UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSRS

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT
COMPANIES

Investment Company Act file number 811-06660

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

Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809

Name and address of agent for service: Anne F. Ackerley, Chief Executive Officer, BlackRock MuniYield 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: 04/30/2010

Date of reporting period: 10/31/2009

Item 1 – Report to Stockholders


EQUITIES  FIXED INCOME  REAL ESTATE  LIQUIDITY  ALTERNATIVES  BLACKROCK SOLUTIONS

 

 

Semi-Annual Report

(BLACKROCK LOGO)

 

OCTOBER 31, 2009 | (UNAUDITED)

 

 

 

BlackRock MuniYield Fund, Inc. (MYD)

 

BlackRock MuniYield Quality Fund, Inc. (MQY)

 

BlackRock MuniYield Quality Fund II, Inc. (MQT)

 

NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE


 

 

Table of Contents

 

 

 

 

 

 

Page

 

Dear Shareholder

 

3

 

Semi-Annual Report:

 

 

 

Fund Summaries

 

4

 

The Benefits and Risks of Leveraging

 

7

 

Derivative Financial Instruments

 

7

 

Financial Statements:

 

 

 

Schedules of Investments

 

8

 

Statements of Assets and Liabilities

 

24

 

Statements of Operations

 

25

 

Statements of Changes in Net Assets

 

26

 

Statements of Cash Flows

 

28

 

Financial Highlights

 

29

 

Notes to Financial Statements

 

32

 

Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements

 

39

 

Officers and Directors

 

43

 

Additional Information

 

44

 

 

 

 

2

SEMI-ANNUAL REPORT

OCTOBER 31, 2009


 

 

Dear Shareholder

Over the past 12 months, we have witnessed a seismic shift in market sentiment — from fear and pessimism during the worst economic decline and crisis of confidence in financial markets since The Great Depression to increasing optimism amid emerging signs of recovery. The period began in the midst of an intense deterioration in global economic activity and financial markets in the final months of 2008 and the early months of 2009. The collapse of confidence resulted in massive government policy intervention on a global scale in the financial system and the economy. The tide turned dramatically in March 2009, however, on the back of new US government initiatives, as well as better-than-expected economic data and upside surprises in corporate earnings.

Not surprisingly, global equity markets endured extreme volatility over the past 12 months, starting with steep declines and heightened risk aversion in the early part of the reporting period, which eventually gave way to an impressive rally that began in March. Although there have been fits and starts along the way and a few modest corrections, the new bull market has pushed all major US indices well into positive territory for 2009. The experience in international markets was similar to that in the United States. In particular, emerging markets (which were less affected by the global credit crunch and are experiencing faster economic growth rates when compared to the developed world) have posted impressive gains since the rally began.

In fixed income markets, the flight-to-safety premium in Treasury securities prevailed during the equity market downturn, which drove yields sharply lower, but concerns about deficit spending, debt issuance, inflation and dollar weakness have kept Treasury yields range bound in recent months. As economic and market conditions began to improve in early 2009, near-zero interest rates on risk-free assets prompted many investors to reallocate money from cash investments into higher-yielding and riskier non-Treasury assets. The high yield sector was the greatest beneficiary of this move, having decisively outpaced all other taxable asset classes since the start of 2009. Similarly, the municipal bond market is on pace for its best performance year ever in 2009, following one of its worst years in 2008. Investor demand remains strong for munis, helping to create a highly favorable technical backdrop. Municipal bond mutual funds are seeing record inflows, reflecting the renewed investor interest in the asset class.

As a result of the rebound in sentiment and global market conditions, most major benchmark indexes are now in positive territory for both the 6- and 12-month periods.

 

 

 

 

 

 

 

 

Total Returns as of October 31, 2009

 

6-month

 

12-month

 

US equities (S&P 500 Index)

 

20.04

%

 

9.80

%

 

Small cap US equities (Russell 2000 Index)

 

16.21

 

 

6.46

 

 

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

 

31.18

 

 

27.71

 

 

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

 

(0.79

)

 

8.12

 

 

Taxable fixed income (Barclays Capital US Aggregate Bond Index)

 

5.61

 

 

13.79

 

 

Tax-exempt fixed income (Barclays Capital Municipal Bond Index)

 

4.99

 

 

13.60

 

 

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

 

27.72

 

 

48.65

 

 

 

 

  *

Formerly a Merrill Lynch index.

 

 

 

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

The market environment has visibly improved since the beginning of the year, but a great deal of uncertainty and risk remain. Through periods of market turbulence, as ever, BlackRock’s full resources are dedicated to the management of our clients’ assets. For additional market perspective and investment insight, visit the most recent issue of our award-winning Shareholder® magazine at www.blackrock.com/shareholdermagazine. As always, we thank you for entrusting BlackRock with your investments, and we look forward to continuing to serve you in the months and years ahead.

Sincerely,

-s- Rob Kapito

Rob Kapito
President, BlackRock Advisors, LLC

 

Announcement to Shareholders

On December 1, 2009, BlackRock, Inc. and Barclays Global Investors, N.A. combined to form one of the world’s preeminent investment management firms. The new company, operating under the BlackRock name, manages $3.19 trillion in assets** and offers clients worldwide a full complement of active management, enhanced and index investment strategies and products, including individual and institutional separate accounts, mutual funds and other pooled investment vehicles, and the industry-leading iShares platform of exchange traded funds.

 

 

**

Data is as of September 30, 2009, is subject to change, and is based on a pro forma estimate of assets under management and other data at BlackRock, Inc. and Barclays Global Investors.

 

 

 

 

THIS PAGE NOT PART OF YOUR FUND REPORT

3

 

 

 

 

Fund Summary as of October 31, 2009

BlackRock MuniYield Fund, Inc.

 

Investment Objective

 

BlackRock MuniYield Fund, Inc. (MYD) (the “Fund”) seeks to provide shareholders with as high a level of current income exempt from federal income taxes as is consistent with its investment policies and prudent investment management by investing primarily in a portfolio of long-term, investment grade municipal obligations the interest on which, in the opinion of bond counsel to the issuer, is exempt from federal income taxes.

 

 

No assurance can be given that the Fund’s investment objective will be achieved.

 

 

Performance

For the six months ended October 31, 2009, the Fund returned 12.77% based on market price and 17.73% based on net asset value (“NAV”). For the same period, the closed-end Lipper General Municipal Debt Funds (Leveraged) category posted an average return of 16.28% on a market price basis and 14.93% on a NAV basis. All returns reflect reinvestment of dividends. The Fund’s discount to NAV, which widened during the period, accounts for the difference between performance based on price and performance based on NAV. Positive performance factors included concentrations in education, health and corporate-related debt. Renewed risk appetite was also beneficial, given the Fund’s focus on lower-rated credits. In addition, the Fund’s long duration stance and emphasis on longer-dated bonds were significant positive contributors as yields on the long end of the curve fell substantially. Negative factors included less exposure to the tax-backed, essential services and tobacco sectors.

