BLACKROCK MUNIYIELD NEW YORK QUALITY FUND, 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: 811-06500

Name of Fund:  BlackRock MuniYield New York Quality Fund, Inc. (MYN)

Fund Address:   100 Bellevue Parkway, Wilmington, DE 19809

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

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

Date of fiscal year end: 07/31/2019

Date of reporting period: 01/31/2019


Item 1 – Report to Stockholders


JANUARY 31, 2019

 

SEMI-ANNUAL REPORT (UNAUDITED)

  LOGO

 

BlackRock MuniHoldings Quality Fund II, Inc. (MUE)

BlackRock MuniYield California Quality Fund, Inc. (MCA)

BlackRock MuniYield New York Quality Fund, Inc. (MYN)

BlackRock MuniYield Quality Fund III, Inc. (MYI)

 

 

Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of each Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from BlackRock or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

You may elect to receive all future reports in paper free of charge. If you hold accounts directly with BlackRock, you can call Computershare at (800) 699-1236 to request that you continue receiving paper copies of your shareholder reports. If you hold accounts through a financial intermediary, you can follow the instructions included with this disclosure, if applicable, or contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. Please note that not all financial intermediaries may offer this service. Your election to receive reports in paper will apply to all funds advised by BlackRock Advisors, LLC or its affiliates, or all funds held with your financial intermediary, as applicable.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive electronic delivery of shareholder reports and other communications by contacting your financial intermediary, if you hold accounts through a financial intermediary. Please note that not all financial intermediaries may offer this service.

 

Not FDIC Insured • May Lose Value • No Bank Guarantee


The Markets in Review

Dear Shareholder,

In the 12 months ended January 31, 2019, concerns about a variety of political risks and a modest slowdown in global growth worked against the equity market, while the bond market delivered modest positive returns. Though the market’s appetite for risk remained healthy for most of the reporting period, risk-taking declined sharply later in the reporting period. As a result, bonds held their value better than stocks, which posted negative returns across the globe. Shorter-term, higher-quality securities led the bond market, and U.S. equities outperformed most international stock markets.

Volatility rose in emerging market stocks, as the rising U.S. dollar and higher interest rates in the U.S. disrupted economic growth abroad. U.S.-China trade relations and debt concerns adversely affected the Chinese stock market, while Turkey and Argentina became embroiled in currency crises, largely due to hyperinflation in both countries. An economic slowdown in Europe also led to negative performance for European equities.

Volatility in the U.S. equity market spiked in October, as a wide range of risks were brought to bear on markets, ranging from rising interest rates and slowing global growth to heightened trade tensions and political turmoil in several countries, including the United States. These risks manifested in a broad based sell-off in December, leading to the worst December performance on record since 1931.

By comparison, fixed income securities delivered modest positive returns with relatively low volatility. In fixed income markets, short-term U.S. Treasury interest rates rose the fastest, while longer-term rates were relatively unchanged. This led to positive returns for U.S. Treasuries and a substantial flattening of the yield curve. Although the credit fundamentals in corporate markets remained relatively solid, investment-grade and high-yield bonds trailed U.S. Treasuries.

The U.S. Federal Reserve (the “Fed”) increased short-term interest rates four times during the reporting period. The Fed also continued to reduce its balance sheet, gradually reversing the unprecedented stimulus measures it enacted after the financial crisis. By our estimation, the Fed’s neutral interest rate (the theoretical rate that is neither stimulative nor restrictive to the economy) is approximately 3.5%. The Fed funds rate is currently at 2.5%, which is stimulative to the economy. At its latest meeting in late January, the Fed left interest rates unchanged and signaled a slower pace of rate hikes in response to the global economic slowdown. Relatively low inflation gives the Fed room to maintain support for the economy until the economic data builds the case for changing interest rates.

Although fears of recession drove equity volatility higher at the end of 2018, we continue to believe the probability of recession in 2019 remains relatively low. Economic growth and global earnings are likely to slow somewhat in 2019 — the tax cut stimulus will be less pronounced, and the Fed’s rate hikes in 2018 will gain traction in 2019. Trade frictions look more baked into asset prices than a year ago, but markets may be overlooking European political risks. Consequently, we are cautious on European equities, as European unity remains tenuous with a history of flare-ups. We continue to prefer to take risk in U.S. and emerging market equities. Within U.S. equities, we believe that companies with high-quality earnings and strong balance sheets offer the most attractive risk/reward trade-off. We also favor short-term bonds over long-term bonds because they offer nearly equivalent yields with far lower volatility.

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

Sincerely,

 

LOGO

Rob Kapito

President, BlackRock Advisors, LLC

LOGO

Rob Kapito

President, BlackRock Advisors, LLC

 

Total Returns as of January 31, 2019
     6-month   12-month

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

  (3.00)%   (2.31)%

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

  (9.62)   (3.52)

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

  (7.80)   (12.51)

Emerging market equities
(MSCI Emerging Markets Index)

  (2.60)   (14.24)

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

  1.10   1.95

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

  4.20   3.21

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

  2.71   2.25

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

  1.86   3.08

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

  1.07   1.73
Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.
 

 

 

2    THIS PAGE IS NOT PART OF YOUR FUND REPORT


Table of Contents

 

      Page  

The Markets in Review

     2  

Semi-Annual Report:

  

Municipal Market Overview

     4  

The Benefits and Risks of Leveraging

     5  

Derivative Financial Instruments

     5  

Fund Summaries

     6  

Financial Statements:

  

Schedules of Investments

     14  

Statements of Assets and Liabilities

     39  

Statements of Operations

     40  

Statements of Changes in Net Assets

     41  

Statements of Cash Flows

     45  

Financial Highlights

     46  

Notes to Financial Statements

     50  

Director and Officer Information

     60  

Additional Information

     61  

Glossary of Terms Used in this Report

     63  

 

 

          3  


Municipal Market Overview  For the Reporting Period Ended January 31, 2019

 

Municipal Market Conditions

Municipal bonds experienced positive performance during the period, despite challenged total returns during most of 2018 as interest rates moved higher on the back of continued Fed policy normalization, fiscal stimulus, strong economic growth, and increased U.S. Treasury issuance. Performance turned particularly strong late in the year, with interest rates rallying as the Fed began to indicate a pivot from forecast based to data driven policy and the potential for a slower pace of future rate hikes. During the period, demand for the asset class remained firm, although displayed some bouts of volatility. Broadly, investors favored the tax-exempt income, diversification, quality, and value of municipal bonds given that tax reform ultimately lowered the top individual tax rate just 2.6% while eliminating deductions. During the 12 months ended January 31, 2019, municipal bond funds experienced net inflows of approximately $2.7 billion (based on data from the Investment Company Institute).

 

 
For the same 12-month period, total new issuance underwhelmed from a historical perspective at $315 billion (below the $394 billion issued in the prior 12-month period), a direct result of the elimination of advanced refundings through the 2017 Tax Cuts and Jobs Act. This shift transitioned the market from an existing net positive supply environment to a much more favorable net negative supply environment in which reinvestment income (coupons, calls, and maturities) largely outstripped gross issuance and provided a powerful technical tailwind.   S&P Municipal Bond Index
  Total Returns as of January 31, 2019
    6 months: 1.86%
  12 months: 3.08%

A Closer Look at Yields

 

LOGO

From January 31, 2018 to January 31, 2019, yields on AAA-rated 30-year municipal bonds increased by 11 basis points (“bps”) from 2.91% to 3.02%, while 10-year rates decreased by 18 bps from 2.35% to 2.17% and 5-year rates decreased by 7 bps from 1.83% to 1.76% (as measured by Thomson Municipal Market Data). The municipal yield curve was nearly unchanged over the 12-month period with the spread between 2- and 30-year maturities bear steepening just 1 bp, which is significant given that the corresponding U.S. Treasury curve bear flattened 26 bps. (Bear steepening is the widening of the yield curve caused by long-term rates increasing at a faster rate than short-term rates. Bear flattened is a yield-rate environment in which short-term interest rates are increasing at a faster rate than long-term interest rates.) The municipal yield curve is now more than 2.5 times steeper than the U.S. Treasury curve.

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

Financial Conditions of Municipal Issuers

The majority of municipal credits remain strong, despite well-publicized problems among a few issuers. Four of the five states with the largest amount of debt outstanding — California, New York, Texas and Florida — continue to exhibit improved credit fundamentals. However, several states with the largest unfunded pension liabilities are faced with elevated borrowing costs and difficult budgetary decisions. Across the country on the local level, property values support credit stability. Standard & Poor’s recent decision to remove its “negative” outlook on New Mexico underscores the improvement in state finances as it was the only remaining state with the designation. Revenue bonds continue to drive performance as investors continue to seek higher yield bonds in the tobacco sector. BlackRock maintains the view that municipal bond defaults will remain minimal and in the periphery while the overall market is fundamentally sound. We continue to advocate careful credit research and believe that a thoughtful approach to structure and security selection remains imperative amid uncertainty in a modestly improving economic environment.

The opinions expressed are those of BlackRock as of January 31, 2019, and are subject to change at any time due to changes in market or economic conditions. The comments should not be construed as a recommendation of any individual holdings or market sectors. Investing involves risk including loss of principal. Bond values fluctuate in price so the value of your investment can go down depending on market conditions. Fixed income risks include interest-rate and credit risk. Typically, when interest rates rise, there is a corresponding decline in bond values. Credit risk refers to the possibility that the bond issuer will not be able to make principal and interest payments. There may be less information on the financial condition of municipal issuers than for public corporations. The market for municipal bonds may be less liquid than for taxable bonds. Some investors may be subject to Alternative Minimum Tax (“AMT”). Capital gains distributions, if any, are taxable.

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

 

 

4    2019 BLACKROCK SEMI-ANNUAL REPORT TO  SHAREHOLDERS


The Benefits and Risks of Leveraging

 

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

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

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

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

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

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

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

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

Derivative Financial Instruments

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

 

 

THE BENEFITS AND RISKS OF LEVERAGING / DERIVATIVE FINANCIAL INSTRUMENTS      5  


Fund Summary  as of January 31, 2019    BlackRock MuniHoldings Quality Fund II, Inc.

 

Fund Overview

BlackRock MuniHoldings Quality Fund II, Inc.’s (MUE) (the “Fund”) investment objective is to provide shareholders with current income exempt from U.S. federal income taxes. The Fund seeks to achieve its investment objective by investing primarily in long-term, investment grade municipal obligations exempt from U.S. federal income taxes (except that the interest may be subject to the U.S. federal alternative minimum tax). The municipal obligations in which the Fund primarily invests are either rated investment grade quality, or are considered by the Fund’s investment adviser to be of comparable quality, at the time of investment. Under normal market conditions, the Fund invests at least 80% of its assets in municipal obligations with remaining maturities of one year or more 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”)

  MUE

Initial Offering Date

  February 26, 1999

Yield on Closing Market Price as of January 31, 2019 ($12.01)(a)

  4.90%

Tax Equivalent Yield(b)

  8.28%

Current Monthly Distribution per Common Share(c)

  $0.0490

Current Annualized Distribution per Common Share(c)

  $0.5880

Economic Leverage as of January 31, 2019(d)

  38%

 

  (a)

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

 
  (b)

Tax equivalent yield assumes the maximum marginal U.S. federal tax rate of 40.80%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields.

 
  (c) 

The distribution rate is not constant and is subject to change. A portion of the distribution may be deemed a return of capital or net realized gain.

 
  (d) 

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

 

Performance

Returns for the six months ended January 31, 2019 were as follows:

 

    Returns Based On  
     Market Price      NAV  

MUE(a)(b)

    (0.24 )%       1.00

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

    2.46        0.94  

 

  (a) 

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 
  (b) 

The Fund’s discount to NAV widened during the period, which accounts for the difference between performance based on market price and performance based on NAV.

 
  (c) 

Average return. Returns reflect reinvestment of dividends and/or distributions at NAV on the ex-dividend date as calculated by Lipper.

 

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

Past performance is not indicative of future results.

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

After performing poorly through the first half of the period, municipal bonds recovered to post a positive total return for the full six months. The initial downturn was largely brought about by concerns that the Fed would raise interest rates aggressively in 2019. However, subsequent signs of slowing growth prompted investors to adjust their expectations in favor of more accommodative Fed policy, sparking a rally across the bond market from early November onward.

The Fund’s positions in the transportation, pre-refunded, state-tax backed and utilities sectors contributed to performance. Its allocation to the tobacco sector, while limited, detracted.

The Fund’s allocation to higher-rated issues, which outpaced lower-quality bonds, aided results.

Income made a meaningful contribution to performance relative to price appreciation. The Fund’s use of leverage augmented the contribution from income.

The Fund sought to manage interest rate risk using U.S. Treasury futures. Given that U.S. Treasury yields fell, as prices rose, this strategy detracted from the Fund’s return.

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

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

 

 

6    2019 BLACKROCK SEMI-ANNUAL REPORT TO  SHAREHOLDERS


Fund Summary  as of January 31, 2019 (continued)    BlackRock MuniHoldings Quality Fund II, Inc.

 

Market Price and Net Asset Value Per Share Summary

 

     01/31/19      07/31/18      Change      High      Low  

Market Price

  $ 12.01      $ 12.36        (2.83 )%     $ 12.38      $ 11.28  

Net Asset Value

    13.33        13.55        (1.62      13.55        13.07  

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

 

LOGO

Overview of the Fund’s Total Investments*

 

SECTOR ALLOCATION

 

Sector   01/31/19     07/31/18  

Transportation

    37     35

County/City/Special District/School District

    14       18  

Utilities

    12       14  

Education.

    11       10  

Health

    10       9  

State

    9       8  

Housing

    3       3  

Corporate

    2       1  

Tobacco

    2       2  

 

   

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

 

CALL/MATURITY SCHEDULE (c)

 

Calendar Year Ended December 31,

       

2019

    11

2020

    3  

2021

    17  

2022

    5  

2023

    23  

 

  (c) 

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

 
  *

Excludes short-term securities.

 

CREDIT QUALITY ALLOCATION (a)

 

Credit Rating   01/31/19     07/31/18  

AAA/Aaa

    2     5

AA/Aa

    50       53  

A

    32       30  

BBB/Baa

    12       9  

N/R(b)

    4       3  

 

  (a) 

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

 
  (b)

The investment adviser evaluates the credit quality of not-rated investments based upon certain factors including, but not limited to, credit ratings for similar investments and financial analysis of sectors and individual investments. Using this approach, the investment adviser has deemed certain of these unrated securities as investment grade quality.

 
 

 

 

FUND SUMMARY      7  


Fund Summary  as of January 31, 2019    BlackRock MuniYield California Quality Fund, Inc.

 

Fund Overview

BlackRock MuniYield California Quality Fund, Inc.’s (MCA) (the “Fund”) investment objective is to provide shareholders with as high a level of current income exempt from U.S. federal and California 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 obligations exempt from U.S. federal income taxes (except that the interest may be subject to the U.S. federal alternative minimum tax) and California income taxes. Under normal market conditions, the Fund invests primarily in long-term municipal obligations that are investment grade quality, or are considered by the Fund’s investment adviser to be of comparable quality, 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

  MCA

Initial Offering Date

  October 30, 1992

Yield on Closing Market Price as of January 31, 2019 ($13.00)(a)

  4.80%

Tax Equivalent Yield(b)

  10.46%

Current Monthly Distribution per Common Share(c)

  $0.0520

Current Annualized Distribution per Common Share(c)

  $0.6240

Economic Leverage as of January 31, 2019(d)

  42%

 

  (a) 

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

 
  (b) 

Tax equivalent yield assumes the maximum marginal U.S. federal and state tax rate of 54.10%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields.

 
  (c) 

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

 
  (d) 

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

 

Performance

Returns for the six months ended January 31, 2019 were as follows:

 

    Returns Based On  
     Market Price      NAV  

MCA(a)(b)

    0.45      0.69

Lipper California Municipal Debt Funds(c)

    2.77        0.80  

 

  (a) 

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 
  (b) 

The Fund’s discount to NAV widened during the period, which accounts for the difference between performance based on market price and performance based on NAV.

 
  (c)

Average return. Returns reflect reinvestment of dividends and/or distributions at NAV on the ex-dividend date as calculated by Lipper.

 

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

Past performance is not indicative of future results.

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

After performing poorly through the first half of the period, municipal bonds recovered to post a positive total return for the full six months. The initial downturn was largely brought about by concerns that the Fed would raise interest rates aggressively in 2019. However, subsequent signs of slowing growth prompted investors to adjust their expectations in favor of more accommodative Fed policy, sparking a rally across the bond market from early November onward.

California municipal bonds lagged the national market. However, the state’s debt gained a measure of support from strong demand among retail investors looking for tax-exempt income in a state with the country’s most punitive income tax regime. The credit quality of state and local authorities remained consistent, but investors were alert for any changes in fiscal responsibility demonstrated by the new governor and his administration.

Income, which was enhanced by leverage, was the largest contributor to Fund performance. However, the cost of leverage became more expensive during the period due to the Fed’s two interest rate increases.

Positions in short-dated maturities were top performers on a price basis, as yields fell the most for bonds with maturities of ten years and below. (Prices and yields move in opposite directions.) Longer-dated maturities, while experiencing less price appreciation than short-term issues, provided the Fund with an attractive level of income.

At the sector level, positions in transportation and school district issues aided results. In both cases, holdings in higher-quality bonds were key contributors. Conversely, an allocation to the tobacco sector was a slight detractor. The sector experienced yield spread widening, which led to poor performance relative to other market segments.

The Fund’s higher-quality mandate proved beneficial given that higher-rated bonds outperformed in the period.

The Fund sought to manage interest rate risk using U.S. Treasury futures. Given that U.S. Treasury yields fell, as prices rose, this strategy detracted from the Fund’s return.

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    2019 BLACKROCK SEMI-ANNUAL REPORT TO  SHAREHOLDERS


Fund Summary  as of January 31, 2019 (continued)    BlackRock MuniYield California Quality Fund, Inc.

 

Market Price and Net Asset Value Per Share Summary

 

     01/31/19      07/31/18      Change      High      Low  

Market Price

  $ 13.00      $ 13.30        (2.26 )%     $ 13.48      $ 12.34  

Net Asset Value

    14.96        15.27        (2.03      15.27        14.65  

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

 

LOGO

Overview of the Fund’s Total Investments*

 

SECTOR ALLOCATION

 

Sector   01/31/19     07/31/18  

County/City/Special District/School District

    33     32

Health

    18       17  

Transportation

    18       16  

Utilities

    13       15  

Education

    12       14  

State

    4       4  

Corporate

    1       1  

Tobacco

    1       1  

 

   

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

 

CALL/MATURITY SCHEDULE (b)

 

Calendar Year Ended December 31,

       

2019

    14

2020

    6  

2021

    11  

2022

    3  

2023

    6  

 

  (b)

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

 
  *

Excludes short-term securities.

 

CREDIT QUALITY ALLOCATION (a)

 

Credit Rating   01/31/19     07/31/18  

AAA/Aaa

    8     9

AA/Aa

    71       72  

A

    15       13  

BBB/Baa

    3       3  

N/R

    3       3  

 

  (a) 

For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either S&P 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.

 
 

 

 

FUND SUMMARY      9  


Fund Summary  as of January 31, 2019    BlackRock MuniYield New York Quality Fund, Inc.

 

Fund Overview

BlackRock MuniYield New York Quality Fund, Inc.’s (MYN) (the “Fund”) investment objective is to provide shareholders with as high a level of current income exempt from U.S. federal income taxes and New York State and New York City personal 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 obligations exempt from U.S. federal income taxes (except that the interest may be subject to the U.S. federal alternative minimum tax) and New York State and New York City personal income taxes. Under normal market conditions, the Fund invests primarily in long-term municipal obligations that are investment grade quality, or are considered by the Fund’s investment adviser to be of comparable quality, 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

  MYN

Initial Offering Date

  February 28, 1992

Yield on Closing Market Price as of January 31, 2019 ($11.93)(a)

  4.27%

Tax Equivalent Yield(b)

  8.48%

Current Monthly Distribution per Common Share(c)

  $0.0425

Current Annualized Distribution per Common Share(c)

  $0.5100

Economic Leverage as of January 31, 2019(d)

  40%

 

  (a) 

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

 
  (b) 

Tax equivalent yield assumes the maximum marginal U.S. federal and state tax rate of 49.62%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields.

 
  (c) 

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

 
  (d) 

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

 

Performance

Returns for the six months ended January 31, 2019 were as follows:

 

    Returns Based On  
    

Market Price

    

NAV

 

MYN(a)(b)

    2.55      1.47

Lipper New York Municipal Debt Funds(c)

    3.35        1.12  

 

  (a) 

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 
  (b) 

The Fund’s discount to NAV narrowed during the period, which accounts for the difference between performance based on market price and performance based on NAV.

 
  (c) 

Average return. Returns reflect reinvestment of dividends and/or distributions at NAV on the ex-dividend date as calculated by Lipper.

 

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

Past performance is not indicative of future results.

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

After performing poorly through the first half of the period, municipal bonds recovered to post a positive total return for the full six months. The initial downturn was largely brought about by concerns that the Fed would raise interest rates aggressively in 2019. However, subsequent signs of slowing growth prompted investors to adjust their expectations in favor of more accommodative Fed policy, sparking a rally across the bond market from early November onward.

The New York municipal market finished somewhat behind the national indexes due primarily to elevated new-issue supply. While New York continues to benefit from a broad and diverse economic base, a tax revenue shortfall — possibly driven by changes stemming from the federal Tax Cuts and Jobs Act — had an adverse effect on investor sentiment. In addition to making revenue forecasting more of a challenge, the tax-law changes made New York’s tax structure less competitive relative to lower-tax states.

Income, which was enhanced by leverage, was the largest contributor to Fund performance. However, the cost of leverage became more expensive during the period due to the Fed’s two interest rate increases.

The Fund’s position in the housing sector, which has an above-average sensitivity to the direction of bond yields, also contributed to Fund performance.

The Fund’s yield curve positioning detracted from Fund performance, largely as a result of an underweight in the outperforming five- to ten-year maturity area.

The Fund sought to manage interest rate risk using U.S. Treasury futures. Given that U.S. Treasury yields fell, as prices rose, this strategy detracted from the Fund’s return.

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    2019 BLACKROCK SEMI-ANNUAL REPORT TO  SHAREHOLDERS


Fund Summary  as of January 31, 2019 (continued)    BlackRock MuniYield New York Quality Fund, Inc.

 

Market Price and Net Asset Value Per Share Summary

 

     01/31/19      07/31/18      Change      High      Low  

Market Price

  $ 11.93      $ 11.89        0.34    $ 11.97      $ 11.09  

Net Asset Value

    13.64        13.74        (0.73      13.74        13.23  

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

 

LOGO

Overview of the Fund’s Total Investments*

 

SECTOR ALLOCATION

 

Sector   01/31/19     07/31/18  

Transportation

    23     25

County/City/Special District/School District

    18       15  

Education

    17       18  

State

    15       17  

Utilities

    14       14  

Health

    6       6  

Housing

    4       2  

Corporate

    2       2  

Tobacco

    1       1  

 

   

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

 

CALL/MATURITY SCHEDULE (c)

 

Calendar Year Ended December 31,

       

2019

    11

2020

    4  

2021

    16  

2022

    9  

2023

    9  

 

  (c) 

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

 
  *

Excludes short-term securities.

 

CREDIT QUALITY ALLOCATION (a)

 

Credit Rating   01/31/19     07/31/18  

AAA/Aaa

    11     20

AA/Aa

    57       48  

A

    22       23  

BBB/Baa

    6       5  

BB/Ba

    1        

N/R

    3       4  

 

  (a) 

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

 
  (b)

The investment adviser evaluates the credit quality of not-rated investments based upon certain factors including, but not limited to, credit ratings for similar investments and financial analysis of sectors and individual investments. Using this approach, the investment adviser has deemed certain of these unrated securities as investment grade quality. As of January 31, 2019 and July 31, 2018, the market value of unrated securities deemed by the investment adviser to be investment grade represents 1% and 1%, respectively, of the Fund’s total investments.

 
 

 

 

FUND SUMMARY      11  


Fund Summary  as of January 31, 2019    BlackRock MuniYield Quality Fund III, Inc.

 

Fund Overview

BlackRock MuniYield Quality Fund III, Inc.’s (MYI) (the “Fund”) investment objective is to provide shareholders with as high a level of current income exempt from U.S. federal income taxes as is consistent with its investment policies and prudent investment management. The Fund seeks to achieve its investment objective by investing at least 80% of its assets in municipal obligations exempt from U.S. federal income taxes (except that the interest may be subject to the U.S. federal alternative minimum tax). Under normal market conditions, the Fund invests primarily in long-term municipal obligations that are investment grade quality, or are considered by the Fund’s investment adviser to be of comparable quality, 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

  MYI

Initial Offering Date

  March 27, 1992

Yield on Closing Market Price as of January 31, 2019 ($12.44)(a)

  4.87%

Tax Equivalent Yield(b)

  8.23%

Current Monthly Distribution per Common Share(c)

  $0.0505

Current Annualized Distribution per Common Share(c)

  $0.6060

Economic Leverage as of January 31, 2019(d)

  40%

 

  (a) 

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

 
  (b) 

Tax equivalent yield assumes the maximum marginal U.S. federal tax rate of 40.80%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields.

 
  (c) 

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

 
  (d) 

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

 

Performance

Returns for the six months ended January 31, 2019 were as follows:

 

    Returns Based On  
    

Market Price

    

NAV

 

MYI(a)(b)

    2.36      1.50

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

    2.46        0.94  

 

  (a) 

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 
  (b) 

The Fund’s discount to NAV narrowed during the period, which accounts for the difference between performance based on market price and performance based on NAV.

 
  (c) 

Average return. Returns reflect reinvestment of dividends and/or distributions at NAV on the ex-dividend date as calculated by Lipper.

 

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

Past performance is not indicative of future results.

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

After performing poorly through the first half of the period, municipal bonds recovered to post a positive total return for the full six months. The initial downturn was largely brought about by concerns that the Fed would raise interest rates aggressively in 2019. However, subsequent signs of slowing growth prompted investors to adjust their expectations in favor of more accommodative Fed policy, sparking a rally across the bond market from early November onward.

Portfolio income, enhanced by leverage, made the largest contribution to the Fund’s return. The Fund’s position in bonds with five- to 10-year maturities also contributed, as yields in this area declined most sharply while finishing largely unchanged among both short- and long-term issues. (Prices and yields move in opposite directions.)

At the sector level, positions in state tax-backed and school district issues were key contributors to performance.

The Fund sought to manage interest rate risk using U.S. Treasury futures. Given that U.S. Treasury yields fell, as prices rose, this strategy detracted from the Fund’s return.

The Fund’s allocation to lower-rated issues also detracted from the Fund’s return, as yield spreads generally widened during the period.

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

 

 

12    2019 BLACKROCK SEMI-ANNUAL REPORT TO  SHAREHOLDERS


Fund Summary  as of January 31, 2019 (continued)    BlackRock MuniYield Quality Fund III, Inc.

 

Market Price and Net Asset Value Per Share Summary

 

     01/31/19      07/31/18      Change      High      Low  

Market Price

  $ 12.44      $ 12.46        (0.16 )%     $ 12.57      $ 11.54  

Net Asset Value

    13.84        13.98        (1.00      13.98        13.38  

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

 

LOGO

Overview of the Fund’s Total Investments*

 

SECTOR ALLOCATION

 

Sector   01/31/19     07/31/18  

Transportation

    30     28

State

    21       19  

Health

    16       16  

Utilities

    13       14  

Education

    9       10  

County/City/Special District/School District

    8       8  

Corporate

    2       3  

Tobacco

    1       1  

Housing

          1  

 

   

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

 

CALL/MATURITY SCHEDULE (c)

 

Calendar Year Ended December 31,

       

2019

    10

2020

    2  

2021

    9  

2022

    5  

2023

    9  

 

  (c) 

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

 
  *

Excludes short-term securities.

 

CREDIT QUALITY ALLOCATION (a)

 

Credit Rating   01/31/19     07/31/18  

AAA/Aaa

    4     6

AA/Aa

    48       49  

A

    27       25  

BBB/Baa

    16       16  

N/R

    5       4  

 

  (a) 

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

 
  (b) 

The investment adviser evaluates the credit quality of not-rated investments based upon certain factors including, but not limited to, credit ratings for similar investments and financial analysis of sectors and individual investments. Using this approach, the investment adviser has deemed certain of these unrated securities as investment grade quality. As of January 31, 2019 and July 31, 2018, the market value of unrated securities deemed by the investment adviser to be investment grade represents 1% and 1%, respectively, of the Fund’s total investments.

