain subject to mandatory redemption by the VRDP Funds on the maturity date. The VRDP Shares will not be remarketed or subject to optional or mandatory tender events during the special rate period. During the special rate period, the VRDP Funds are required to comply with the same asset coverage, basic maintenance amount and leverage requirements for the VRDP Shares as is required when the VRDP Shares are not in a special rate period. MYD pays a nominal fee at the annual rate of 0.01% to the liquidity provider and the remarketing agent during the special rate period. MQY does not pay any fees to the liquidity provider and

 

                
50    ANNUAL REPORT    APRIL 30, 2016   


Notes to Financial Statements (continued)     

 

remarketing agent during the special rate period. The VRDP Funds also pay dividends monthly based on the sum of the Securities Industry and Financial Markets Association (“SIFMA”) Municipal Swap Index rate and a percentage per annum based on the long-term ratings assigned to the VRDP Shares.

If a VRDP Fund redeems the VRDP Shares prior to the end of the special rate period and the VRDP Shares have long-term ratings above A1/A+ or its equivalent by all ratings agencies then rating the VRDP Shares, then such redemption may be subject to a redemption premium payable to the holder of the VRDP Shares based on the time remaining in the special rate period, subject to certain exceptions for redemptions that are required to comply with minimum asset coverage requirements.

For the year ended April 30, 2016, VRDP Shares issued and outstanding of each VRDP Fund remained constant.

VMTP Shares

MQT has issued Series W-7 VMTP Shares, $100,000 liquidation preference per share, in a privately negotiated offering and sale of VMTP Shares exempt from registration under the Securities Act. The VMTP Shares are subject to certain restrictions on transfer, and MQT may also be required to register the VMTP Shares for sale under the Securities Act under certain circumstances. In addition, amendments to the VMTP governing documents generally require the consent of the holders of VMTP Shares.

As of period end, the VMTP Shares outstanding were as follows:

 

     Issue Date      Shares Issued      Aggregate Principal      Term Redemption Date  

MQT

    12/16/11         1,165       $ 116,500,000         1/02/19   

Redemption Terms: MQT is required to redeem its VMTP Shares on the term redemption date, unless earlier redeemed or repurchased or unless extended. In June 2015, the term redemption date for VMTP Shares was extended until January 2, 2019. There is no assurance that the term of MQT’s VMTP Shares will be extended further or that MQT’s VMTP Shares will be replaced with any other preferred shares or other form of leverage upon the redemption or repurchase of the VMTP Shares. Six months prior to term redemption date, MQT is required to begin to segregate liquid assets with its custodian to fund the redemption. In addition, MQT is required to redeem certain of its outstanding VMTP Shares if it fails to maintain certain asset coverage, basic maintenance amount or leverage requirements.

Subject to certain conditions, MQT’s VMTP Shares may be redeemed, in whole or in part, at any time at the option of MQT. The redemption price per VMTP Share is equal to the liquidation preference per share plus any outstanding unpaid dividends and applicable redemption premium. If the MQT redeems the VMTP Shares prior to the term redemption date and the VMTP Shares have long-term ratings above A1/A+ or its equivalent by the rating agencies then rating the VMTP Shares, then such redemption may be subject to a prescribed redemption premium (up to 3% of the liquidation preference) payable to the holder of the VMTP Shares based on the time remaining until the term redemption date, subject to certain exceptions for redemptions that are required to comply with minimum asset coverage requirements.

Dividends: Dividends on the VMTP Shares are declared daily and payable monthly at a variable rate set weekly at a fixed rate spread to the SIFMA Municipal Swap Index. The fixed spread is determined based on the long-term preferred share rating assigned to the VMTP Shares by Moody’s and Fitch. At the date of issuance, the VMTP Shares were assigned long-term ratings of Aaa from Moody’s and AAA from Fitch. Subsequent to the issuance of the VMTP Shares, Moody’s completed a review of its methodology for rating securities issued by registered closed-end funds. As of period end, the VMTP Shares were assigned a long-term rating of Aa1 from Moody’s under its new rating methodology. The VMTP Shares continue to be assigned a long-term rating of AAA from Fitch. The dividend rate on the VMTP Shares is subject to a step-up spread if MQT fails to comply with certain provisions, including, among other things, the timely payment of dividends, redemptions or gross-up payments, and complying with certain asset coverage and leverage requirements.

For the year ended April 30, 2016, the average annualized dividend rate for the VMTP Shares was 1.07%.

For the year ended April 30, 2016, VMTP Shares issued and outstanding of MQT remained constant.

Offering Costs: The Funds incurred costs in connection with the issuance of VRDP Shares and/or VMTP Shares. For VRDP Shares, these costs were recorded as a deferred charge and will be amortized over the 30-year life of the VRDP Shares with the exception of upfront fees paid to the liquidity provider which were amortized over the life of the liquidity agreement. For VMTP Shares, these costs were recorded as a deferred charge and will be amortized over the 3-year life of the VMTP Shares. Amortization of these costs is included in interest expense, fees and amortization of offering costs in the Statements of Operations.

Financial Reporting: The VRDP Shares and VMTP Shares are considered debt of the issuer; therefore, the liquidation value, which approximates fair value, of the VRDP Shares and VMTP Shares is recorded as a liability in the Statements of Assets and Liabilities. Unpaid dividends are included in interest expense and fees payable in the Statements of Assets and Liabilities, and the dividends accrued and paid on the VRDP Shares and VMTP Shares are included as a component of interest expense, fees and amortization of offering costs in the Statements of Operations. The VRDP Shares and VMTP Shares are treated as equity for tax purposes. Dividends paid to holders of the VRDP Shares and VMTP Shares are generally classified as tax-exempt income for tax-reporting purposes.