 

 

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

 

 

Fund Information

 

 

 

Symbol on New York Stock Exchange (“NYSE”)

 

MYD

Initial Offering Date

 

November 29, 1991

Yield on Closing Market Price as of October 31, 2009 ($12.49)1

 

6.63%

Tax Equivalent Yield2

 

10.20%

Current Monthly Distribution per Common Share3

 

$0.069

Current Annualized Distribution per Common Share3

 

$0.828

Leverage as of October 31, 20094

 

38%

 

 

 

 

 

1

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

 

 

 

 

2

Tax equivalent yield assumes the maximum federal tax rate of 35%.

 

 

 

 

3

The distribution is not constant and is subject to change.

 

 

 

 

4

Represents Auction Market Preferred Shares (“Preferred Shares”) and tender option bond trusts (“TOBs”) as a percentage of total managed assets, which is the total assets of the Fund, including any assets attributable to Preferred Shares and TOBs, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Fund, please see The Benefits and Risks of Leveraging on page 7.

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10/31/09

 

4/30/09

 

Change

 

High

 

Low

 

Market Price

 

$

12.49

 

$

11.45

 

 

9.08

%

$

13.58

 

$

11.09

 

Net Asset Value

 

$

13.13

 

$

11.53

 

 

13.88

%

$

13.84

 

$

11.53

 

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

 

 

 

 

 

 

 

 

Sector Allocations

 

 

 

 

 

 

 

 

 

10/31/09

 

4/30/09

 

Health

 

23

%

 

18

%

 

Corporate

 

15

 

 

12

 

 

State

 

15

 

 

24

 

 

County/City/Special District/School District

 

10

 

 

9

 

 

Transportation

 

9

 

 

6

 

 

Utilities

 

9

 

 

8

 

 

Education

 

9

 

 

10

 

 

Housing

 

7

 

 

9

 

 

Tobacco

 

3

 

 

4

 

 

 

 

 

 

 

 

 

 

 

Credit Quality Allocations5

 

 

 

 

 

 

 

 

 

10/31/09

 

4/30/09

 

AAA/Aaa

 

22

%

 

28

%

 

AA/Aa

 

29

 

 

26

 

 

A/A

 

24

 

 

20

 

 

BBB/Baa

 

9

 

 

9

 

 

BB/Ba

 

1

 

 

1

 

 

B/B

 

3

 

 

2

 

 

CCC/Caa

 

2

 

 

2

 

 

Not Rated6

 

10

 

 

12

 

 

 

 

 

 

 

5

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

 

 

 

 

6

The investment advisor has deemed certain of these securities as investment grade quality. As of October 31, 2009 and April 30, 2009, the market value of these securities was $22,209,791 representing 2% and $18,072,535 representing 2%, respectively, of the Fund’s long-term investments.

 

 

 

4

SEMI-ANNUAL REPORT

OCTOBER 31, 2009


 

 

 

 

Fund Summary as of October 31, 2009

BlackRock MuniYield Quality Fund, Inc.

 

 

Investment Objective

 

BlackRock MuniYield Quality Fund, Inc. (MQY) (the “Fund”) seeks to provide shareholders with as high a level of current income exempt from federal income taxes as is consistent with its investment policies and prudent investment management by investing primarily in a portfolio of long-term, high-grade municipal obligations the interest on which, in the opinion of bond counsel to the issuer, is exempt from federal income taxes.

 

 

No assurance can be given that the Fund’s investment objective will be achieved.

 

 

Performance

For the six months ended October 31, 2009, the Fund returned 10.72% based on market price and 10.79% based on NAV. For the same period, the closed-end Lipper Insured Municipal Debt Funds (Leveraged) category posted an average return of 11.62% on a market price basis and 9.56% on a NAV basis. All returns reflect reinvestment of dividends. The Fund’s discount to NAV, which widened during the period, accounts for the difference between performance based on price and performance based on NAV. Among the factors that contributed to Fund performance during the reporting period were: exposure to the long end of the curve during a period of yield-curve flattening and a general tightening of credit spreads, which drove performance in the Fund’s holdings of insured bonds with weaker underlying credits; and, the Fund’s concentration in the transportation and escrowed sectors, which outperformed during the period. Conversely, low exposure to the utilities and education sectors detracted from Fund performance as both segments performed well.

 

 

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

 

 

Fund Information

 

 

 

Symbol on NYSE

 

MQY

Initial Offering Date

 

June 26, 1992

Yield on Closing Market Price as of October 31, 2009 ($13.24)1

 

6.30%

Tax Equivalent Yield2

 

9.69%

Current Monthly Distribution per Common Share3

 

$0.0695

Current Annualized Distribution per Common Share3

 

$0.8340

Leverage as of October 31, 20094

 

39%

 

 

 

 

 

1

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

 

 

 

 

2

Tax equivalent yield assumes the maximum federal tax rate of 35%.

 

 

 

 

3

The distribution is not constant and is subject to change.

 

 

 

 

4

Represents Preferred Shares and TOBs as a percentage of total managed assets, which is the total assets of the Fund, including any assets attributable to Preferred Shares and TOBs, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Fund, please see The Benefits and Risks of Leveraging on page 7.

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10/31/09

 

4/30/09

 

Change

 

High

 

Low

 

Market Price

 

$

13.24

 

$

12.32

 

 

7.47

%

$

14.44

 

$

11.80

 

Net Asset Value

 

$

14.27

 

$

13.27

 

 

7.54

%

$

15.03

 

$

13.04

 

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

 

 

 

 

 

 

 

 

Sector Allocations

 

 

 

 

 

 

 

10/31/09

 

4/30/09

 

Transportation

 

25

%

 

26

%

 

County/City/Special District/School District

 

23

 

 

20

 

 

State

 

16

 

 

18

 

 

Utilities

 

15

 

 

16

 

 

Health

 

8

 

 

7

 

 

Tobacco

 

4

 

 

5

 

 

Corporate

 

4

 

 

4

 

 

Housing

 

3

 

 

2

 

 

Education

 

2

 

 

2

 

 

 

 

 

 

 

 

 

 

Credit Quality Allocations5

 

 

 

 

 

 

 

 

 

10/31/09

 

4/30/09

 

AAA/Aaa

 

38

%

 

39

%

 

AA/Aa

 

29

 

 

42

 

 

A/A

 

26

 

 

14

 

 

BBB/Baa

 

5

 

 

5

 

 

Not Rated

 

2

6

 

—

 

 

 

 

 

 

 

5

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

 

 

 

 

6

The investment advisor has deemed certain of these securities as investment grade quality. As of October 31, 2009, the market value of these securities was $7,684,952 representing 1% of the Fund’s long-term investments.

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2009

5


 

 

 

 

Fund Summary as of October 31, 2009

BlackRock MuniYield Quality Fund II, Inc.

 

 

Investment Objective

 

BlackRock MuniYield Quality Fund II, Inc. (MQT) (the “Fund”) seeks to provide shareholders with as high a level of current income exempt from federal income taxes as is consistent with its investment policies and prudent investment management by investing primarily in a portfolio of long-term, high-grade municipal obligations the interest on which, in the opinion of bond counsel to the issuer, is exempt from federal income taxes. The Fund invests primarily in insured municipal bonds.