 
 

 

 

FUND SUMMARY      13  


Schedule of Investments  (unaudited) 

January 31, 2019

  

BlackRock MuniHoldings Quality Fund II, Inc. (MUE)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  

Municipal Bonds — 130.8%

 

Alabama — 2.1%  

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

  $ 5,225     $ 5,296,948  

City of Selma Alabama IDB, RB, Gulf Opportunity Zone, International Paper Co. Project, Series A, 5.38%, 12/01/35

    940       1,010,303  
   

 

 

 
      6,307,251  
Arizona — 0.9%  

Salt Verde Financial Corp., RB, Senior, 5.00%, 12/01/37

    2,450       2,846,263  
   

 

 

 
California — 18.9%            

California Health Facilities Financing Authority, RB, Sutter Health, Series B, 6.00%, 08/15/20(a)

    2,865       3,058,445  

California Municipal Finance Authority, ARB, Senior Lien, Linxs APM Project, AMT, 5.00%, 12/31/43

    1,400       1,527,148  

City & County of San Francisco California Airports Commission, ARB, Special Facility Lease, SFO Fuel, Series A, AMT (AGM), 6.10%, 01/01/20

    240       240,864  

City & County of San Francisco California Airports Commission, Refunding ARB, AMT, Series A:

   

2nd, 5.50%, 05/01/28

    1,800       2,044,710  

2nd, 5.25%, 05/01/33

    1,410       1,574,716  

5.00%, 05/01/44

    1,860       2,035,324  

City of San Jose California, Refunding ARB, Norman Y Mineta San Jose International Airport SJC, Series A-1, AMT, 5.50%, 03/01/30

    4,045       4,311,687  

City of Sunnyvale California, Refunding RB, 5.25%, 04/01/20(a)

    2,800       2,921,072  

County of Riverside Public Financing Authority, RB, Capital Facilities Project, 5.25%, 11/01/40

    4,500       5,226,840  

Emery Unified School District, GO, Election of 2010, Series A (AGM), 5.50%, 08/01/21(a)

    1,875       2,057,756  

Kern Community College District, GO, Safety, Repair & Improvement, Series C, 5.50%, 11/01/33

    2,445       2,835,002  

Los Angeles Community College District California, GO, Election of 2008, Series C, 5.25%, 08/01/20(a)

    2,000       2,109,620  

Redondo Beach Unified School District, GO, Election of 2008, Series E, 5.50%, 08/01/21(a)

    2,670       2,933,689  

Regents of the University of California Medical Center Pooled Revenue, Refunding RB, Series J:

   

5.25%, 05/15/23(a)

    5,905       6,793,112  

5.25%, 05/15/38

    1,675       1,870,925  

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

   

5.50%, 11/01/30

    5,000       5,714,700  

5.50%, 11/01/31

    3,130       3,568,325  

5.50%, 11/01/33

    3,000       3,410,010  

State of California Public Works Board, RB, Department of Corrections & Rehabilitation, Series F, 5.25%, 09/01/33

    1,260       1,412,951  

Township of Washington California Health Care District, GO, Election of 2004, Series B, 5.50%, 08/01/40

    940       1,090,663  
   

 

 

 
      56,737,559  
Colorado — 2.1%  

City & County of Denver Colorado Airport System, ARB, Series A, AMT:

   

5.50%, 11/15/28

    1,500       1,700,070  

5.50%, 11/15/30

    565       636,834  

5.50%, 11/15/31

    675       759,200  

Colorado Health Facilities Authority, RB, Hospital, NCMC, Inc. Project, Series B (AGM), 6.00%, 05/15/19(a)

    3,300       3,340,260  
   

 

 

 
      6,436,364  
Security   Par
(000)
    Value  
Connecticut — 1.0%  

State of Connecticut, GO, Series A, 5.00%, 04/15/38

  $ 1,690     $ 1,848,826  

State of Connecticut Health & Educational Facility Authority, Refunding RB, Sacred Heart University Issue, Series I-1, 5.00%, 07/01/42

    1,015       1,114,186  
   

 

 

 
      2,963,012  
Delaware — 0.5%  

State of Delaware Health Facilities Authority, RB, Beebe Medical Center Project, 5.00%, 06/01/43

    1,400       1,510,376  
   

 

 

 
Florida — 19.9%  

Central Florida Expressway Authority, Refunding RB, Senior Lien, 5.00%, 07/01/48

    4,730       5,302,472  

City of Jacksonville Florida, RB, 5.00%, 10/01/38

    1,000       1,125,480  

County of Broward Florida Airport System, ARB, Series A, AMT, 5.00%, 10/01/45

    1,440       1,571,702  

County of Broward Florida Airport System Revenue, ARB, Series A, AMT, 5.13%, 10/01/38

    5,665       6,181,931  

County of Hillsborough Florida Aviation Authority, Refunding ARB, Tampa International Airport, Series A, AMT, 5.50%, 10/01/29

    2,995       3,389,082  

County of Lee Florida, Refunding ARB, Series A, AMT, 5.38%, 10/01/32

    2,500       2,670,725  

County of Lee Florida HFA, RB, S/F Housing, Multi-County Program, Series A-2, AMT (Ginnie Mae, Fannie Mae & Freddie Mac), 6.00%, 09/01/40

    180       181,276  

County of Miami-Dade Florida, RB, Seaport Department:

   

Series A, 5.38%, 10/01/33

    1,765       1,974,400  

Series A, 5.50%, 10/01/42

    3,000       3,341,610  

Series B, AMT, 6.25%, 10/01/38

    800       918,960  

Series B, AMT, 6.00%, 10/01/42

    1,060       1,207,626  

County of Miami-Dade Florida, Refunding RB, Water & Sewer System, Series B, 5.25%, 10/01/29

    3,130       3,545,946  

County of Miami-Dade Florida Aviation, Refunding ARB, Series A, AMT, 5.00%, 10/01/31

    5,155       5,568,947  

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

    5,000       5,392,450  

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

    7,600       7,744,552  

Reedy Creek Florida Improvement District, GO, Series A, 5.25%, 06/01/32

    1,805       2,034,867  

Tohopekaliga Water Authority, Refunding RB, Series A, 5.25%, 10/01/21(a)

    6,965       7,599,163  
   

 

 

 
      59,751,189  
Hawaii — 1.7%            

State of Hawaii Airports System, ARB, Series A, AMT, 5.00%, 07/01/45

    2,805       3,083,424  

State of Hawaii Airports System, COP, AMT:

   

5.25%, 08/01/25

    740       826,950  

5.25%, 08/01/26

    1,205       1,340,081  
   

 

 

 
      5,250,455  
Illinois — 14.2%            

City of Chicago Illinois Midway International Airport, Refunding GARB, 2nd Lien, Series A, AMT:

   

5.00%, 01/01/41

    1,140       1,227,655  

5.50%, 01/01/28

    1,000       1,106,690  

5.50%, 01/01/29

    1,500       1,655,925  

5.38%, 01/01/33

    2,000       2,180,060  

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

   

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

    1,680       1,808,184  

3rd Lien, Series A, 5.75%, 01/01/39

    320       339,315  

3rd Lien, Series C, 6.50%, 01/01/21(a)

    9,085       9,903,831  

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

    735       795,777  
 

 

 

14    2019 BLACKROCK SEMI-ANNUAL REPORT TO  SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniHoldings Quality Fund II, Inc. (MUE)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Illinois (continued)            

City of Chicago Illinois Transit Authority, RB, Sales Tax Receipts:

   

5.25%, 12/01/36

  $ 2,940     $ 3,106,316  

5.25%, 12/01/40

    1,500       1,576,560  

City of Chicago Illinois Wastewater Transmission, RB, 2nd Lien, 5.00%, 01/01/42

    2,985       3,122,847  

County of Cook Illinois Community College District No. 508, GO, City College of Chicago:

   

5.25%, 12/01/30

    1,270       1,323,111  

5.50%, 12/01/38

    1,205       1,256,128  

5.25%, 12/01/43

    2,960       3,048,652  

Illinois Finance Authority, Refunding RB, Presence Health Network, Series C, 5.00%, 02/15/41

    975       1,079,481  

Railsplitter Tobacco Settlement Authority, RB(a):

   

5.50%, 06/01/21

    2,350       2,548,176  

6.00%, 06/01/21

    670       734,099  

State of Illinois, GO:

   

5.25%, 02/01/31

    1,495       1,566,401  

5.25%, 02/01/32

    2,320       2,423,356  

5.50%, 07/01/33

    1,000       1,055,070  

5.50%, 07/01/38

    700       730,520  
   

 

 

 
      42,588,154  
Indiana — 0.2%            

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

    460       486,031  
   

 

 

 
Iowa — 0.7%            

State of Iowa Finance Authority, RB, Lifespace Communities, Series A, 5.00%, 05/15/48

    1,950       2,008,091  
   

 

 

 
Louisiana — 1.5%            

Lake Charles Louisiana Harbor & Terminal District, RB, Series B, AMT (AGM), 5.50%, 01/01/29

    2,225       2,503,014  

Tobacco Settlement Financing Corp., Refunding RB, Asset-Backed, Series A, 5.50%, 05/15/29

    2,020       2,037,049  
   

 

 

 
      4,540,063  
Maryland — 6.4%            

County of Howard Maryland Housing Commission, RB, M/F Housing, Woodfield Oxford Square Apartments, 5.00%, 12/01/42

    2,450       2,687,821  

Maryland Stadium Authority, RB, Construction and Revitalization Program:

   

5.00%, 05/01/47

    9,815       11,009,584  

5.00%, 05/01/34

    4,780       5,542,219  
   

 

 

 
      19,239,624  
Massachusetts — 1.8%            

Massachusetts Development Finance Agency, RB:

   

Emerson College Issue, Series A, 5.00%, 01/01/47

    420       449,984  

Emerson College Issue, Series A, 5.25%, 01/01/42

    940       1,026,282  

UMass Darthmouth Student Housing Project, 5.00%, 10/01/43

    2,265       2,409,371  

Massachusetts Development Finance Agency, Refunding RB, Emerson College, Series A, 5.00%, 01/01/40

    1,025       1,113,150  

Massachusetts HFA, Refunding RB, Series C, AMT, 5.35%, 12/01/42

    485       488,143  
   

 

 

 
      5,486,930  
Michigan — 1.6%            

Hudsonville Michigan Public Schools, GO, School Building & Site (Q-SBLF), 5.25%, 05/01/21(a)

    3,420       3,687,410  

Michigan Strategic Fund, RB, I-75 Improvement Projects, AMT, 5.00%, 06/30/48

    895       971,406  
   

 

 

 
      4,658,816  
Security   Par
(000)
    Value  
Minnesota — 0.3%            

County of St. Paul Minnesota Housing & Redevelopment Authority, Refunding RB, Fairview Health Services, Series A, 4.00%, 11/15/43

  $ 985     $ 989,304  
   

 

 

 
Mississippi — 2.4%            

Mississippi Development Bank, RB, Jackson Water & Sewer System Project (AGM), 6.88%, 12/01/40

    2,225       2,634,756  

Mississippi State University Educational Building Corp., Refunding RB, Mississippi State University Improvement Project, 5.25%, 08/01/23(a)

    1,000       1,150,090  

State of Mississippi, RB, Series A:

   

5.00%, 10/15/37

    565       643,123  

4.00%, 10/15/38

    2,815       2,851,060  
   

 

 

 
      7,279,029  
Montana — 0.3%            

Montana State Board of Housing, RB, S/F, Series B-2:

   

3.38%, 12/01/37

    395       379,247  

3.50%, 12/01/42

    175       165,237  

3.60%, 12/01/47

    265       251,300  
   

 

 

 
      795,784  
Nevada — 2.5%            

City of Carson City Nevada, Refunding RB, Carson Tahoe Regional Healthcare Project, 5.00%, 09/01/42

    1,130       1,195,325  

County of Clark Nevada, ARB, Las Vegas-McCarran International Airport, Series A (AGM), 5.25%, 07/01/39

    3,210       3,293,107  

County of Clark Nevada, GO, Stadium Improvement, Series A:

   

5.00%, 06/01/36

    2,065       2,404,176  

5.00%, 06/01/37

    500       579,475  
   

 

 

 
    7,472,083  
New Jersey — 8.1%  

New Jersey EDA, RB:

   

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

    1,940       2,083,657  

Private Activity Bond, Goethals Bridge Replacement Project, AMT (AGM), 5.00%, 01/01/31

    1,355       1,470,703  

State Government Buildings Project, Series A, 5.00%, 06/15/47

    2,500       2,607,125  

New Jersey Health Care Facilities Financing Authority, RB, Virtua Health, Series A (AGC), 5.50%, 07/01/38

    3,400       3,449,878  

New Jersey Housing & Mortgage Finance Agency, Refunding RB, S/F Housing, Series BB, AMT, 3.80%, 10/01/32

    2,455       2,480,213  

New Jersey Transportation Trust Fund Authority, RB:

   

Transportation Program Bonds, Series S, 5.25%, 06/15/43

    2,980       3,215,420  

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

    3,040       3,223,281  

New Jersey Transportation Trust Fund Authority, Refunding RB, Transportation System, Series A, 5.00%, 12/15/32

    2,735       2,981,615  

Tobacco Settlement Financing Corp., Refunding RB:

   

Series A, 5.25%, 06/01/46

    2,355       2,489,989  

Sub-Series B, 5.00%, 06/01/46

    445       443,131  
   

 

 

 
    24,445,012  
New York — 8.2%            

City of New York New York Municipal Water Finance Authority, Refunding RB, Water & Sewer System, 2nd General Resolution, Series EE, 5.38%, 06/15/43

    2,220       2,358,040  

City of New York New York Water & Sewer System, Refunding RB, 2nd General Resolution, Fiscal 2009, Series EE, 5.25%, 06/15/40

    6,930       7,015,100  

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

   

5.75%, 02/15/21(a)

    580       627,531  

5.75%, 02/15/47

    360       386,654  

Metropolitan Transportation Authority, RB:

   

Series A, 5.25%, 11/15/21(a)

    8,500       9,342,690  

Series A-1, 5.25%, 11/15/39

    1,550       1,727,553  
 

 

 

SCHEDULES OF INVESTMENTS      15  


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniHoldings Quality Fund II, Inc. (MUE)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
New York (continued)            

Port Authority of New York & New Jersey, Refunding ARB, Consolidated, 166th Series, 5.25%, 07/15/36

  $ 2,000     $ 2,120,740  

TSASC, Inc., Refunding RB, Series A, 5.00%, 06/01/41

    895       925,099  
   

 

 

 
    24,503,407  
Ohio — 0.9%  

State of Ohio Turnpike Commission, RB, Junior Lien, Infrastructure Projects, Series A-1, 5.25%, 02/15/31

    2,500       2,783,350  
   

 

 

 
Oklahoma — 0.5%  

Oklahoma Development Finance Authority, RB, Provident Oklahoma Education Resources, Inc., Cross Village Student Housing Project, Series A, 5.25%, 08/01/57

    1,640       1,528,513  
   

 

 

 
Oregon — 0.4%  

Oregon Health & Science University, RB, Series A, 5.00%, 07/01/42

    1,100       1,237,159  
   

 

 

 
Pennsylvania — 7.2%  

Altoona Area School District, GO, 5.00%, 12/01/36

    185       207,918  

County of Delaware Springfield School District, GO:

   

5.00%, 03/01/40

    1,485       1,679,060  

5.00%, 03/01/43

    1,100       1,237,324  

County of Montgomery Higher Education & Health Authority, Refunding RB, Thomas Jeferson University, Series A, 5.00%, 09/01/48

    1,690       1,860,014  

County of Westmoreland Pennsylvania Municipal Authority, Refunding RB, (BAM), 5.00%, 08/15/36

    2,215       2,499,982  

Pennsylvania Housing Finance Agency, RB, S/F, Series 125B, 3.65%, 10/01/42

    3,000       2,943,870  

Pennsylvania Turnpike Commission, Refunding RB, 2nd Series, Subordinate, Special Motor License Fund, 5.00%, 12/01/41

    2,490       2,757,401  

Pennsylvania Turnpike Commission, RB, Sub-Series B-1, 5.25%, 06/01/47

    2,300       2,537,705  

Swarthmore Borough Authority, RB, Swarthmore College, 5.00%, 09/15/47

    1,600       1,856,784  

Township of Bristol Pennsylvania School District, GO:

   

5.25%, 06/01/37

    2,500       2,763,875  

5.25%, 06/01/43

    1,100       1,210,429  
   

 

 

 
    21,554,362  
South Carolina — 5.3%  

County of Charleston South Carolina, RB, Special Source, 5.25%, 12/01/38

    3,760       4,249,025  

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

   

6.00%, 07/01/38

    2,940       3,345,838  

5.50%, 07/01/41

    2,500       2,775,850  

South Carolina Jobs EDA, Refunding RB, Prisma Health Obligated Group, Series A, 5.00%, 05/01/43

    1,360       1,482,781  

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

    1,870       2,031,736  

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

    1,000       1,066,520  

State of South Carolina Public Service Authority, Refunding RB, Series C, 5.00%, 12/01/46

    1,000       1,053,040  
   

 

 

 
    16,004,790  
Tennessee — 1.1%  

Metropolitan Nashville Airport Authority, ARB, Series B, AMT, 5.00%, 07/01/40

    3,000       3,276,030  
   

 

 

 
Texas — 9.9%  

City of Beaumont Texas, GO, Certificates of Obligation, 5.25%, 03/01/37

    2,345       2,605,811  

City of Houston Texas Airport System Revenue, Refunding RB, Sub-Series D, 5.00%, 07/01/37

    2,010       2,312,445  
Security   Par
(000)
    Value  
Texas (continued)  

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

   

6.00%, 05/15/19

  $ 6,345     $ 6,422,028  

6.00%, 05/15/19

    355       359,363  

County of Tarrant Texas Cultural Education Facilities Finance Corp., RB, Christus Health, Series B, 5.00%, 07/01/35

    2,500       2,831,775  

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

   

Series A, 5.00%, 11/01/38

    1,615       1,679,390  

Series H, 5.00%, 11/01/37

    1,810       1,911,360  

Lower Colorado River Authority, Refunding RB, 5.50%, 05/15/33

    2,155       2,435,452  

North Texas Tollway Authority, RB, Special Projects, Series A, 5.50%, 09/01/21(a)

    5,480       5,990,791  

North Texas Tollway Authority, Refunding RB, 1st Tier, Series A, 5.00%, 01/01/48

    1,775       1,984,414  

Red River Texas Education Financing Corp., RB, Texas Christian University Project, 5.25%, 03/15/38

    1,070       1,190,118  
   

 

 

 
    29,722,947  
Vermont — 1.0%  

University of Vermont & State Agricultural College, Refunding RB, 5.00%, 10/01/43

    2,535       2,851,064  
   

 

 

 
Virginia — 1.8%  

City of Lexington Virginia IDA, RB, Washington & Lee University, 5.00%, 01/01/43

    945       1,019,683  

Virginia Small Business Financing Authority, RB, Transform 66 P3 Project, AMT, 5.00%, 12/31/49

    4,000       4,283,000  
   

 

 

 
    5,302,683  
Washington — 6.4%  

City of Seattle Washington Municipal Light & Power, Refunding RB, Series A, 5.25%, 02/01/21(a)

    2,400       2,567,616  

Port of Seattle Washington, ARB, AMT:

   

Intermediate Lien, Series C, 5.00%, 05/01/37

    2,485       2,776,142  

Series A, 5.00%, 05/01/43

    660       726,838  

State of Washington, COP, Series B:

   

5.00%, 07/01/36

    1,000       1,161,970  

5.00%, 07/01/38

    1,155       1,328,793  

State of Washington, GO:

   

Series C, 5.00%, 02/01/36

    7,565       8,801,499  

Various Purposes, Series B, 5.25%, 02/01/21(a)

    1,865       1,995,252  
   

 

 

 
    19,358,110  
Wisconsin — 0.8%  

Wisconsin Health & Educational Facilities Authority, Refunding RB, Milwaukee Regional Medical Center Thermal Service, 5.00%, 04/01/44

    2,065       2,322,299  
   

 

 

 
Wyoming — 0.2%  

State of Wyoming Municipal Power Agency, Inc., Refunding RB, Series A (BAM), 5.00%, 01/01/42

    570       633,179  
   

 

 

 

Total Municipal Bonds — 130.8%
(Cost — $375,518,157)

 

    392,869,283  
   

 

 

 

Municipal Bonds Transferred to Tender Option Bond Trusts(b)

 

California — 2.8%

   

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

    7,499       8,415,437  
   

 

 

 
Colorado — 1.2%            

City & County of Denver Colorado Airport System Revenue, Refunding ARB, Sub-System, Series A, AMT, 5.25%, 12/01/43(c)

    3,262       3,726,413  
   

 

 

 
 

 

 

16    2019 BLACKROCK SEMI-ANNUAL REPORT TO  SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniHoldings Quality Fund II, Inc. (MUE)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Connecticut — 1.1%            

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

  $ 3,061     $ 3,361,805  
   

 

 

 
Illinois — 3.3%            

City of Chicago Illionis Waterworks, Refunding RB, 2017 2nd Lien, Water Revenue Project (AGM), 5.25%, 11/01/33

    760       760,365  

State of Illinois Toll Highway Authority, RB:

   

Series A, 5.00%, 01/01/40

    1,980       2,218,167  

Series B, 5.00%, 01/01/40

    6,148       6,777,868  
   

 

 

 
    9,756,400  
Maryland — 0.9%            

City of Baltimore Maryland, RB, Wastewater Project, Series A, 5.00%, 07/01/46

    2,499       2,793,895  
   

 

 

 
Nevada — 2.8%            

County of Clark Nevada Water Reclamation District, GO, Series B, 5.50%, 07/01/29(a)

    8,247       8,377,966  
   

 

 

 
New Jersey — 1.5%            

New Jersey Housing & Mortgage Finance Agency, RB, S/F Housing, Series CC, 5.25%, 10/01/29

    3,041       3,051,525  

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

    1,500       1,563,717  
   

 

 

 
    4,615,242  
New York — 6.5%            

City of New York Municipal Water Finance Authority, Refunding RB, Series FF, 5.00%, 06/15/45

    5,958       6,448,732  

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

    7,515       8,158,023  

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

    4,400       4,814,456  
   

 

 

 
    19,421,211  
Pennsylvania — 4.0%            

Commonwealth of Pennsylvania, GO, 1st Series, 4.00%, 03/01/38(c)

    3,600       3,723,552  

County of Northampton General Purpose Authority, Refunding RB, Lafayette College, 4.00%, 11/01/38(c)

    5,927       6,113,697  

County of Westmoreland Pennsylvania Municipal Authority, Refunding RB, (BAM), 5.00%, 08/15/38

    1,963       2,189,278  
   

 

 

 
      12,026,527  
Security   Par
(000)
    Value  
Texas — 1.6%            

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

  $ 4,296     $ 4,644,570  
   

 

 

 
Utah — 0.9%            

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

    2,504       2,548,760  
   

 

 

 
Virginia — 1.4%            

County of Fairfax Virginia EDA, RB, Metrorail Parking System Project, 5.00%, 04/01/47(c)

    3,720       4,196,569  
   

 

 

 

Total Municipal Bonds Transferred to Tender Option Bond Trusts — 28.0%
(Cost — $82,018,433)

 

    83,884,795  
   

 

 

 

Total Long-Term Investments — 158.8%
(Cost — $457,536,590)

 

    476,754,078  
   

 

 

 

Total Investments — 158.8%
(Cost — $457,536,590)

 

    476,754,078  

Other Assets Less Liabilities — 1.3%

 

    4,059,078  

Liability for TOB Trust Certificates, Including Interest Expense and Fees Payable — (16.5)%

 

    (49,500,094

VMTP Shares, at Liquidation Value, Net of Deferred Offering Costs — (43.6)%

 

    (131,000,000
   

 

 

 

Net Assets Applicable to Common Shares — 100.0%

 

  $ 300,313,062  
   

 

 

 

 

(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) 

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.

(c) 

All or a portion of security is subject to a recourse agreement. The aggregate maximum potential amount the Fund could ultimately be required to pay under the agreements, which expire between June 15, 2019 and November 1, 2026, is $13,124,918. See Note 4 of the Notes to Financial Statements for details.

 

During the six months ended January 31, 2019, investments in issuers considered to be an affiliate of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliate    Shares
Held at
07/31/18
     Net
Activity
     Shares
Held at
01/31/19
     Value at
01/31/19
     Income      Net
Realized
Gain (Loss)
 (a)
     Change in
Unrealized
Appreciation
(Depreciation)
 

BlackRock Liquidity Funds, MuniCash, Institutional Class(b)

     2,901,453        (2,901,453           $      $ 47,459      $ 2,687      $ (289
           

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Includes net capital gain distributions, if applicable.

 
  (b) 

No longer held by the Fund as of period end.

 

 

 

SCHEDULES OF INVESTMENTS      17  


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniHoldings Quality Fund II, Inc. (MUE)

 

Derivative Financial Instruments Outstanding as of Period End

Futures Contracts

 

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

Short Contracts:

                 

10-Year U.S. Treasury Note

     58          03/20/19        $ 7,103        $ (163,618

Long U.S. Treasury Bond

     111          03/20/19          16,282          (714,355

5-Year U.S. Treasury Note

     49          03/29/19          5,628          (99,356
                 

 

 

 
                  $ (977,329
                 

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

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

 

     

Commodity

Contracts

    

Credit

Contracts

    

Equity

Contracts

    

Foreign

Currency

Exchange

Contracts

    

Interest

Rate

Contracts

    

Other

Contracts

     Total  

Liabilities — Derivative Financial Instruments

                    

Futures Contracts

                    

Net unrealized depreciation(a) . . . . . . . . . . . . . .. . . .

   $      $      $      $      $ 977,329      $      $ 977,329  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Includes cumulative 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 six months ended January 31, 2019, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

      Commodity
Contract
    

Credit

Contracts

    

Equity

Contracts

    

Foreign

Currency

Exchange

Contracts

    

Interest

Rate

Contracts

    

Other

Contracts

     Total  

Net Realized Gain (Loss) from:

                    

Futures Contracts

   $      $      $      $      $ 234,126      $      $ 234,126  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

                    

Futures Contracts

   $      $      $      $      $ (1,051,783    $      $ (1,051,783
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

        

Average notional value of contracts short . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

   $ 21,002,410  
  

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

Fair Value Hierarchy as of Period End

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

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

 

      Level 1        Level 2        Level 3        Total  

Assets:

                 

Investments:

                 

Long-Term Investments(a)

   $        $ 476,754,078        $                 $ 476,754,078  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative Financial Instruments(b)

                 

Liabilities:

                 

Interest rate contracts

   $ (977,329      $        $        $ (977,329
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

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

 
  (b) 

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

 

 

 

18    2019 BLACKROCK SEMI-ANNUAL REPORT TO  SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniHoldings Quality Fund II, Inc. (MUE)

 

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

 

      Level 1        Level 2        Level 3        Total  

Liabilities:

                 

TOB Trust Certificates

   $        $ (49,352,286      $        $ (49,352,286

VMTP Shares at Liquidation Value

              (131,000,000                 (131,000,000
  

 

 

      

 

 

      

 

 

      

 

 

 
   $                 $ (180,352,286      $                 $ (180,352,286
  

 

 

      

 

 

      

 

 

      

 

 

 

During the six months ended January 31, 2019, there were no transfers between levels.

See notes to financial statements.