 

                
   ANNUAL REPORT    APRIL 30, 2016    51


Notes to Financial Statements (concluded)     

 

11. Subsequent Events:

Management’s evaluation of the impact of all subsequent events on the Funds’ financial statements was completed through the date the financial statements were issued and the following items were noted:

The Funds paid a net investment income dividend in the following amounts per share on June 1, 2016 to Common Shareholders of record on May 16, 2016:

 

     Common
Dividend
Per Share
 

MYD

  $ 0.0770   

MQY

  $ 0.0765   

MQT

  $ 0.0670   

Additionally, the Funds declared a net investment income dividend in the following amounts per share on June 1, 2016 payable to Common Shareholders of record on June 15, 2016:

 

    

Common
Dividend
Per Share

 

MYD

  $ 0.0720   

MQY

  $ 0.0725   

MQT

  $ 0.0620   

The dividends declared on Preferred Shares for the period May 1, 2016 to May 31, 2016 for the Funds were as follows:

 

     Preferred
Shares
     Series      Dividend
Declared
 

MYD

    VRDP Shares         W-7       $ 271,869   

MQY

    VRDP Shares         W-7       $ 193,971   

MQT

    VMTP Shares         W-7       $ 137,826   

 

                
52    ANNUAL REPORT    APRIL 30, 2016   


Report of Independent Registered Public Accounting Firm

 

To the Board of Directors and Shareholders of BlackRock MuniYield Fund, Inc., BlackRock MuniYield Quality Fund, Inc., and BlackRock MuniYield Quality Fund II, Inc.:

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of BlackRock MuniYield Fund, Inc., BlackRock MuniYield Quality Fund, Inc., and BlackRock MuniYield Quality Fund II, Inc. (collectively, the “Funds”), as of April 30, 2016, and the related statements of operations and cash flows for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of April 30, 2016, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of BlackRock MuniYield Fund, Inc., BlackRock MuniYield Quality Fund, Inc., and BlackRock MuniYield Quality Fund II, Inc. as of April 30, 2016, the results of their operations and their cash flows for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP

Boston, Massachusetts

June 23, 2016

 

 

                
   ANNUAL REPORT    APRIL 30, 2016    53


Automatic Dividend Reinvestment Plan     

 

Pursuant to each Fund’s Dividend Reinvestment Plan (the “Reinvestment Plan”), Common Shareholders are automatically enrolled to have all distributions of dividends and capital gains reinvested by Computershare Trust Company, N.A. (the “Reinvestment Plan Agent”) in the respective Fund’s shares pursuant to the Reinvestment Plan. Shareholders who do not participate in the Reinvestment Plan will receive all distributions in cash paid by check and mailed directly to the shareholders of record (or if the shares are held in street name or other nominee name, then to the nominee) by the Reinvestment Plan Agent, which serves as agent for the shareholders in administering the Reinvestment Plan.

After MYD, MQY and MQT declare a dividend or determine to make a capital gain distribution, the Reinvestment Plan Agent will acquire shares for the participants’ accounts, depending upon the following circumstances, either (i) through receipt of unissued but authorized shares from the Funds (“newly issued shares”) or (ii) by purchase of outstanding shares on the open market or on the Fund’s primary exchange (“open-market purchases”). If, on the dividend payment date, the net asset value per share (“NAV”) is equal to or less than the market price per share plus estimated brokerage commissions (such condition often referred to as a “market premium”), the Reinvestment Plan Agent will invest the dividend amount in newly issued shares acquired on behalf of the participants. The number of newly issued shares to be credited to each participant’s account will be determined by dividing the dollar amount of the dividend by the NAV on the date the shares are issued. However, if the NAV is less than 95% of the market price on the dividend payment date, the dollar amount of the dividend will be divided by 95% of the market price on the dividend payment date. If, on the dividend payment date, the NAV is greater than the market price per share plus estimated brokerage commissions (such condition often referred to as a “market discount”), the Reinvestment Plan Agent will invest the dividend amount in shares acquired on behalf of the participants in open-market purchases. If the Reinvestment Plan Agent is unable to invest the full dividend amount in open-market purchases, or if the market discount shifts to a market premium during the purchase period, the Reinvestment Plan Agent will invest any un-invested portion in newly issued shares. Investments in newly issued shares made in this manner would be made pursuant to the same process described above and the date of issue for such newly issued shares will substitute for the dividend payment date.

Participation in the Reinvestment Plan is completely voluntary and may be terminated or resumed at any time without penalty by notice if received and processed by the Reinvestment Plan Agent prior to the dividend record date. Additionally, the Reinvestment Plan Agent seeks to process notices received after the record date but prior to the payable date and such notices often will become effective by the payable date. Where late notices are not processed by the applicable payable date, such termination or resumption will be effective with respect to any subsequently declared dividend or other distribution.

The Reinvestment Plan Agent’s fees for the handling of the reinvestment of dividends and distributions will be paid by each Fund. However, each participant will pay a pro rata share of brokerage commissions incurred with respect to the Reinvestment Plan Agent’s open market purchases in connection with the reinvestment of dividends and distributions. The automatic reinvestment of dividends and distributions will not relieve participants of any federal income tax that may be payable on such dividends or distributions.

Each Fund reserves the right to amend or terminate the Reinvestment Plan. There is no direct service charge to participants in the Reinvestment Plan; however, each Fund reserves the right to amend the Reinvestment Plan to include a service charge payable by the participants. Participants in MQY that request a sale of shares are subject to a $2.50 sales fee and a $0.15 per share fee. Per share fees include any applicable brokerage commissions the Reinvestment Plan Agent is required to pay. Participants in MYD and MQT that request a sale of shares are subject to a $0.02 per share sold brokerage commission. All correspondence concerning the Reinvestment Plan should be directed to Computershare Trust Company, N.A. through the internet at http://www.computershare.com/blackrock, or in writing to Computershare, P.O. Box 30170, College Station, TX 77842-3170, Telephone: (800) 699-1236. Overnight correspondence should be directed to the Computershare, 211 Quality Circle, Suite 210, College Station, TX 77845.