 

 

No assurance can be given that the Fund’s investment objective will be achieved.

 

 

Performance

For the six months ended October 31, 2009, the Fund returned 17.55% based on market price and 10.90% based on NAV. For the same period, the closed-end Lipper Insured Municipal Debt Funds (Leveraged) category posted an average return of 11.62% on a market price basis and 9.56% on a NAV basis. All returns reflect reinvestment of dividends. The Fund’s discount to NAV, which narrowed during the period, accounts for the difference between performance based on price and performance based on NAV. Among the factors that contributed to Fund performance during the reporting period were: exposure to the long end of the curve during a period of yield-curve flattening and a general tightening of credit spreads, which drove performance in the Fund’s holdings of insured bonds with weaker underlying credits; and the Fund’s concentration in the transportation and housing sectors, which outperformed during the period. Conversely, low exposure to the utilities and education sectors detracted from Fund performance as both segments performed well.

 

 

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

 

 

Fund Information

 

 

 

Symbol on NYSE

 

MQT

Initial Offering Date

 

August 28, 1992

Yield on Closing Market Price as of October 31, 2009 ($11.58)1

 

6.42%

Tax Equivalent Yield2

 

9.88%

Current Monthly Distribution per Common Share3

 

$0.062

Current Annualized Distribution per Common Share3

 

$0.744

Leverage as of October 31, 20094

 

39%

 

 

 

 

 

1

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

 

 

 

 

2

Tax equivalent yield assumes the maximum federal tax rate of 35%.

 

 

 

 

3

The distribution is not constant and is subject to change.

 

 

 

 

4

Represents Preferred Shares and TOBs as a percentage of total managed assets, which is the total assets of the Fund, including any assets attributable to Preferred Shares and TOBs, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Fund, please see The Benefits and Risks of Leveraging on page 7.

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10/31/09

 

4/30/09

 

Change

 

High

 

Low

 

Market Price

 

$

11.58

 

$

10.16

 

 

13.98

%

$

12.28

 

$

10.10

 

Net Asset Value

 

$

12.42

 

$

11.55

 

 

7.53

%

$

13.06

 

$

11.36

 

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

 

 

 

 

 

 

 

 

Sector Allocations

 

 

 

 

 

 

 

 

 

10/31/09

 

4/30/09

 

Transportation

 

29

%

 

29

%

 

County/City/Special District/ School District

 

26

 

 

23

 

 

State

 

17

 

 

18

 

 

Utilities

 

11

 

 

13

 

 

Housing

 

7

 

 

7

 

 

Health

 

5

 

 

3

 

 

Corporate

 

3

 

 

3

 

 

Education

 

2

 

 

2

 

 

Tobacco

 

—

 

 

2

 

 

 

 

 

 

 

 

 

 

Credit Quality Allocations5

 

 

 

 

 

 

 

 

 

10/31/09

 

4/30/09

 

AAA/Aaa

 

47

%

 

46

%

 

AA/Aa

 

25

 

 

36

 

 

A/A

 

22

 

 

15

 

 

BBB/Baa

 

5

 

 

3

 

 

Not Rated

 

1

 

 

—

 

 

 

 

 

 

 

5

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

 

 

 

6

SEMI-ANNUAL REPORT

OCTOBER 31, 2009


 

 

The Benefits and Risks of Leveraging

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

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

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

If short-term interest rates rise, narrowing the differential between short-term and long-term interest rate, the incremental net income pickup on the Common Shares will be reduced or eliminated completely. Furthermore, if prevailing short-term interest rates rise above long-term interest rates of 6%, the yield curve has a negative slope. In this case, the Fund pays dividends on the higher short-term interest rates whereas the Fund’s total portfolio earns income based on lower long-term interest rates.

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

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

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

Under the Investment Company Act of 1940, the Funds are permitted to issue Preferred Shares in an amount of up to 50% of their total managed assets at the time of issuance. Under normal circumstances, each Fund anticipates that the total economic leverage from Preferred Shares and TOBs will not exceed 50% of its total managed assets at the time such leverage is incurred. As of October 31, 2009, the Funds had economic leverage from Preferred Shares and TOBs as a percentage of their total managed assets as follows:

 

 

 

 

 

 

Percent of
Leverage

 

MYD

 

38

%

 

MQY

 

39

%

 

MQT

 

39

%

 

 

 

Derivative Financial Instruments

The Funds may invest in various derivative instruments, including financial futures contracts as specified in Note 2 of the Notes to Financials Statements, which constitute forms of economic leverage. Such instruments are used to obtain exposure to a market without owning or taking physical custody of securities or to hedge market and/or interest rate risks. Such derivative instruments involve risks, including the imperfect correlation between the value of a derivative instrument and the underlying asset and illiquidity of the derivative instrument. The Funds’ ability to successfully use a derivative instrument depends on the investment advisor’s ability to accurately predict pertinent market movements, which cannot be assured. The use of derivative instruments may result in losses greater than if they had not been used, may require the Funds to sell or purchase portfolio securities at inopportune times or for distressed values, may limit the amount of appreciation the Funds can realize on an investment or may cause the Funds to hold a security that it might otherwise sell. The Funds’ investments in these instruments are discussed in detail in the Notes to Financial Statements.

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2009

7

 

 

 

 

Schedule of Investments October 31, 2009 (Unaudited)

BlackRock MuniYield Fund, Inc. (MYD)

 

(Percentages shown are based on Net Assets)

 

 

 

 

 

 

 

 

 

Municipal Bonds

 

Par 
(000)

 

Value

 

Alabama — 1.3%

 

 

 

 

 

 

 

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

 

$

5,250

 

$

4,371,150

 

Tuscaloosa Special Care Facilities Financing Authority,
RB, Capstone Village, Series A (a)(b):

 

 

 

 

 

 

 

5.63%, 8/01/25

 

 

2,200

 

 

880,000

 

5.88%, 8/01/36

 

 

6,425

 

 

2,570,000

 

 

 

 

 

 

 

 

 

 

 

 

7,821,150

 

Arizona — 11.7%

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

5.00%, 7/01/21

 

 

5,825

 

 

6,290,184

 

5.00%, 7/01/22

 

 

7,030

 

 

7,689,414

 

5.00%, 7/01/23

 

 

5,240

 

 

5,632,738

 

Maricopa County IDA, Arizona, RB, Arizona Charter
Schools Project 1, Series A, 6.75%, 7/01/29

 

 

3,300

 

 

2,249,907

 

Maricopa County IDA, Arizona, Refunding RB,
Series A-1 (GNMA):

 

 

 

 

 

 

 

6.00%, 10/20/31

 

 

5,000

 

 

5,249,200

 

6.05%, 10/20/36

 

 

5,000

 

 

5,093,650

 

Phoenix IDA, Arizona, RB, America West Airlines Inc.
Project, AMT, 6.25%, 6/01/19

 

 

3,000

 

 

2,113,140

 

Phoenix IDA, Arizona, Refunding RB, America West
Airlines Inc., AMT, 6.30%, 4/01/23

 

 

5,090

 