 

 

SCHEDULES OF INVESTMENTS      19  


Schedule of Investments  (unaudited) 

January 31, 2019

  

BlackRock MuniYield California Quality Fund, Inc. (MCA)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  

Municipal Bonds — 91.2%

   

California — 91.2%

   
Corporate — 1.3%            

California Pollution Control Financing Authority, RB, San Jose Water Company Project, AMT, 4.75%, 11/01/46

  $ 4,000     $ 4,283,040  

City of Chula Vista California, Refunding RB, San Diego Gas & Electric, Series A, 5.88%, 02/15/34

    2,435       2,459,935  
   

 

 

 
      6,742,975  
County/City/Special District/School District — 30.3%  

Chaffey Joint Union High School District, GO, CAB, Election of 2012, Series C(a):

   

0.00%, 08/01/32

    250       157,338  

0.00%, 08/01/33

    500       297,535  

0.00%, 08/01/34

    505       287,431  

0.00%, 08/01/35

    545       296,126  

0.00%, 08/01/36

    500       258,725  

0.00%, 08/01/37

    650       321,074  

0.00%, 08/01/38

    630       296,932  

0.00%, 08/01/39

    750       336,187  

0.00%, 08/01/40

    1,850       789,395  

0.00%, 08/01/41

    305       123,961  

0.00%, 02/01/42

    350       138,936  

City & County of San Francisco California, COP, Port Facilities Project, Series C, AMT, 5.25%, 03/01/32

    1,050       1,165,920  

City of Sacramento California Transient Occupancy Tax Revenue, RB, Convention Center Complex, Series A, 5.00%, 06/01/48

    3,750       4,251,525  

County of Kern California, COP, Capital Improvements Projects, Series A (AGC), 6.00%, 02/01/19

    2,000       2,000,000  

County of Orange California Sanitation District, COP, Series A, 5.00%, 02/01/19

    1,000       1,000,000  

County of Orange California Water District, COP, Refunding, 5.25%, 08/15/19(b)

    9,045       9,223,548  

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

    2,755       3,001,986  

El Monte City School District, GO, Los Angeles Country, California Series B, 5.50%, 08/01/46

    4,265       5,044,685  

Fowler Unified School District, GO, Election of 2016, Series A (BAM), 5.25%, 08/01/46

    3,700       4,286,931  

Garden Grove Unified School District, GO, Election of 2010, Series C, 5.25%, 08/01/37

    2,725       3,078,596  

Gavilan Joint Community College District, GO, Election of 2004, Series D(b):

   

5.50%, 08/01/21

    2,165       2,378,815  

5.75%, 08/01/21

    8,400       9,280,740  

Grossmont California Healthcare District, GO, Election of 2006, Series B, 6.13%, 07/15/21(b)

    2,500       2,776,775  

Grossmont California Union High School District, GO, Election of 2008, Series C, 5.50%, 08/01/21(b)

    1,880       2,065,669  

Kern Community College District, GO, Safety Repair & Improvements, Series C, 5.25%, 11/01/32

    5,715       6,576,193  

Los Angeles Municipal Improvement Corp., Refunding LRB, Real Property, Series B (AGC), 5.50%, 04/01/19(b)

    2,075       2,088,384  

Menifee Union School District, GO, Series B (BAM), 4.00%, 08/01/43

    5,370       5,451,194  

Mount San Antonio Community College District, GO, Refunding, Election of 2008, Series A, 5.00%, 08/01/34

    4,500       5,091,660  

Ohlone Community College District, GO, Election of 2010, Series A, 5.25%, 08/01/21(b)

    8,140       8,894,252  

Orchard School District, GO, Election of 2001, Series A (AGC), 5.00%, 08/01/19(b)

    7,490       7,617,929  
Security   Par
(000)
    Value  
County/City/Special District/School District (continued)  

Perris Union High School District, GO, Election of 2012, Series B (BAM), 5.25%, 09/01/39

  $ 2,715     $ 3,152,549  

Riverside County Public Financing Authority, Tax Allocation Bonds, Series A (BAM), 4.00%, 10/01/40

    2,455       2,487,210  

RNR School Financing Authority, Special Tax Bonds, Community Facilities Distric No. 92-1, Series A (BAM):

   

5.00%, 09/01/37

    1,500       1,694,310  

5.00%, 09/01/41

    3,000       3,341,400  

San Jose California Financing Authority, LRB, Convention Center Expansion & Renovation Project, Series A:

   

5.75%, 05/01/36

    2,570       2,577,556  

5.75%, 05/01/42

    4,500       4,859,730  

San Jose California Financing Authority, Refunding LRB, Civic Center Project, Series A:

   

5.00%, 06/01/32

    3,375       3,761,269  

5.00%, 06/01/39

    5,800       6,446,062  

San Juan Unified School District, GO, Election of 2002 (AGM), 5.00%, 08/01/20(b)

    6,475       6,810,988  

San Leandro California Unified School District, GO, Election of 2010, Series A, 5.75%, 08/01/41

    3,000       3,270,570  

Snowline Joint Unified School District, COP, Refunding, Refining Project (AGC), 5.75%, 09/01/19(b)

    5,600       5,735,352  

Walnut Valley Unified School District, GO, Election of 2007, Series B, 5.75%, 08/01/21(b)

    7,680       8,485,248  

Washington Township Health Care District, GO, Election of 2004, Series B, 5.50%, 08/01/38

    1,625       1,895,481  

West Contra Costa California Unified School District, GO:

   

Election of 2010, Series A (AGM), 5.25%, 08/01/21(b)

    6,140       6,708,932  

Election of 2010, Series B, 5.50%, 08/01/39

    3,000       3,440,580  

Election of 2012, Series A, 5.50%, 08/01/39

    2,500       2,867,150  
   

 

 

 
      156,112,829  
Education — 7.0%            

California Educational Facilities Authority, RB, Series A, 5.00%, 10/01/53

    10,000       11,211,200  

California Municipal Finance Authority, RB, Emerson College, 6.00%, 01/01/22(b)

    2,750       3,096,637  

California School Finance Authority, RB, Alliance for College-Ready Public Schools Projects, Series A, 5.00%, 07/01/36(c)

    755       801,667  

California School Finance Authority, Refunding RB, Aspire Public Schools Obligated Group, 5.00%, 08/01/46(c)

    1,250       1,309,925  

California Statewide Communities Development Authority, RB,University of California, Irvine East Campus, Series A, 5.00%, 05/15/37

    4,000       4,452,200  

California Statewide Communities Development Authority, Refunding RB, CHF-Irvine LLC:

   

5.00%, 05/15/33

    2,625       2,929,579  

5.00%, 05/15/40

    2,250       2,453,062  

University of California, RB, 5.25%, 05/15/36

    3,680       4,199,064  

University of California, Refunding RB, General, Series AZ, 5.25%, 05/15/58

    5,000       5,709,300  
   

 

 

 
    36,162,634  
Health — 12.0%            

California Health Facilities Financing Authority, RB:

   

Children’s Hospital, Series A, 5.25%, 11/01/41

    10,000       10,901,700  

Providence Health Services, Series B, 5.50%, 10/01/39

    4,205       4,306,803  

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

    7,715       8,235,917  

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

   

Adventist Health System West, 4.00%, 03/01/43

    1,400       1,410,444  

Adventist Health System/West, 4.00%, 03/01/39

    985       1,003,843  

Catholic Healthcare West, 6.00%, 07/01/19(b)

    5,500       5,599,330  

Dignity Health, 6.00%, 07/01/19(b)

    2,370       2,412,802  
 

 

 

20    2019 BLACKROCK SEMI-ANNUAL REPORT TO  SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniYield California Quality Fund, Inc. (MCA)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Health (continued)            

California Municipal Finance Authority, Refunding RB, Community Medical Centers, Series A, 5.00%, 02/01/42

  $ 4,000     $ 4,368,480  

California Statewide Communities Development Authority, RB:

   

Green Bond, Marin General Hospital, 4.00%, 08/01/45

    2,500       2,511,225  

Huntington Memorial Hospital Project, 4.00%, 07/01/48

    1,780       1,767,754  

Methodist Hospital of Southern California, 4.25%, 01/01/43

    4,550       4,556,552  

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

    4,130       4,405,595  

California Statewide Communities Development Authority, Refunding RB:

   

Front Porch Communities and Services, 4.00%, 04/01/42

    2,595       2,620,119  

Front Porch Communities and Services, 4.00%, 04/01/47

    1,320       1,321,769  

John Muir Health, Series A, 4.00%, 12/01/57

    3,250       3,205,637  

Trinity Health Credit Group Composite Issue, 5.00%, 12/01/41

    2,860       3,071,583  
   

 

 

 
      61,699,553  
State — 6.3%            

State of California, GO, Various Purposes:

   

6.00%, 04/01/19(b)

    4,910       4,945,548  

6.00%, 03/01/33

    5,500       5,756,245  

6.00%, 04/01/38

    8,970       9,028,395  

6.00%, 11/01/39

    3,510       3,614,563  

State of California Public Works Board, LRB:

   

Department of Education, Riverside Campus Project, Series B, 6.50%, 04/01/19(b)

    3,670       3,699,397  

Various Capital Projects, Series I, 5.50%, 11/01/33

    2,575       2,926,925  

Various Capital Projects, Sub-Series I-1, 6.13%, 11/01/19(b)

    2,615       2,704,198  
   

 

 

 
      32,675,271  
Tobacco — 1.2%            

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

   

5.00%, 06/01/33

    2,175       2,425,234  

5.00%, 06/01/35

    3,215       3,555,275  
   

 

 

 
      5,980,509  
Transportation — 21.4%            

Alameda Corridor Transportation Authority, Refunding RB, 2nd Subordinate Lien, Series B, 5.00%, 10/01/35

    1,500       1,668,180  

California Municipal Finance Authority, ARB, AMT:

   

Senior Lien, Linxs APM Project, 5.00%, 12/31/43

    6,500       7,090,330  

Senior Lien-Linxs APM Project, 4.00%, 12/31/47

    7,500       7,373,400  

City & County of San Francisco Airport Commission, Refunding RB, AMT, San Francisco International Airport, Series D, 5.00%, 05/01/43

    7,715       8,634,551  

City & County of San Francisco California Airports Commission, ARB:

   

Second Series E, 6.00%, 05/01/19(b)

    745       753,106  

Second Series E, 6.00%, 05/01/39

    8,905       9,001,886  

Special Facility Lease, SFO Fuel, Series A, AMT (AGM), 6.10%, 01/01/20

    190       190,684  

Special Facility Lease, SFO Fuel, Series A, AMT (AGM), 6.13%, 01/01/27

    985       992,003  

City & County of San Francisco California Airports Commission, Refunding ARB, AMT, Series A:

   

2nd, 5.25%, 05/01/33

    1,900       2,121,958  

5.00%, 05/01/40

    3,785       4,184,280  

5.00%, 05/01/44(d)

    6,000       6,768,240  

5.00%, 05/01/44

    2,660       2,910,732  

5.00%, 05/01/49(d)

    3,500       3,928,890  
Security   Par
(000)
    Value  
Transportation (continued)            

City of Los Angeles California Department of Airports, ARB:

   

Los Angeles International Airoport, Sub-Series B, 5.00%, 05/15/40

  $ 2,500     $ 2,595,575  

Series D, AMT, 5.00%, 05/15/35

    2,000       2,255,400  

Series D, AMT, 5.00%, 05/15/36

    1,500       1,686,945  

City of Los Angeles California Department of Airports, Refunding ARB, Los Angeles International Airport, Senior Series A, 5.25%, 05/15/29

    3,760       3,800,946  

City of Los Angeles Department of Airports, ARB, AMT, Subordinate, Series C, 5.00%, 05/15/38

    3,215       3,644,267  

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

   

Series A, 5.00%, 03/01/41

    3,075       3,410,636  

Series A, 5.00%, 03/01/47

    6,770       7,463,790  

Series A-1, 6.25%, 03/01/34

    1,400       1,511,986  

County of Sacramento California Airport System Revenue, Refunding ARB:

   

Airport System Subordinate Revenue, Sub-Series B, 5.00%, 07/01/41

    1,750       1,947,715  

Senior Series A, 5.00%, 07/01/41

    2,500       2,791,150  

County of San Bernardino California Transportation Authority, RB, Series A, 5.25%, 03/01/40

    4,500       5,148,585  

County of San Diego California Regional Airport Authority, Refunding ARB, Series B, 5.00%, 07/01/40

    6,350       6,608,635  

County of San Diego Regional Airport Authority, ARB, Subordinate, Series B, AMT, 5.00%, 07/01/47

    6,000       6,622,920  

Port of Los Angeles California Harbor Department, RB, Series B, 5.25%, 08/01/19(b)

    4,530       4,614,032  

Port of Los Angeles California Harbor Department, Refunding RB, Series A, AMT, 5.00%, 08/01/44

    200       222,038  
   

 

 

 
      109,942,860  
Utilities — 11.7%            

Anaheim Public Financing Authority, RB, Electric System Distribution Facilities, Series A, 5.38%, 04/01/21(b)

    5,000       5,416,550  

City of Los Angeles California Department of Water & Power, Refunding RB, Water System, Series A, 5.25%, 07/01/39

    8,000       8,501,360  

City of Los Angeles California Wastewater System Revenue, Refunding RB, Sub-Series A:

   

5.00%, 06/01/20(b)

    1,325       1,385,234  

5.00%, 06/01/28

    675       703,681  

City of San Francisco California Public Utilities Commission Water Revenue, RB, Sub-Series A, 5.00%, 11/01/37

    10,000       10,899,800  

City of San Francisco California Public Utilities Commission Water Revenue, Refunding RB, Series A:

   

5.25%, 11/01/19(b)

    6,280       6,453,830  

5.00%, 11/01/36

    3,335       3,811,872  

Dublin-San Ramon Services District Water Revenue, Refunding RB, 6.00%, 02/01/21(b)

    4,000       4,352,720  

East Bay California Municipal Utility District Water System Revenue, Refunding RB, Sub-Series A, 5.00%, 06/01/20(b)

    5,000       5,230,650  

El Dorado Irrigation District/El Dorado County Water Agency, Refunding RB, Series A (AGM), 5.25%, 03/01/39

    5,000       5,689,800  

San Diego Public Facilities Financing Authority, RB, Subordinate, Series A, 5.25%, 08/01/47

    5,000       5,860,150  

San Diego Public Facilities Financing Authority Sewer, Refunding RB, Senior Series A, 5.25%, 05/15/19(b)

    2,000       2,021,380  
   

 

 

 
      60,327,027  
   

 

 

 

Total Municipal Bonds — 91.2%
(Cost — $450,810,679
)

 

    469,643,658  
   

 

 

 
 

 

 

SCHEDULES OF INVESTMENTS      21  


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniYield California Quality Fund, Inc. (MCA)

(Percentages shown are based on Net Assets)

 

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

California — 82.6%

   
County/City/Special District/School District — 28.7%            

California Municipal Finance Authority, RB, Orange County Civic Center Infrastructure, 5.00%, 06/01/48

  $ 9,500     $ 10,704,457  

County of Riverside California Public Financing Authority, RB, Capital Facilities Project, 5.25%, 11/01/45

    10,000       11,538,600  

County of San Luis California Obispo Community College District, GO, Refunding Election of 2014, Series A, 4.00%, 08/01/40

    6,585       6,747,475  

County of San Mateo California Community College District, GO, Election of 2014, Series A, 5.00%, 09/01/45

    17,615       20,018,141  

Fremont Union High School District, GO, Refunding Series A, 4.00%, 08/01/46

    5,000       5,200,925  

Los Angeles California Unified School District, GO:

   

Election of 2008, Series B-1, 5.25%, 07/01/42(f)

    7,075       8,338,779  

Series I, 5.00%, 01/01/34

    5,000       5,060,375  

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

    9,596       9,807,106  

Los Angeles County Facilities Inc., RB, Vermont Corridor County Administration Building, Series A, 5.00%, 12/01/51(f)

    11,420       12,883,897  

Los Rios Community College District, GO, Election of 2008, Series A, 5.00%, 08/01/20(b)

    11,000       11,552,420  

Palomar Community College District, GO, Election of 2006, Series C, 5.00%, 08/01/44

    15,140       17,196,088  

Sacramento Area Flood Control Agency, Refunding, Consolidated Capital Assessment District No. 2, Series A, 5.00%, 10/01/43

    10,005       11,276,202  

West Valley-Mission Community College District, GO, Election of 2012, Series B, 4.00%, 08/01/40

    17,000       17,689,265  
   

 

 

 
    148,013,730  
Education — 11.7%  

University of California, RB:

   

Series AM, 5.25%, 05/15/44

    9,210       10,372,256  

Series O, 5.75%, 05/15/19(b)

    11,193       11,323,672  

University of California, Refunding RB:

   

Series A, 5.00%, 11/01/43

    13,002       14,640,789  

Series I, 5.00%, 05/15/40

    21,105       23,663,951  
   

 

 

 
    60,000,668  
Health — 19.1%  

California Health Facilities Financing Authority, Refunding RB, Kaiser Permanent, Sub-Series A-2, 4.00%, 11/01/44

    13,280       13,542,081  

California Health Facilities Financing Authority, RB:

   

Lucile Salter Packard Children’s Hospital at Stanford, 5.00%, 11/15/56

    6,000       6,565,760  

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

    7,500       7,605,150  

Sutter Health, Series A, 5.00%, 08/15/52

    10,000       10,730,850  

California Health Facilities Financing Authority, Refunding RB:

   

Lucile Salter Packard Children’s Hospital, Series B, 5.00%, 08/15/55

    4,500       4,921,594  

Providence St. Joseph Health, Series A, 4.00%, 10/01/47

    6,018       6,084,838  

Sutter Health, Series A, 5.00%, 08/15/43

    24,940       27,437,990  

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

    19,860       21,263,705  
   

 

 

 
    98,151,968  
State — 0.7%  

State of California, GO, Refunding, Various Purpose, 5.25%, 10/01/39

    3,000       3,443,760  
   

 

 

 
Security   Par
(000)
    Value  
Transportation — 9.5%  

Bay Area Toll Authority, Refunding RB, San Francisco Bay Area Toll Bridge(f):

   

4.00%, 04/01/42

  $ 11,250     $ 11,525,221  

4.00%, 04/01/49

    6,555       6,682,866  

City of Los Angeles California Department of Airports, ARB, AMT:

   

Los Angeles International Airport, Series B, 5.00%, 05/15/46

    5,000       5,507,075  

Series D, 5.00%, 05/15/41

    13,311       14,859,018  

City of Los Angeles California Department of Airports, RB, AMT:

   

Los Angeles International Airport, Series B, 5.00%, 05/15/41

    3,641       4,030,934  

Senior Revenue, Series A, 5.00%, 05/15/40

    5,500       6,144,050  
   

 

 

 
    48,749,164  
Utilities — 12.9%  

Anaheim Public Financing Authority, Refunding RB, Anaheim Convention Center Expansion Project, Series A:

   

5.00%, 05/01/39

    6,000       6,637,980  

5.00%, 05/01/46

    13,500       14,818,815  

Beaumont Public Improvement Authority, RB, Series A (AGM), 5.00%, 09/01/49

    6,000       6,881,900  

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

    4,380       4,491,909  

City of Los Angeles California Wastewater System Revenue, RB, Green Bonds, Series A, 5.00%, 06/01/44

    6,290       7,118,204  

City of Sacramento California Water Revenue, RB, 5.25%, 09/01/47

    14,825       17,281,436  

Los Angeles Department of Water, Refunding RB, Series A, 5.00%, 07/01/46

    8,413       9,408,494  
   

 

 

 
      66,638,738  
   

 

 

 

Total Municipal Bonds Transferred to Tender Option Bond Trusts — 82.6%
(Cost — $418,890,289)

 

    424,998,028  
   

 

 

 

Total Long-Term Investments — 173.8%
(Cost — $869,700,968
)

 

    894,641,686  
   

 

 

 
     Shares         
Short-Term Securities — 0.1%            

BlackRock Liquidity Funds California Money Fund, Institutional Class, 0.87%(g)(h)

    249,795       249,845  
   

 

 

 

Total Short-Term Securities — 0.1%
(Cost — $249,845
)

 

    249,845  
   

 

 

 

Total Investments — 173.9%
(Cost — $869,950,813
)

 

    894,891,531  

Liabilities in Excess of Other Assets — (0.1)%

 

    (206,556

Liability for TOB Trust Certificates, Including Interest Expense and Fees Payable — (41.5)%

 

    (213,724,464

VRDP Shares, at Liquidation Value, Net of Deferred Offering Costs — (32.3)%

 

    (166,245,364
   

 

 

 

Net Assets Applicable to Common Shares — 100.0%

 

  $ 514,715,147  
   

 

 

 

 

(a) 

Zero-coupon bond.

(b) 

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

(c) 

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.

 

 

 

22    2019 BLACKROCK SEMI-ANNUAL REPORT TO  SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniYield California Quality Fund, Inc. (MCA)

 

(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 April 1, 2025 to June 1, 2026 is $25,985,300. See Note 4 of the Notes to Financial Statements for details.

(g) 

Annualized 7-day yield as of period end.

    

 
(h) 

During the six months ended January 31, 2019, 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
07/31/18
     Net
Activity
     Shares
Held at
01/31/19
     Value at
01/31/19
     Income     

Net

Realized

Gain (Loss) (a)

     Change in
Unrealized
Appreciation
(Depreciation)
 

BlackRock Liquidity Funds California Money Fund, Institutional Class

            249,795        249,795      $ 249,845      $ 5,885      $      $  

BlackRock Liquidity Funds, MuniCash, Institutional Class

     349,727        (349,727                    8,242        (11      (25
           

 

 

    

 

 

    

 

 

    

 

 

 
            $ 249,845      $ 14,127      $ (11    $ (25
           

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Includes net capital gain distributions, if applicable.

 

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

Derivative Financial Instruments Outstanding as of Period End

Futures Contracts

 

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

Short Contracts:

                 

10-Year U.S. Treasury Note

     150          03/20/19        $ 18,370        $ (391,539

Long U.S. Treasury Bond

     216          03/20/19          31,685          (1,595,518

5-Year U.S. Treasury Note

     44          03/29/19          5,054          (86,574
                 

 

 

 
                  $ (2,073,631
                 

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

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

 

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

Liabilities — Derivative Financial Instruments

                    

Futures contracts

                    

Net unrealized depreciation(a)

   $      $      $      $      $ 2,073,631      $      $ 2,073,631  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

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

 

For the six months ended January 31, 2019, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

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

Net Realized Gain (Loss) from:

                    

Futures contracts

   $      $      $      $      $ 574,423      $      $ 574,423  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

                    

Futures contracts

   $      $      $      $      $ (2,141,292    $      $ (2,141,292
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

 

 

SCHEDULES OF INVESTMENTS      23  


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniYield California Quality Fund, Inc. (MCA)

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

        

Average notional value of contracts — short

   $ 40,865,016  

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

Fair Value Hierarchy as of Period End

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

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

 

      Level 1        Level 2        Level 3        Total  

Assets:

                 

Investments:

                 

Long-Term Investments(a)

   $        $ 894,641,686        $        $ 894,641,686  

Short-Term Securities

     249,845                            249,845  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 249,845        $ 894,641,686        $        $ 894,891,531  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative Financial Instruments(b)

                 

Liabilities:

                 

Interest rate contracts

   $ (2,073,631      $        $             —        $ (2,073,631
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

See above Schedule of Investments for values in each sector.

 
  (b) 

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

 

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

 

      Level 1        Level 2        Level 3        Total  

Liabilities:

                 

TOB trust certificates

   $        $ (212,664,205      $        $ (212,664,205

VRDP Shares at Liquidation Value

              (166,500,000                 (166,500,000
  

 

 

      

 

 

      

 

 

      

 

 

 
   $             —        $ (379,164,205      $             —        $ (379,164,205
  

 

 

      

 

 

      

 

 

      

 

 

 

During the six months ended January 31, 2019, there were no transfers between levels.

See notes to financial statements.

 

 

24    2019 BLACKROCK SEMI-ANNUAL REPORT TO  SHAREHOLDERS


Schedule of Investments  (unaudited) 

January 31, 2019

  

BlackRock MuniYield New York Quality Fund, Inc. (MYN)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  

Municipal Bonds — 127.2%

   

New York — 125.6%

   
Corporate — 2.9%            

City of New York Industrial Development Agency, Refunding RB, Transportation Infrastructure Properties LLC, Series A, AMT, 5.00%, 07/01/28

  $ 930     $ 993,231  

New York Liberty Development Corp., Refunding RB, Goldman Sachs Headquarters, 5.25%, 10/01/35

    12,070       14,735,780  
   

 

 

 
      15,729,011  
County/City/Special District/School District — 22.6%  

City of New York, GO, Refunding:

   

Fiscal 2012, Series I, 5.00%, 08/01/32

    490       534,144  

Fiscal 2014, Series E, 5.00%, 08/01/32

    2,040       2,281,169  

Series E, 5.50%, 08/01/25

    5,435       6,268,512  

City of New York, GO:

   

Series A-1, 5.00%, 08/01/35

    1,950       2,086,091  

Sub-Series A-1, 5.00%, 08/01/33

    2,100       2,345,406  

Sub-Series D-1, 5.00%, 10/01/33

    8,350       8,981,677  

Sub-Series D-1, Fiscal 2014, 5.00%, 08/01/31

    1,300       1,455,454  

City of New York Convention Center Development Corp., RB, CAB, Sub Lien, Hotel Unit Fee, Series B (AGM), 0.00%, 11/15/56(a)

    7,825       1,609,446  

City of New York Convention Center Development Corp., Refunding RB, Hotel Unit Fee Secured:

   

5.00%, 11/15/40

    7,370       8,253,589  

5.00%, 11/15/45

    13,995       15,609,183  

City of New York New York Industrial Development Agency, RB, PILOT:

   

(AMBAC), 5.00%, 01/01/39

    1,750       1,773,695  

CAB, Yankee Stadium Project, Series A (AGC), 0.00%, 03/01/39(a)

    5,000       2,266,650  

CAB, Yankee Stadium Project, Series A (AGC), 0.00%, 03/01/43(a)

    4,330       1,595,605  

Queens Baseball Stadium (AGC), 6.38%, 01/01/39

    1,000       1,003,550  

Queens Baseball Stadium (AMBAC), 5.00%, 01/01/36

    6,400       6,417,792  

Yankee Stadium Project (NPFGC), 5.00%, 03/01/36

    2,250       2,254,410  

Yankee Stadium Project (NPFGC), 5.00%, 03/01/46

    9,650       9,704,426  

City of New York Transitional Finance Authority Future Tax Secured, RB:

   

Future Tax Secured, Sub-Series A-3, 4.00%, 08/01/43

    3,320       3,413,956  

Future Tax Secured, Sub-Series E-1, 5.00%, 02/01/43

    975       1,094,964  

Series A-2, 5.00%, 08/01/38

    4,105       4,689,962  

Sub-Series B-1, 5.00%, 11/01/35

    2,510       2,820,336  

County of Nassau New York, GO, Series A, 5.00%, 01/15/31

    1,770       2,032,119  

County of Nassau New York, GOL, Series B, General Improvement Bonds (AGM), 5.00%, 07/01/45

    2,185       2,453,187  

Hudson Yards Infrastructure Corp., Refunding RB, Series A:

   

5.00%, 02/15/39

    800       904,888  

5.00%, 02/15/42

    6,225       6,994,161  

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

    5,655       6,050,850  

New York Convention Center Development Corp., RB, Hotel Unit Fee Secured, Series B(a):

   

0.00%, 11/15/42

    2,640       964,366  

0.00%, 11/15/47

    6,740       1,953,319  

0.00%, 11/15/48

    3,550       982,605  

New York Liberty Development Corp., Refunding RB:

   

4 World Trade Center Project, 5.00%, 11/15/31

    2,570       2,758,664  

4 World Trade Center Project, 5.00%, 11/15/44

    2,000       2,131,760  

4 World Trade Center Project, 5.75%, 11/15/51

    3,000       3,288,180  

7 World Trade Center Project, Class 1, 4.00%, 09/15/35

    1,090       1,136,663  

7 World Trade Center Project, Class 2, 5.00%, 09/15/43

    3,725       4,001,060  
   

 

 

 
      122,111,839  
Security   Par
(000)
    Value  
Education — 25.5%  

Albany Capital Resource Corp., Refunding RB, Albany College of Pharmacy and Health Sciences, Series A:

   

5.00%, 12/01/31

  $ 250     $ 274,568  

5.00%, 12/01/32

    100       109,270  

Amherst Development Corp., Refunding RB, University at Buffalo Foundation Faculty-Student Housing Corp., Series A (AGM), 4.63%, 10/01/20(b)

    2,000       2,097,240  

Build NYC Resource Corp., Refunding RB:

   

City University Queens College, Series A, 5.00%, 06/01/43

    525       583,123  

Manhattan College Project, 4.00%, 08/01/42

    975       988,328  

City of Albany New York Capital Resource Corp., Refunding RB, Albany College of Pharmacy and Health Sciences, Series A, 4.00%, 12/01/34

    110       111,711  

City of New York Trust for Cultural Resources, Refunding RB, Series A:

   

American Museum of Natural History, 5.00%, 07/01/37

    2,265       2,565,656  

American Museum of Natural History, 5.00%, 07/01/41

    825       927,820  

Carnegie Hall, 4.75%, 12/01/39

    3,550       3,620,574  

Carnegie Hall, 5.00%, 12/01/39

    2,150       2,200,847  

Wildlife Conservation Society, 5.00%, 08/01/42

    750       828,855  

City of Troy New York Capital Resource Corp., Refunding RB, Rensselaer Polytechnic Institute Project, Series A, 5.13%, 09/01/40

    5,740       5,974,766  

Counties of Buffalo & Erie New York Industrial Development Agency, RB, City School District of Buffalo Project, Series A:

   

5.25%, 05/01/31

    2,305       2,476,769  

5.25%, 05/01/32

    1,000       1,071,090  

Counties of Buffalo & Erie New York Industrial Development Agency, Refunding RB, City School District of Buffalo Project:

   

5.00%, 05/01/28

    750       888,623  

Series A, 5.00%, 05/01/29

    4,060       4,793,601  

Counties of Buffalo & Erie New York Industrial Land Development Corp., Refunding RB, Buffalo State College Foundation Housing Corp. Project, Series A, 5.38%, 10/01/41

    1,040       1,111,250  

County of Dutchess New York Local Development Corp., RB, Marist College Project:

   

5.00%, 07/01/43

    685       778,509  

5.00%, 07/01/48

    1,030       1,167,042  

County of Dutchess New York Local Development Corp., Refunding RB, Vassar College Project:

   

5.00%, 07/01/42

    1,180       1,336,975  

4.00%, 07/01/46

    2,235       2,297,669  

County of Madison New York Capital Resource Corp., RB, Colgate University Project, Series B:

   

5.00%, 07/01/40

    815       917,397  

5.00%, 07/01/43

    2,940       3,302,061  

County of Monroe New York Industrial Development Corp., RB, University of Rochester Project, Series B, 4.50%, 07/01/21(b)

    3,885       4,151,045  

County of Monroe New York Industrial Development Corp., Refunding RB, University of Rochester Project:

   

Series A, 5.00%, 07/01/23(b)

    1,440       1,643,616  

Series A, 4.00%, 07/01/39

    500       516,840  

Series C, 4.00%, 07/01/43

    1,000       1,033,180  

County of Onondaga New York, RB, Syracuse University Project:

   

5.00%, 12/01/30

    1,190       1,288,913  

5.00%, 12/01/36

    1,150       1,239,332  

County of St. Lawrence New York Industrial Development Agency, RB, Clarkson University Project, 5.38%, 09/01/41

    500       533,810  
 

 

 

SCHEDULES OF INVESTMENTS      25  


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniYield New York Quality Fund, Inc. (MYN)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Education (continued)  

County of Tompkins New York Development Corp., RB, Ithaca College Project (AGM)(b):

   

5.25%, 01/01/21

  $ 860     $ 917,414  

5.50%, 01/01/21

    500       535,715  

County of Tompkins New York Industrial Development Agency, RB, Civic Facility Cornell University Project, Series A, 5.00%, 07/01/37

    675       702,878  

State of New York Dormitory Authority, RB:

   

Convent of the Sacred Heart (AGM), 5.75%, 11/01/40

    2,075       2,238,489  

Fordham University, Series A,
5.00%, 07/01/21(b)

    325       351,078  

Fordham University, Series A,
5.50%, 07/01/21(b)

    1,550       1,692,615  

General Purpose, Series A, 5.00%, 02/15/36

    5,500       6,064,025  

New School (AGM), 5.50%, 07/01/20(b)

    4,050       4,266,715  

New York University Mount Sinai School of Medicine, 5.13%, 07/01/19(b)

    665       674,410  

New York University, Series 1 (AMBAC), 5.50%, 07/01/40

    4,580       5,918,734  

New York University, Series B,
5.00%, 07/01/19(b)

    1,000       1,013,850  

New York University, Series B, 5.00%, 07/01/37

    600       655,692  

New York University, Series B, 5.00%, 07/01/42

    3,240       3,531,794  

State University Dormitory Facilities, Series A, 5.00%, 07/01/35

    800       833,488  

State University Dormitory Facilities, Series A, 5.00%, 07/01/40

    2,035       2,114,406  

State University Dormitory Facilities, Series A, 5.00%, 07/01/41

    1,500       1,599,060  

State of New York Dormitory Authority, Refunding RB:

   

3rd General Resolution, State University Educational Facilities Issue, Series A, 5.00%, 05/15/29