 

                
54    ANNUAL REPORT    APRIL 30, 2016   


Officers and Directors     

 

Name, Address1
and Year of Birth
 

Position(s)

Held with
the Funds

  Length
of Time
Served as a
Director3
  Principal Occupation(s) During Past Five Years   Number of BlackRock-
Advised Registered
Investment Companies
(“RICs”) Consisting of
Investment Portfolios
(“Portfolios”) Overseen4
  Public Company
and Investment
Company
Directorships
During Past Five Years
Independent Directors2               

Richard E. Cavanagh

 

1946

  Chair of the Board and Director  

Since

2007

  Trustee, Aircraft Finance Trust from 1999 to 2009; Director, The Guardian Life Insurance Company of America since 1998; Director, Arch Chemical (chemical and allied products) from 1999 to 2011; Trustee, Educational Testing Service from 1997 to 2009 and Chairman thereof from 2005 to 2009; Senior Advisor, The Fremont Group since 2008 and Director thereof since 1996; Faculty Member/Adjunct Lecturer, Harvard University since 2007; President and Chief Executive Officer, The Conference Board, Inc. (global business research organization) from 1995 to 2007.  

75 RICs consisting of

75 Portfolios

  None

Karen P. Robards

 

1950

  Vice Chair of the Board, Chair of the Audit Committee and Director  

Since

2007

  Principal of Robards & Company, LLC (consulting and private investing firm) since 1987; Co-founder and Director of the Cooke Center for Learning and Development (a not-for-profit organization) since 1987; Investment Banker at Morgan Stanley from 1976 to 1987.  

75 RICs consisting of

75 Portfolios

  AtriCure, Inc. (medical devices); Greenhill & Co., Inc.

Michael J. Castellano

 

1946

  Director and Member of the Audit Committee  

Since

2011

  Chief Financial Officer of Lazard Group LLC from 2001 to 2011; Chief Financial Officer of Lazard Ltd from 2004 to 2011; Director, Support Our Aging Religious (non-profit) from 2009 to June 2015; Director, National Advisory Board of Church Management at Villanova University since 2010; Trustee, Domestic Church Media Foundation since 2012; Director, CircleBlack Inc. (financial technology company) since 2015.  

75 RICs consisting of

75 Portfolios

  None

Cynthia L. Egan

1955

 

  Director  

Since

2016

  Advisor, U.S. Department of the Treasury from 2014 to 2015; a President at T. Rowe Price Group, Inc. from 2007 to 2012.  

74 RICs consisting of

74 Portfolios

  Unum (insurance); The Hanover Insurance Group (insurance); Envestnet (investment platform) from 2013 until 2016

Frank J. Fabozzi

 

1948

  Director and Member of the Audit Committee  

Since

2007

  Editor of and Consultant for The Journal of Portfolio Management since 2006; Professor of Finance, EDHEC Business School since 2011; Visiting Professor, Princeton University from 2013 to 2014; Professor in the Practice of Finance and Becton Fellow, Yale University School of Management from 2006 to 2011.  

75 RICs consisting of

75 Portfolios

  None

Jerrold B. Harris

 

1942

  Director  

Since

2007

  Trustee, Ursinus College from 2000 to 2012; Director, Ducks Unlimited — Canada (conservation) since 2015; Director, Waterfowl Chesapeake (conservation) since 2014; Director, Ducks Unlimited, Inc. since 2013; Director, Troemner LLC (scientific equipment) since 2000; Director of Delta Waterfowl Foundation from 2010 to 2012; President and Chief Executive Officer, VWR Scientific Products Corporation from 1990 to 1999.  

75 RICs consisting of

75 Portfolios

  BlackRock Capital Investment Corp. (business development company)

R. Glenn Hubbard

 

1958

  Director   Since
2007
  Dean, Columbia Business School since 2004; Faculty member, Columbia Business School since 1988.  

75 RICs consisting of

75 Portfolios

  ADP (data and information services); Metropolitan Life Insurance Company (insurance)

 

                
   ANNUAL REPORT    APRIL 30, 2016    55


Officers and Directors (continued)     

 

Name, Address1
and Year of Birth
 

Position(s)

Held with
the Funds

  Length
of Time
Served as a
Director3
  Principal Occupation(s) During Past Five Years   Number of BlackRock-
Advised Registered
Investment Companies
(“RICs”) Consisting of
Investment Portfolios
(“Portfolios”) Overseen4
 

Public Company
and Investment
Company
Directorships
During Past Five Years

Independent Directors2               

Catherine A. Lynch

 

1961

  Director and Member of the Audit Committee  

Since

2016

  Chief Executive Officer, Chief Investment Officer and various other positions, National Railroad Retirement Investment Trust from 2003 to 2016; Associate Vice President for Treasury Management, The George Washington University from 1999 to 2003; Assistant Treasurer, Episcopal Church of America from 1995 to 1999.  

75 RICs consisting of

75 Portfolios

  None

W. Carl Kester

 

1951

  Director and Member of the Audit Committee  

Since

2007

  George Fisher Baker Jr. Professor of Business Administration, Harvard Business School since 2008, Deputy Dean for Academic Affairs from 2006 to 2010, Chairman of the Finance Unit, from 2005 to 2006, Senior Associate Dean and Chairman of the MBA Program from 1999 to 2005; Member of the faculty of Harvard Business School since 1981.  

75 RICs consisting of

75 Portfolios

  None
 

1    The address of each Director and Officer is c/o BlackRock, Inc., 55 East 52nd Street, New York, NY 10055.

 

2    Independent Directors serve until their resignation, retirement, removal or death, or until December 31 of the year in which they turn 75. The maximum age limitation may be waived as to any Director by action of a majority of the Directors upon finding of good cause thereof.

 

3    Date shown is the earliest date a person has served on this board. Following the combination of Merrill Lynch Investment Managers, L.P. (“MLIM”) and BlackRock, Inc. (“BlackRock”) in September 2006, the various legacy MLIM and legacy BlackRock fund boards were realigned and consolidated into three new fund boards in 2007. As a result, although the chart shows certain Directors as joining the Fund’s board in 2007, those Directors first became members of the boards of other legacy MLIM or legacy BlackRock funds as follows: Richard E. Cavanagh, 1994; Frank J. Fabozzi, 1988; Jerrold B. Harris, 1999; R. Glenn Hubbard, 2004; W. Carl Kester, 1995 and Karen P. Robards, 1998.