 

3,363,065

 

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

 

 

765

 

 

676,818

 

Pima County IDA, RB, Industrial Development, Tucson
Electric Power, Series A, 6.38%, 9/01/29

 

 

3,000

 

 

3,048,630

 

Pima County IDA, RB, Prerefunded, Charters Schools,
Project II, Series A, 6.75%, 7/01/11 (c)

 

 

565

 

 

620,432

 

Pima County IDA, Refunding RB, Tucson Electric
Power Co., San Juan, Series A, 4.95%, 10/01/20

 

 

3,435

 

 

3,442,351

 

Salt Verde Financial Corp., RB, Senior:

 

 

 

 

 

 

 

5.00%, 12/01/32

 

 

10,020

 

 

8,959,884

 

5.00%, 12/01/37

 

 

7,900

 

 

6,719,740

 

Vistancia Community Facilities District, Arizona, GO:

 

 

 

 

 

 

 

5.50%, 7/15/20

 

 

3,000

 

 

2,926,320

 

5.75%, 7/15/24

 

 

2,125

 

 

2,065,266

 

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

 

 

3,900

 

 

3,870,282

 

 

 

 

 

 

 

 

 

 

 

 

70,011,021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal Bonds

 

Par 
(000)

 

Value

 

California — 13.2%

 

 

 

 

 

 

 

California Health Facilities Financing Authority, RB:

 

 

 

 

 

 

 

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

 

$

3,155

 

$

3,315,274

 

Cedars-Sinai Medical Center, 5.00%, 8/15/39

 

 

3,730

 

 

3,468,229

 

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

 

 

4,425

 

 

4,587,353

 

California State Public Works Board, RB, Department
Mental Health, Coalinga, Series A, 5.13%, 6/01/29

 

 

4,500

 

 

4,267,980

 

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

 

 

4,375

 

 

4,203,981

 

Golden State Tobacco Securitization Corp.,
California, RB:

 

 

 

 

 

 

 

Asset Backed, Senior, Series A-1,
5.13%, 6/01/47

 

 

2,090

 

 

1,381,594

 

Series A-4, 7.80%, 6/01/42 (c)

 

 

7,500

 

 

9,026,250

 

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

 

 

19,075

 

 

19,360,171

 

State of California, GO:

 

 

 

 

 

 

 

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

 

 

10

 

 

9,508

 

Various Purpose, 5.25%, 11/01/25

 

 

5,000

 

 

5,086,900

 

Various Purpose, 5.00%, 6/01/32

 

 

9,335

 

 

8,792,637

 

Various Purpose, 6.50%, 4/01/33

 

 

14,075

 

 

15,555,831

 

 

 

 

 

 

 

 

 

 

 

 

79,055,708

 

Colorado — 7.1%

 

 

 

 

 

 

 

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

 

 

6,195

 

 

6,806,942

 

Colorado Health Facilities Authority, RB, Series C
(FSA), 5.25%, 3/01/40

 

 

3,750

 

 

3,739,537

 

Colorado Health Facilities Authority, Refunding RB,
Catholic Healthcare, Series A (d):

 

 

 

 

 

 

 

5.50%, 7/01/34

 

 

4,295

 

 

4,375,274

 

5.00%, 7/01/39

 

 

5,070

 

 

4,771,326

 

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

 

 

195

 

 

208,763

 

Elk Valley Public Improvement, RB, Public
Improvement Fee, Series A:

 

 

 

 

 

 

 

7.10%, 9/01/14

 

 

700

 

 

714,686

 

7.35%, 9/01/31

 

 

5,065

 

 

4,572,783

 

 

Portfolio Abbreviations

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

 

 

AGC

Assured Guaranty Corp.

AMBAC

American Municipal Bond Assurance Corp.

AMT

Alternative Minimum Tax (subject to)

CAB

Capital Appreciation Bonds

CIFG

CDC IXIS Financial Guaranty

COP

Certificate of Participation

EDA

Economic Development Authority

FGIC

Financial Guaranty Insurance Co.

FHA

Federal Housing Administration

FSA

Financial Security Assurance Inc.

GAN

Grant Anticipation Notes

GNMA

Government National Mortgage Association

GO

General Obligation Bonds

HDA

Housing Development Authority

HFA

Housing Finance Agency

IDA

Industrial Development Authority

IDRB

Industrial Development Revenue Bond

ISD

Independent School District

MBIA

Municipal Bond Investors Assurance

 

(National Public Finance Guaranty Corp.)

PSF-GTD

Permanent School Fund Guaranteed

RB

Revenue Bonds

S/F

Single-Family

SO

Special Obligation

TAN

Tax Anticipation Notes

 

 

 

See Notes to Financial Statements.

 

8

SEMI-ANNUAL REPORT

OCTOBER 31, 2009


 

 

 

 

Schedule of Investments (continued)

BlackRock MuniYield Fund, Inc. (MYD)

 

(Percentages shown are based on Net Assets)

 

 

 

 

 

 

 

 

Municipal Bonds

 

Par 
(000)

 

Value

 

Colorado (concluded)

 

 

 

 

 

 

 

Platte River Power Authority, Colorado, RB, Series HH:

 

 

 

 

 

 

 

5.00%, 6/01/26

 

$

2,500

 

$

2,689,100

 

5.00%, 6/01/27

 

 

1,130

 

 

1,209,902

 

Plaza Metropolitan District No. 1, Colorado, TAN,
Tax Increment:

 

 

 

 

 

 

 

Public Improvement Fee, 8.00%, 12/01/25

 

 

6,850

 

 

6,686,285

 

Subordinate Public Improvement Fee, 8.13%,
12/01/25

 

 

1,885

 

 

1,750,468

 

University of Colorado, RB, Series A:

 

 

 

 

 

 

 

5.25%, 6/01/30

 

 

2,250

 

 

2,394,563

 

5.38%, 6/01/32

 

 

1,250

 

 

1,330,350

 

5.38%, 6/01/38

 

 

830

 

 

873,459

 

 

 

 

 

 

 

 

 

 

 

 

42,123,438

 

Connecticut — 0.0%

 

 

 

 

 

 

 

Connecticut State Development Authority, RB, AFCO
Cargo BDL, LLC Project, AMT, 7.35%, 4/01/10

 

 

125

 

 

124,385

 

District of Columbia — 1.5%

 

 

 

 

 

 

 

Metropolitan Washington, DC, Airports Authority
Dulles Toll Road Revenue, RB (AGC) (e):

 

 

 

 

 

 

 

Series 2nd Senior Lien, 7.00%, 10/01/31

 

 

10,000

 

 

2,600,500

 

Series 2nd Senior Lien-B, 7.03%, 10/01/32

 

 

15,000

 

 

3,660,150

 

Series 2nd Senior Lien-B, 7.05%, 10/01/33

 

 

13,410

 

 

3,006,388

 

 

 

 

 

 

 

 

 

 

 

 

9,267,038

 

Florida — 6.0%

 

 

 

 

 

 

 

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

 

 

3,435

 

 

3,510,673

 

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

 

 

2,155

 

 

2,224,606

 