    1,000       1,095,100  

Barnard College, Series A, 5.00%, 07/01/34

    1,150       1,316,313  

Barnard College, Series A, 4.00%, 07/01/37

    240       248,364  

Barnard College, Series A, 5.00%, 07/01/43

    2,520       2,839,939  

Cornell University, Series A, 5.00%, 07/01/40

    700       728,609  

Fordham University, 5.00%, 07/01/44

    2,130       2,338,932  

Icahn School of Medicine at Mount Sinai, Series A, 5.00%, 07/01/35

    1,380       1,547,477  

New York University, Series A, 5.00%, 07/01/31

    3,955       4,342,590  

New York University, Series A, 5.00%, 07/01/37

    4,775       5,218,215  

Pratt Institute, 5.00%, 07/01/46

    910       1,001,491  

Rochester Institute of Technology, 5.00%, 07/01/42

    750       807,825  

Series B, 5.00%, 02/15/37

    2,130       2,445,048  

Series E, 5.25%, 03/15/33

    2,250       2,623,477  

St. John’s University, Series A, 5.00%, 07/01/37

    2,240       2,525,802  

State University Dormitory Facilities, Series A, 5.25%, 07/01/30

    4,195       4,744,755  

State University Dormitory Facilities, Series A, 5.25%, 07/01/31

    8,735       9,871,860  

State University Dormitory Facilities, Series A, 5.00%, 07/01/42

    1,490       1,613,998  

State University Dormitory Facilities, Series A, 5.00%, 07/01/46

    2,490       2,802,420  

State University Dormitory Facilities, Series B, 5.00%, 07/01/32

    500       572,625  

State University Dormitory Facilities, Series B, 5.00%, 07/01/33

    1,140       1,300,523  

State University of New York Dormitory Facilities, Series A, 5.00%, 07/01/38

    1,475       1,683,344  

Town of Hempstead New York Local Development Corp., Refunding RB, Hofstra University Project, 5.00%, 07/01/47

    1,645       1,838,584  
   

 

 

 
      137,448,134  
Health — 9.2%            

City of New York Health & Hospital Corp., Refunding RB, Health System, Series A, 5.00%, 02/15/30

    2,200       2,262,194  
Security   Par
(000)
    Value  
Health (continued)            

County of Dutchess New York Industrial Development Agency, RB, Vassar Brothers Medical Center (AGC):

   

5.50%, 04/01/30

  $ 250     $ 264,110  

5.50%, 04/01/34

    490       517,494  

County of Dutchess New York Local Development Corp., RB, Health Quest Systems, Inc., Series B, 4.00%, 07/01/41

    3,305       3,315,444  

County of Monroe New York Industrial Development Corp., RB, Rochester General Hospital Project:

   

4.00%, 12/01/41

    800       802,632  

5.00%, 12/01/46

    1,280       1,398,464  

Series A, 5.00%, 12/01/32

    830       901,422  

Series A, 5.00%, 12/01/37

    350       377,601  

County of Monroe New York Industrial Development Corp., Refunding RB, Unity Hospital of Rochester Project (FHA), 5.50%, 08/15/40

    5,650       6,042,731  

County of Suffolk New York EDC, RB, Catholic Health Services, Series C, 5.00%, 07/01/32

    625       678,506  

County of Westchester New York Healthcare Corp., Refunding RB, Senior Lien, Remarketing, Series A, 5.00%, 11/01/30

    1,790       1,883,957  

State of New York Dormitory Authority, RB:

   

Healthcare, Series A, 5.00%, 03/15/19(b)

    2,000       2,008,000  

New York University Hospitals Center, Series A, 5.75%, 07/01/20(b)

    3,450       3,646,546  

New York University Hospitals Center, Series A, 6.00%, 07/01/20(b)

    1,100       1,166,484  

North Shore-Long Island Jewish Obligated Group, Series A, 5.50%, 05/01/19(b)

    2,075       2,094,630  

North Shore-Long Island Jewish Obligated Group, Series C, 4.25%, 05/01/39

    1,000       1,040,190  

North Shore-Long Island Jewish Obligated Group, Series D, 4.25%, 05/01/39

    300       312,057  

State of New York Dormitory Authority, Refunding RB:

   

Memorial Sloan-Kettering Cancer Center, Series 1, 5.00%, 07/01/42

    2,625       2,958,480  

North Shore-Long Island Jewish Obligated Group, Series A, 5.00%, 05/01/21(b)

    4,000       4,294,520  

North Shore-Long Island Jewish Obligated Group, Series A, 5.25%, 05/01/21(b)

    9,220       9,949,394  

North Shore-Long Island Jewish Obligated Group, Series A, 5.00%, 05/01/32

    3,525       3,957,553  
   

 

 

 
    49,872,409  
Housing — 4.5%            

City of New York Housing Development Corp., RB, M/F Housing, Fund Grant Program, New York City Housing Authority Program, Series B1:

   

5.25%, 07/01/32

    6,865       7,551,775  

5.00%, 07/01/33

    1,675       1,819,536  

City of New York Housing Development Corp., Refunding RB, M/F Housing, 8 Spruce Street, Class F, 4.50%, 02/15/48

    1,230       1,274,132  

City of Yonkers New York Industrial Development Agency, RB, Monastery Manor Associates LP Project, Series A, AMT (SONYMA), 5.25%, 04/01/37

    2,445       2,451,822  

State of New York HFA, RB, M/F:

   

Affordable Housing, Series B (Ginnie Mae, Fannie Mae & Freddie Mac), 4.00%, 11/01/42

    1,045       1,054,112  

Green Bonds, Series H, 4.15%, 11/01/43

    1,650       1,681,086  

Green Bonds, Series H, 4.20%, 11/01/48

    1,095       1,116,363  

St. Philip’s Housing, Series A, AMT, 4.65%, 11/15/38

    1,500       1,523,775  

State of New York Mortgage Agency, Refunding RB:

   

S/F, Series 213, 4.20%, 10/01/43

    2,305       2,367,235  

Series 190, 3.80%, 10/01/40

    3,470       3,471,492  
   

 

 

 
    24,311,328  
 

 

 

26    2019 BLACKROCK SEMI-ANNUAL REPORT TO  SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniYield New York Quality Fund, Inc. (MYN)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
State — 17.0%            

City of New York Transitional Finance Authority, BARB, Series S-3, 5.25%, 07/15/36

  $ 1,910     $ 2,259,492  

City of New York Transitional Finance Authority Building Aid Revenue, BARB, Fiscal 2015, Series S-1, 5.00%, 07/15/37

    2,000       2,229,040  

City of New York Transitional Finance Authority Building Aid Revenue, Refunding RB, Series S-3, 4.00%, 07/15/38

    6,070       6,387,157  

City of New York Transitional Finance Authority Future Tax Secured, RB:

   

Fiscal 2014, Sub-Series A-1, 5.00%, 11/01/38

    1,000       1,105,440  

Fiscal 2014, Sub-Series B-1, 5.00%, 11/01/36

    1,690       1,896,298  

Fiscal 2016, Sub-Series B-1, 5.00%, 11/01/38

    4,000       4,497,840  

Future Tax Secured Subordinate Bonds, SubSeries A-1, 5.00%, 08/01/40

    1,025       1,175,901  

Future Tax Secured, Sub-Series F-1, 5.00%, 05/01/42

    7,175       8,092,682  

Metropolitan Transportation Authority, Refunding RB, Dedicated Tax Fund:

   

Series B, 5.00%, 11/15/19(b)

    1,500       1,539,720  

Sub-Series B-1, 5.00%, 11/15/31

    3,465       3,902,872  

Sales Tax Asset Receivable Corp., Refunding RB, Fiscal 2015, Series A, 4.00%, 10/15/32

    3,835       4,157,677  

State of New York Dormitory Authority, RB:

   

Bid Group 3, Series A, 5.00%, 03/15/39

    1,610       1,848,441  

Bid Group 3, Series A, 5.00%, 03/15/43

    1,560       1,776,434  

Bidding Group Bond, 4.00%, 02/15/46

    2,835       2,909,249  

General Purpose, Series B, 5.00%, 03/15/37

    1,000       1,081,920  

General Purpose, Series B, 5.00%, 03/15/42

    7,500       8,060,475  

Group B, State Sales Tax, Series A, 5.00%, 03/15/39

    2,280       2,586,842  

Group C, Sales Tax, Series A, 5.00%, 03/15/41

    8,550       9,648,333  

Group C, State Sales Tax, Series A, 4.00%, 03/15/45

    3,900       3,992,235  

Master BOCES Program Lease (AGC), 5.00%, 08/15/19(b)

    1,750       1,781,868  

Sales tax, Group B, Series A, 5.00%, 03/15/38

    3,245       3,691,707  

Series A, 5.00%, 02/15/42

    3,000       3,358,800  

Series B, 5.00%, 03/15/37

    2,000       2,258,760  

State Personal Income Tax, Series A, 5.00%, 02/15/43

    1,000       1,096,080  

State of New York Dormitory Authority, Refunding RB:

   

Group 3, Series E, 5.00%, 03/15/41

    3,335       3,834,283  

Series C, 5.00%, 03/15/38

    3,850       4,436,702  

State of New York Urban Development Corp., RB, State Personal Income Tax, Series C, 5.00%, 03/15/32

    2,000       2,219,900  
   

 

 

 
      91,826,148  
Tobacco — 2.4%            

Counties of New York Tobacco Trust VI, Refunding RB, Tobacco Settlement Pass-Through:

   

Series A, 5.00%, 06/01/41

    425       446,497  

Series A-2B, 5.00%, 06/01/51

    800       807,760  

Series B, 5.00%, 06/01/45

    2,460       2,497,515  

County of Chautauqua New York Tobacco Asset Securitization Corp., Refunding RB, Asset-Backed, 4.75%, 06/01/39

    2,190       2,139,608  

County of Niagara New York Tobacco Asset Securitization Corp., Refunding RB, Asset-Backed:

   

5.25%, 05/15/34

    1,650       1,738,374  

5.25%, 05/15/40

    2,250       2,353,117  

Westchester New York Tobacco Asset Securitization, Refunding RB, Tobacco Settlement Bonds, Sub-Series C, 4.00%, 06/01/42

    3,325       3,090,787  
   

 

 

 
      13,073,658  
Transportation — 25.9%            

Buffalo & Fort Erie Public Bridge Authority, RB, Toll Bridge System:

   

5.00%, 01/01/42

    1,250       1,394,050  

5.00%, 01/01/47

    1,545       1,716,248  
Security   Par
(000)
    Value  
Transportation (continued)            

Metropolitan Transportation Authority, RB:

   

Green Bonds, Series A, 5.00%, 11/15/42

  $ 3,500     $ 3,968,545  

Series A, 5.00%, 11/15/21(b)

    1,000       1,092,370  

Series A, 5.00%, 05/15/23(b)

    1,000       1,137,880  

Series A-1, 5.25%, 11/15/23(b)

    2,565       2,985,173  

Series A-1, 5.25%, 11/15/23(b)

    2,840       3,305,220  

Series D, 5.25%, 11/15/21(b)

    765       840,842  

Series E, 5.00%, 11/15/38

    7,785       8,458,792  

Series E, 5.00%, 11/15/43

    4,000       4,336,920  

Series H, 5.00%, 11/15/22(b)

    930       1,044,799  

Series H, 5.00%, 11/15/31

    760       823,528  

Sub-Series B, 5.00%, 11/15/23(b)

    3,250       3,745,202  

Metropolitan Transportation Authority, Refunding RB:

   

Green Bond, SubSeries B-1, 5.00%, 11/15/51

    2,815       3,147,029  

Green Bonds, Climate Bond Certified, Sub-Series B-2, 4.00%, 11/15/34

    3,000       3,222,780  

Green Bonds, Series A-1, 5.25%, 11/15/56

    2,610       2,876,481  

Green Bonds, Series A-1, 5.25%, 11/15/57

    1,795       1,997,189  

Series D, 5.25%, 11/15/20(b)

    1,000       1,063,980  

Series D, 5.25%, 11/15/21(b)

    2,685       2,951,191  

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

    3,500       3,804,780  

New York Transportation Development Corp., ARB, LaGuardia Airport Terminal B Redevelopment Project, Series A, AMT:

   

5.00%, 07/01/41

    2,155       2,275,960  

5.00%, 07/01/46

    11,545       12,158,501  

5.25%, 01/01/50

    920       978,153  

(AGM), 4.00%, 07/01/41

    1,575       1,582,576  

Niagara Falls Bridge Commission, Refunding RB, Toll Bridge System, Series A (AGC), 4.00%, 10/01/19

    420       426,149  

Port Authority of New York & New Jersey, ARB,:

   

Consolidated, 163rd Series, 5.00%, 07/15/35

    2,500       2,605,700  

Consolidated,169th Series, 5.00%, 10/15/41

    1,000       1,065,050  

Consolidated,183rd Series, 4.00%, 06/15/44

    1,500       1,528,245  

JFK International Air Terminal LLC, Special Project, Series 6, AMT (NPFGC), 5.75%, 12/01/22

    6,705       6,975,882  

Port Authority of New York & New Jersey, Refunding ARB:

   

178th Series, AMT, 5.00%, 12/01/33

    1,140       1,263,815  

179th Series, 5.00%, 12/01/38

    1,390       1,559,080  

Consolidated, 177th Series, AMT, 4.00%, 01/15/43

    735       741,938  

Consolidated, 178th Series, AMT, 5.00%, 12/01/43

    750       817,238  

Consolidated, 186th Series, AMT, 5.00%, 10/15/44

    1,000       1,094,110  

Consolidated, 195th Series, AMT, 5.00%, 04/01/36

    1,500       1,682,040  

Series G, JFK International Air Terminal (AGM), 5.75%, 12/01/25

    3,500       3,641,645  

State of New York Thruway Authority, RB, Junior Lien, Series A:

   

5.00%, 01/01/41

    2,110       2,347,818  

5.25%, 01/01/56

    2,940       3,245,613  

State of New York Thruway Authority, Refunding RB:

   

General, Series I, 5.00%, 01/01/37

    4,225       4,502,287  

General, Series I, 5.00%, 01/01/42

    3,250       3,448,282  

General, Series J, 5.00%, 01/01/41

    6,275       6,879,722  

General, Series K, 5.00%, 01/01/29

    2,225       2,549,761  

General, Series K, 5.00%, 01/01/31

    1,500       1,708,290  

Series L, 5.00%, 01/01/33

    490       573,619  

Series L, 5.00%, 01/01/34

    840       977,592  

Series L, 5.00%, 01/01/35

    970       1,124,754  

Triborough Bridge & Tunnel Authority, RB, Series B:

   

5.00%, 11/15/40

    1,010       1,147,653  

5.00%, 11/15/45

    1,500       1,697,505  

Triborough Bridge & Tunnel Authority, Refunding RB:

   

General, CAB, Series B, 0.00%, 11/15/32(a)

    9,700       6,070,648  
 

 

 

SCHEDULES OF INVESTMENTS      27  


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniYield New York Quality Fund, Inc. (MYN)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Transportation (continued)            

General, Series A, 5.00%, 11/15/38

  $ 1,000     $ 1,096,430  

General, Series A, 5.25%, 11/15/45

    1,460       1,689,205  

General, Series A, 5.00%, 11/15/50

    4,500       5,063,580  

MTA Bridge and Tunnels, Series C, 5.00%, 11/15/37

    1,050       1,234,601  
   

 

 

 
      139,666,441  
Utilities — 16.9%            

City of New York Municipal Water Finance Authority, RB, Water & Sewer System, 2nd General Resolution, Fiscal 2017, Series DD, 5.25%, 06/15/47

    4,140       4,744,357  

City of New York Municipal Water Finance Authority, Refunding RB, Water & Sewer System, 2nd General Resolution, Fiscal 2015, Series HH, 5.00%, 06/15/39

    3,000       3,365,460  

City of New York Municipal Water Finance Authority, Refunding RB, Water & Sewer System, 2nd General Resolution:

   

Fiscal 2010, Series FF, 5.00%, 06/15/31

    1,500       1,563,105  

Fiscal 2011, Series BB, 5.00%, 06/15/31

    1,000       1,042,070  

Fiscal 2011, Series GG, 5.00%, 06/15/21(b)

    1,000       1,078,790  

City of New York Water & Sewer System, RB, Series DD-1, 4.00%, 06/15/49

    1,365       1,403,643  

City of New York Water & Sewer System, Refunding RB, Series EE, 5.00%, 06/15/40

    5,170       5,917,427  

County of Western Nassau New York Water Authority, RB, Series A, 5.00%, 04/01/40

    1,185       1,326,501  

Long Island Power Authority, RB:

   

5.00%, 09/01/37

    3,825       4,423,039  

5.00%, 09/01/35

    2,000       2,334,340  

General, 5.00%, 09/01/47

    1,075       1,202,828  

General, 5.00%, 09/01/36

    975       1,119,066  

General, Electric Systems, 5.00%, 09/01/42

    335       377,223  

General, Electric Systems, Series A (AGM), 5.00%, 05/01/21(b)

    3,775       4,052,953  

Long Island Power Authority, Refunding RB:

   

Electric System, Series B, 5.00%, 09/01/41

    590       657,980  

Electric System, Series B, 5.00%, 09/01/46

    825       914,801  

Electric Systems, Series A (AGC), 5.75%, 04/01/19(b)

    1,015       1,021,719  

General, Electric Systems, Series A (AGC), 6.00%, 05/01/19(b)

    1,500       1,515,990  

State of New York Environmental Facilities Corp., RB, Series B:

   

Green Bonds, 5.00%, 03/15/45

    5,145       5,767,597  

Revolving Funds, Green Bonds, 5.00%, 09/15/40

    1,195       1,346,765  

Subordinated SRF Bonds, 5.00%, 06/15/48

    1,345       1,544,195  

State of New York Environmental Facilities Corp., Refunding RB:

   

Revolving Funds, New York City Municipal Water, Series B, 5.00%, 06/15/36

    2,100       2,240,679  

Series A, 5.00%, 06/15/40

    4,275       4,840,925  

Series A, 5.00%, 06/15/45

    18,920       21,306,758  

State of New York Power Authority, Refunding RB, Series A, 5.00%, 11/15/38

    4,920       5,315,716  

Utility Debt Securitization Authority, Refunding RB, Restructuring, Series TE, 5.00%, 12/15/41

    9,960       11,078,906  
   

 

 

 
      91,502,833  
   

 

 

 

Total Municipal Bonds in New York

 

    685,541,801  
   

 

 

 

Guam — 0.3%

 

Utilities — 0.3%  

Guam Power Authority, RB, Series A (AGM), 5.00%, 10/01/20(b)

    1,380       1,454,354  
   

 

 

 

Total Municipal Bonds — 127.2%
(Cost — $657,073,083)

 

    686,996,155  
   

 

 

 
Security   Par
(000)
    Value  

Municipal Bonds Transferred to Tender Option Bond Trusts(c)

 

New York — 38.5%

 

 
County/City/Special District/School District — 7.1%        

City of New York, GO:

   

Sub-Series C-3 (AGC), 5.75%, 02/15/19(b)(e)

  $ 916     $ 917,026  

Sub-Series C-3 (AGC), 5.75%, 08/15/28(e)

    13,484       13,501,622  

Sub-Series I-1, 5.00%, 03/01/36

    3,500       3,913,403  

Refunding Series E, 5.00%, 08/01/19(b)

    309       313,758  

Refunding Series E, 5.00%, 08/01/27

    755       767,644  

City of New York Transitional Finance Authority, RB, Future Tax Secured, Sub-Series D-1, 5.00%, 11/01/38

    4,125       4,413,420  

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

   

5.75%, 02/15/21(b)

    6,030       6,496,211  

5.75%, 02/15/47

    3,709       3,996,272  

New York Liberty Development Corp., Refunding RB, 7 World Trade Center Project, Class 1, 5.00%, 09/15/40

    3,645       3,946,028  
   

 

 

 
      38,265,384  
Education — 2.6%            

City of New York Trust for Cultural Resources, Refunding RB, Wildlife Conservation Society, Series A, 5.00%, 08/01/33

    1,981       2,206,443  

State of New York Dormitory Authority, RB, State University Dormitory Facilities, New York University, Series A:

   

5.25%, 07/01/19(b)

    6,000       6,090,390  

5.00%, 07/01/35

    5,198       5,549,183  
   

 

 

 
      13,846,016  
Housing — 1.8%            

City of New York Housing Development Corp., Refunding RB, Sustainable Neighborhood Bonds, Series A, 4.25%, 11/01/43(d)

    4,370       4,508,769  

New York State Housing Finance Agency, RB, M/F, Affordable Housing, Climate Bond Certified, Series I, 4.05%, 11/01/48

    5,457       5,496,127  
   

 

 

 
      10,004,896  
State — 7.4%  

City of New York Transitional Finance Authority, RB, Future Tax Secured, Sub-Series F-1, 5.00%, 05/01/38

    4,123       4,694,804  

Sales Tax Asset Receivable Corp., Refunding RB, Fiscal 2015, Series A:

   

5.00%, 10/15/31

    7,995       9,150,518  

4.00%, 10/15/32

    8,000       8,672,480  

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

    7,850       7,887,641  

State of New York Dormitory Authority, RB:

   

Bid Group 2, Series A, 5.00%, 03/15/32

    2,000       2,369,370  

General Purpose, Series C, 5.00%, 03/15/41

    1,650       1,745,576  

State of New York Dormitory Authority, Refunding RB, Series A, 5.00%, 03/15/40(e)

    3,549       4,076,235  

State of New York Urban Development Corp., Refunding RB, State Personal Income Tax, Series A, 5.00%, 03/15/45

    1,001       1,113,455  
   

 

 

 
    39,710,079  
Transportation — 13.5%  

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

    17,999       19,540,176  

Port Authority of New York & New Jersey, Refunding ARB:

   

194th Series, 5.25%, 10/15/55

    3,900       4,447,716  

Consolidated, 210th Series, 5.00%, 09/01/48

    4,760       5,436,396  

Consolidated, Series 169th, 5.00%, 10/15/25

    7,990       8,564,231  

Consolidated, Series 169th, 5.00%, 10/15/26

    6,000       6,432,150  

State of New York Thruway Authority, Refunding RB, Transportation, Personal Income Tax,
Series A, 5.00%, 03/15/31

    3,940       4,233,707  
 

 

 

28    2019 BLACKROCK SEMI-ANNUAL REPORT TO  SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniYield New York Quality Fund, Inc. (MYN)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Transportation (continued)  

Triborough Bridge & Tunnel Authority, Refunding RB:

   

General, Series A, 5.00%, 11/15/46

  $ 15,000     $ 16,792,200  

MTA Bridges & Tunnels, Series C-2, 5.00%, 11/15/42

    6,675       7,632,039  
   

 

 

 
      73,078,615  
Utilities — 6.1%  

City of New York Municipal Water Finance Authority, Refunding RB, Water & Sewer System, 2nd General Resolution:

   

Fiscal 2011, Series HH, 5.00%, 06/15/32

    9,900       10,577,292  

Fiscal 2012, Series BB, 5.00%, 06/15/44

    3,991       4,283,918  

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

    2,760       2,796,984  

City of New York Water & Sewer System, Refunding RB, 2nd General Resolution, Fiscal 2018, 5.00%, 06/15/38(e)

    1,391       1,590,435  

Utility Debt Securitization Authority, Refunding RB:

   

5.00%, 12/15/41

    5,998       6,665,050  

Restructuring, Series A, 5.00%, 12/15/35

    3,500       4,031,387  

Restructuring, Series B, 4.00%, 12/15/35

    2,980       3,160,052  
   

 

 

 
    33,105,118  
   

 

 

 

Total Municipal Bonds Transferred to Tender Option Bond Trusts — 38.5%
(Cost — $202,943,874)

 

    208,010,108  
   

 

 

 

Total Long-Term Investments — 165.7%
(Cost — $860,016,957)

 

    895,006,263  
   

 

 

 
Security  

    

Shares

    Value  
Short-Term Securities — 0.1%            

BlackRock Liquidity Funds New York Money Fund Portfolio, 1.13%(f)(g)

    270,137     $ 270,137  
   

 

 

 

Total Short-Term Securities — 0.1%
(Cost — $270,137)

 

    270,137  
   

 

 

 

Total Investments — 165.8%
(Cost — $860,287,094)

 

    895,276,400  

Other Assets Less Liabilities — 0.9%

 

    4,972,100  

Liability for TOB Trust Certificates, Including Interest Expense and Fees Payable — (20.9)%

 

    (112,833,415

VRDP Shares at Liquidation Value, Net of Deferred Offering Costs — (45.8)%

 

    (247,361,144
   

 

 

 

Net Assets Applicable to Common Shares — 100.0%

 

  $ 540,053,941  
   

 

 

 
(a) 

Zero-coupon bond.

(b) 

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

(c) 

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.

(d) 

When-issued security.

(e) 

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 February 15, 2019 to September 15, 2026, is $15,965,215. See Note 4 of the Notes to Financial Statements for details.

(f) 

Annualized 7-day yield as of period end.

 
(g) 

During the six months ended January 31, 2019, 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
07/31/18
     Net
Activity
     Shares
Held at
01/31/19
     Value at
01/31/19
     Income      Net
Realized
Gain (Loss) (a)
     Change in
Unrealized
Appreciation
(Depreciation)
 

BlackRock Liquidity Funds New York Money Fund Portfolio

            270,137        270,137      $ 270,137      $ 10,948      $      $  

BlackRock Liquidity Funds, MuniCash, Institutional Class

     2,731,322        (2,731,322                    8,816        87        (361
           

 

 

    

 

 

    

 

 

    

 

 

 
            $ 270,137      $ 19,764      $ 87      $ (361
           

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Includes net capital gain distributions, if applicable.

 

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

Derivative Financial Instruments Outstanding as of Period End

Futures Contracts

 

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

Short Contracts:

                 

10-Year U.S. Treasury Note

     117          03/20/19        $ 14,329        $ (308,427

Long U.S. Treasury Bond

     238          03/20/19          34,912          (1,535,822

5-Year U.S. Treasury Note

     66          03/29/19          7,581          (120,573
                 

 

 

 
                  $ (1,964,822
                 

 

 

 

 

 

SCHEDULES OF INVESTMENTS      29  


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniYield New York Quality Fund, Inc. (MYN)

 

Derivative Financial Instruments Categorized by Risk Exposure

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

 

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

Liabilities — Derivative Financial Instruments

                    

Futures contracts

                    

Net unrealized depreciation(a)

   $      $      $      $      $ 1,964,822      $      $ 1,964,822  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Includes cumulative 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 six months ended January 31, 2019, the effect of derivative financial instruments in the Statements of Operations were as follows:

 

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

Other

Contracts

     Total  

Net Realized Gain (Loss) from:

                    

Futures contracts

   $      $      $      $      $ 274,036      $      $ 274,036  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

                    

Futures contracts

   $      $      $      $      $ (1,901,734    $      $ (1,901,734
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

        

Average notional value of contracts — short

   $ 42,095,887  

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

Fair Value Hierarchy as of Period End

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

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

 

      Level 1        Level 2        Level 3        Total  

Assets:

                 

Investments:

                 

Long-Term Investments(a)

   $        $ 895,006,263        $        $ 895,006,263  

Short-Term Securities

     270,137                            270,137  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 270,137        $ 895,006,263        $        $ 895,276,400  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative Financial Instruments(b)

                 

Liabilities:

                 

Interest rate contracts

   $ (1,964,822      $        $             —        $ (1,964,822
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

See above Schedule of Investments for values in each sector.

 
  (b) 

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

 

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

 

      Level 1        Level 2        Level 3        Total  

Liabilities:

                 

TOB Trust Certificates

   $        $ (112,386,871      $        $ (112,386,871

VRDP Shares at Liquidation Value

              (247,700,000                 (247,700,000
  

 

 

      

 

 

      

 

 

      

 

 

 
   $             —        $ (360,086,871      $             —        $ (360,086,871
  

 

 

      

 

 

      

 

 

      

 

 

 

During the six months ended January 31, 2019, there were no transfers between levels.

See notes to financial statements.