 

4    For purposes of this chart, “RICs” refers to investment companies registered under the 1940 Act and “Portfolios” refers to the investment programs of the BlackRock-advised funds. The Closed-End Complex is comprised of 75 RICs. Mr. Perlowski and Ms. Novick are also board members of certain complexes of BlackRock registered open-end funds. Mr. Perlowski is also a board member of the BlackRock Equity-Bond Complex and the Equity-Liquidity Complex, and Ms. Novick is also a board member of the BlackRock Equity-Liquidity Complex.

Interested Directors5               

Barbara G. Novick

 

1960

  Director  

Since

2014

  Vice Chairman of BlackRock since 2006; Chair of BlackRock’s Government Relations Steering Committee since 2009; Head of the Global Client Group of BlackRock from 1988 to 2008.   108 RICs consisting of 228 Portfolios   None

John M. Perlowski

 

1964

  Director, President and Chief Executive Officer   Since 2014 (Director); Since 2011 (President and Chief Executive Officer)   Managing Director of BlackRock since 2009; Head of BlackRock Global Fund Services since 2009; Managing Director and Chief Operating Officer of the Global Product Group at Goldman Sachs Asset Management, L.P. from 2003 to 2009; Treasurer of Goldman Sachs Mutual Funds from 2003 to 2009 and Senior Vice President thereof from 2007 to 2009; Director of Goldman Sachs Offshore Funds from 2002 to 2009; Director of Family Resource Network (charitable foundation) since 2009.   136 RICs consisting of 326 Portfolios   None
 

5    Mr. Perlowski and Ms. Novick are both “interested persons,” as defined in the 1940 Act, of the Funds based on their positions with BlackRock and its affiliates. Mr. Perlowski and Ms. Novick are also board members of certain complexes of BlackRock registered open-end funds. Mr. Perlowski is also a board member of the BlackRock Equity-Bond Complex and the BlackRock Equity-Liquidity Complex, and Ms. Novick is a board member of the BlackRock Equity-Liquidity Complex. Interested Directors serve until their resignation, removal or death, or until December 31 of the year in which they turn 72. The maximum age limitation may be waived as to any Director by action of a majority of the Directors upon a finding of good cause thereof.

 

                
56    ANNUAL REPORT    APRIL 30, 2016   


Officers and Directors (concluded)     

 

 

Name, Address1
and Year of Birth
  Position(s)
Held with
the Funds
  Length of
Time Served
as an Officer
  Principal Occupation(s) During Past Five Years
Officers2               

John M. Perlowski

 

1964

  Director, President and Chief Executive Officer   Since 2014 (Director); Since 2011 (President and Chief Executive Officer)   See Principal Occupations During Past Five Years under Interested Directors for details.

Jonathan Diorio

 

1980

  Vice President   Since
2015
  Managing Director of BlackRock since 2015; Director of BlackRock, Inc. from 2011 to 2015; Director of Deutsche Asset & Wealth Management from 2009 to 2011.

Neal J. Andrews

 

1966

  Chief Financial Officer   Since
2007
  Managing Director of BlackRock since 2006; Senior Vice President and Line of Business Head of Fund Accounting and Administration at PNC Global Investment Servicing (U.S.) Inc. from 1992 to 2006.

Jay M. Fife

 

1970

  Treasurer   Since
2007
  Managing Director of BlackRock since 2007; Director of BlackRock in 2006; Assistant Treasurer of the MLIM and Fund Asset Management, L.P. advised funds from 2005 to 2006; Director of MLIM Fund Services Group from 2001 to 2006.

Charles Park

 

1967

  Chief Compliance Officer   Since
2014
  Anti-Money Laundering Compliance Officer for the BlackRock-advised Funds in the Equity-Bond Complex, the Equity-Liquidity Complex and the Closed-End Complex from 2014 to 2015; Chief Compliance Officer of BlackRock Advisors, LLC and the BlackRock-advised Funds in the Equity-Bond Complex, the Equity-Liquidity Complex and the Closed-End Complex since 2014; Principal of and Chief Compliance Officer for iShares® Delaware Trust Sponsor LLC since 2012 and BlackRock Fund Advisors (“BFA”) since 2006; Chief Compliance Officer for the BFA-advised iShares exchange traded funds since 2006; Chief Compliance Officer for BlackRock Asset Management International Inc. since 2012.

Janey Ahn

 

1975

  Secretary   Since
2012
  Director of BlackRock since 2009; Vice President of BlackRock from 2008 to 2009; Assistant Secretary of the funds in the Closed-End Complex from 2008 to 2012.
 

1    The address of each Director and Officer is c/o BlackRock, Inc., 55 East 52nd Street, New York, NY 10055.

 

2    Officers of the Funds serve at the pleasure of the Board.

  Further information about the Corporation’s Officers and Directors is available in the Funds’ Statement of Additional Information, which can be obtained without charge by calling (800) 441-7762.

 

Effective December 31, 2015, Kathleen F. Feldstein and James T. Flynn retired as Directors of the Funds.

Effective March 1, 2016, Catherine A. Lynch was appointed to serve as a Director and a Member of the Audit Committee of the Funds.

Effective April 1, 2016, Cynthia L. Egan was appointed to serve as a Director of the Funds.

 

         

Investment Advisor

BlackRock Advisors, LLC

Wilmington, DE 19809

 

Transfer Agent

Computershare Trust

Company, N.A.

Canton, MA 02021

 

VRDP Remarketing Agents

Merrill Lynch, Pierce, Fenner

& Smith Incorporated1

New York, NY 10036

 

Barclays Capital Inc.2

New York, NY 10019

 

Accounting Agent and Custodian

State Street Bank and

Trust Company

Boston, MA 02110

 

Address of the Funds

100 Bellevue Parkway

Wilmington, DE 19809

VRDP Tender and

Paying Agent and

VMTP Redemption

and Paying Agent

The Bank of New York Mellon

New York, NY 10289

 

VRDP Liquidity Providers

Bank of America, N.A.1

New York, NY 10036

 

Barclays Bank PLC2

New York, NY 10019

 

Independent Registered

Public Accounting Firm

Deloitte & Touche LLP

Boston, MA 02116

 

Legal Counsel

Skadden, Arps, Slate,

Meagher & Flom LLP

Boston, MA 02116

 

 

 

  1   

For MYD.

 

  2   

For MQY.