County of Lee, Florida, RB (AMBAC),
5.00%, 10/01/22

 

 

4,705

 

 

4,811,756

 

County of Miami-Dade, Florida, RB, Miami

 

 

 

 

 

 

 

International Airport, Series A, AMT (AGC),
5.25%, 10/01/38

 

 

5,150

 

 

5,022,640

 

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

 

 

2,500

 

 

2,022,350

 

Hillsborough County IDA, RB, National Gypsum,
Series A, AMT:

 

 

 

 

 

 

 

7.13%, 4/01/30

 

 

11,500

 

 

7,930,055

 

7.13%, 4/01/30

 

 

5,000

 

 

3,447,850

 

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

 

 

5,330

 

 

4,435,999

 

Santa Rosa Bay Bridge Authority, RB,
6.25%, 7/01/28

 

 

4,620

 

 

2,494,061

 

 

 

 

 

 

 

 

 

 

 

 

35,899,990

 

Georgia — 1.2%

 

 

 

 

 

 

 

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

 

 

6,945

 

 

7,094,109

 

Guam — 1.0%

 

 

 

 

 

 

 

Territory of Guam, GO, Series A:

 

 

 

 

 

 

 

6.00%, 11/15/19

 

 

1,270

 

 

1,322,438

 

6.75%, 11/15/29

 

 

2,225

 

 

2,380,617

 

7.00%, 11/15/39

 

 

2,300

 

 

2,485,932

 

 

 

 

 

 

 

 

 

 

 

 

6,188,987

 

 

 

 

 

 

 

 

 

Municipal Bonds

 

Par 
(000)

 

Value

 

Idaho — 1.7%

 

 

 

 

 

 

 

Idaho Housing & Finance Association, RB,
S/F Mortgage, Senior, Series C-2, AMT,
7.15%, 7/01/23

 

$

25

 

$

25,042

 

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

 

 

10,000

 

 

10,018,400

 

 

 

 

 

 

 

 

 

 

 

 

10,043,442

 

Illinois — 1.1%

 

 

 

 

 

 

 

Illinois Finance Authority, RB, Series A:

 

 

 

 

 

 

 

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

 

 

875

 

 

692,195

 

Monarch Landing Inc. Facilities, 7.00%,
12/01/37

 

 

1,445

 

 

722,500

 

Metropolitan Pier & Exposition Authority, Illinois, RB,
McCormick Place Expansion, Series A (MBIA),
5.50%, 6/15/23

 

 

4,000

 

 

4,288,520

 

Village of Bolingbrook, Illinois, Special Tax, Forest City
Project, 5.90%, 3/01/27

 

 

1,000

 

 

761,050

 

 

 

 

 

 

 

 

 

 

 

 

6,464,265

 

Indiana — 3.6%

 

 

 

 

 

 

 

County of Saint Joseph, RB, Notre Dame Du Lac
Project, 5.00%, 3/01/36

 

 

4,545

 

 

4,742,980

 

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

 

 

6,645

 

 

6,766,670

 

Indiana Finance Authority, Refunding RB, Duke Energy,
Series C, 4.95%, 10/01/40

 

 

5,945

 

 

5,668,201

 

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

 

 

1,690

 

 

1,637,914

 

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

 

 

2,230

 

 

2,392,233

 

 

 

 

 

 

 

 

 

 

 

 

21,207,998

 

Kansas — 1.5%

 

 

 

 

 

 

 

City of Lenexa, Kansas, RB, Lakeview Village Inc.,
Series C, 6.88%, 5/15/32 (c)

 

 

1,250

 

 

1,437,800

 

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

 

 

7,100

 

 

7,296,031

 

 

 

 

 

 

 

 

 

 

 

 

8,733,831

 

Kentucky — 0.3%

 

 

 

 

 

 

 

Kentucky Economic Development Finance Authority,
Kentucky, RB, Louisville Arena, Sub-Series A-1
(AGC), 6.00%, 12/01/38

 

 

800

 

 

847,808

 

Kentucky Economic Development Finance Authority,
Refunding RB, Norton Healthcare Inc., Series A,
6.63%, 10/01/28

 

 

650

 

 

664,729

 

 

 

 

 

 

 

 

 

 

 

 

1,512,537

 

Louisiana — 5.1%

 

 

 

 

 

 

 

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

 

 

9,000

 

 

8,625,780

 

Louisiana Public Facilities Authority, RB, Franciscan
Missionaries, Series A, 5.25%, 8/15/36

 

 

1,705

 

 

1,661,795

 

Parish of East Baton Rouge, Louisiana, RB, Series A,
5.25%, 2/01/39

 

 

1,610

 

 

1,652,472

 

Port Lake Charles, Louisiana, Refunding RB,
Continental Grain Co. Project, 6.50%, 1/01/17

 

 

19,000

 

 

18,637,480

 

 

 

 

 

 

 

 

 

 

 

 

30,577,527

 

 

 

 

 

See Notes to Financial Statements.

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2009

9

 

 

 

 

Schedule of Investments (continued)

BlackRock MuniYield Fund, Inc. (MYD)

 

(Percentages shown are based on Net Assets)

 

 

 

 

 

 

 

 

Municipal Bonds

 

Par 
(000)

 

Value

 

Maryland — 1.5%

 

 

 

 

 

 

 

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

 

$

1,500

 

$

1,211,370

 

Maryland Community Development Administration,
RB, Residential, Series A, AMT, 4.65%, 9/01/32

 

 

2,580

 

 

2,395,685

 

Maryland Health & Higher Educational Facilities
Authority, RB, Peninsula Regional Medical Center,
5.00%, 7/01/36

 

 

2,000

 

 

1,994,020

 

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

 

 

500

 

 

437,720

 

Maryland State Energy Financing Administration,
IDRB, Cogeneration, AES Warrior Run, AMT,
7.40%, 9/01/19

 

 

3,000

 

 

3,000,630

 

 

 

 

 

 

 

 

 

 

 

 

9,039,425

 

Massachusetts — 0.5%

 

 

 

 

 

 

 

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

 

 

3,500

 

 

3,140,095

 

Michigan — 3.0%

 

 

 

 

 

 

 

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

 

 

1,835

 

 

2,265,858

 

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

 

 

6,085

 

 

5,833,385

 

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

 

 

 

 

 

 

 

8.00%, 9/01/29

 

 

2,000

 

 

2,324,680

 

8.25%, 9/01/39

 

 

6,365

 

 

7,392,247

 

 

 

 

 

 

 

 

 

 

 

 

17,816,170

 

Minnesota — 0.6%

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

6.00%, 8/20/21

 

 

420

 

 

450,908

 

6.20%, 2/20/43

 

 

2,000

 

 

2,128,980

 

City of Minneapolis, Minnesota, RB, Housing, Gaar
Scott Loft Project, AMT, 5.95%, 5/01/30

 

 

895

 

 

906,859

 

 

 

 

 

 

 

 

 

 

 

 

3,486,747

 

Mississippi — 0.0%

 

 

 

 

 

 

 

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

 

 

280

 

 

295,408

 