 

 

30    2019 BLACKROCK SEMI-ANNUAL REPORT TO  SHAREHOLDERS


Schedule of Investments  (unaudited) 

January 31, 2019

  

BlackRock MuniYield Quality Fund III, Inc. (MYI)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  

Municipal Bonds — 116.8%

   
Alabama — 2.8%            

Auburn University, RB, Series A, 5.00%, 06/01/48

  $ 11,185     $ 12,725,734  

Birmingham-Jefferson Civic Center Authority, Special Tax Bonds, Series A, 4.00%, 07/01/43

    4,000       4,031,120  

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

    3,605       3,654,641  

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

    2,485       2,768,539  

Homewood Educational Building Authority, Refunding RB, Educational Facilities, Samford University, Series A, 5.00%, 12/01/47

    2,835       3,103,219  
   

 

 

 
    26,283,253  
Alaska — 1.4%            

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

    2,690       2,894,063  

Borough of Matanuska-Susitna Alaska, RB, Goose Creek Correctional Center (AGC)(a):

   

6.00%, 09/01/19

    3,700       3,791,464  

6.00%, 09/01/19

    6,450       6,607,574  
   

 

 

 
    13,293,101  
Arizona — 0.4%            

County of Maricopa Industrial Development Authority, Refunding RB, HonorHealth, Series A, 5.00%, 09/01/42

    435       480,605  

State of Arizona, COP, Department of Administration, Series A (AGM), 5.00%, 10/01/27

    3,075       3,141,697  
   

 

 

 
    3,622,302  
California — 8.8%            

California Health Facilities Financing Authority, RB:

   

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

    1,550       1,575,978  

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

    3,200       3,410,016  

California Health Facilities Financing Authority, Refunding RB:

   

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

    1,625       2,092,383  

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

    2,965       3,264,702  

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

    4,030       4,316,251  

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

   

Series A, 5.00%, 03/01/36

    1,160       1,306,647  

Series A, 5.00%, 03/01/37

    1,275       1,430,397  

Series A-1, 5.75%, 03/01/34

    2,300       2,453,571  

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

    1,830       1,994,060  

Dublin Unified School District California, GO, CAB, Election of 2004, Series D, 0.00%, 08/01/34(b)

    5,000       1,930,450  

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

    5,110       3,479,655  

Long Beach Unified School District, GO, CAB, Election of 2008, Series B, 0.00%, 08/01/34(b)

    5,000       2,890,000  

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

    3,975       3,369,528  

Norwalk-La Mirada Unified School District, GO, Refunding, CAB, Election of 2002, Series E (AGC),
0.00%, 08/01/38(b)

    7,620       3,495,827  

Poway Unified School District, GO, Refunding, CAB, School Facilities Improvement, Election of 2008, Series B(b):

   

0.00%, 08/01/35

    7,820       4,334,704  

0.00%, 08/01/36

    10,000       5,284,300  

Rio Hondo Community College District California, GO, CAB, Election of 2004, Series C(b):

   

0.00%, 08/01/37

    8,000       4,053,920  

0.00%, 08/01/38

    12,940       6,224,528  
Security   Par
(000)
    Value  
California (continued)            

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

   

0.00%, 07/01/34

  $ 1,860     $ 928,735  

0.00%, 07/01/35

    1,970       925,033  

0.00%, 07/01/36

    2,960       1,307,106  

0.00%, 07/01/37

    1,975       820,494  

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

    3,485       2,350,319  

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

   

5.00%, 08/01/21

    1,800       1,955,826  

5.00%, 08/01/21

    1,600       1,738,512  

State of California, GO, Refunding, Various Purposes:

   

5.00%, 09/01/41

    2,700       2,893,131  

5.00%, 10/01/41

    2,555       2,743,457  

State of California, GO, Series 2007-2 (NPFGC), 5.50%, 04/01/30

    10       10,030  

State of California Public Works Board, LRB, Various Capital Projects, Series I, 5.00%, 11/01/38

    5,040       5,547,780  

State of California University, RB, Systemwide, Series A, 5.50%, 05/01/19(a)

    1,525       1,539,945  

Walnut Valley Unified School District, GO, CAB, Election of 2007, Series B, 0.00%, 08/01/36(b)

    6,545       3,343,121  
   

 

 

 
    83,010,406  
Colorado — 0.8%            

Denver Convention Center Hotel Authority, Refunding RB, 5.00%, 12/01/36

    1,500       1,638,600  

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

    5,655       6,192,055  
   

 

 

 
    7,830,655  
Florida — 9.2%            

City of Jacksonville Florida, Refunding RB, Series A, 5.25%, 10/01/42

    4,000       4,560,480  

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

    4,535       4,884,331  

County of Broward Florida Airport System Revenue, RB, Series A , AMT, 5.00%, 10/01/40

    3,000       3,283,740  

County of Highlands Florida Health Facilities Authority, RB, Adventist Health System/Sunbelt Obligated Group:

   

6.00%, 11/15/19(a)

    5       5,167  

6.00%, 11/15/37

    1,745       1,801,224  

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

   

5.63%, 10/01/26

    2,600       2,801,344  

5.38%, 10/01/32

    3,440       3,674,918  

County of Miami-Dade Florida, RB, Seaport:

   

Department, Series A, 6.00%, 10/01/38

    5,695       6,514,909  

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

    1,165       1,338,235  

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

    1,865       2,124,738  

Series B, AMT, 6.00%, 10/01/30

    1,820       2,089,760  

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

    530       582,449  

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

    6,500       7,222,540  

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

    14,360       15,674,802  

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

    1,675       1,854,292  

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

   

5.00%, 08/01/41

    1,550       1,654,656  

5.00%, 08/01/47

    4,590       4,875,452  
 

 

 

SCHEDULES OF INVESTMENTS      31  


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniYield Quality Fund III, Inc. (MYI)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Florida (continued)            

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

   

5.00%, 10/01/21(a)

  $ 50     $ 54,161  

5.00%, 10/01/31

    3,050       3,300,496  

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

    5,135       5,216,749  

Greater Orlando Aviation Authority, ARB, Priority Sub-Series A, AMT, 5.00%, 10/01/42

    4,760       5,270,415  

South Miami Health Facilities Authority, Refunding RB, Baptist Health South Florida Obligated Group, 5.00%, 08/15/42

    2,965       3,309,059  

Town of Davie Florida, Refunding RB, Nova Southeastern University Project, 5.00%, 04/01/37

    4,630       5,139,300  
   

 

 

 
    87,233,217  
Georgia — 0.4%            

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

    1,405       1,594,127  

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

   

5.00%, 04/01/33

    395       430,846  

5.00%, 04/01/44

    1,775       1,892,381  
   

 

 

 
    3,917,354  
Hawaii — 1.3%            

State of Hawaii Airports System Revenue, ARB, Series A,AMT, 5.00%, 07/01/43

    2,385       2,651,405  

State of Hawaii Department of Budget & Finance, Refunding RB, Hawaiian Electric Co., Inc. AMT, 4.00%, 03/01/37

    5,275       5,318,413  

State of Hawaii Department of Transportation, COP, AMT:

   

5.00%, 08/01/27

    2,000       2,198,680  

5.00%, 08/01/28

    1,775       1,945,027  
   

 

 

 
    12,113,525  
Illinois — 13.6%            

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

    2,425       2,582,043  

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

    3,035       3,282,686  

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

   

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

    7,555       8,131,447  

3rd Lien, Series A, 5.75%, 01/01/39

    1,445       1,532,220  

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

    8,285       9,272,738  

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

    2,865       3,101,907  

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

    1,620       1,711,643  

County of Cook Illinois Community College District No. 508, GO, City College of Chicago, 5.13%, 12/01/38

    3,250       3,335,605  

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

    615       644,206  

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

    8,700       9,393,564  

Illinois Finance Authority, Refunding RB:

   

Northwestern Memorial Hospital,
Series A, 6.00%, 08/15/19(a)

    5,250       5,368,703  

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

    985       1,050,434  

Metropolitan Pier & Exposition Authority, RB, CAB, McCormick Place Expansion Project, Series A (NPFGC)(b):

   

0.00%, 12/15/26

    8,500       6,307,425  

0.00%, 06/15/32

    14,000       7,856,520  

0.00%, 12/15/33

    20,000       10,397,200  

0.00%, 12/15/34

    41,880       20,577,319  
Security   Par
(000)
    Value  
Illinois (continued)            

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

  $ 9,430     $ 2,990,159  

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

    1,700       1,862,639  

Regional Transportation Authority, RB, Series C (NPFGC), 7.75%, 06/01/20

    385       403,657  

State of Illinois, GO:

   

5.25%, 07/01/29

    3,160       3,319,390  

5.25%, 02/01/33

    5,860       6,102,370  

5.50%, 07/01/33

    2,235       2,358,081  

5.25%, 02/01/34

    5,360       5,567,057  

5.50%, 07/01/38

    1,200       1,252,320  

State of Illinois Toll Highway Authority, RB, Series A, 5.00%, 01/01/42

    8,540       9,532,860  
   

 

 

 
    127,934,193  
Indiana — 0.8%            

Indiana Finance Authority, RB, Series A:

   

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

    2,900       3,130,202  

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

    1,400       1,474,522  

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

    2,425       2,562,231  
   

 

 

 
    7,166,955  
Iowa — 1.8%            

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

    12,650       12,911,096  

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

   

5.60%, 12/01/26

    975       1,014,751  

5.70%, 12/01/27

    970       1,008,606  

5.75%, 12/01/28

    515       535,136  

5.80%, 12/01/29

    655       679,851  

5.85%, 12/01/30

    685       710,201  
   

 

 

 
    16,859,641  
Kentucky — 3.1%            

Kentucky Economic Development Finance Authority, RB, Catholic Health Initiatives, Series A, 5.38%, 01/01/40

    1,000       1,068,660  

Kentucky Public Energy Authority, RB, Gas Supply, Series C-1, 4.00%, 12/01/49(d)

    10,125       10,670,130  

Kentucky Public Transportation Infrastructure Authority, RB, Downtown Crossing Project, Convertible CAB, 1st Tier, Series C, 6.60%, 07/01/39(c)

    8,225       7,946,419  

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

   

5.25%, 02/01/19(a)

    5,315       5,315,000  

5.25%, 02/01/19(a)

    3,545       3,545,000  

5.25%, 02/01/28

    455       456,274  
   

 

 

 
    29,001,483  
Louisiana — 2.1%            

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

    4,825       5,242,990  

City of Shreveport Louisiana Water & Sewer Revenue, RB, Series A (AGM), 5.00%, 12/01/41

    1,645       1,836,165  

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

   

5.00%, 12/01/34

    670       775,445  

5.00%, 12/01/35

    895       1,032,096  

5.00%, 12/01/36

    805       924,277  

5.00%, 12/01/37

    1,005       1,151,398  

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

    8,155       8,945,546  
   

 

 

 
    19,907,917  
 

 

 

32    2019 BLACKROCK SEMI-ANNUAL REPORT TO  SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniYield Quality Fund III, Inc. (MYI)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Massachusetts — 1.5%            

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

  $ 5,950     $ 6,374,770  

Massachusetts Development Finance Agency, Refunding RB, Emmanuel College Issue, Series A, 5.00%, 10/01/43

    320       337,888  

Massachusetts HFA, Refunding RB, AMT:

   

Series A, 4.45%, 12/01/42

    2,235       2,274,113  

Series C, 5.35%, 12/01/42

    1,000       1,006,480  

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

    3,495       3,837,056  
   

 

 

 
    13,830,307  
Michigan — 6.1%            

City of Detroit Michigan Water Supply System Revenue, RB, 2nd Lien, Series B (AGM), 6.25%, 07/01/19(a)

    1,075       1,094,834  

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

    3,185       3,441,074  

Michigan Finance Authority, Refunding RB:

   

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

    2,505       2,193,428  

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

    16,040       17,067,843  

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

    60       65,299  

Michigan Strategic Fund, RB, 1-75 Improvement Project, AMT:

   

5.00%, 12/31/43

    9,940       10,839,669  

(AGM), 4.25%, 12/31/38

    2,000       2,027,420  

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

    1,330       1,436,121  

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

   

Series I (AGC), 5.25%, 10/15/24

    1,750       1,790,740  

Series I (AGC), 5.25%, 10/15/25

    3,250       3,324,945  

Series I-A, 5.38%, 10/15/36

    2,075       2,250,524  

Series I-A, 5.38%, 10/15/41

    1,900       2,055,002  

Series II-A (AGM), 5.25%, 10/15/36

    8,040       8,724,767  

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

    1,080       1,207,623  
   

 

 

 
    57,519,289  
Nebraska — 0.8%            

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

    6,825       7,382,671  
   

 

 

 
Nevada — 3.4%            

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

    2,250       2,265,548  

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

   

5.25%, 07/01/42

    2,000       2,049,400  

(AGM), 5.25%, 07/01/39

    5,170       5,303,851  

Las Vegas Convention & Visitors Authority, RB, Series B, 5.00%, 07/01/43

    20,000       22,369,600  
   

 

 

 
    31,988,399  
New Jersey — 9.9%            

New Jersey EDA, RB:

   

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

    4,920       5,284,326  

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

    1,930       2,076,564  

School Facilities Construction Bonds, Series DDD, 5.00%, 06/15/42

    590       617,040  

Series WW, 5.25%, 06/15/33

    445       483,510  

Series WW, 5.00%, 06/15/34

    570       608,652  

Series WW, 5.00%, 06/15/36

    2,635       2,795,313  

Series WW, 5.25%, 06/15/40

    1,025       1,086,264  
Security   Par
(000)
    Value  
New Jersey (continued)            

New Jersey EDA, Refunding RB, School Facilities Construction:

   

Series N-1 (AMBAC), 5.50%, 09/01/24

  $ 6,325     $ 7,278,178  

Series N-1 (NPFGC), 5.50%, 09/01/28

    1,685       2,033,290  

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

   

5.50%, 12/01/25

    565       601,380  

5.50%, 12/01/26

    815       863,623  

5.75%, 12/01/28

    90       96,022  

5.88%, 12/01/33

    6,895       7,363,998  

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

    2,645       2,730,592  

New Jersey Transportation Trust Fund Authority, RB:

   

CAB, Transportation System,
Series A, 0.00%, 12/15/35(b)

    18,525       8,746,579  

CAB, Transportation System, Series C (AGC) (AMBAC), 0.00%, 12/15/25(b)

    8,550       6,927,210  

Federal Highway Reimbursement Revenue Notes, Series A, 5.00%, 06/15/28

    4,205       4,739,077  

Federal Highway Reimbursement Revenue Notes, Series A, 5.00%, 06/15/29

    2,145       2,402,421  

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

    4,150       4,413,733  

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

    3,990       4,182,677  

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

    2,980       3,107,067  

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

    4,000       4,724,200  

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

    5,625       5,964,131  

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

    1,000       1,055,430  

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

    2,575       2,654,696  

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

    1,825       1,952,933  

New Jersey Transportation Trust Fund Authority, Refunding RB, Transportation System, Series A (BAM), 4.00%, 12/15/37

    3,000       3,039,000  

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

   

5.00%, 06/01/46

    4,000       4,135,280  

5.25%, 06/01/46

    1,035       1,094,326  
   

 

 

 
    93,057,512  
New Mexico — 0.1%            

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

    1,040       1,143,823  
   

 

 

 
New York — 5.9%            

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

    4,150       4,568,195  

City of New York Transitional Finance Authority Future Tax Secured, RB, Future Tax Secured:

   

Subordinate Bond, Series C-3, 5.00%, 05/01/41

    5,000       5,706,300  

Sub-Series F-1, 5.00%, 05/01/39

    3,360       3,815,784  

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

   

5.75%, 02/15/21(a)

    1,190       1,287,521  

5.75%, 02/15/47

    730       784,049  

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

    11,500       12,756,375  

New York State Dormitory Authority, Refunding RB, Series A, 5.00%, 03/15/45

    5,000       5,699,600  

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

    8,300       8,824,643  

State of New York Dormitory Authority, ERB, Series B, 5.25%, 03/15/19(a)

    3,250       3,263,748  

State of New York Urban Development Corp., RB, State Personal Income Tax, General Purpose, Series A, 5.00%, 03/15/43

    7,500       8,576,025  
   

 

 

 
    55,282,240  
 

 

 

SCHEDULES OF INVESTMENTS      33  


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniYield Quality Fund III, Inc. (MYI)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Ohio — 3.0%            

American Municipal Power, Inc., RB, Combined Hydroelectric Projects, Series A, 5.00%, 02/15/41

  $ 4,000     $ 4,384,080  

American Municipal Power, Inc., Refunding RB, Combined Hydroelectric Projects, Series A, 5.00%, 02/15/38

    3,055       3,370,398  

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

    3,000       3,381,510  

County of Montgomery Ohio, RB, Catholic Health Initiatives, Series D-2, 5.45%, 10/01/38

    11,135       12,147,506  

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

   

5.25%, 02/15/32

    1,950       2,169,414  

5.25%, 02/15/33

    2,730       3,034,968  
   

 

 

 
    28,487,876  
Oregon — 0.3%            

Clackamas Community College District, GO, Convertible Deferred Interest Bonds, Series A, 5.00%, 06/15/38(c)

    425       450,305  

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

    395       417,602  

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

    420       442,415  

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

    2,800       1,292,704  
   

 

 

 
    2,603,026  
Pennsylvania — 7.9%            

Commonwealth Financing Authority, RB:

   

Series B, 5.00%, 06/01/42

    3,305       3,542,894  

Tobacco Master Settlement Payment, 5.00%, 06/01/34

    2,180       2,454,789  

Pennsylvania Economic Development Financing Authority, RB:

   

AMT, 5.00%, 06/30/42

    8,805       9,404,973  

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

    7,115       7,781,462  

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

    6,850       7,380,601  

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

    10,445       10,529,291  

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

    8,075       9,045,776  

Pennsylvania Turnpike Commission, RB:

   

Series A, 5.00%, 12/01/38

    1,775       1,944,477  

Series A-1, 5.00%, 12/01/41

    2,320       2,544,599  

Series B, 5.00%, 12/01/40

    4,920       5,411,410  

Series C, 5.50%, 12/01/23(a)

    1,565       1,832,991  

Sub-Series B-1, 5.00%, 06/01/42

    7,330       7,952,317  

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

    2,575       2,772,090  

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

    2,165       2,366,995  
   

 

 

 
    74,964,665  
Rhode Island — 1.6%            

Rhode Island Commerce Corp., RB, Airport Corp., Series D, 5.00%, 07/01/41

    495       541,718  

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

    4,000       4,043,480  

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

   

4.50%, 06/01/45

    3,000       2,789,850  

5.00%, 06/01/50

    7,465       7,484,558  
   

 

 

 
    14,859,606  
South Carolina — 5.4%            

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

    3,600       4,016,088  
Security   Par
(000)
    Value  
South Carolina (continued)            

South Carolina Jobs-Economic Development Authority, RB, McLeod Health Obligated Group, 5.00%, 11/01/43

  $ 5,000     $ 5,583,400  

South Carolina Ports Authority, ARB, AMT,
5.00%, 07/01/38

    3,380       3,794,861  

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

    6,530       7,094,780  

State of South Carolina Public Service Authority, RB:

   

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

    11,450       12,277,033  

Series E, 5.50%, 12/01/53

    4,525       4,826,003  

State of South Carolina Public Service Authority, Refunding RB, Series B:

   

Santee Cooper, 5.00%, 12/01/38

    5,870       6,182,871  

(AGM), 5.00%, 12/01/56

    7,155       7,611,489  
   

 

 

 
    51,386,525  
Texas — 14.1%            

City of Dallas TX Waterworks & Sewer System Revenue, Refunding RB, Series C, 4.00%, 10/01/43

    5,000       5,199,050  

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

   

6.00%, 05/15/19

    300       303,687  

6.00%, 05/15/19

    5,400       5,465,556  

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

   

5.38%, 05/15/19

    190       192,005  

5.38%, 05/15/19

    3,460       3,496,019  

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

    7,450       8,394,585  

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

    1,450       1,582,284  

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

    5,810       2,851,257  

County of Tarrant Cultural Education Facilities Finance Corp., RB, Christus Health, Series B, 5.00%, 07/01/34

    5,000       5,695,100  

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

    2,095       2,322,077  

Dallas-Fort Worth International Airport, ARB, Joint Improvement, Series D, AMT, 5.00%, 11/01/38

    10,980       11,580,057  

Dallas-Fort Worth International Airport, Refunding ARB, Series F:

   

5.25%, 11/01/33

    2,745       3,063,530  

5.00%, 11/01/35

    5,000       5,212,400  

Grand Parkway Transportation Corp., RB, Subordinate Tier Toll Revenue Bonds, TELA Supported, Series A,
5.00%, 10/01/43

    7,940       9,005,786  

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

    9,685       4,246,872  

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

    18,100       5,226,013  

North Texas Tollway Authority, Refunding RB:

   

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

    1,175       1,178,772  

1st Tier-Series A, 5.00%, 01/01/39

    9,080       10,292,725  

2nd Tier-Series B, 5.00%, 01/01/43

    9,455       10,489,093  

Series B, 5.00%, 01/01/40

    1,710       1,846,338  

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

   

0.00%, 09/15/35

    680       322,966  

0.00%, 09/15/36

    12,195       5,450,921  

0.00%, 09/15/37

    8,730       3,667,386  

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

   

5.00%, 12/15/31

    1,665       1,779,302  

5.00%, 12/15/32

    3,930       4,189,459  
 

 

 

34    2019 BLACKROCK SEMI-ANNUAL REPORT TO  SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniYield Quality Fund III, Inc. (MYI)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Texas (continued)            

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

  $ 3,630     $ 3,858,363  

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

    11,345       12,005,960  

Texas Water Development Board, RB, State Water Implementation Fund, Series B, 4.00%, 10/15/43

    4,315       4,462,185  
   

 

 

 
      133,379,748  
Utah — 1.2%  

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

   

5.00%, 07/01/42

    3,490       3,849,645  

5.00%, 07/01/43

    3,190       3,543,643  

Salt Lake City Corp. Airport Revenue, RB, AMT, Series A, 5.00%, 07/01/37

    3,475       3,922,371  
   

 

 

 
      11,315,659  
Washington — 6.6%  

Port of Seattle Washington, ARB, AMT, Series A, 5.00%, 05/01/38

    20,000       22,251,800  

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

    2,830       3,102,359  

State of Washington Convention Center Public Facilities District, RB:

   

Civic Convention Center, 5.00%, 07/01/38

    9,260       10,428,242  

Sub, 5.00%, 07/01/43

    7,635       8,494,319  

Washington Health Care Facilities Authority, RB:

   

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

    1,000       1,070,680  

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

    2,725       2,816,587  

Washington Health Care Facilities Authority, Refunding RB:

   

Catholic Health Initiatives, Series D, 6.38%, 10/01/36

    5,400       5,418,522  

Multicare Health System, Series B, 4.00%, 08/15/41

    9,000       9,095,220  
   

 

 

 
      62,677,729  
Wisconsin — 2.5%  

Public Finance Authority, RB, KU Campus Development Corp., Central District Development Project, 5.00%, 03/01/46

    560       609,297  

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

    3,745       3,821,773  

Wisconsin Health & Educational Facilities Authority, Refunding RB:

   

Ascension Health Credit Group, Series A, 5.00%, 11/15/36

    4,815       5,390,296  

Ascension Health Credit Group, Series A, 5.00%, 11/15/39

    5,000       5,522,050  

Milwaukee Regional Medical Center Thermal Service, 5.00%, 04/01/44

    7,350       8,265,811  
   

 

 

 
      23,609,227  
   

 

 

 

Total Municipal Bonds — 116.8%
(Cost — $1,042,706,491)

 

    1,101,662,304  
   

 

 

 

Municipal Bonds Transferred to Tender Option Bond Trusts(e)

 

Arizona — 1.0%

   

City of Phoenix Civic Improvement Corp., Refunding RB, Senior Lien, AMT, 5.00%, 07/01/43

    8,500       9,511,202  
   

 

 

 
California — 4.1%  

City of Riverside California Electric Revenue, RB, Issue D (AGM), 5.00%, 10/01/38

    17,685       17,761,465  

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

    7,074       8,338,760  
Security   Par
(000)
    Value  
California (continued)  

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

  $ 5,248     $ 5,363,261  

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

    1,047       1,066,620  

State of California, GO, Refunding, Various Purpose, 5.25%, 10/01/39

    3,000       3,443,760  

University of California, RB, Series O, 5.75%, 05/15/19(a)

    2,206       2,231,340  
   

 

 

 
      38,205,206  
Colorado — 1.0%  

City & County of Denver Colorado Airport System Revenue, Refunding ARB, Sub-System, Series A, AMT, 5.25%, 12/01/43(f)

    5,834       6,664,107  

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

    2,469       2,496,157  
   

 

 

 
      9,160,264  
Connecticut — 0.5%  

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

    3,932       4,317,612  
   

 

 

 
District of Columbia — 0.3%  

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

    2,594       2,669,785  
   

 

 

 
Florida — 6.3%  

City of Miami Beach Florida, RB, 5.00%, 09/01/45

    8,760       9,848,846  

City of Miami Beach Florida Stormwater Revenue, Refunding RB, 5.00%, 09/01/41

    10,000       11,300,281  

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

    4,840       5,229,233  

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

    11,702       12,334,564  

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

    12,013       12,238,884  

County of Pinellas Florida School Board, COP, Master Lease Program, Series A, 5.00%, 07/01/41

    7,880       8,831,825  
   

 

 

 
      59,783,633  
Illinois — 3.5%  

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

    3,499       3,543,624  

State of Illinois Toll Highway Authority, RB:

   

Senior, Series C, 5.00%, 01/01/36

    10,000       11,197,196  

Series A, 5.00%, 01/01/38

    5,836       6,328,098  

Series A, 5.00%, 01/01/40

    7,621       8,536,582  

Series B, 5.00%, 01/01/40

    2,939       3,240,152  
   

 

 

 
      32,845,652  
Kansas — 1.7%  

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

    13,470       15,816,731  
   

 

 

 
Massachusetts — 3.0%  

Commonwealth of Massachusetts, GO:

   

Consolidated Loan, Series E, 5.25%, 09/01/43

    20,000       23,393,900  

Series A, 5.00%, 03/01/46

    4,204       4,627,476  
   

 

 

 
      28,021,376  
Michigan — 2.1%  

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

    5,591       6,059,202  

State of Michigan Building Authority, Refunding RB, Series I:

   

Facilities Program, 5.00%, 10/15/45

    2,410       2,726,819  

5.00%, 04/15/38

    10,000       11,375,251  
   

 

 

 
      20,161,272  
 

 

 

SCHEDULES OF INVESTMENTS      35  


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniYield Quality Fund III, Inc. (MYI)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Nevada — 2.9%  

County of Clark Nevada, GOL, Stadium Improvement, Series A, 5.00%, 06/01/43

  $ 9,730     $ 11,096,664  

County of Clark Nevada Water Reclamation District, GO, Series B(a):

   

5.50%, 07/01/19

    510       517,911  

5.75%, 07/01/19

    4,813       4,894,377  

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

    9,840       10,960,800  
   

 

 

 
      27,469,752  
New Jersey — 2.1%  

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

    2,320       2,607,587  

Garden State Preservation Trust, RB, Election of 2005, Series A (AGM), 5.75%, 11/01/28

    10,000       12,058,100  

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

    4,961       5,170,692  
   

 

 

 
      19,836,379  
New York — 7.4%  

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

   

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

    15,521       17,260,960  

Series DD, 5.00%, 06/15/35

    4,740       5,353,514  

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

    9,850       11,036,186  

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

    4,275       4,737,176  

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

    6,402       7,242,736  

State of New York Dormitory Authority, RB, Group B, State Sales Tax, Series A, 5.00%, 03/15/39

    7,622       8,646,899  

State of New York Urban Development Corp., RB, Personal Income Tax, General Purpose, Series A-1, 5.00%, 03/15/43

    14,280       15,656,056  
   

 

 

 
      69,933,527  
Pennsylvania — 0.3%  

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

    2,560       2,806,387  
   

 

 

 
Texas — 3.5%  

Aldine Independent School District, GO, Refunding(PSF-GTD), 5.00%, 02/15/42

    9,701       10,987,681  

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

    1,799       1,944,238  

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

    9,840       10,885,033  

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

    8,868       9,353,627  
   

 

 

 
      33,170,579  
Virginia — 1.5%            

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

    11,740       13,926,353  
   

 

 

 
Washington — 1.8%  

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

    6,880       7,438,897  

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

    8,205       9,448,167  
   

 

 

 
      16,887,064  
Security   Par
(000)
    Value  
Wisconsin — 4.1%  

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

  $ 14,780     $ 14,937,148  

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

    7,459       7,501,251  

Wisconsin Health & Educational Facilities Authority, Refunding RB:

   

Ascension Health Credit Group, 5.00%, 11/15/39

    12,650       13,970,769  

Froedtert & Community Health, Inc., Obligated Group, Series A, 5.00%, 04/01/42

    2,490       2,662,669  
   

 

 

 
      39,071,837  
   

 

 

 

Total Municipal Bonds Transferred to Tender Option Bond Trusts — 47.1%
(Cost — $436,569,873)

 

    443,594,611  
   

 

 

 

Total Long-Term Investments — 163.9%
(Cost — $1,479,276,364)

 

    1,545,256,915  
   

 

 

 
     Shares         
Short-Term Securities — 0.9%  

BlackRock Liquidity Funds, MuniCash, Institutional Class, 1.24%(g)(h)

    8,629,327       8,631,052  
   

 

 

 

Total Short-Term Securities — 0.9%
(Cost — $8,630,415)

 

    8,631,052  
   

 

 

 

Total Investments — 164.8%
(Cost — $1,487,906,779)

 

    1,553,887,967  

Other Assets Less Liabilities — 1.2%

 

    12,210,069  

Liability for TOB Trust Certificates, Including Interest Expense and Fees Payable — (28.3)%

 

    (266,973,335

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

 

    (355,952,998
   

 

 

 

Net Assets Applicable to Common Shares — 100.0%

 

  $ 943,171,703  
   

 

 

 

 

(a) 

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

(b) 

Zero-coupon bond.

(c) 

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

(d) 

Variable or floating rate security, which interest rate adjusts periodically based on changes in current interest rates and prepayments on the underlying pool of assets. Rate shown is the rate in effect as of period end.

(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 agreements, which expire between June 15, 2019 to April 01, 2039, is $25,013,578. See Note 4 of the Notes to Financial Statements for details.

(g) 

Annualized 7-day yield as of period end.

 

 

 

36    2019 BLACKROCK SEMI-ANNUAL REPORT TO  SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniYield Quality Fund III, Inc. (MYI)

 

(h) 

During the six months ended January 31, 2019, investments in issuers considered to be an affiliate of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliate    Shares
Held at
07/31/18
     Net
Activity
     Shares
Held at
01/31/19
     Value at
01/31/19
     Income     

Net

Realized

Gain (Loss) (a)

     Change in
Unrealized
Appreciation
(Depreciation)
 

BlackRock Liquidity Funds, MuniCash, Institutional Class

     14,318,158        (5,688,831      8,629,327      $ 8,631,052      $ 64,548      $ (837    $ 218  
           

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Includes net capital gain distributions, if applicable.