 

                
   ANNUAL REPORT    APRIL 30, 2016    57


Additional Information     

 

Fund Certification      

Certain Funds are listed for trading on the NYSE and have filed with the NYSE their annual chief executive officer certification regarding compliance with the NYSE’s listing standards. The Funds filed with the SEC the certification of its chief executive officer and chief financial officer required by section 302 of the Sarbanes-Oxley Act.

 

Dividend Policy      

Each Fund’s dividend policy is to distribute all or a portion of its net investment income to its shareholders on a monthly basis. In order to provide shareholders with a more stable level of distributions, the Funds may at times pay out less than the entire amount of net investment income earned in any particular month and may at times in any particular month pay out such accumulated but undistributed income in addition to net investment income earned in that month. As a result, the distributions paid by the Funds for any particular month may be more or less than the amount of net investment income earned by the Funds during such month. The Funds’ current accumulated but undistributed net investment income, if any, is disclosed in the Statements of Assets and Liabilities, which comprises part of the financial information included in this report.

 

General Information      

The Funds do not make available copies of their Statements of Additional Information because the Funds’ shares are not continuously offered, which means that the Statement of Additional Information of each Fund has not been updated after completion of the respective Fund’s offerings and the information contained in each Fund’s Statement of Additional Information may have become outdated.

During the period, there were no material changes in the Funds’ investment objectives or policies or to the Funds’ charters or by-laws that would delay or prevent a change of control of the Funds that were not approved by the shareholders or in the principal risk factors associated with investment in the Funds. There have been no changes in the persons who are primarily responsible for the day-to-day management of the Funds’ portfolio.

Quarterly performance, semi-annual and annual reports, current net asset value and other information regarding the Funds may be found on BlackRock’s website, which can be accessed at http://www.blackrock.com. This reference to BlackRock’s website is intended to allow investors public access to information regarding the Funds and does not, and is not intended to, incorporate BlackRock’s website in this report.

Electronic Delivery

Shareholders can sign up for e-mail notifications of quarterly statements, annual and semi-annual shareholder reports by enrolling in the electronic delivery program. Electronic copies of shareholder reports are available on BlackRock’s website.

To enroll in electronic delivery:

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

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

Householding

The Funds will mail only one copy of shareholder documents, including annual and semi-annual reports and proxy statements, to shareholders with multiple accounts at the same address. This practice is commonly called “householding” and is intended to reduce expenses and eliminate duplicate mailings of shareholder documents. Mailings of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please call the Funds at (800) 882-0052.

Availability of Quarterly Schedule of Investments

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

 

                
58    ANNUAL REPORT    APRIL 30, 2016   


Additional Information (concluded)     

 

D.C. Information on the operation of the Public Reference Room or how to access documents on the SEC’s website without charge may be obtained by calling (800) SEC-0330. The Funds’ Forms N-Q may also be obtained upon request and without charge by calling (800) 882-0052.

Availability of Proxy Voting Policies and Procedures

A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available upon request and without charge (1) by calling (800) 882-0052; (2) at http://www.blackrock.com; and (3) on the SEC’s website at http://www.sec.gov.

Availability of Proxy Voting Record

Information about how the Funds voted proxies relating to securities held in the Funds’ portfolios during the most recent 12-month period ended June 30 is available upon request and without charge (1) at http://www.blackrock.com; or by calling (800) 882-0052; and (2) on the SEC’s website at http://www.sec.gov.

Availability of Fund Updates

BlackRock will update performance and certain other data for the Funds on a monthly basis on its website in the “Closed-end Funds” section of http://www.blackrock.com as well as certain other material information as necessary from time to time. Investors and others are advised to check the website for updated performance information and the release of other material information about the Funds. This reference to BlackRock’s website is intended to allow investors public access to information regarding the Funds and does not, and is not intended to, incorporate BlackRock’s website in this report.

 

BlackRock Privacy Principles      

BlackRock is committed to maintaining the privacy of its current and former fund investors and individual clients (collectively, “Clients”) and to safeguarding their non-public personal information. The following information is provided to help you understand what personal information BlackRock collects, how we protect that information and why in certain cases we share such information with select parties.

If you are located in a jurisdiction where specific laws, rules or regulations require BlackRock to provide you with additional or different privacy-related rights beyond what is set forth below, then BlackRock will comply with those specific laws, rules or regulations.

BlackRock obtains or verifies personal non-public information from and about you from different sources, including the following: (i) information we receive from you or, if applicable, your financial intermediary, on applications, forms or other documents; (ii) information about your transactions with us, our affiliates, or others; (iii) information we receive from a consumer reporting agency; and (iv) from visits to our websites.

BlackRock does not sell or disclose to non-affiliated third parties any non public personal information about its Clients, except as permitted by law or as is necessary to respond to regulatory requests or to service Client accounts. These non-affiliated third parties are required to protect the confidentiality and security of this information and to use it only for its intended purpose.

We may share information with our affiliates to service your account or to provide you with information about other BlackRock products or services that may be of interest to you. In addition, BlackRock restricts access to non-public personal information about its Clients to those BlackRock employees with a legitimate business need for the information. BlackRock maintains physical, electronic and procedural safeguards that are designed to protect the non-public personal information of its Clients, including procedures relating to the proper storage and disposal of such information.

 

                
   ANNUAL REPORT    APRIL 30, 2016    59


This report is intended for current holders. It is not a prospectus. Past performance results shown in this report should not be considered a representation of future performance. The Funds have leveraged their Common Shares, which creates risks for Common Shareholders, including the likelihood of greater volatility of net asset value and market price of the Common Shares, and the risk that fluctuations in short-term interest rates may reduce the Common Shares’ yield. Statements and other information herein are as dated and are subject to change.

 

LOGO

 

MYQII-4/16-AR    LOGO


Item 2 – Code of Ethics – The registrant (or the “Fund”) has adopted a code of ethics, as of the end of the period covered by this report, applicable to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. During the period covered by this report, the code of ethics was amended to update certain information and to make other non-material changes. During the period covered by this report, there have been no waivers granted under the code of ethics. The registrant undertakes to provide a copy of the code of ethics to any person upon request, without charge, by calling 1-800-882-0052, option 4.