Missouri — 2.8%

 

 

 

 

 

 

 

Missouri State Highways & Transit Commission,
RB, First Lien, Series A, 5.00%, 5/01/21

 

 

15,000

 

 

16,444,650

 

Nebraska — 0.1%

 

 

 

 

 

 

 

City of Lincoln, Nebraska, RB, 4.25%, 6/15/24

 

 

790

 

 

803,059

 

New Hampshire — 0.6%

 

 

 

 

 

 

 

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

 

 

3,285

 

 

3,329,742

 

New Jersey — 10.7%

 

 

 

 

 

 

 

New Jersey EDA, RB, Cigarette Tax, 5.50%, 6/15/24

 

 

11,435

 

 

10,914,707

 

New Jersey EDA, RB, Continental Airlines Inc.
Project, AMT:

 

 

 

 

 

 

 

6.25%, 9/15/19

 

 

3,905

 

 

3,520,436

 

6.25%, 9/15/29

 

 

14,000

 

 

11,962,020

 

 

 

 

 

 

 

 

 

Municipal Bonds

 

Par 
(000)

 

Value

 

New Jersey (concluded)

 

 

 

 

 

 

 

New Jersey EDA, RB, First Mortgage, Series A:

 

 

 

 

 

 

 

Lions Gate Project, 5.75%, 1/01/25

 

$

710

 

$

611,722

 

Lions Gate Project, 5.88%, 1/01/37

 

 

230

 

 

179,563

 

Presbyterian, 6.38%, 11/01/31

 

 

3,000

 

 

2,565,960

 

New Jersey EDA, RB, Motor Vehicle Surcharge,
Series A (MBIA), 5.00%, 7/01/29

 

 

19,350

 

 

19,500,930

 

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

 

 

 

 

 

 

 

6.00%, 7/01/13

 

 

1,335

 

 

134

 

6.63%, 7/01/36

 

 

1,835

 

 

184

 

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

 

 

 

 

 

 

 

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

 

 

13,110

 

 

2,558,023

 

Series A, 5.50%, 12/15/21

 

 

3,975

 

 

4,483,244

 

Series A, 5.50%, 12/15/22

 

 

6,600

 

 

7,425,198

 

 

 

 

 

 

 

 

 

 

 

 

63,722,121

 

New York — 6.5%

 

 

 

 

 

 

 

City of New York, New York, GO, Series O,
5.00%, 6/01/33

 

 

2,500

 

 

2,548,175

 

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

 

 

2,200

 

 

2,138,576

 

Metropolitan Transportation Authority, RB, Series B,
5.00%, 11/15/34

 

 

4,910

 

 

5,038,593

 

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

 

 

1,250

 

 

1,168,600

 

New York State Dormitory Authority, RB:

 

 

 

 

 

 

 

Education, Series F, 5.00%, 3/15/35

 

 

5,000

 

 

5,084,500

 

Mount Sinai Health, Series A, 6.75%, 7/01/20

 

 

1,855

 

 

1,901,190

 

Tobacco Settlement Financing Corp., New York, RB,
Series B-1C, 5.50%, 6/01/21

 

 

6,900

 

 

7,251,969

 

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

 

 

10,000

 

 

10,322,600

 

Westchester County Industrial Development Agency,
New York, RB, Mortgage, Kendal On Hudson Project,
Series A, 6.38%, 1/01/24

 

 

3,450

 

 

3,161,304

 

 

 

 

 

 

 

 

 

 

 

 

38,615,507

 

North Carolina — 3.7%

 

 

 

 

 

 

 

North Carolina Eastern Municipal Power Agency,
North Carolina, RB:

 

 

 

 

 

 

 

Series B, 5.00%, 1/01/26

 

 

4,465

 

 

4,546,888

 

Series D, 6.75%, 1/01/10 (c)

 

 

4,750

 

 

4,848,895

 

North Carolina HFA, North Carolina, RB, Home
Ownership, Series 8, Series A, AMT,
6.20%, 7/01/16

 

 

145

 

 

145,331

 

North Carolina Housing Finance Agency, North
Carolina, RB, S/F, Series II (FHA), 6.20%, 3/01/16

 

 

525

 

 

525,950

 

North Carolina Medical Care Commission, North
Carolina, RB, First Mortgage:

 

 

 

 

 

 

 

Arbor Acres Community Project,
6.38%, 3/01/12 (c)

 

 

1,000

 

 

1,123,360

 

Presbyterian Homes, 5.40%, 10/01/27

 

 

5,000

 

 

4,560,500

 

North Carolina Medical Care Commission, RB,
Duke University Health System, Series A (d):

 

 

 

 

 

 

 

5.00%, 6/01/39

 

 

1,270

 

 

1,256,398

 

5.00%, 6/01/42

 

 

2,805

 

 

2,751,789

 

North Carolina Municipal Power Agency, RB, Number 1
Catawba, North Carolina, Series A, 5.00%, 1/01/30

 

 

2,145

 

 

2,163,704

 

 

 

 

 

 

 

 

 

 

 

 

21,922,815

 

 

 

 

See Notes to Financial Statements.

10

SEMI-ANNUAL REPORT

OCTOBER 31, 2009


 

 

 

 

Schedule of Investments (continued)

BlackRock MuniYield Fund, Inc. (MYD)

 

(Percentages shown are based on Net Assets)

 

 

 

 

 

 

 

 

Municipal Bonds

 

Par 
(000)

 

Value

 

Ohio — 3.5%

 

 

 

 

 

 

 

Buckeye Tobacco Settlement Financing Authority, RB,
Asset-Backed, Senior, Turbo, Series A-2,
6.50%, 6/01/47

 

$

7,460

 

$

6,009,627

 

County of Hamilton, Ohio, RB, Improvement,
Metropolitan Sewer District, Series B (MBIA),
5.00%, 12/01/28

 

 

5,065

 

 

5,263,903

 

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

 

 

2,175

 

 

2,193,487

 

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

 

 

5,070

 

 

4,793,837

 

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

 

 

 

 

 

 

 

6.00%, 5/15/24

 

 

750

 

 

641,325

 

6.00%, 5/15/34

 

 

2,250

 

 

1,755,563

 

 

 

 

 

 

 

 

 

 

 

 

20,657,742

 

Oregon — 0.6%

 

 

 

 

 

 

 

Portland Housing Authority, RB, Housing, Pine
Square & University Place, Series A,
5.88%, 1/01/22

 

 

1,610

 

 

1,404,532

 

State of Oregon, GO, Veterans Welfare, Series 80A,
5.70%, 10/01/32

 

 

1,915

 

 

1,935,127

 

 

 

 

 

 

 

 

 

 

 

 

3,339,659

 

Pennsylvania — 7.3%

 

 

 

 

 

 

 

Montgomery County Higher Education & Health
Authority, Refunding RB, Abington Memorial
Hospital, Series A, 5.13%, 6/01/33 (d)

 

 

2,365

 

 

2,309,541

 

Pennsylvania Economic Development Financing
Authority, RB:

 

 

 

 

 

 

 

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

 

 

3,805

 

 

3,778,784

 