 

Derivative Financial Instruments Outstanding as of Period End

Futures Contracts

 

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

Short Contracts:

                 

10-Year U.S. Treasury Note

     337          03/20/19        $ 41,272        $ (665,743

Long U.S. Treasury Bond

     525          03/20/19          77,011          (3,162,789

5-Year U.S. Treasury Note

     56          03/29/19          6,432          (119,570
                 

 

 

 
                  $ (3,948,102
                 

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

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

 

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

Liabilities — Derivative Financial Instruments

                    

Futures contracts

                    

Net unrealized depreciation(a)

   $      $      $      $      $ (3,948,102    $      $ (3,948,102
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

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

 

For the six months ended January 31, 2019, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

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

Net Realized Gain (Loss) from:

                    

Futures contracts

   $      $      $      $      $ 751,861      $      $ 751,861  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

                    

Futures contracts

   $      $      $      $      $ (3,811,508    $      $ (3,811,508
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

        

Average notional value of contracts — short

   $ 87,587,750  

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

 

 

SCHEDULES OF INVESTMENTS      37  


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniYield Quality Fund III, Inc. (MYI)

 

Fair Value Hierarchy as of Period End

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

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

 

      Level 1        Level 2        Level 3        Total  

Assets:

                 

Investments:

                 

Long-Term Investments(a)

   $        $ 1,545,256,915        $        $ 1,545,256,915  

Short-Term Securities

     8,631,052                            8,631,052  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 8,631,052        $ 1,545,256,915        $        $ 1,553,887,967  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative Financial Instruments(b)

                 

Liabilities:

                 

Interest rate contracts

   $ (3,948,102      $        $        $ (3,948,102
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

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

 
  (b) 

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

 

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

 

      Level 1        Level 2        Level 3        Total  

Liabilities:

                 

TOB trust certificates

   $        $ (265,817,094      $        $ (265,817,094

VRDP Shares at Liquidation Value

              (356,400,000                 (356,400,000
  

 

 

      

 

 

      

 

 

      

 

 

 
   $        $ (622,217,094      $        $ (622,217,094
  

 

 

      

 

 

      

 

 

      

 

 

 

During the six months ended January 31, 2019, there were no transfers between levels.

See notes to financial statements.

 

 

38    2019 BLACKROCK SEMI-ANNUAL REPORT TO  SHAREHOLDERS


Statements of Assets and Liabilities  (unaudited)

January 31, 2019

 

     MUE      MCA      MYN      MYI  

ASSETS

          

Investments at value — unaffiliated(a)

  $ 476,754,078      $ 894,641,686      $ 895,006,263      $ 1,545,256,915  

Investments at value — affiliated(b)

           249,845        270,137        8,631,052  

Cash pledged for futures contracts

    390,800        763,750        798,350        1,785,600  

Receivables:

          

Interest — unaffiliated

    5,375,693        12,516,567        9,192,434        16,226,474  

Dividends — affiliated

    12,802        855        2,783        10,475  

TOB Trust

                  2,185,000         

Prepaid expenses

    5,306        6,239        6,306        7,746  
 

 

 

    

 

 

    

 

 

    

 

 

 

Total assets

    482,538,679        908,178,942        907,461,273        1,571,918,262  
 

 

 

    

 

 

    

 

 

    

 

 

 

ACCRUED LIABILITIES

          

Bank overdraft

    132,552                       

Payables:

          

Income dividend distributions — Common Shares

    1,103,517        1,789,097        1,682,430        3,441,609  

Interest expense and fees

    147,808        1,060,259        446,544        1,156,241  

Variation margin on futures contracts

    151,586        298,344        310,891        698,285  

Investment advisory fees

    214,398        379,452        380,520        663,085  

Directors’ and Officer’s fees

    3,755        281,119        295,457        509,408  

Investments purchased

           10,590,980        4,370,000        149,288  

Other accrued expenses

    119,715        154,975        173,475        358,551  
 

 

 

    

 

 

    

 

 

    

 

 

 

Total accrued liabilities

    1,873,331        14,554,226        7,659,317        6,976,467  
 

 

 

    

 

 

    

 

 

    

 

 

 

OTHER LIABILITIES

          

TOB Trust Certificates

    49,352,286        212,664,205        112,386,871        265,817,094  

VMTP Shares, at liquidation value of $100,000 per share(c)(d)

    131,000,000                       

VRDP Shares, at liquidation value of $100,000 per share, net of deferred offering costs(c)(d)

           166,245,364        247,361,144        355,952,998  
 

 

 

    

 

 

    

 

 

    

 

 

 

Total other liabilities

    180,352,286        378,909,569        359,748,015        621,770,092  
 

 

 

    

 

 

    

 

 

    

 

 

 

Total liabilities

    182,225,617        393,463,795        367,407,332        628,746,559  
 

 

 

    

 

 

    

 

 

    

 

 

 

NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS

  $ 300,313,062      $ 514,715,147      $ 540,053,941      $ 943,171,703  
 

 

 

    

 

 

    

 

 

    

 

 

 

NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS CONSIST OF

          

Paid-in capital(e)(f)

  $ 290,717,417      $ 493,026,986      $ 524,464,224      $ 885,376,588  

Accumulated earnings

    9,595,645        21,688,161        15,589,717        57,795,115  
 

 

 

    

 

 

    

 

 

    

 

 

 

NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS

  $ 300,313,062      $ 514,715,147      $ 540,053,941      $ 943,171,703  
 

 

 

    

 

 

    

 

 

    

 

 

 

Net asset value, per Common Share

  $ 13.33      $ 14.96      $ 13.64      $ 13.84  
 

 

 

    

 

 

    

 

 

    

 

 

 

(a) Investments at cost — unaffiliated

  $ 457,536,590      $ 869,700,968      $ 860,016,957      $ 1,479,276,364  

(b) Investments at cost — affiliated

  $      $ 249,845      $ 270,137      $ 8,630,415  

(c) Preferred Shares outstanding, par value $0.10 per share

    1,310        1,665        2,477        3,564  

(d) Preferred Shares authorized

    9,490        12,665        14,637        26,364  

(e) Common Shares outstanding, par value $0.10 per share

    22,520,759        34,405,717        39,586,584        68,150,681  

(f)  Common Shares authorized

    199,990,510        199,987,335        199,985,363        199,973,636  

See notes to financial statements.

 

 

FINANCIAL STATEMENTS      39  


 

Statements of Operations  (unaudited)

Six Months Ended January 31, 2019

 

     MUE     MCA     MYN     MYI  

INVESTMENT INCOME

       

Interest — unaffiliated

  $ 10,213,848     $ 17,266,817     $ 17,235,792     $ 31,993,274  

Dividends — affiliated

    47,459       14,127       19,764       64,548  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total investment income

    10,261,307       17,280,944       17,255,556       32,057,822  
 

 

 

   

 

 

   

 

 

   

 

 

 

EXPENSES

       

Investment advisory

    1,327,861       2,240,844       2,253,202       3,922,279  

Professional

    40,807       54,277       57,627       84,979  

Accounting services

    35,768       51,939       56,675       78,520  

Rating agency

    21,752       21,762       21,786       21,821  

Transfer agent

    16,134       18,569       21,315       38,073  

Directors and Officer

    14,672       20,443       21,059       37,006  

Custodian

    5,132       6,141       4,930       11,763  

Printing

    3,936       4,732       4,902       6,328  

Registration

    4,787       6,739       7,754       13,530  

Liquidity fees

                15,291       98,311  

Remarketing fees on Preferred Shares

                1,417       8,910  

Miscellaneous

    10,741       16,875             23,102  
 

 

 

   

 

 

   

 

 

   

 

 

 

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

    1,481,590       2,442,321       2,465,958       4,344,622  

Interest expense, fees and amortization of offering costs(a)

    2,239,147       4,290,171       4,206,995       7,143,160  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

    3,720,737       6,732,492       6,672,953       11,487,782  

Less fees waived and/or reimbursed by the Manager

    (53,672     (712     (595     (4,198
 

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses after fees waived and/or reimbursed

    3,667,065       6,731,780       6,672,358       11,483,584  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    6,594,242       10,549,164       10,583,198       20,574,238  
 

 

 

   

 

 

   

 

 

   

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

       

Net realized gain (loss) from:

       

Investments — unaffiliated

    (50,006     (1,600,396     (2,829,499     (2,028,774

Investments — affiliated

    2,138       (11     87       (1,247

Futures contracts

    234,126       574,423       274,036       751,861  

Capital gain distributions from investment companies — affiliated

    549                   410  
 

 

 

   

 

 

   

 

 

   

 

 

 
    186,807       (1,025,984     (2,555,376     (1,277,750
 

 

 

   

 

 

   

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation) on:

       

Investments — unaffiliated

    (3,611,437     (6,033,603     267,906       (4,461,916

Investments — affiliated

    (289     (25     (361     218  

Futures contracts

    (1,051,783     (2,141,292     (1,901,734     (3,811,508
 

 

 

   

 

 

   

 

 

   

 

 

 
    (4,663,509     (8,174,920     (1,634,189     (8,273,206
 

 

 

   

 

 

   

 

 

   

 

 

 

Net realized and unrealized loss

    (4,476,702     (9,200,904     (4,189,565     (9,550,956
 

 

 

   

 

 

   

 

 

   

 

 

 

NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS RESULTING FROM OPERATIONS

  $ 2,117,540     $ 1,348,260     $ 6,393,633     $ 11,023,282  
 

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 

Related to TOB Trusts, VMTP Shares and/or VRDP Shares.

See notes to financial statements.

 

 

40    2019 BLACKROCK SEMI-ANNUAL REPORT TO  SHAREHOLDERS


Statements of Changes in Net Assets

 

    MUE  
     Six Months Ended
01/31/19
(unaudited)
   

Year Ended
07/31/18

 

INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS

   

OPERATIONS

   

Net investment income

  $ 6,594,242     $ 15,481,866  

Net realized gain

    186,807       1,072,068  

Net change in unrealized appreciation (depreciation)

    (4,663,509     (14,608,136
 

 

 

   

 

 

 

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

    2,117,540       1,945,798  
 

 

 

   

 

 

 

DISTRIBUTIONS TO COMMON SHAREHOLDERS(a)(b)

   

Decrease in net assets resulting from distributions to Common Shareholders

    (7,071,518     (16,169,915
 

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

   

Reinvestment of common distributions

          78,607  
 

 

 

   

 

 

 

NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS(b)

   

Total decrease in net assets applicable to Common Shareholders

    (4,953,978     (14,145,510

Beginning of period

    305,267,040       319,412,550  
 

 

 

   

 

 

 

End of period

  $ 300,313,062     $ 305,267,040  
 

 

 

   

 

 

 

 

(a) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(b) 

Prior year distribution character information and undistributed net investment income has been modified or removed to conform with current year Regulation S-X presentation changes. Refer to Note 11 for this prior year information.

See notes to financial statements.

 

 

FINANCIAL STATEMENTS      41  


 

Statements of Changes in Net Assets  (continued)

 

    MCA  
     Six Months Ended
01/31/19
(unaudited)
    Year Ended
07/31/18
 

INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS

   

OPERATIONS

 

Net investment income

  $ 10,549,164     $ 23,092,580  

Net realized gain (loss)

    (1,025,984     2,912,708  

Net change in unrealized appreciation (depreciation)

    (8,174,920     (18,294,474
 

 

 

   

 

 

 

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

    1,348,260       7,710,814  
 

 

 

   

 

 

 

DISTRIBUTIONS TO COMMON SHAREHOLDERS(a)(b)

 

Decrease in net assets resulting from distributions to Common Shareholders

    (12,165,071     (23,481,902
 

 

 

   

 

 

 

NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS(b)

 

Total decrease in net assets applicable to Common Shareholders

    (10,816,811     (15,771,088

Beginning of period

    525,531,958       541,303,046  
 

 

 

   

 

 

 

End of period

  $ 514,715,147     $ 525,531,958  
 

 

 

   

 

 

 

 

(a)

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(b)

Prior year distribution character information and undistributed net investment income has been modified or removed to conform with current year Regulation S-X presentation changes. Refer to Note 11 for this prior year information.

See notes to financial statements.

 

 

42    2019 BLACKROCK SEMI-ANNUAL REPORT TO  SHAREHOLDERS


Statements of Changes in Net Assets  (continued)

 

    MYN  
     Six Months Ended
01/31/19
(unaudited)
    Year Ended
07/31/18
 

INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS

   

OPERATIONS

 

Net investment income

  $ 10,583,198     $ 22,782,316  

Net realized gain (loss)

    (2,555,376     2,845,599  

Net change in unrealized appreciation (depreciation)

    (1,634,189     (22,601,678
 

 

 

   

 

 

 

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

    6,393,633       3,026,237  
 

 

 

   

 

 

 

DISTRIBUTIONS TO COMMON SHAREHOLDERS(a)(b)

 

Decrease in net assets resulting from distributions to Common Shareholders

    (10,111,601     (23,456,159
 

 

 

   

 

 

 

NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS(b)

 

Total decrease in net assets applicable to Common Shareholders

    (3,717,968     (20,429,922

Beginning of period

    543,771,909       564,201,831  
 

 

 

   

 

 

 

End of period

  $ 540,053,941     $ 543,771,909  
 

 

 

   

 

 

 

 

(a)

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(b)

Prior year distribution character information and undistributed net investment income has been modified or removed to conform with current year Regulation S-X presentation changes. Refer to Note 11 for this prior year information.

See notes to financial statements.

 

 

FINANCIAL STATEMENTS      43  


 

Statements of Changes in Net Assets  (continued)

 

    MYI  
     Six Months Ended
01/31/19
(unaudited)
    Year Ended
07/31/18
 

INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS

   

OPERATIONS

   

Net investment income

  $ 20,574,238     $ 46,465,254  

Net realized gain (loss)

    (1,277,750     6,625,739  

Net change in unrealized appreciation (depreciation)

    (8,273,206     (36,598,743
 

 

 

   

 

 

 

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

    11,023,282       16,492,250  
 

 

 

   

 

 

 

DISTRIBUTIONS TO COMMON SHAREHOLDERS(a)(b)

   

Decrease in net assets resulting from distributions to Common Shareholders

    (20,661,787     (50,233,328
 

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

   

Reinvestment of common distributions

          957,599  
 

 

 

   

 

 

 

NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS(b)

   

Total decrease in net assets applicable to Common Shareholders

    (9,638,505     (32,783,479

Beginning of period

    952,810,208       985,593,687  
 

 

 

   

 

 

 

End of period

  $ 943,171,703     $ 952,810,208  
 

 

 

   

 

 

 

 

(a)

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(b)

Prior year distribution character information and undistributed net investment income has been modified or removed to conform with current year Regulation S-X presentation changes. Refer to Note 11 for this prior year information.

See notes to financial statements.

 

 

44    2019 BLACKROCK SEMI-ANNUAL REPORT TO  SHAREHOLDERS


Statements of Cash Flows  (unaudited)

Six Months Ended January 31, 2019

 

     MUE     MCA     MYN     MYI  

CASH PROVIDED BY OPERATING ACTIVITIES

 

Net increase in net assets resulting from operations

  $ 2,117,540     $ 1,348,260     $ 6,393,633     $ 11,023,282  

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 and principal paydowns

    72,760,959       151,583,934       128,637,286       223,051,076  

Purchases of long-term investments

    (75,986,100     (157,621,298     (129,505,299     (231,266,028

Net proceeds from sales of short-term securities

    2,903,883       99,917       2,461,457       5,689,970  

Amortization of premium and accretion of discount on investments and other fees

    1,220,964       3,290,354       2,966,321       1,511,994  

Net realized loss on investments

    47,868       1,600,407       2,829,412       2,030,021  

Net unrealized (appreciation) depreciation on investments

    3,611,726       6,033,628       (267,545     4,461,698  

(Increase) Decrease in Assets:

 

Receivables:

 

Interest — unaffiliated

    (44,895     225,068       (111,726     561,576  

Dividends — affiliated

    (4,493     1,255       1,489       5,228  

Prepaid expenses

    12,946       16,001       17,011       24,835  

Increase (Decrease) in Liabilities:

 

Payables:

 

Investment advisory fees

    (4,768     (1,996     (2,734     1,059  

Interest expense and fees

    23,660       160,807       55,241       253,045  

Directors’ and Officer’s fees

    946       (12,800     (13,768     (22,924

Variation margin on futures contracts

    141,638       237,165       266,603       594,728  

Other accrued expenses

    (51,660     (87,062     (68,713     5,251  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

    6,750,214       6,873,640       13,658,668       17,924,811  
 

 

 

   

 

 

   

 

 

   

 

 

 

CASH USED FOR FINANCING ACTIVITIES

 

Proceeds from TOB Trust Certificates

    5,585,909       28,267,890       9,077,501       17,174,622  

Repayments of TOB Trust Certificates

    (4,780,025     (22,538,997     (11,895,295     (13,059,165

Proceeds from Loan for TOB Trust Certificates

          11,902,245              

Repayments of Loan for TOB Trust Certificates

          (11,902,245            

Cash dividends paid to Common Shareholders

    (7,184,122     (12,165,071     (10,111,601     (20,661,787

Decrease in bank overdraft

    (88,976     (207,228     (351,945     (468,566

Amortization of deferred offering costs

          5,766       7,672       10,085  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used for financing activities

    (6,467,214     (6,637,640     (13,273,668     (17,004,811
 

 

 

   

 

 

   

 

 

   

 

 

 

CASH

 

Net increase (decrease) in restricted and unrestricted cash and foreign currency

    283,000       236,000       385,000       920,000  

Restricted and unrestricted cash and foreign currency at beginning of period

    107,800       527,750       413,350       865,600  
 

 

 

   

 

 

   

 

 

   

 

 

 

Restricted and unrestricted cash and foreign currency at end of period

  $ 390,800     $ 763,750     $ 798,350     $ 1,785,600  
 

 

 

   

 

 

   

 

 

   

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

 

Cash paid during the period for interest expense

  $ 2,215,487     $ 4,123,598     $ 4,144,082     $ 6,880,031  
 

 

 

   

 

 

   

 

 

   

 

 

 

RECONCILIATION OF RESTRICTED AND UNRESTRICTED CASH AT THE END OF PERIOD TO THE STATEMENTS OF ASSETS AND LIABILITIES

       

Cash pledged:

 

Futures contracts

  $ 390,800     $ 763,750     $ 798,350     $ 1,785,600  
 

 

 

   

 

 

   

 

 

   

 

 

 

RECONCILIATION OF RESTRICTED AND UNRESTRICTED CASH AT THE BEGINNING OF PERIOD TO THE STATEMENTS OF ASSETS AND LIABILITIES

       

Cash pledged:

 

Futures contracts

  $ 107,800     $ 527,750     $ 413,350     $ 865,600  
 

 

 

   

 

 

   

 

 

   

 

 

 

See notes to financial statements.

 

 

FINANCIAL STATEMENTS      45  


Financial Highlights  

(For a share outstanding throughout each period)

 

    MUE  
   

Six Months Ended

01/31/19
(unaudited)

          Year Ended July 31,  
          2018      2017      2016      2015      2014  
               

Net asset value, beginning of period

  $ 13.55       $ 14.19      $ 15.08      $ 14.48      $ 14.42      $ 13.27  
 

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income(a)

    0.29         0.69        0.75        0.78        0.80        0.82  

Net realized and unrealized gain (loss)

    (0.20       (0.61      (0.87      0.63        0.09        1.18  
 

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) from investment operations

    0.09         0.08        (0.12      1.41        0.89        2.00  
 

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Distributions to Common Shareholders from net investment income(b)

    (0.31       (0.72      (0.77      (0.81      (0.83      (0.85
 

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net asset value, end of period

  $ 13.33       $ 13.55      $ 14.19      $ 15.08      $ 14.48      $ 14.42  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Market price, end of period

  $ 12.01       $ 12.36      $ 14.17      $ 14.94      $ 13.13      $ 12.94  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Return Applicable to Common Shareholders(c)

 

Based on net asset value

    1.00 %(d)        0.87      (0.50 )%       10.33      6.84      16.19
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Based on market price

    (0.24 )%(d)        (7.85 )%       0.29      20.55      7.96      12.30
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Ratios to Average Net Assets Applicable to Common Shareholders

 

Total expenses

    2.47 %(e)        2.24      1.96      1.56      1.50      1.61
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses after fees waived and paid indirectly

    2.43 %(e)        2.20      1.92      1.55      1.49      1.56
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses after fees waived and paid indirectly and excluding interest expense and fees, and amortization of offering costs(f)

    0.95 %(e)        0.95      0.95      0.95      0.96      0.95
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income to Common Shareholders

    4.37 %(e)        4.96      5.21      5.32      5.41      6.01
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Supplemental Data

 

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

  $ 300,313       $ 305,267      $ 319,413      $ 339,493      $ 325,911      $ 324,563  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

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

  $ 131,000       $ 131,000      $ 131,000      $ 131,000      $ 131,000      $ 131,000  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Asset coverage per VMTP Shares at $100,000 liquidation value, end of period

  $ 329,247       $ 333,028      $ 343,826      $ 359,155      $ 348,787      $ 347,758  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Borrowings outstanding, end of period (000)

  $ 49,352       $ 48,546      $ 62,841      $ 57,549      $ 51,795      $ 52,497  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Portfolio turnover rate

    15       21      19      15      13      28
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(a)

Based on average Common Shares outstanding.

(b)

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(c)

Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions at actual reinvestment prices.

(d)

Aggregate total return.

(e)

Annualized.

(f)

Interest expense, fees and amortization of offering costs related to TOB Trusts and/or VMTP Shares. See Note 4 and Note 10 of the Notes to Financial Statements for details.

See notes to financial statements.

 

 

46    2019 BLACKROCK SEMI-ANNUAL REPORT TO  SHAREHOLDERS


Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    MCA  
   

Six Months Ended

01/31/19
(unaudited)

          Year Ended July 31,  
          2018      2017      2016      2015      2014  
               

Net asset value, beginning of period

  $ 15.27       $ 15.73      $ 16.77      $ 16.11      $ 16.14      $ 14.83  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income(a)

    0.31         0.67        0.73        0.81        0.83        0.87  

Net realized and unrealized gain (loss)

    (0.27       (0.45      (0.94      0.70        0.02        1.35  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) from investment operations

    0.04         0.22        (0.21      1.51        0.85        2.22  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Distributions to Common Shareholders(b)

 

From net investment income

    (0.31       (0.68      (0.78      (0.85      (0.88      (0.91

From net realized gain

    (0.04              (0.05                     
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total distributions

    (0.35       (0.68      (0.83      (0.85      (0.88      (0.91
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net asset value, end of period

  $ 14.96       $ 15.27      $ 15.73      $ 16.77      $ 16.11      $ 16.14  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Market price, end of period

  $ 13.00       $ 13.30      $ 15.18      $ 16.75      $ 14.71      $ 14.37  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Return Applicable to Common Shareholders(c)

 

Based on net asset value

    0.69 %(d)        1.86      (0.92 )%       9.84      5.76      16.04
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Based on market price

    0.45 %(d)        (8.07 )%       (4.26 )%       20.15      8.47      12.16
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Ratios to Average Net Assets Applicable to Common Shareholders

 

Total expenses

    2.60 %(e)        2.22      1.91      1.46      1.32      1.40
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses after fees waived

    2.60 %(e)        2.22      1.91      1.46      1.32      1.40
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses after fees waived and excluding interest expense, fees, and amortization of offering costs(f)

    0.94 %(e)        0.93      0.92      0.89      0.86      0.90
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income to Common Shareholders

    4.07 %(e)        4.33      4.64      4.94      5.09      5.63
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Supplemental Data

 

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

  $ 514,715       $ 525,532      $ 541,303      $ 576,764      $ 554,060      $ 555,127  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

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

  $ 166,500       $ 166,500      $ 166,500      $ 166,500      $ 166,500      $ 166,500  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

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

  $ 409,138       $ 415,635      $ 425,107      $ 446,404      $ 432,769      $ 433,410  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Borrowings outstanding, end of period (000)

  $ 212,664       $ 214,550      $ 195,488      $ 176,433      $ 172,574      $ 127,397  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Portfolio turnover rate

    16       25      37      23      36      15
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(a)

Based on average Common Shares outstanding.

(b)

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(c)

Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions at actual reinvestment prices.

(d)

Aggregate total return.

(e)

Annualized.

(f)

Interest expense, fees and amortization of offering costs related to TOB Trusts and/or VRDP Shares. See Note 4 and Note 10 of the Notes to Financial Statements for details.

See notes to financial statements.

 

 

FINANCIAL HIGHLIGHTS      47  


Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    MYN  
   

Six Months Ended

01/31/19
(unaudited)

          Year Ended July 31,  
          2018      2017      2016      2015      2014  
               

Net asset value, beginning of period

  $ 13.74       $ 14.25      $ 15.07      $ 14.16      $ 14.09      $ 13.17  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income(a)

    0.27         0.58        0.64        0.70        0.75        0.78  

Net realized and unrealized gain (loss)

    (0.11       (0.50      (0.81      0.94        0.09        0.97  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) from investment operations

    0.16         0.08        (0.17      1.64        0.84        1.75  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Distributions to Common Shareholders from net investment income(b)

    (0.26       (0.59      (0.65      (0.73      (0.77      (0.83
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net asset value, end of period

  $ 13.64       $ 13.74      $ 14.25      $ 15.07      $ 14.16      $ 14.09  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Market price, end of period

  $ 11.93       $ 11.89      $ 13.26      $ 14.40      $ 13.13      $ 12.71  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Return Applicable to Common Shareholders(c)

 

Based on net asset value

    1.47 %(d)        1.07      (0.69 )%       12.19      6.54      14.21
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Based on market price

    2.55 %(d)        (6.00 )%       (3.29 )%       15.60      9.52      9.95
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Ratios to Average Net Assets Applicable to Common Shareholders

 

Total expenses

    2.48 %(e)        2.19      1.93      1.51      1.44      1.50
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses after fees waived and paid indirectly

    2.48 %(e)        2.19      1.93      1.50      1.44      1.50
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses after fees waived and paid indirectly and excluding interest expense and fees, and amortization of offering costs(f)

    0.92 %(e)        0.91      0.92      0.89      0.89      0.91
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income to Common Shareholders

    3.93 %(e)        4.11      4.52      4.79      5.22      5.82
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Supplemental Data

 

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

  $ 540,054       $ 543,772      $ 564,202      $ 596,528      $ 560,372      $ 557,606  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

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

  $ 247,700       $ 247,700      $ 247,700      $ 247,700      $ 247,700      $ 247,700  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

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

  $ 318,027       $ 319,528      $ 327,776      $ 340,827      $ 326,230      $ 325,114  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Borrowings outstanding, end of period (000)

  $ 112,387       $ 113,020      $ 113,374      $ 112,712      $ 93,113      $ 89,734  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Portfolio turnover rate

    14       14      13      15      20      18
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(a)

Based on average Common Shares outstanding.

(b)

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(c)

Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions at actual reinvestment prices.

(d)

Aggregate total return.

(e)

Annualized.

(f)

Interest expense, fees and amortization of offering costs related to TOBs and/or VRDP Shares. See Note 4 and Note 10 of the Notes to Financial Statements for details.

See notes to financial statements.

 

 

48    2019 BLACKROCK SEMI-ANNUAL REPORT TO  SHAREHOLDERS


Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    MYI  
   

Six Months Ended

01/31/19
(unaudited)

          Year Ended July 31,  
          2018      2017      2016      2015      2014  
               

Net asset value, beginning of period

  $ 13.98       $ 14.48      $ 15.49      $ 14.79      $ 14.84      $ 13.64  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income(a)

    0.30         0.68        0.77        0.84        0.87        0.89  

Net realized and unrealized gain (loss)

    (0.14       (0.44      (0.96      0.74        (0.03      1.18  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) from investment operations

    0.16         0.24        (0.19      1.58        0.84        2.07  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Distributions to Common Shareholders from net investment income(b)

    (0.30       (0.74      (0.82      (0.88      (0.89      (0.87
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net asset value, end of period

  $ 13.84       $ 13.98      $ 14.48      $ 15.49      $ 14.79      $ 14.84  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Market price, end of period

  $ 12.44       $ 12.46      $ 14.66      $ 15.63      $ 14.04      $ 13.46  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Return Applicable to Common Shareholders(c)

 

Based on net asset value

    1.50 %(d)        2.02      (1.02 )%       11.08      6.12      16.23
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Based on market price

    2.36 %(d)        (10.18 )%       (0.69 )%       18.07      11.06      12.35
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Ratios to Average Net Assets Applicable to Common Shareholders

 

Total expenses

    2.44 %(e)        2.11      1.85      1.45      1.39      1.47
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses after fees waived and paid indirectly

    2.44 %(e)        2.11      1.84      1.45      1.39      1.47
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses after fees waived and paid indirectly and excluding interest expense and fees, and amortization of offering costs(f)

    0.92 %(e)        0.89      0.89      0.88      0.88      0.91
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income to Common Shareholders

    4.37 %(e)        4.79      5.30      5.60      5.78      6.35
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Supplemental Data

 

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

  $ 943,172       $ 952,810      $ 985,594      $ 1,053,232      $ 1,003,621      $ 1,007,291  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

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

  $ 356,400       $ 356,400      $ 356,400      $ 356,400      $ 356,400      $ 356,400  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

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

  $ 364,639       $ 367,343      $ 376,541      $ 395,520      $ 381,600      $ 382,629  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Borrowings outstanding, end of period (000)

  $ 265,817       $ 261,702      $ 252,930      $ 261,803      $ 244,245      $ 262,507  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Portfolio turnover rate

    14       22      16      10      11      15
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(a)

Based on average Common Shares outstanding.

(b)

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(c)

Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions at actual reinvestment prices.

(d)

Aggregate total return.

(e)

Annualized.

(f)

Interest expense, fees and amortization of offering costs related to TOB Trusts and/or VRDP Shares. See Note 4 and Note 10 of the Notes to Financial Statements for details.

See notes to financial statements.

 

 

FINANCIAL HIGHLIGHTS      49  


Notes to Financial Statements  (unaudited)

 

1.

ORGANIZATION

The following are registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as closed-end management investment companies and are referred to herein collectively as the “Funds”, or individually as a “Fund”:

 

Fund Name   Herein Referred To As    Organized    Diversification
Classification

BlackRock MuniHoldings Quality Fund II, Inc.