 

Item 3 – Audit Committee Financial Expert – The registrant’s board of directors (the “board of directors”), has determined that (i) the registrant has the following audit committee financial experts serving on its audit committee and (ii) each audit committee financial expert is independent:

Michael Castellano

Frank J. Fabozzi

W. Carl Kester

Catherine A. Lynch

Karen P. Robards

The registrant’s board of directors has determined that W. Carl Kester and Karen P. Robards qualify as financial experts pursuant to Item 3(c)(4) of Form N-CSR.

Prof. Kester has a thorough understanding of generally accepted accounting principles, financial statements and internal control over financial reporting as well as audit committee functions. Prof. Kester has been involved in providing valuation and other financial consulting services to corporate clients since 1978. Prof. Kester’s financial consulting services present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the registrant’s financial statements.

Ms. Robards has a thorough understanding of generally accepted accounting principles, financial statements and internal control over financial reporting as well as audit committee functions. Ms. Robards has been President of Robards & Company, a financial advisory firm, since 1987. Ms. Robards was formerly an investment banker for more than 10 years where she was responsible for evaluating and assessing the performance of companies based on their financial results. Ms. Robards has over 30 years of experience analyzing financial statements. She also is a member of the audit committee of one publicly held company and a non-profit organization.

Under applicable securities laws, a person determined to be an audit committee financial expert will not be deemed an “expert” for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and board of directors in the absence of such designation or identification. The designation or identification of a person as an audit committee financial expert does not affect the duties, obligations, or liability of any other member of the audit committee or board of directors.

 

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Item 4 – Principal Accountant Fees and Services

The following table presents fees billed by Deloitte & Touche LLP (“D&T”) in each of the last two fiscal years for the services rendered to the Fund:

 

         
      (a) Audit Fees    (b) Audit-Related Fees1    (c) Tax Fees2    (d) All Other Fees3
Entity Name    Current
Fiscal Year
End
   Previous
Fiscal Year
End
   Current
Fiscal Year
End
   Previous
Fiscal Year
End
   Current
Fiscal Year
End
   Previous
Fiscal Year
End
   Current
Fiscal Year
End
   Previous
Fiscal Year
End
BlackRock MuniYield Quality Fund II, Inc.    $37,363    $37,363    $0    $0    $13,362    $13,362    $0    $0

The following table presents fees billed by D&T that were required to be approved by the registrant’s audit committee (the “Committee”) for services that relate directly to the operations or financial reporting of the Fund and that are rendered on behalf of BlackRock Advisors, LLC (“Investment Adviser” or “BlackRock”) and entities controlling, controlled by, or under common control with BlackRock (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) that provide ongoing services to the Fund (“Fund Service Providers”):

 

      Current Fiscal Year End    Previous Fiscal Year End

(b) Audit-Related Fees1

   $0    $0

(c) Tax Fees2

   $0    $0

(d) All Other Fees3

   $2,129,000    $2,391,000

1 The nature of the services includes assurance and related services reasonably related to the performance of the audit of financial statements not included in Audit Fees.

2 The nature of the services includes tax compliance, tax advice and tax planning.

3 Aggregate fees borne by BlackRock in connection with the review of compliance procedures and attestation thereto performed by D&T with respect to all of the registered closed-end funds and some of the registered open-end funds advised by BlackRock.

(e)(1) Audit Committee Pre-Approval Policies and Procedures:

The Committee has adopted policies and procedures with regard to the pre-approval of services. Audit, audit-related and tax compliance services provided to the registrant on an annual basis require specific pre-approval by the Committee. The Committee also must approve other non-audit services provided to the registrant and those non-audit services provided to the Investment Adviser and Fund Service Providers that relate directly to the operations and the financial reporting of the registrant. Certain of these non-audit services that the Committee believes are (a) consistent with the SEC’s auditor independence rules and (b) routine and recurring services that will not impair the independence of the independent accountants may be approved by the Committee without consideration on a specific case-by-case basis (“general pre-approval”). The term of any general pre-approval is 12 months from the date of the pre-approval, unless the Committee provides for a different period. Tax or other non-audit services provided to the registrant which have a direct impact on the operations or financial reporting of the registrant will only be deemed pre-approved provided that any individual project does not exceed $10,000 attributable to the registrant or $50,000 per project. For this purpose, multiple projects will be aggregated to determine if they exceed the previously mentioned cost levels.

Any proposed services exceeding the pre-approved cost levels will require specific pre-approval by the Committee, as will any other services not subject to general pre-approval (e.g.,

 

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unanticipated but permissible services). The Committee is informed of each service approved subject to general pre-approval at the next regularly scheduled in-person board meeting. At this meeting, an analysis of such services is presented to the Committee for ratification. The Committee may delegate to the Committee Chairman the authority to approve the provision of and fees for any specific engagement of permitted non-audit services, including services exceeding pre-approved cost levels.

(e)(2) None of the services described in each of Items 4(b) through (d) were approved by the Committee pursuant to the de minimis exception in paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

(f) Not Applicable

(g) The aggregate non-audit fees paid to the accountant for services rendered by the accountant to the registrant, the Investment Adviser and the Fund Service Providers were:

 

            Entity Name   

Current Fiscal

Year End

  

Previous Fiscal

Year End

   BlackRock MuniYield Quality Fund II, Inc.    $13,362    $13,362

Additionally, SSAE 16 Review (Formerly, SAS No. 70) fees for the current and previous fiscal years of $2,129,000 and $2,391,000, respectively, were billed by D&T to the Investment Adviser.

(h) The Committee has considered and determined that the provision of non-audit services that were rendered to the Investment Adviser, and the Fund Service Providers that were not pre-approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.