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

 

 

5,270

 

 

3,336,964

 

Pennsylvania HFA, RB, Series 97A, AMT,
4.60%, 10/01/27

 

 

2,450

 

 

2,297,806

 

Pennsylvania Higher Educational Facilities Authority,
RB, Allegheny Delaware Valley Obligation, Series C
(MBIA), 5.88%, 11/15/16

 

 

11,990

 

 

10,612,949

 

Pennsylvania Turnpike Commission, RB, Sub-Series B,
5.25%, 6/01/39

 

 

13,905

 

 

13,833,945

 

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

 

 

1,265

 

 

1,175,096

 

Sayre Health Care Facilities Authority, RB, Guthrie
Health Issue, Series B, 7.13%, 12/01/11 (c)

 

 

5,000

 

 

6,013,150

 

 

 

 

 

 

 

 

 

 

 

 

43,358,235

 

Puerto Rico — 1.8%

 

 

 

 

 

 

 

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

 

 

10,120

 

 

10,944,780

 

Rhode Island — 1.0%

 

 

 

 

 

 

 

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

 

 

4,240

 

 

3,598,022

 

City of Woonsocket, Rhode Island, GO (MBIA):

 

 

 

 

 

 

 

6.00%, 10/01/17

 

 

1,225

 

 

1,262,546

 

6.00%, 10/01/18

 

 

1,195

 

 

1,229,739

 

 

 

 

 

 

 

 

 

 

 

 

6,090,307

 

South Dakota — 0.8%

 

 

 

 

 

 

 

South Dakota Health & Educational Facilities
Authority, South Dakota, RB, Sanford Health,
5.00%, 11/01/40

 

 

5,210

 

 

4,980,968

 

 

 

 

 

 

 

 

 

Municipal Bonds

 

Par 
(000)

 

Value

 

Tennessee — 0.5%

 

 

 

 

 

 

 

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

 

$

3,505

 

$

3,271,742

 

Texas — 14.7%

 

 

 

 

 

 

 

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

 

 

3,500

 

 

2,230,235

 

Austin Texas Convention Enterprises Inc., RB, First Tier,
Series A, 6.70%, 1/01/11 (c)

 

 

5,000

 

 

5,350,550

 

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

 

 

 

 

 

 

 

5.80%, 8/01/21

 

 

1,300

 

 

953,927

 

6.00%, 8/01/31

 

 

2,460

 

 

1,604,215

 

6.05%, 8/01/36

 

 

1,000

 

 

635,120

 

Brazos River Authority, Refunding RB, TXU Electric Co.
Project, Series C, AMT, 5.75%, 5/01/36

 

 

7,600

 

 

6,844,940

 

City of Houston, Texas, RB, Special Facilities,
Continental, Series E, AMT:

 

 

 

 

 

 

 

7.38%, 7/01/22

 

 

3,500

 

 

3,411,205

 

7.00%, 7/01/29

 

 

3,000

 

 

2,791,380

 

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

 

 

12,500

 

 

7,438,500

 

Guadalupe-Blanco River Authority, RB, E.I. du Pont de
Nemours & Co. Project, AMT, 6.40%, 4/01/26

 

 

5,000

 

 

5,002,750

 

Gulf Coast IDA, RB, Citgo Petroleum Corp. Project,
AMT, 7.50%, 5/01/25

 

 

3,900

 

 

3,956,511

 

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

 

 

1,590

 

 

1,326,171

 

Houston Texas Airport Systems Revenue, Refunding
ARB, Senior Lien, Series A, 5.50%, 7/01/39

 

 

3,100

 

 

3,215,444

 

La Vernia Higher Education Finance Corp., RB,
KIPP Inc., 6.38%, 8/15/44 (d)

 

 

2,360

 

 

2,338,524

 

Lower Colorado River Authority, RB, Samsung Austin
Semiconductor, AMT, 6.95%, 4/01/30

 

 

3,330

 

 

3,339,224

 

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

 

 

4,320

 

 

4,624,733

 

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

 

 

12,140

 

 

12,608,361

 

San Antonio Energy Acquisition Public Facility Corp.,
RB, Gas Supply Revenue:

 

 

 

 

 

 

 

5.50%, 8/01/23

 

 

6,955

 

 

7,089,023

 

5.50%, 8/01/25

 

 

6,365

 

 

6,364,427

 

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

 

 

6,500

 

 

6,400,160

 

 

 

 

 

 

 

 

 

 

 

 

87,525,400

 

U.S. Virgin Islands — 1.1%

 

 

 

 

 

 

 

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

 

 

6,250

 

 

6,349,063

 

Utah — 0.9%

 

 

 

 

 

 

 

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

 

 

5,595

 

 

5,421,443

 

Virginia — 0.6%

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

5.35%, 9/01/26

 

 

1,500

 

 

1,262,010

 

5.50%, 9/01/34

 

 

2,000

 

 

1,587,820

 

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

 

 

1,000

 

 

896,130

 

 

 

 

 

 

 

 

 

 

 

 

3,745,960

 

 

 

 

 

See Notes to Financial Statements.

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2009

11

 

 

 

 

Schedule of Investments (continued)

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

 

 

 

 

 

 

 

 

Municipal Bonds

 

Par 
(000)

 

Value

 

Washington — 0.3%

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

6.00%, 9/01/22

 

$

945

 

$

830,050

 

6.20%, 9/01/32

 

 

1,250

 

 

1,047,363

 

 

 

 

 

 

 

 

 

 

 

 

1,877,413

 

Wisconsin — 3.8%

 

 

 

 

 

 

 

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

 

 

660

 

 

549,028

 

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

 

 

14,300

 

 

15,700,113

 

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

 

 

7,425

 

 

6,651,538

 

 

 

 

 

 

 

 

 

 

 

 

22,900,679

 

Wyoming — 2.0%

 

 

 

 

 

 

 

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

 

 

6,195

 

 

6,411,205

 

Wyoming Community Development Authority,
Wyoming, RB, Series 3, AMT, 4.75%, 12/01/37

 

 

5,315

 

 

4,839,626

 

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

 

 

595

 

 

571,081

 

 

 

 

 

 

 

 

 

 

 

 

11,821,912

 

Total Municipal Bonds — 125.2%

 

 

 

 

 

747,026,468

 

 

 

 

 

 

 

 

 

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (f)

 

 

 

 

 

 

 

Alabama — 0.8%

 

 

 

 

 

 

 

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

 

 

4,538

 

 

4,546,064

 

California — 3.3%

 

 

 

 

 

 

 

Bay Area Toll Authority, Refunding RB, San Francisco
Bay Area, Series F1, 5.63%, 4/01/44

 

 

6,581

 

 

7,087,568

 

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

 

 

5,310

 

 

5,595,731

 

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

 

 

4,650

 

 

4,772,853

 

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

 

 

2,154

 

 

2,261,090

 

 

 

 

 

 

 

 

 

 

 

 

19,717,242

 

Colorado — 2.1%

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

Series C3, 5.10%, 10/01/41

 

 

7,490

 

 

7,567,147

 

Series C7, 5.00%, 9/01/36

 