  MUE    Maryland    Diversified

BlackRock MuniYield California Quality Fund, Inc.

  MCA    Maryland    Diversified

BlackRock MuniYield New York Quality Fund, Inc.

  MYN    Maryland    Non-diversified

BlackRock MuniYield Quality Fund III, Inc.

  MYI    Maryland    Diversified

The Boards of Directors of the Funds are collectively referred to throughout this report as the “Board of Directors” or the “Board,” and the directors thereof are collectively referred to throughout this report as “Directors”. The Funds determine and make available for publication the 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 non-index fixed-income mutual funds and all BlackRock-advised closed-end funds referred to as the Fixed-Income Complex.

 

2.

SIGNIFICANT ACCOUNTING POLICIES

The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. Each Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. Below is a summary of significant accounting policies:

Investment Transactions and Income Recognition: For financial reporting purposes, investment transactions are recorded on the dates the transactions are entered into (the “trade dates”). Realized gains and losses on investment transactions are determined on the identified cost basis. Dividend income is recorded on the ex-dividend date. Interest income, including amortization and accretion of premiums and discounts on debt securities, is recognized on an accrual basis.

Segregation and Collateralization: In cases where a Fund enters into certain investments (e.g., futures contracts) or certain borrowings (e.g., TOB Trust transactions) that would be treated as “senior securities” for 1940 Act purposes, a Fund may segregate or designate on its books and records cash or liquid assets having a market value at least equal to the amount of its future obligations under such investments or borrowings. Doing so allows the investment or borrowing to be excluded from treatment as a “senior security.” Furthermore, if required by an exchange or counterparty agreement, the Funds may be required to deliver/deposit cash and/or securities to/with an exchange, or broker-dealer or custodian as collateral for certain investments or obligations.

Distributions: Distributions from net investment income are declared monthly and paid monthly. Distributions of capital gains are recorded on the ex-dividend date and made at least annually. The character and timing of distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP.

Distributions to Preferred Shareholders are accrued and determined as described in Note 10.

Deferred Compensation Plan: Under the Deferred Compensation Plan (the “Plan”) approved by each Fund’s Board, the independent Directors (“Independent Directors”) may defer a portion of their annual complex-wide compensation. Deferred amounts earn an approximate return as though equivalent dollar amounts had been invested in common shares of certain funds in the BlackRock Fixed-Income Complex 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 funds in the BlackRock Fixed-Income Complex.

The Plan is not funded and obligations thereunder represent general unsecured claims against the general assets of each Fund, as applicable. Deferred compensation liabilities are included in the Directors’ and Officer’s fees payable in the Statements of Assets and Liabilities and will remain as a liability of the Funds until such amounts are distributed in accordance with the Plan.

Recent Accounting Standards: In March 2017, the Financial Accounting Standards Board issued Accounting Standards Update “Premium Amortization of Purchased Callable Debt Securities” which amends the amortization period for certain purchased callable debt securities. Under the new guidance, the premium amortization of purchased callable debt securities that have explicit, non-contingent call features and are callable at fixed prices will be amortized to the earliest call date. The guidance will be applied on a modified retrospective basis and is effective for fiscal years, and their interim periods, beginning after December 15, 2018. Management is currently evaluating the impact of this guidance to the Funds.

In August 2018, the Financial Accounting Standards Board issued Accounting Standards Update 2018-13 “Changes to the Disclosure Requirements for Fair Value Measurement” which modifies disclosure requirements for fair value measurements. The guidance is effective for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years. Management is currently evaluating the impact of this guidance to the Funds.

Indemnifications: In the normal course of business, a Fund enters into contracts that contain a variety of representations that provide general indemnification. A Fund’s maximum exposure under these arrangements is unknown because it involves future potential claims against a Fund, which cannot be predicted with any certainty.

Other: Expenses directly related to a Fund are charged to that Fund. Other operating expenses shared by several funds, including other funds managed by the Manager, are prorated among those funds on the basis of relative net assets or other appropriate methods.

 

 

50    2019 BLACKROCK SEMI-ANNUAL REPORT TO  SHAREHOLDERS


Notes to Financial Statements  (unaudited) (continued)

 

 

3.

INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS

Investment Valuation Policies: The Funds’ investments are valued at fair value (also referred to as “market value” within the financial statements) as of the close of trading on the New York Stock Exchange (“NYSE”) (generally 4:00 p.m., Eastern time). U.S. GAAP defines fair value as the price the Funds would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Funds determine the fair values of their financial instruments using various independent dealers or pricing services under policies approved by the Board of Directors of each Fund (the “Board”). The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to oversee the pricing function for all financial instruments.

Fair Value Inputs and Methodologies: The following methods and inputs are used to establish the fair value of each Fund’s assets and liabilities:

 

   

Municipal investments (including commitments to purchase such investments on a “when-issued” basis) are valued on the basis of prices provided by dealers or pricing services. In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from dealers, pricing matrixes, market transactions in comparable investments and information with respect to various relationships between investments.

 

   

Investments in open-end U.S. mutual funds are valued at NAV each business day.

 

   

Futures contracts traded on exchanges are valued at their last sale price.

If events (e.g., a company announcement, market volatility or a natural disaster) occur that are expected to materially affect the value of such investments, or in the event that the application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued by the Global Valuation Committee, or its delegate, in accordance with a policy approved by the Board as reflecting fair value (“Fair Valued Investments”). The fair valuation approaches that may be used by the Global Valuation Committee will include market approach, income approach and cost approach. Valuation techniques such as discounted cash flow, use of market comparables and matrix pricing are types of valuation approaches and are typically used in determining fair value. When determining the price for Fair Valued Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that each Fund might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant and consistent with the principles of fair value measurement. The pricing of all Fair Valued Investments is subsequently reported to the Board or a committee thereof on a quarterly basis.

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

 

   

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

 

   

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

 

   

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

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Investments classified within Level 3 have significant unobservable inputs used by the Global Valuation Committee in determining the price for Fair Valued Investments. Level 3 investments include equity or debt issued by privately held companies or funds. There may not be a secondary market, and/or there are a limited number of investors. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the Global Valuation Committee in the absence of market information.

Changes in valuation techniques may result in transfers into or out of an assigned level within the hierarchy. In accordance with each Fund’s policy, transfers between different levels of the fair value hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investments and derivative financial instruments and is not necessarily an indication of the risks associated with investing in those securities.

 

4.

SECURITIES AND OTHER INVESTMENTS

Zero-Coupon Bonds: Zero-coupon bonds are normally issued at a significant discount from face value and do not provide for periodic interest payments. These bonds may experience greater volatility in market value than other debt obligations of similar maturity which provide for regular interest payments.

Forward Commitments and When-Issued Delayed Delivery Securities: Certain funds may purchase securities on a when-issued basis and may purchase or sell securities on a forward commitment basis. Settlement of such transactions normally occurs within a month or more after the purchase or sale commitment is made. A fund may purchase securities under such conditions with the intention of actually acquiring them, but may enter into a separate agreement to sell the securities before the settlement date. Since the value of securities purchased may fluctuate prior to settlement, a fund may be required to pay more at settlement than the security is worth. In addition, a fund is not entitled to any of the interest earned prior to settlement. When purchasing a security on a delayed delivery basis, a fund assumes the rights and risks of ownership of the security, including the risk of price and yield fluctuations. In the event of default by the counterparty, a fund’s maximum amount of loss is the unrealized appreciation of unsettled when-issued transactions.

 

 

NOTES TO FINANCIAL STATEMENTS      51  


Notes to Financial Statements  (unaudited) (continued)

 

Municipal Bonds Transferred to TOB Trusts: Certain funds leverage their assets through the use of “TOB Trust” transactions. The funds transfer municipal bonds into a special purpose trust (a “TOB Trust”). A TOB Trust issues two classes of beneficial interests: short-term floating rate interests (“TOB Trust Certificates”), which are sold to third party investors, and residual inverse floating rate interests (“TOB Residuals”), which are issued to the participating funds that contributed the municipal bonds to the TOB Trust. The TOB Trust Certificates have interest rates that reset weekly and their holders have the option to tender such certificates to the TOB Trust for redemption at par and any accrued interest at each reset date. The TOB Residuals held by a fund provide the fund with the right to cause the holders of a proportional share of the TOB Trust Certificates to tender their certificates to the TOB Trust at par plus accrued interest. The funds may withdraw a corresponding share of the municipal bonds from the TOB Trust. Other funds managed by the investment adviser may also contribute municipal bonds to a TOB Trust into which a fund has contributed bonds. If multiple BlackRock advised funds participate in the same TOB Trust, the economic rights and obligations under the TOB Residuals will be shared among the funds ratably in proportion to their participation in the TOB Trust.

TOB Trusts are supported by a liquidity facility provided by a third party bank or other financial institution (the “Liquidity Provider”) that allows the holders of the TOB Trust Certificates to tender their certificates in exchange for payment of par plus accrued interest on any business day. The tendered TOB Trust Certificates are remarketed by a Remarketing Agent. In the event of a failed remarketing, the TOB Trust may draw upon a loan from the Liquidity Provider to purchase the tendered TOB Trust Certificates. Any loans made by the Liquidity Provider will be secured by the purchased TOB Trust Certificates held by the TOB Trust and will be subject to an increased interest rate based on number of days the loan is outstanding.

The TOB Trust may be collapsed without the consent of a fund, upon the occurrence of a termination event, as defined in the TOB Trust agreement. Upon the occurrence of a termination event, a TOB Trust would be liquidated with the proceeds applied first to any accrued fees owed to the trustee of the TOB Trust, the Remarketing Agent and the Liquidity Provider. Upon certain termination events, TOB Trust Certificates holders will be paid before the TOB Residuals holders (i.e., the funds) whereas in other termination events, TOB Trust Certificates holders and TOB Residuals holders will be paid pro rata.

While a Fund’s investment policies and restrictions expressly permit investments in inverse floating rate securities, such as TOB Residuals, they restrict the ability of a fund to borrow money for purposes of making investments. MCA, MYN and MYI’s management believes that the fund’s restrictions on borrowings do not apply to the funds’ TOB Trust transactions. Each fund’s transfer of the municipal bonds to a TOB Trust is considered a secured borrowing for financial reporting purposes. The cash received by the TOB Trust from the sale of the TOB Trust Certificates, less certain transaction expenses, is paid to a fund. A fund typically invests the cash received in additional municipal bonds.

Accounting for TOB Trusts: The municipal bonds deposited into a TOB Trust are presented in a fund’s Schedule of Investments and the TOB Trust Certificates are shown in Other Liabilities in the Statements of Assets and Liabilities. Any loans drawn by the TOB Trust pursuant to the liquidity facility to purchase tendered TOB Trust Certificates are shown as Loan for TOB Trust Certificates. The carrying amount of a fund’s payable to the holder of the TOB Trust Certificates, as reported in the Statements of Assets and Liabilities as TOB Trust Certificates, approximates its fair value.

Interest income, including amortization and accretion of premiums and discounts, from the underlying municipal bonds is recorded by a fund on an accrual basis. Interest expense incurred on the TOB Trust transaction and other expenses related to remarketing, administration, trustee, liquidity and other services to a TOB Trust are shown as interest expense, fees and amortization of offering costs in the Statements of Operations. Fees paid upon creation of the TOB Trust are recorded as debt issuance costs and are amortized to interest expense, fees and amortization of offering costs in the Statements of Operations to the expected maturity of the TOB Trust. In connection with the restructurings of the TOB Trusts to non-bank sponsored TOB Trusts, a fund incurred non-recurring, legal and restructuring fees, which are recorded as interest expense, fees and amortization of deferred offering costs in the Statements of Operations.

 

     Interest Expense      Liquidity Fees      Other Expenses      Total  

MUE

  $ 384,887      $ 106,562      $ 40,428      $ 531,877  

MCA

    1,636,898        475,421        144,823        2,257,142  

MYN

    888,751        253,085        82,271        1,224,107  

MYI

    2,131,182        586,085        181,825        2,899,092  

For the six months ended January 31, 2019, the following table is a summary of each Fund’s TOB Trusts:

 

    

Underlying

Municipal Bonds

Transferred to

TOB Trusts (a)

    

Liability for

TOB Trust

Certificates (b)

    

Range of

Interest Rates
on TOB Trust
Certificates at
Period End

    

Average
TOB Trust

Certificates

Outstanding

     Daily Weighted
Average Rate
of Interest and
Other Expenses
on TOB Trusts
 

MUE

  $ 83,884,795      $ 49,352,286        1.29% — 1.61%      $ 48,457,073        2.18

MCA

    424,998,028        212,664,205        1.25% — 1.41%        207,660,149        2.15  

MYN

    208,010,108        112,386,871        1.30% — 1.46%        111,903,299        2.17  

MYI

    443,594,611        265,817,094        1.25% — 1.70%        265,556,570        2.16  

 

  (a) 

The municipal bonds transferred to a TOB Trust are generally high grade municipal bonds. In certain cases, when municipal bonds transferred are lower grade municipal bonds, the TOB Trust transaction may include a credit enhancement feature that provides for the timely payment of principal and interest on the bonds to the TOB Trust by a credit enhancement provider in the event of default of the municipal bond. The TOB Trust would be responsible for the payment of the credit enhancement fee and the funds, as TOB Residuals holders, would be responsible for reimbursement of any payments of principal and interest made by the credit enhancement provider. The maximum potential amounts owed by the funds, for such reimbursements, as applicable, are included in the maximum potential amounts disclosed for recourse TOB Trusts.

 
  (b) 

TOB Trusts may be structured on a non-recourse or recourse basis. When a fund invests in TOB Trusts on a non-recourse basis, the Liquidity Provider may be required to make a payment under the liquidity facility to allow the TOB Trust to repurchase TOB Trust Certificates. The Liquidity Provider will be reimbursed from the liquidation of bonds held in the TOB Trust. If a fund invests in a TOB Trust on a recourse basis, a fund enters into a reimbursement agreement with the Liquidity Provider where a fund is required to reimburse the Liquidity Provider for any shortfall between the amount paid by the Liquidity Provider and proceeds received from liquidation of municipal bonds held in the TOB Trust (the “Liquidation Shortfall”). As a result, if a fund invests in a recourse TOB Trust, the fund will bear the risk of loss with respect to any Liquidation Shortfall. If multiple funds participate in any such TOB Trust, these losses will be shared ratably, including the maximum potential amounts owed by a fund at January 31, 2019, 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 January 31, 2019.

 

 

 

52    2019 BLACKROCK SEMI-ANNUAL REPORT TO  SHAREHOLDERS


Notes to Financial Statements  (unaudited) (continued)

 

For the six months ended January 31, 2019, the following table is a summary of each Fund’s Loan for TOB Trust Certificates:

 

    

Loans

Outstanding
at Period End

    

Range of

Interest Rates
on Loans at

Period End

     Average
Loans
Outstanding
     Daily Weighted
Average Rate
of Interest and
Other Expenses
on Loans
 

MCA

  $           $ 545,088        0.82

 

5.

DERIVATIVE FINANCIAL INSTRUMENTS

The Funds engage in various portfolio investment strategies using derivative contracts both to increase the returns of the Funds and/or to manage their exposure to certain risks such as credit risk, equity risk, interest rate risk, foreign currency exchange rate risk, commodity price risk or other risks (e.g., inflation risk). Derivative financial instruments categorized by risk exposure are included in the Schedules of Investments. These contracts may be transacted on an exchange or over-the-counter.

Futures Contracts: Futures contracts are purchased or sold to gain exposure to, or manage exposure to, changes in interest rates (interest rate risk) and changes in the value of equity securities (equity risk) or foreign currencies (foreign currency exchange rate risk).

Futures contracts are agreements between the Funds and a counterparty to buy or sell a specific quantity of an underlying instrument at a specified price and on a specified date. Depending on the terms of a contract, it is settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash amount on the settlement date. Upon entering into a futures contract, the Funds are required to deposit initial margin with the broker in the form of cash or securities in an amount that varies depending on a contract’s size and risk profile. The initial margin deposit must then be maintained at an established level over the life of the contract. Amounts pledged, which are considered restricted, are included in cash pledged for futures contracts in the Statements of Assets and Liabilities.

Securities deposited as initial margin are designated in the Schedules of Investments and cash deposited, if any, is shown as cash pledged for futures contracts in the Statements of Assets and Liabilities. Pursuant to the contract, the Funds agree to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”). Variation margin is recorded as unrealized appreciation (depreciation) and, if any, shown as variation margin receivable (or payable) on futures contracts in the Statements of Assets and Liabilities. When the contract is closed, a realized gain or loss is recorded in the Statements of Operations equal to the difference between the notional amount of the contract at the time it was opened and the notional amount at the time it was closed. The use of futures contracts involves the risk of an imperfect correlation in the movements in the price of futures contracts and interest, foreign currency exchange rates or underlying assets.

 

6.

INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Advisory: Each Fund entered into an Investment Advisory Agreement with the Manager, the Funds’ investment adviser and indirect, wholly-owned subsidiary of BlackRock, Inc. (“BlackRock”), to provide investment advisory and administrative services. The Manager is responsible for the management of each Fund’s portfolio and provides the personnel, facilities, equipment and certain other services necessary to the operations of each Fund.

For such services, each Fund pays the Manager a monthly fee at an annual rate equal to the following percentages of the average daily value of each Fund’s net assets:

 

     MUE      MCA      MYN      MYI  

Investment advisory fees

    0.55      0.50      0.50      0.50

For purposes of calculating these fees, “net assets” mean the total assets of a Fund minus the sum of its accrued liabilities (which does not include liabilities represented by TOB Trusts and the liquidation preference of any outstanding preferred shares). It is understood that the liquidation preference of any outstanding preferred stock (other than accumulated dividends) and TOB Trusts is not considered a liability in determining a fund’s NAV.

Expense Waivers: With respect to each Fund, the Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees each Fund pays to the Manager indirectly through its investment in affiliated money market funds (the “affiliated money market fund waiver”). These amounts are included in fees waived and/or reimbursed by the Manager in the Statements of Operations. For the six months ended January 31, 2019, the amounts waived were as follows:

 

     MUE      MCA      MYN      MYI  

Amounts waived

  $ 2,944      $ 712      $ 595      $ 4,198  

The Manager contractually agreed to waive its investment advisory fee with respect to any portion of each Fund’s assets invested in affiliated equity and fixed-income mutual funds and affiliated exchange-traded funds that have a contractual management fee through June 30, 2019. The agreement can be renewed for annual periods thereafter, and may be terminated on 90 days’ notice, each subject to approval by a majority of the Funds’ Independent Directors. For the six months ended January 31, 2019, there were no fees waived by the Manager pursuant to these arrangements.

The Manager, for MUE, voluntarily agreed to waive its investment advisory fee on the proceeds of the Preferred Shares and TOB Trusts that exceed 35% of total assets minus the sum of its accrued liabilities (which does not include liabilities represented by TOB Trusts and the liquidation preference of any outstanding preferred shares). The voluntary waiver may be reduced or discontinued at any time without notice. This amount is included in fees waived and/or reimbursed by the Manager in the Statements of Operations. For the six months ended January 31, 2019, the waiver was $50,728.

 

 

 

NOTES TO FINANCIAL STATEMENTS      53  


Notes to Financial Statements  (unaudited) (continued)

 

Directors and Officers: Certain directors and/or officers of the Funds are directors and/or officers of BlackRock or its affiliates. The Funds reimburse the Manager for a portion of the compensation paid to the Funds’ Chief Compliance Officer, which is included in Directors and Officer in the Statements of Operations.

 

7.

PURCHASES AND SALES

For the six months ended January 31, 2019, purchases and sales of investments, excluding short-term securities, were as follows:

 

     MUE      MCA      MYN      MYI  

Purchases

  $ 73,661,635      $ 144,671,836      $ 133,875,299      $ 220,079,466  

Sales

    72,760,959        150,553,410        128,637,286        220,974,456  

 

8.

INCOME TAX INFORMATION

It is each Fund’s policy to comply with the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies, and to distribute substantially all of its taxable income to its shareholders. Therefore, no U.S. federal income tax provision is required.

Each Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on each Fund’s U.S. federal tax returns generally remains open for each of the four years ended July 31, 2018. The statutes of limitations on each Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

Management has analyzed tax laws and regulations and their application to the Funds as of January 31, 2019, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Funds’ financial statements.

As of July 31, 2018, the Funds had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates as follows:

 

Expires July 31,   MUE      MYN  

No expiration date(a)

  $ 8,359,275      $ 14,138,506  

2019

           1,287,746  
 

 

 

    

 

 

 
  $ 8,359,275      $ 15,426,252  
 

 

 

    

 

 

 
  (a) 

Must be utilized prior to losses subject to expiration

 

As of January 31, 2019, gross unrealized appreciation and depreciation for investments and derivatives based on cost for U.S. federal income tax purposes were as follows:

 

     MUE      MCA      MYN      MYI  

Tax cost

  $ 408,380,522      $ 657,579,179      $ 748,312,292      $ 1,225,377,023  
 

 

 

    

 

 

    

 

 

    

 

 

 

Gross unrealized appreciation

  $ 20,218,577      $ 26,608,968      $ 36,553,293      $ 71,014,012  

Gross unrealized depreciation

    (2,174,636      (4,034,452      (3,940,878      (12,268,264
 

 

 

    

 

 

    

 

 

    

 

 

 

Net unrealized appreciation

  $ 18,043,941      $ 22,574,516      $ 32,612,415      $ 58,745,748  
 

 

 

    

 

 

    

 

 

    

 

 

 

 

9.

PRINCIPAL RISKS

Many municipalities insure repayment of their bonds, which may reduce the potential for loss due to credit risk. The market value of these bonds may fluctuate for other reasons, including market perception of the value of such insurance, and there is no guarantee that the insurer will meet its obligation.

Inventories of municipal bonds held by brokers and dealers may decrease, which would lessen their ability to make a market in these securities. Such a reduction in market making capacity could potentially decrease a fund’s ability to buy or sell bonds. As a result, a fund may sell a security at a lower price, sell other securities to raise cash, or give up an investment opportunity, any of which could have a negative impact on performance. If a fund needed to sell large blocks of bonds, those sales could further reduce the bonds’ prices and impact performance.

In the normal course of business, certain Funds invest in securities or other instruments and may enter into certain transactions, and such activities subject each Fund to various risks, including among others, fluctuations in the market (market risk) or failure of an issuer to meet all of its obligations. The value of securities or other instruments may also be affected by various factors, including, without limitation: (i) the general economy; (ii) the overall market as well as local, regional or global political and/or social instability; (iii) regulation, taxation or international tax treaties between various countries; or (iv) currency, interest rate and price fluctuations.

Each Fund may be exposed to prepayment risk, which is the risk that borrowers may exercise their option to prepay principal earlier than scheduled during periods of declining interest rates, which would force each Fund to reinvest in lower yielding securities. Each Fund may also be exposed to reinvestment risk, which is the risk that income from each Fund’s portfolio will decline if each Fund invests the proceeds from matured, traded or called fixed-income securities at market interest rates that are below each Fund portfolio’s current earnings rate.

The Funds may hold a significant amount of bonds subject to calls by the issuers at defined dates and prices. When bonds are called by issuers and the Funds reinvest the proceeds received, such investments may be in securities with lower yields than the bonds originally held, and correspondingly, could adversely impact the yield and total return performance of a Fund.

 

 

 

54    2019 BLACKROCK SEMI-ANNUAL REPORT TO  SHAREHOLDERS


Notes to Financial Statements  (unaudited) (continued)

 

A Fund structures and “sponsors” the TOB Trusts in which it holds TOB Residuals and has certain duties and responsibilities, which may give rise to certain additional risks including, but not limited to, compliance, securities law and operational risks.

Should short-term interest rates rise, the Funds’ investments in the TOB Trusts may adversely affect the Funds’ net investment income and dividends to Common Shareholders. Also, fluctuations in the market value of municipal bonds deposited into the TOB Trust may adversely affect the Funds’ NAVs per share.

The U.S. Securities and Exchange Commission (“SEC”) and various federal banking and housing agencies have adopted credit risk retention rules for securitizations (the “Risk Retention Rules”). The Risk Retention Rules would require the sponsor of a TOB Trust to retain at least 5% of the credit risk of the underlying assets supporting the TOB Trust’s municipal bonds. The Risk Retention Rules may adversely affect the Funds’ ability to engage in TOB Trust transactions or increase the costs of such transactions in certain circumstances.

TOB Trusts constitute an important component of the municipal bond market. Any modifications or changes to rules governing TOB Trusts may adversely impact the municipal market and the Funds, including through reduced demand for and liquidity of municipal bonds and increased financing costs for municipal issuers. The ultimate impact of any potential modifications on the TOB Trust market and the overall municipal market is not yet certain.

Counterparty Credit Risk: The Funds may be exposed to counterparty credit risk, or the risk that an entity may fail to or be unable to perform on its commitments related to unsettled or open transactions. The Funds manage counterparty credit risk by entering into transactions only with counterparties that the Manager believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Funds’ exposure to market, issuer and counterparty credit risks with respect to these financial assets is approximately their value recorded in the Statements of Assets and Liabilities, less any collateral held by the Funds.

A derivative contract may suffer a mark-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.

With exchange-traded futures, there is less counterparty credit risk to the Funds since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, a Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency). Additionally, credit risk exists in exchange-traded futures and centrally cleared swaps 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: MCA and MYN invest a substantial amount of their assets in issuers located in a single state or limited number of states. This may subject each Fund to the risk that economic, political or social issues impacting a particular state or group of states could have an adverse and disproportionate impact on the income from, or the value or liquidity of, the Funds’ respective portfolios. Investment percentages in specific states or U.S. territories are presented in the Schedules of Investments.

As of period end, MUE and MYI invested a significant portion of their assets in securities in the transportation sector. MCA invested a significant portion of its assets in securities in the county, city, special district and school district sector. 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. The Federal Reserve has begun to raise the Federal Funds rate, and each increase results in more pronounced interest rate risk in the current market environment.

 

10.

CAPITAL SHARE TRANSACTIONS

Each Fund is authorized to issue 200 million shares, all of which were initially classified as Common Shares. The par value for each Fund’s Common Shares is $0.10. The par value for each Fund’s Preferred Shares outstanding is $0.10. The Board is authorized, however, to reclassify any unissued Common Shares to Preferred Shares without the approval of Common Shareholders.

Common Shares

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

 

     MUE      MYI  

Six months ended January 31, 2019

            

Year ended July 31, 2018

    5,535        65,843  

For the six months ended January 31, 2019, shares issued and outstanding remained constant for each Fund. For the year ended July 31, 2018, shares issued and outstanding remained constant for MCA and MYN.

 

 

NOTES TO FINANCIAL STATEMENTS      55  


Notes to Financial Statements  (unaudited) (continued)

 

On November 15, 2018, the Board authorized each Fund to participate in an open market share repurchase program. Under the program, each Fund may repurchase up to 5% of its outstanding common shares through November 30, 2019, based on common shares outstanding as of the close of business on November 30, 2018, subject to certain conditions. There is no assurance that the Funds will purchase shares in any particular amounts. For the six months ended January 31, 2019, the Funds did not repurchase any shares.

Preferred Shares

A Fund’s Preferred Shares rank prior to its Common Shares as to the payment of dividends by the Fund and distribution of assets upon dissolution or liquidation of the Fund. The 1940 Act prohibits the declaration of any dividend on Common Shares or the repurchase of Common Shares if the Fund fails to maintain asset coverage of at least 200% of the liquidation preference of the its outstanding Preferred Shares. In addition, pursuant to the Preferred Shares’ governing instruments, a Fund is restricted from declaring and paying dividends on classes of shares ranking junior to or on parity with its Preferred Shares or repurchasing such shares if the Fund fails to declare and pay dividends on the Preferred Shares, redeem any Preferred Shares required to be redeemed under the Preferred Shares’ governing instruments or comply with the basic maintenance amount requirement of the ratings agencies rating the Preferred Shares.

Holders of Preferred Shares have voting rights equal to the voting rights of holders of Common Shares (one vote per share) and vote together with holders of Common Shares (one vote per share) as a single class on certain matters. Holders of Preferred Shares, voting as a separate class, are also entitled to (i) elect two members of the Board, (ii) elect the full Board if dividends on the Preferred Shares are not paid for a period of two years and (iii) a separate class vote to amend the Preferred Share governing documents. In addition, the 1940 Act requires the approval of the holders of a majority of any outstanding Preferred Shares, voting as a separate class, to (a) adopt any plan of reorganization that would adversely affect the Preferred Shares, (b) change a Fund’s sub-classification as a closed-end investment company or change its fundamental investment restrictions or (c) change its business so as to cease to be an investment company.

VRDP Shares

MCA, MYN and MYI (for purposes of this section, a “VRDP Fund”) have issued Series W-7 VRDP Shares, $100,000 liquidation preference per share, in one or more privately negotiated offerings to qualified institutional buyers as defined pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The VRDP Shares include a liquidity feature and may be subject to a special rate period. As of period end, the VRDP Shares outstanding were as follows:

 

     Issue
Date
     Shares
Issued
     Aggregate
Principal
     Maturity
Date
 

MCA

    04/21/11        1,665      $ 166,500,000        05/01/41  

MYN

    04/21/11        2,477        247,700,000        05/01/41  

MYI

    05/19/11        3,564        356,400,000        06/01/41  

Redemption Terms: A VRDP Fund is required to redeem its VRDP Shares on the maturity date, unless earlier redeemed or repurchased. Six months prior to the maturity date, a VRDP Fund is required to begin to segregate liquid assets with the Fund’s custodian to fund the redemption. In addition, a VRDP Fund is required to redeem certain of its outstanding VRDP Shares if it fails to comply with certain asset coverage, basic maintenance amount or leverage requirements.