 

Item 5 – Audit Committee of Listed Registrants

 

  (a) The following individuals are members of the registrant’s separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934
(15 U.S.C. 78c(a)(58)(A)):

Michael Castellano

Frank J. Fabozzi

W. Carl Kester

Catherine A. Lynch

Karen P. Robards

 

  (b) Not Applicable

 

Item 6 – Investments

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

 

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

 

Item 7 – Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies – The board of directors has delegated the voting of proxies for the Fund’s portfolio securities to the Investment Adviser pursuant to the Investment Adviser’s proxy voting guidelines. Under these guidelines, the Investment Adviser will vote proxies related to Fund securities in the best interests of the Fund and its stockholders. From time to time, a vote may present a conflict between the interests of the Fund’s stockholders, on the one hand, and those of the Investment Adviser, or any affiliated person of the Fund or the Investment Adviser, on the other. In such event, provided that the Investment Adviser’s Equity Investment Policy Oversight Committee, or a sub-committee thereof (the “Oversight Committee”) is aware of the real or potential conflict or material non-routine matter and if the Oversight Committee does not reasonably believe it is able to follow its general voting guidelines (or if the particular proxy matter is not addressed in the guidelines) and vote impartially, the Oversight Committee may retain an independent fiduciary to advise the Oversight Committee on how to vote or to cast votes on behalf of the Investment Adviser’s clients. If the Investment Adviser determines not to retain an independent fiduciary, or does not desire to follow the advice of such independent fiduciary, the Oversight Committee shall determine how to vote the proxy after consulting with the Investment Adviser’s Portfolio Management Group and/or the Investment Adviser’s Legal and Compliance Department and concluding that the vote cast is in its client’s best interest notwithstanding the conflict. A copy of the Fund’s Proxy Voting Policy and Procedures are attached as Exhibit 99.PROXYPOL. Information on how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge, (i) at www.blackrock.com and (ii) on the SEC’s website at http://www.sec.gov.

 

Item 8 – Portfolio Managers of Closed-End Management Investment Companies – as of April 30, 2016.

 

  (a)(1) The registrant is managed by a team of investment professionals comprised of Michael Kalinoski, Director at BlackRock, Theodore R. Jaeckel, Jr., CFA, Managing Director at BlackRock and Walter O’Connor, Managing Director at BlackRock. Each is a member of BlackRock’s municipal tax-exempt management group. Each is jointly responsible for the day-to-day management of the registrant’s portfolio, which includes setting the registrant’s overall investment strategy, overseeing the management of the registrant and/or selection of its investments. Messrs. Kalinoski, Jaeckel and O’Connor have been members of the registrant’s portfolio management team since 2000, 2006 and 2006, respectively.

 

  Portfolio Manager    Biography     
  Michael Kalinoski    Director of BlackRock since 2006; Director of Merrill Lynch Investment Managers, L.P. (“MLIM”) from 1999 to 2006.   
  Theodore R. Jaeckel, Jr.    Managing Director of BlackRock since 2006; Managing Director of MLIM from 2005 to 2006; Director of MLIM from 1997 to 2005.   
  Walter O’Connor    Managing Director of BlackRock since 2006; Managing Director of MLIM from 2003 to 2006; Director of MLIM from 1998 to 2003.   

 

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  (a)(2) As of April 30, 2016:

 

     

(ii) Number of Other Accounts Managed

and Assets by Account Type

  

(iii) Number of Other Accounts and

Assets for Which Advisory Fee is

Performance-Based

(i) Name of

Portfolio Manager

  

Other

Registered

Investment

Companies

  

Other Pooled

Investment

Vehicles

  

Other

Accounts

  

Other

Registered

Investment

Companies

  

Other Pooled

Investment

Vehicles

  

Other

Accounts

Michael Kalinoski    11    0    0    0    0    0
     $11.95 Billion    $0    $0    $0    $0    $0
Theodore R. Jaeckel, Jr.    61    0    0    0    0    0
     $32.94 Billion    $0    $0    $0    $0    $0
Walter O’Connor    57    0    0    0    0    0
     $24.93 Billion    $0    $0    $0    $0    $0

 

  (iv) Potential Material Conflicts of Interest

BlackRock has built a professional working environment, firm-wide compliance culture and compliance procedures and systems designed to protect against potential incentives that may favor one account over another. BlackRock has adopted policies and procedures that address the allocation of investment opportunities, execution of portfolio transactions, personal trading by employees and other potential conflicts of interest that are designed to ensure that all client accounts are treated equitably over time. Nevertheless, BlackRock furnishes investment management and advisory services to numerous clients in addition to the Fund, and BlackRock may, consistent with applicable law, make investment recommendations to other clients or accounts (including accounts which are hedge funds or have performance or higher fees paid to BlackRock, or in which portfolio managers have a personal interest in the receipt of such fees), which may be the same as or different from those made to the Fund. In addition, BlackRock, Inc., its affiliates and significant shareholders and any officer, director, shareholder or employee may or may not have an interest in the securities whose purchase and sale BlackRock recommends to the Fund. BlackRock, Inc. or any of its affiliates or significant shareholders, or any officer, director, shareholder, employee or any member of their families may take different actions than those recommended to the Fund by BlackRock with respect to the same securities. Moreover, BlackRock may refrain from rendering any advice or services concerning securities of companies of which any of BlackRock, Inc.’s (or its affiliates’ or significant shareholders’) officers, directors or employees are directors or officers, or companies as to which BlackRock, Inc. or any of its affiliates or significant shareholders or the officers, directors and employees of any of them has any substantial economic interest or possesses material non-public information. Certain portfolio managers also may manage accounts whose investment strategies may at times be opposed to the strategy utilized for a fund. It should also be noted that a portfolio manager may be managing certain hedge fund and/or long only accounts, or may be part of a team managing certain hedge fund and/or long only accounts, subject to incentive fees. Such portfolio managers may therefore be entitled to receive a portion of any incentive fees earned on such accounts. Currently, the portfolio managers of this fund are not entitled to receive a portion of incentive fees of other accounts.

As a fiduciary, BlackRock owes a duty of loyalty to its clients and must treat each client fairly. When BlackRock purchases or sells securities for more than one account, the trades must be allocated in a manner consistent with its fiduciary duties. BlackRock attempts to allocate investments in a fair and equitable manner among client accounts, with no account receiving

 

6


preferential treatment. To this end, BlackRock, Inc. has adopted policies that are intended to ensure reasonable efficiency in client transactions and provide BlackRock with sufficient flexibility to allocate investments in a manner that is consistent with the particular investment discipline and client base, as appropriate.