Subject to certain conditions, the VRDP Shares may also be redeemed, in whole or in part, at any time at the option of a VRDP Fund. The redemption price per VRDP Share is equal to the liquidation preference per share plus any outstanding unpaid dividends.

Liquidity Feature: VRDP Shares are subject to a fee agreement between the VRDP Fund and the liquidity provider that requires a per annum liquidity fee and, in some cases, an upfront or initial commitment fee, payable to the liquidity provider. These fees, if applicable, are shown as liquidity fees in the Statements of Operations. The fee agreement is set to expire, unless renewed or terminated in advance, on July 4, 2019.

In the event a fee agreement is not renewed or is terminated in advance, and the VRDP Fund does not enter into a fee agreement with an alternate liquidity provider, the VRDP Shares will be subject to mandatory purchase by the liquidity provider prior to the termination of the fee agreement. In the event of such mandatory purchase, a VRDP Fund is required to redeem the VRDP Shares six months after the purchase date. Immediately after such mandatory purchase, the VRDP Fund is required to begin to segregate liquid assets with its custodian to fund the redemption. There is no assurance that a VRDP Fund will replace such redeemed VRDP Shares with any other preferred shares or other form of leverage.

Remarketing: A VRDP Fund may incur remarketing fees on the aggregate principal amount of all its VRDP Shares, which, if any, are included in remarketing fees on Preferred Shares in the Statements of Operations. During any special rate period (as described below), a VRDP Fund may incur nominal or no remarketing fees.

Ratings: As of period end, the VRDP Shares were assigned the following long-term ratings:

 

     Moody’s      Fitch  

MCA

    Aa2        AAA  

MYN

    Aa2        AAA  

MYI

    Aa1        AAA  

Any short-term ratings on VRDP Shares are directly related to the short-term ratings of the liquidity provider for such VRDP Shares. Changes in the credit quality of the liquidity provider could cause a change in the short-term credit ratings of the VRDP Shares as rated by Moody’s and Fitch. The liquidity provider may be terminated prior to the scheduled termination date if the liquidity provider fails to maintain short-term debt ratings in one of the two highest rating categories. As of period end, the short-term ratings of the VRDP Shares were within the two highest rating categories as follows:

 

     Moody’s      Fitch  

MYN

    P-1        F1  

MYI

    P-1        F1  

 

 

56    2019 BLACKROCK SEMI-ANNUAL REPORT TO  SHAREHOLDERS


Notes to Financial Statements  (unaudited) (continued)

 

Special Rate Period: A VRDP Fund may commence a “special rate period” with respect to its VRDP Shares, during which the VRDP Shares will not be subject to any remarketing and the dividend rate will be based on a predetermined methodology. During a special rate period, short-term ratings on VRDP Shares are withdrawn. The following VRDP Fund has commenced or is set to commence a special rate period:

 

     Commencement
Date
     Expiration Date
as of period
ended 01/31/19
 

MCA

    06/21/12      06/19/19  

 

  *

Issuance date of VRDP Shares.

 

The following VRDP Funds were in a special rate period that terminated during the reporting period:

 

     Commencement
Date
     Termination
Date
 

MYN

    06/21/12      01/24/19  

MYI

    06/21/12      01/17/19  

 

  *

Issuance date of VRDP Shares.

 

Prior to the expiration date, the VRDP Funds and the VRDP Shares holder may mutually agree to extend the special rate period. If a special rate period is not extended, the VRDP Shares will revert to remarketable securities upon the termination of the special rate period and will be remarketed and available for purchase by qualified institutional investors.

During the special rate period: (i) the liquidity and fee agreements remain in effect, (ii) VRDP Shares remain subject to mandatory redemption by the VRDP Fund on the maturity date, (iii) VRDP Shares will not be remarketed or subject to optional or mandatory tender events, (iv) the VRDP Fund is required to comply with the same asset coverage, basic maintenance amount and leverage requirements for the VRDP Shares as is required when the VRDP Shares are not in a special rate period, (v) the VRDP Fund will pay dividends monthly based on the sum of the Securities Industry and Financial Markets Association (“SIFMA”) Municipal Swap Index rate and a percentage per annum based on the long-term ratings assigned to the VRDP Shares and (vi) the VRDP Fund will pay nominal or no fees to the liquidity provider and remarketing agent.

If a VRDP Fund redeems its VRDP Shares prior to end of the special rate period and the VRDP Shares have long-term ratings above A1/A+ and its equivalent by all ratings agencies then rating the VRDP Shares, then such redemption may be subject to a redemption premium payable to the holder of the VRDP Shares based on the time remaining in the special rate period, subject to certain exceptions for redemptions that are required to comply with minimum asset coverage requirements.

Dividends: Except during the Special Rate Period, dividends on the VRDP Shares are payable monthly at a variable rate set weekly by the remarketing agent. Such dividend rates are generally based upon a spread over a base rate and cannot exceed a maximum rate. A change in the short-term credit rating of the liquidity provider or the VRDP Shares may adversely affect the dividend rate paid on such shares, although the dividend rate paid on the VRDP Shares is not directly based upon either short-term rating. In the event of a failed remarketing, the dividend rate of the VRDP Shares will be reset to a maximum rate. The maximum rate is determined based on, among other things, the long-term preferred share rating assigned to the VRDP Shares and the length of time that the VRDP Shares fail to be remarketed.

For the six months ended January 31, 2019, the annualized dividend rates for the VRDP Shares were as follows:

 

     MCA      MYN      MYI  

Rate

    2.42      2.38      2.36

For the six months ended January 31, 2019, VRDP Shares issued and outstanding of each VRDP Fund remained constant.

VMTP Shares

MUE (for purposes of this section, a “VMTP Fund”) has issued Series W-7 VMTP Shares, $100,000 liquidation preference per share, in one or more privately negotiated offerings to qualified institutional buyers as defined pursuant to Rule 144A under the Securities Act. The VMTP Shares are subject to certain restrictions on transfer, and a VMTP Fund may also be required to register its VMTP Shares for sale under the Securities Act under certain circumstances. As of period end, the VMTP Shares outstanding were as follows:

 

     Issue
Date
     Shares
Issued
     Aggregate
Principal
     Term
Redemption
Date
 

MUE

    12/16/11        1,310      $ 131,000,000        07/02/20  

Redemption Terms: A VMTP Fund is required to redeem its VMTP Shares on the term redemption date, unless earlier redeemed or repurchased or unless extended. There is no assurance that a term will be extended further or that any VMTP Shares will be replaced with any other preferred shares or other form of leverage upon the redemption or repurchase of the VMTP Shares. Six months prior to the term redemption date, a VMTP Fund is required to begin to segregate liquid assets with its custodian to fund the redemption. In addition, a VMTP Fund is required to redeem certain of its outstanding VMTP Shares if it fails to comply with certain asset coverage, basic maintenance amount or leverage requirements.

 

 

NOTES TO FINANCIAL STATEMENTS      57  


Notes to Financial Statements  (unaudited) (continued)

 

Subject to certain conditions, VMTP Shares may be redeemed, in whole or in part, at any time at the option of the VMTP Fund. The redemption price per VMTP Share is equal to the liquidation preference per share plus any outstanding unpaid dividends and applicable redemption premium. If a VMTP Fund redeems its VMTP Shares prior to the term redemption date and the VMTP Shares have long-term ratings above A1/A+ or its equivalent by the ratings agencies then rating the VMTP Shares, then such redemption may be subject to a prescribed redemption premium (up to 3% of the liquidation preference) payable to the holder of the VMTP Shares based on the time remaining until the term redemption date, subject to certain exceptions for redemptions that are required to comply with minimum asset coverage requirements.

Dividends: Dividends on the VMTP Shares are declared daily and payable monthly at a variable rate set weekly at a fixed rate spread to the SIFMA Municipal Swap Index or to a percentage of the one-month LIBOR rate, as set forth in the VMTP Shares governing instrument. The fixed spread is determined based on the long-term preferred share rating assigned to the VMTP Shares by the ratings agencies then rating the VMTP Shares. As of period end, the VMTP Shares were assigned the following long-term ratings:

 

     Moody’s      Fitch  

MUE

    Aa1        AAA  

The dividend rate on VMTP Shares is subject to a step-up spread if the VMTP Fund fails to comply with certain provisions, including, among other things, the timely payment of dividends, redemptions or gross-up payments, and complying with certain asset coverage and leverage requirements.

For the six months ended January 31, 2019, the average annualized dividend rate for MUE’s VMTP Shares was 2.59%.

Offering Costs: The Funds incurred costs in connection with the issuance of VRDP and VMTP Shares, which were recorded as a direct deduction from the carrying value of the related debt liability and will be amortized over the life of the VRDP and VMTP Shares with the exception of any upfront fees paid by a VRDP Fund to the liquidity provider which, if any, were amortized over the life of the liquidity agreement. Amortization of these costs is included in interest expense, fees and amortization of offering costs in the Statements of Operations.

Financial Reporting: The VRDP and VMTP Shares are considered debt of the issuer; therefore, the liquidation preference, which approximates fair value of the VRDP and VMTP Shares, is recorded as a liability in the Statements of Assets and Liabilities net of deferred offering costs. Unpaid dividends are included in interest expense and fees payable in the Statements of Assets and Liabilities, and the dividends accrued and paid on the VRDP and VMTP Shares are included as a component of interest expense, fees and amortization of offering costs in the Statements of Operations. The VRDP and VMTP Shares are treated as equity for tax purposes. Dividends paid to holders of the VRDP and VMTP Shares are generally classified as tax-exempt income for tax-reporting purposes. Dividends and amortization of deferred offering costs on VRDP and VMTP Shares are included in interest expense, fees and amortization of offering costs in the Statements of Operations:

 

     Dividends Accrued      Deferred Offering Costs
Amortization
 

MUE

  $ 1,707,270      $  

MCA

    2,027,263        5,766  

MYN

    2,975,216        7,672  

MYI

    4,233,983        10,085  

 

11.

REGULATION S-X AMENDMENTS

On August 17, 2018, the SEC adopted amendments to certain disclosure requirements in Securities Act Release No. 33-10532, Disclosure Update and Simplification. The Funds have adopted the amendments pertinent to Regulation S-X in this shareholder report. The amendments impacted certain disclosure presentation on the Statements of Assets and Liabilities, Statements of Changes in Net Assets and Notes to the Financial Statements.

Prior year distribution information and undistributed net investment income in the Statements of Changes in Net Assets has been modified to conform to the current year presentation in accordance with the Regulation S-X changes.

Distributions for the year ended July 31, 2018 were classified as follows:

 

     Net Investment Income  

MUE

  $ 16,169,915  

MCA

    23,481,902  

MYN

    23,456,159  

MYI

    50,233,328  

Undistributed net investment income as of July 31, 2018 was as follows:

 

     Undistributed Net Investment Income  

MUE

  $ 836,903  

MCA

    945,392  

MYN

    2,205,494  

MYI

    4,983,874  

 

 

58    2019 BLACKROCK SEMI-ANNUAL REPORT TO  SHAREHOLDERS


Notes to Financial Statements  (unaudited) (continued)

 

 

12.

SUBSEQUENT EVENTS

Management’s evaluation of the impact of all subsequent events on the Funds’ financial statements was completed through the date the financial statements were issued and the following items were noted:

 

     Common Dividend
Per Share
     Preferred Shares (c)  
     Paid (a)      Declared (b)      Shares      Series      Declared  

MUE

  $ 0.0490      $ 0.0490        VMTP        W-7      $ 267,603  

MCA

    0.0520        0.0520        VRDP        W-7        317,217  

MYN

    0.0425        0.0425        VRDP        W-7        329,407  

MYI

    0.0505        0.0505        VRDP        W-7        482,165  

 

(a) 

Net investment income dividend paid on March 1, 2019 to Common Shareholders of record on February 15, 2019.

(b) 

Net investment income dividend declared on March 1, 2019, payable to Common Shareholders of record on March 15, 2019.

(c) 

Dividends declared for period February 1, 2019 to February 28, 2019.

 

 

NOTES TO FINANCIAL STATEMENTS      59  


Director and Officer Information

 

Richard E. Cavanagh, Co-Chair of the Board and Director

Karen P. Robards, Co-Chair of the Board and Director

Michael J. Castellano, Director

Cynthia L. Egan, Director

Frank J. Fabozzi, Director

Henry Gabbay, Director

R. Glenn Hubbard, Director

W. Carl Kester, Director

Catherine A. Lynch, Director

Robert Fairbairn, Director

John M. Perlowski, Director, President and Chief Executive Officer

Jonathan Diorio, Vice President

Neal J. Andrews, Chief Financial Officer

Jay M. Fife, Treasurer

Charles Park, Chief Compliance Officer

Janey Ahn, Secretary

 

As of the date of this report, the portfolio managers of MNY are Walter O’Connor and Christian Romaglino. Mr. Romaglino joined MYN’s portfolio management team effective October 1, 2018. Mr. Romaglino has been a Director of BlackRock, Inc. since 2017; a Portfolio Manager for the Municipal Mutual Fund Desk within BlackRock’s Global Fixed Income Group since 2017; and a Portfolio Manager at Brown Brothers Harriman from 2007 to 2017.

Effective January 1, 2019, Richard E. Cavanagh and Karen P. Robards were appointed as a Co-Chair of the Board. Prior to January 1, 2019, Mr. Cavanagh served as Chair of the Board and Ms. Robards served as Vice Chair of the Board. In addition, effective January 1, 2019, Henry Gabbay was appointed as a Director of each Fund.

 

Investment Adviser

BlackRock Advisors, LLC

Wilmington, DE 19809

Accounting Agent and Custodian

State Street Bank and Trust Company

Boston, MA 02111

Transfer Agent

Computershare Trust
 Company, N.A.

Canton, MA 02021

VRDP Tender and Paying Agent and VMTP Redemption and Paying Agent

The Bank of New York Mellon

New York, NY 10286

VRDP Liquidity Provider

Citibank, N.A.

New York, NY 10179

VRDP Remarketing Agent

Citigroup Global Markets Inc.

New York, NY 10179

Independent Registered Public Accounting Firm

Deloitte & Touche LLP

Boston, MA 02116

Legal Counsel

Willkie Farr & Gallagher LLP

New York, NY 10019

Address of the Funds

100 Bellevue Parkway

Wilmington, DE 19809

 

 

 

60    2019 BLACKROCK SEMI-ANNUAL REPORT TO  SHAREHOLDERS


Additional Information

 

Section 19(a) Notices

The amounts and sources of distributions reported in this notice are estimates that are subject to change based on the Fund’s investment experience during the remainder of the calendar year, are for financial reporting purposes and are not being provided for tax reporting purposes. The actual amounts and character of the distributions for tax reporting purposes will be reported to shareholders on Form 1099-DIV which is sent to shareholders shortly after calendar year end.

 

  

 

         Total Fiscal Year to Date Cumulative
Distributions by Character
    Percentage of Fiscal Year to Date Cumulative
Distributions by Character
 
Fund   Ticker     Net
Investment
Income
   

Net Realized

Capital Gains

Short Term

    Net Realized
Capital Gains
Long Term
    Return of
Capital*
    Total Per
Common
Share
    Net
Investment
Income
    Net Realized
Capital Gains
Short Term
    Net Realized
Capital Gains
Long Term
    Return of
Capital
    Total Per
Common
Share
 

BlackRock Holdings Quality Fund II, Inc.

    MUE     $ 0.305980     $     —     $     —     $ 0.008020     $ 0.314000       97     0     0     3     100
  *

MUE estimates that it has distributed more than the amount of earned income and net realized gains; therefore, a portion of the distribution may be a return of capital. A return of capital may occur, for example, when some or all of the shareholder’s investment is paid back to the shareholder. A return of capital distribution does not necessarily reflect the Fund’s investment performance and should not be confused with “yield” or “income”. When distributions exceed total return performance, the difference will reduce the Fund’s net asset value per share.

 

Section 19(a) notices for the Funds, as applicable, are available on the BlackRock website at http://www.blackrock.com.

Fund Certification

The Funds are listed for trading on the NYSE and have filed with the NYSE their annual chief executive officer certification regarding compliance with the NYSE’s listing standards. The Funds filed with the SEC the certification of its chief executive officer and chief financial officer required by section 302 of the Sarbanes-Oxley Act.

Dividend Policy

Each Fund’s dividend policy is to distribute all or a portion of its net investment income to its shareholders on a monthly basis. In order to provide shareholders with a more stable level of distributions, the Funds may at times pay out less than the entire amount of net investment income earned in any particular month and may at times in any particular month pay out such accumulated but undistributed income in addition to net investment income earned in that month. As a result, the distributions paid by the Funds for any particular month may be more or less than the amount of net investment income earned by the Funds during such month. The Funds’ current accumulated but undistributed net investment income, if any, is disclosed in the Statements of Assets and Liabilities, which comprises part of the financial information included in this report.

General Information

The Funds do not make available copies of their Statements of Additional Information because the Funds’ shares are not continuously offered, which means that the Statement of Additional Information of each Fund has not been updated after completion of the respective Fund’s offerings and the information contained in each Fund’s Statement of Additional Information may have become outdated.

During the period, there were no material changes in the Funds’ investment objectives or policies or to the Funds’ charters or by-laws that would delay or prevent a change of control of the Funds that were not approved by the shareholders or in the principal risk factors associated with investment in the Funds. Except as disclosed on page 59, there have been no changes in the persons who are primarily responsible for the day-to-day management of the Funds’ portfolios.

In accordance with Section 23(c) of the Investment Company Act of 1940, each Fund may from time to time purchase shares of its common stock in the open market or in private transactions.

Quarterly performance, semi-annual and annual reports, current net asset value and other information regarding the Funds may be found on BlackRock’s website, which can be accessed at http://www.blackrock.com. Any reference to BlackRock’s website in this report is intended to allow investors public access to information regarding the Funds and does not, and is not intended to, incorporate BlackRock’s website in this report.

Electronic Delivery

Shareholders can sign up for e-mail notifications of quarterly statements, annual and semi-annual shareholder reports by enrolling in the electronic delivery program. Electronic copies of shareholder reports are available on BlackRock’s website.

To enroll in electronic delivery:

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

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

 

 

ADDITIONAL INFORMATION      61  


Additional Information  (continued)

 

Householding

The Funds will mail only one copy of shareholder documents, annual and semi-annual reports and proxy statements, to shareholders with multiple accounts at the same address. This practice is commonly called “householding” and is intended to reduce expenses and eliminate duplicate mailings of shareholder documents. Mailings of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please call the Funds at (800) 882-0052.

Availability of Quarterly Schedule of Investments

The Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the SEC’s website at http://www.sec.gov. The Funds’ Forms N-Q may also be obtained upon request and without charge by calling (800) 882-0052.

Availability of Proxy Voting Policies and Procedures

A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available upon request and without charge (1) by calling (800) 882-0052; (2) at http://www.blackrock.com; and (3) on the SEC’s website at http://www.sec.gov.

Availability of Proxy Voting Record

Information about how the Funds voted proxies relating to securities held in the Funds’ portfolios during the most recent 12-month period ended June 30 is available upon request and without charge (1) at http://www.blackrock.com or by calling (800) 882-0052; and (2) on the SEC’s website at http://www.sec.gov.

Availability of Fund Updates

BlackRock will update performance and certain other data for the Funds on a monthly basis on its website in the “Closed-end Funds” section of http://www.blackrock.com as well as certain other material information as necessary from time to time. Investors and others are advised to check the website for updated performance information and the release of other material information about the Funds. This reference to BlackRock’s website is intended to allow investors public access to information regarding the Funds and does not, and is not intended to, incorporate BlackRock’s website in this report.

BlackRock Privacy Principles

BlackRock is committed to maintaining the privacy of its current and former fund investors and individual clients (collectively, “Clients”) and to safeguarding their non-public personal information. The following information is provided to help you understand what personal information BlackRock collects, how we protect that information and why in certain cases we share such information with select parties.

If you are located in a jurisdiction where specific laws, rules or regulations require BlackRock to provide you with additional or different privacy-related rights beyond what is set forth below, then BlackRock will comply with those specific laws, rules or regulations.

BlackRock obtains or verifies personal non-public information from and about you from different sources, including the following: (i) information we receive from you or, if applicable, your financial intermediary, on applications, forms or other documents; (ii) information about your transactions with us, our affiliates, or others; (iii) information we receive from a consumer reporting agency; and (iv) from visits to our websites.

BlackRock does not sell or disclose to non-affiliated third parties any non-public personal information about its Clients, except as permitted by law or as is necessary to respond to regulatory requests or to service Client accounts. These non-affiliated third parties are required to protect the confidentiality and security of this information and to use it only for its intended purpose.

We may share information with our affiliates to service your account or to provide you with information about other BlackRock products or services that may be of interest to you. In addition, BlackRock restricts access to non-public personal information about its Clients to those BlackRock employees with a legitimate business need for the information. BlackRock maintains physical, electronic and procedural safeguards that are designed to protect the non-public personal information of its Clients, including procedures relating to the proper storage and disposal of such information.

 

 

62    2019 BLACKROCK SEMI-ANNUAL REPORT TO  SHAREHOLDERS


Glossary of Terms Used in this Report

 

Portfolio Abbreviations
AGC    Assured Guarantee Corp.
AGM    Assured Guaranty Municipal Corp.
AMBAC    American Municipal Bond Assurance Corp.
AMT    Alternative Minimum Tax (subject to)
ARB    Airport Revenue Bonds
BAM    Build America Mutual Assurance Co.
BARB    Building Aid Revenue Bonds
BOCES    Board of Cooperative Educational Services
CAB    Capital Appreciation Bonds
COP    Certificates of Participation
EDA    Economic Development Authority
EDC    Economic Development Corp.
ERB    Education Revenue Bonds
FHA    Federal Housing Administration
GARB    General Airport Revenue Bonds
GO    General Obligation Bonds
GTD    Guaranteed
HFA    Housing Finance Agency
IDA    Industrial Development Authority
IDB    Industrial Development Board
ISD    Independent School District
LRB    Lease Revenue Bonds
M/F    Multi-Family
NPFGC    National Public Finance Guarantee Corp.
PILOT    Payment in Lieu of Taxes
PSF-GTD    Permanent School Fund Guaranteed
Q-SBLF    Qualified School Bond Loan Fund
RB    Revenue Bonds
S/F    Single-Family
SONYMA    State of New York Mortgage Agency
SRF    State Revolving Fund

 

 

GLOSSARY OF TERMS USED IN THIS REPORT      63  


This report is intended for current holders. It is not a prospectus. Past performance results shown in this report should not be considered a representation of future performance. The Funds have leveraged their Common Shares, which creates risks for Common Shareholders, including the likelihood of greater volatility of net asset value and market price of the Common Shares, and the risk that fluctuations in short-term interest rates may reduce the Common Shares’ yield. Statements and other information herein are as dated and are subject to change.

 

LOGO

 

 

MHMYINS4-1/19-SAR    LOGO


Item 2 –

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

 

Item 3 –

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

 

Item 4 –

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

 

Item 5 –

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

 

Item 6 –

Investments

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

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

 

Item 7 –

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

 

Item 8 –

Portfolio Managers of Closed-End Management Investment Companies

(a)(1) As of the date of filing this Report:

The registrant is managed by a team of investment professionals comprised of Walter O’Connor, CFA, Managing Director at BlackRock and Christian Romaglino, Director at BlackRock. Each is a member of BlackRock’s municipal tax-exempt management group. Each is jointly responsible for the day-to-day management of the registrant’s portfolio, which includes setting the registrant’s overall investment strategy, overseeing the management of the registrant and/or selection of its investments. Messrs. O’Connor and Romaglino have been members of the registrant’s portfolio management team since 2006 and 2018, respectively.

Information below is with respect to Mr. Romaglino, who became portfolio manager to the Fund on October 1, 2018.

 

 

Portfolio Manager

  

 

Biography

Christian Romaglino

 

 

  

Director of BlackRock since 2017

 

 

(a)(2) As of January 31, 2019:

 

     

(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

             

Christian Romaglino

 

  

12

 

  

0

 

  

0

 

  

0

 

  

0

 

  

0

 

             
    

$5.04 Billion

 

  

$0

 

  

$0

 

  

$0

 

  

$0

 

  

$0

 

 

2


(iv)  Portfolio Manager 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 hedge fund and/or long only accounts, or may be part of a team managing 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 manager of this Fund is not entitled to receive a portion of incentive fees of other accounts.

As a fiduciary, BlackRock owes a duty of loyalty to its clients and must treat each client fairly. When BlackRock purchases or sells securities for more than one account, the trades must be allocated in a manner consistent with its fiduciary duties. BlackRock attempts to allocate investments in a fair and equitable manner among client accounts, with no account receiving preferential treatment. To this end, BlackRock, Inc. has adopted policies that are intended to ensure reasonable efficiency in client transactions and provide BlackRock with sufficient flexibility to allocate investments in a manner that is consistent with the particular investment discipline and client base, as appropriate.

(a)(3) As of January 31, 2019:

Portfolio Manager Compensation Overview

The discussion below describes the portfolio managers’ compensation as of January 31, 2019.

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.

 

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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 the portfolio manager, such benchmarks for the Fund and other accounts are: a combination of market-based indices (e.g., Standard & Poor’s Municipal Bond Index), certain customized indices and certain fund industry peer groups.

Distribution of Discretionary Incentive Compensation. Discretionary incentive compensation is distributed to portfolio managers in a combination of cash, deferred BlackRock, Inc. stock awards, and/or deferred cash awards that notionally track the return of certain BlackRock investment products.

Portfolio managers receive their annual discretionary incentive compensation in the form of cash. Portfolio managers whose total compensation is above a specified threshold also receive deferred BlackRock, Inc. stock awards annually as part of their discretionary incentive compensation. Paying a portion of discretionary incentive compensation in the form of deferred BlackRock, Inc. stock puts compensation earned by a portfolio manager for a given year “at risk” based on BlackRock’s ability to sustain and improve its performance over future periods. In some cases, additional deferred BlackRock, Inc. stock may be granted to certain key employees as part of a long-term incentive award to aid in retention, align interests with long-term shareholders and motivate performance. Deferred BlackRock, Inc. stock awards are generally granted in the form of BlackRock, Inc. restricted stock units that vest pursuant to the terms of the applicable plan and, once vested, settle in BlackRock, Inc. common stock. The portfolio manager of this Fund has deferred BlackRock, Inc. stock awards.

For certain portfolio managers, a portion of the discretionary incentive compensation is also distributed in the form of deferred cash awards that notionally track the returns of select BlackRock investment products they manage, which provides direct alignment of portfolio manager discretionary incentive compensation with investment product results. Deferred cash awards vest ratably over a number of years and, once vested, settle in the form of cash. Only portfolio managers who manage specified products and whose total compensation is above a specified threshold are eligible to participate in the deferred cash award program.

Other Compensation Benefits. In addition to base salary and discretionary incentive compensation, portfolio managers may be eligible to receive or participate in one or more of the following:

Incentive Savings Plans — BlackRock, Inc. has created a variety of incentive savings plans in which BlackRock, Inc. employees are eligible to participate, including a 401(k) plan, the BlackRock Retirement Savings Plan (RSP), and the BlackRock Employee Stock Purchase Plan (ESPP). The employer contribution components of the RSP include a company match equal to 50% of the first 8% of eligible pay

 

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contributed to the plan capped at $5,000 per year, and a company retirement contribution equal to 3-5% of eligible compensation up to the Internal Revenue Service limit ($275,000 for 2018). The RSP offers a range of investment options, including registered investment companies and collective investment funds managed by the firm. BlackRock, Inc. contributions follow the investment direction set by participants for their own contributions or, absent participant investment direction, are invested into a target date fund that corresponds to, or is closest to, the year in which the participant attains age 65. The ESPP allows for investment in BlackRock, Inc. common stock at a 5% discount on the fair market value of the stock on the 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 January 31, 2019.

 

Portfolio Manager

  

Dollar Range of Equity Securities

of the Fund Beneficially Owned

Christian Romaglino

   None

(b) Effective October 1, 2018, Christian Romaglino was added as a portfolio manager.

 

Item 9 –

Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers

 

Period   (a) Total   (b) Average Price Paid per Share   (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs  

(d) Maximum Number of Shares that May Yet Be Purchased Under the Plans

or Programs1

   

Number of

Shares

Purchased

August 1 – 31, 2018   N/A   N/A   N/A   N/A
September 1 – 30, 2018   N/A   N/A   N/A   N/A
October 1 - 31, 2018   N/A   N/A   N/A   N/A
November 1 – 30, 2018   N/A   N/A   N/A   N/A
December 1 – 31, 2018   0   $0   0   1,979,329
January 1 –31, 2019   0   $0   0   1,979,329
Total:   0   $0   0   1,979,329

1The Fund announced an open market share repurchase program on November 15, 2018 pursuant to which the Fund was authorized to repurchase, through November 30, 2019, up to 5% of its common shares based on common shares outstanding on November 30, 2018, in open market transactions, subject to certain conditions.

 

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.

 

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

 

Item 12 –

Disclosure of Securities Lending Activities for Closed-End Management Investment

Companies – Not Applicable

 

Item 13 –

Exhibits attached hereto

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

(a)(2) – Certifications – Attached hereto

(a)(3) – Not Applicable

(a)(4) – Not Applicable

(b) –   Certifications – Attached hereto

 

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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 New York Quality Fund, Inc.

 

By:       /s/ John M. Perlowski                  
  John M. Perlowski  
  Chief Executive Officer (principal executive officer) of
  BlackRock MuniYield New York Quality Fund, Inc.

Date: April 5, 2019

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

 

By:       /s/ John M. Perlowski                  
  John M. Perlowski  
  Chief Executive Officer (principal executive officer) of
  BlackRock MuniYield New York Quality Fund, Inc.

Date: April 5, 2019

 

By:       /s/ Neal J. Andrews                      
  Neal J. Andrews  
  Chief Financial Officer (principal financial officer) of
  BlackRock MuniYield New York Quality Fund, Inc.

Date: April 5, 2019

 

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