 

  (a)(3) As of April 30, 2016:

Portfolio Manager Compensation Overview

The discussion below describes the portfolio managers’ compensation as of April 30, 2016.

BlackRock’s financial arrangements with its portfolio managers, its competitive compensation and its career path emphasis at all levels reflect the value senior management places on key resources. Compensation may include a variety of components and may vary from year to year based on a number of factors. The principal components of compensation include a base salary, a performance-based discretionary bonus, participation in various benefits programs and one or more of the incentive compensation programs established by BlackRock.

Base compensation. Generally, portfolio managers receive base compensation based on their position with the firm.

Discretionary Incentive Compensation

Discretionary incentive compensation is a function of several components: the performance of BlackRock, Inc., the performance of the portfolio manager’s group within BlackRock, the investment performance, including risk-adjusted returns, of the firm’s assets under management or supervision by that portfolio manager relative to predetermined benchmarks, and the individual’s performance and contribution to the overall performance of these portfolios and BlackRock. In most cases, these benchmarks are the same as the benchmark or benchmarks against which the performance of the Funds or other accounts managed by the portfolio managers are measured. Among other things, BlackRock’s Chief Investment Officers make a subjective determination with respect to each portfolio manager’s compensation based on the performance of the Funds and other accounts managed by each portfolio manager relative to the various benchmarks. Performance of fixed income funds is measured on a pre-tax and/or after-tax basis over various time periods including 1-, 3- and 5- year periods, as applicable. With respect to these portfolio managers, such benchmarks for the Fund and other accounts are: a combination of market-based indices (e.g., Standard & Poor’s Municipal Bond Index), certain customized indices and certain fund industry peer groups.

Distribution of Discretionary Incentive Compensation. Discretionary incentive compensation is distributed to portfolio managers in a combination of cash and BlackRock, Inc. restricted stock units which vest ratably over a number of years. For some portfolio managers, discretionary incentive compensation is also distributed in deferred cash awards that notionally track the returns of select BlackRock investment products they manage and that vest ratably over a number of years. The BlackRock, Inc. restricted stock units, upon vesting, will be settled in BlackRock, Inc. common stock. Typically, the cash portion of the discretionary incentive compensation, when combined with base salary, represents more than 60% of total compensation for

 

7


the portfolio managers. Paying a portion of discretionary incentive compensation in BlackRock, Inc. stock puts compensation earned by a portfolio manager for a given year “at risk” based on BlackRock’s ability to sustain and improve its performance over future periods. Providing a portion of discretionary incentive compensation in deferred cash awards that notionally track the BlackRock investment products they manage provides direct alignment with investment product results.

Long-Term Incentive Plan Awards — From time to time long-term incentive equity awards are granted to certain key employees to aid in retention, align their interests with long-term shareholder interests and motivate performance. Equity awards are generally granted in the form of BlackRock, Inc. restricted stock units that, once vested, settle in BlackRock, Inc. common stock. The portfolio managers of this Fund have unvested long-term incentive awards.

Deferred Compensation Program — A portion of the compensation paid to eligible United States-based BlackRock employees may be voluntarily deferred at their election for defined periods of time into an account that tracks the performance of certain of the firm’s investment products. Any portfolio manager who is either a managing director or director at BlackRock with compensation above a specified threshold is eligible to participate in the deferred compensation program.

Other compensation benefits. In addition to base salary and discretionary incentive compensation, portfolio managers may be eligible to receive or participate in one or more of the following:

Incentive Savings Plans — BlackRock, Inc. has created a variety of incentive savings plans in which BlackRock, Inc. employees are eligible to participate, including a 401(k) plan, the BlackRock Retirement Savings Plan (RSP), and the BlackRock Employee Stock Purchase Plan (ESPP). The employer contribution components of the RSP include a company match equal to 50% of the first 8% of eligible pay contributed to the plan capped at $5,000 per year, and a company retirement contribution equal to 3-5% of eligible compensation up to the Internal Revenue Service limit ($265,000 for 2016). The RSP offers a range of investment options, including registered investment companies and collective investment funds managed by the firm. BlackRock, Inc. contributions follow the investment direction set by participants for their own contributions or, absent participant investment direction, are invested into a target date fund that corresponds to, or is closest to, the year in which the participant attains age 65. The ESPP allows for investment in BlackRock, Inc. common stock at a 5% discount on the fair market value of the stock on the purchase date. Annual participation in the ESPP is limited to the purchase of 1,000 shares of common stock or a dollar value of $25,000 based on its fair market value on the purchase date. All of the eligible portfolio managers are eligible to participate in these plans.

(a)(4) Beneficial Ownership of Securities – As of April 30, 2016.

 

Portfolio Manager   

Dollar Range of Equity Securities

of the Fund Beneficially Owned

Michael Kalinoski

   $10,001 - $50,000

Theodore R. Jaeckel, Jr.

   None

Walter O’Connor

   None

 

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(b) Not Applicable

 

Item 9 – Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers – Not Applicable due to no such purchases during the period covered by this report.

 

Item 10 – Submission of Matters to a Vote of Security Holders – There have been no material changes to these procedures.

 

Item 11 – Controls and Procedures

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

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

 

Item 12 – Exhibits attached hereto

(a)(1) – Code of Ethics – See Item 2

(a)(2) – Certifications – Attached hereto

(a)(3) – Not Applicable

(b) – Certifications – Attached hereto

 

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

BlackRock MuniYield Quality Fund II, Inc.

 

By:   

/s/ John M. Perlowski

     
   John M. Perlowski      
   Chief Executive Officer (principal executive officer) of   
   BlackRock MuniYield Quality Fund II, Inc.   

Date: July 1, 2016

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

 

By:   

/s/ John M. Perlowski

     
   John M. Perlowski      
   Chief Executive Officer (principal executive officer) of   
   BlackRock MuniYield Quality Fund II, Inc.   

Date: July 1, 2016

 

By:   

/s/ Neal J. Andrews

     
   Neal J. Andrews      
   Chief Financial Officer (principal financial officer) of   
   BlackRock MuniYield Quality Fund II, Inc.   

Date: July 1, 2016

 

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