 

4,800

 

 

4,839,696

 

 

 

 

 

 

 

 

 

 

 

 

12,406,843

 

Connecticut — 3.2%

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

Series T1, 4.70%, 7/01/29

 

 

9,130

 

 

9,622,107

 

Series X3, 4.85%, 7/01/37

 

 

9,270

 

 

9,648,772

 

 

 

 

 

 

 

 

 

 

 

 

19,270,879

 

 

 

 

 

 

 

 

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (f)

 

Par 
(000)

 

Value

 

Georgia — 1.1%

 

 

 

 

 

 

 

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

 

$

6,398

 

$

6,652,323

 

New Hampshire — 0.7%

 

 

 

 

 

 

 

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

 

 

4,048

 

 

4,331,070

 

New York — 0.6%

 

 

 

 

 

 

 

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

 

 

3,194

 

 

3,462,334

 

North Carolina — 3.8%

 

 

 

 

 

 

 

North Carolina Capital Facilities Finance Agency,
Refunding RB:

 

 

 

 

 

 

 

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

 

 

18,897

 

 

19,442,005

 

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

 

 

3,120

 

 

3,247,858

 

 

 

 

 

 

 

 

 

 

 

 

22,689,863

 

Ohio — 4.8%

 

 

 

 

 

 

 

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

 

 

27,900

 

 

28,789,731

 

South Carolina — 3.0%

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

5.25%, 12/01/28

 

 

7,795

 

 

8,069,384

 

5.25%, 12/01/29

 

 

6,920

 

 

7,133,897

 

5.25%, 12/01/30

 

 

2,510

 

 

2,572,876

 

 

 

 

 

 

 

 

 

 

 

 

17,776,157

 

Tennessee — 1.9%

 

 

 

 

 

 

 

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

 

 

11,240

 

 

11,411,073

 

Virginia — 9.4%

 

 

 

 

 

 

 

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

 

 

6,265

 

 

6,578,679

 

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

 

 

10,620

 

 

11,203,250

 

Virginia HDA, RB, Sub-Series H-1 (MBIA),
5.38%, 7/01/36

 

 

30,930

 

 

31,180,224

 

Virginia Housing Development Authority, RB,
Sub-Series H-1 (MBIA), 5.35%, 7/01/31

 

 

6,720

 

 

6,789,955

 

 

 

 

 

 

 

 

 

 

 

 

55,752,108

 

Washington — 0.9%

 

 

 

 

 

 

 

Central Puget Sound Regional Transportation
Authority, Washington, RB, Series A (FSA),
5.00%, 11/01/32

 

 

5,384

 

 

5,555,859

 

Wisconsin — 1.9%

 

 

 

 

 

 

 

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

 

 

11,459

 

 

11,255,835

 

Total Municipal Bonds Transferred to
Tender Option Bond Trusts — 37.5%

 

 

 

 

 

223,617,381

 

Total Long-Term Investments
(Cost — $989,186,404) — 162.7%

 

 

 

 

 

970,643,849

 


 

 

 

See Notes to Financial Statements.

12

SEMI-ANNUAL REPORT

OCTOBER 31, 2009


 

 

 

 

Schedule of Investments (concluded)

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

 

 

 

 

 

 

 

 

Short-Term Securities

 

Shares

 

Value

 

FFI Institutional Tax-Exempt Fund, 0.23% (g)(h)

 

 

17,401,862

 

$

17,401,862

 

Total Short-Term Securities
(Cost — $17,401,862) — 2.9%

 

 

 

 

 

17,401,862

 

Total Investments (Cost — $1,006,588,266*) — 165.6%

 

 

 

 

 

988,045,711

 

Liabilities in Excess of Other Assets — (4.5)%

 

 

 

 

 

(26,705,437

)

Liability for Trust Certificates, Including Interest
Expense and Fees Payable — (19.0)%

 

 

 

 

 

(113,225,720

)

Preferred Shares, at Redemption Value — (42.1)%

 

 

 

 

 

(251,489,000

)

 

 

 

 

 

Net Assets Applicable to Common Shares — 100.0%

 

 

 

 

$

596,625,554

 

 

 

 

 

 

 

 

*

The cost and unrealized appreciation (depreciation) of investments as of October 31, 2009, as computed for federal income tax purposes, were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aggregate cost

 

 

 

 

$

891,713,876

 

 

 

 

 

 

Gross unrealized appreciation

 

 

 

 

$

29,598,876

 

Gross unrealized depreciation

 

 

 

 

 

(46,388,005

)

 

 

 

 

 

Net unrealized depreciation

 

 

 

 

$

(16,789,129

)

 

 

 

 

 

 

 

(a)

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

 

 

(b)

Non-income producing security.

 

 

(c)

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

 

 

(d)

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

 

 

 

 

 

 

 

 

Counterparty

 

Value

 

Unrealized
Depreciation

 

Citigroup Inc.

 

$

9,841,572

 

$

(66,111

)

Goldman Sachs Bank USA

 

$

2,309,541

 

$

(9,365

)

Jeffries and Co.

 

$

3,778,784

 

$

(63,467

)

JPMorgan Chase Bank NA

 

$

5,421,443

 

$

(85,548

)

Merrill Lynch and Co.

 

$

1,637,914

 

$

(2,417

)

Morgan Stanley Capital Services, Inc.

 

$

13,940,437

 

$

(228,418

)

RBC Capital

 

$

2,338,524

 

$

(12,980

)

 

 

(e)

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

 

 

(f)

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

 

 

(g)

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

 

 

 

 

 

 

 

 

Affiliate

 

Net
Activity

 

Income

 

FFI Institutional Tax-Exempt Fund

 

$

15,296,830

 

$

15,276

 

 

 

 

(h)

Represents the current yield as of report date.

 

 

•

Fair Value Measurements — Various inputs are used in determining the fair value of investments, which are as follows:

 

 

 

•

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

 

 

 

 

•

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

 

 

 

 

•

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

 

 

 

 

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

 

 

 

The following table summarizes the inputs used as of October 31, 2009 in determining the fair valuation of the Fund’s investments:

 

 

 

 

 

 

 

 

Valuation Inputs

 

 

 

Investments in
Securities

 

 

 

 

 

 

Assets

 

 

 

 

 

 

Level 1 — Short-Term Securities

 

 

 

 

$

17,401,862

 

Level 2 — Long-Term Investments1

 

 

 

 

 

970,643,849

 

Level 3

 

 

 

 

 

—

 

 

 

 

 

 

Total

 

 

 

 

$

988,045,711

 

 

 

 

 

 

 

 

 

 

1

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

 

 

 

See Notes to Financial Statements.

SEMI-ANNUAL REPORT

OCTOBER 31, 2009

13


 

 

 

 

Schedule of Investments October 31, 2009 (Unaudited)

BlackRock MuniYield Quality Fund, Inc. (MQY)

 

(Percentages shown are based on Net Assets)

 

 

 

 

 

 

 

 

 

 

Par 

 

 

 

 

Municipal Bonds

 

(000)

 

Value

 

Alabama — 2.5%

 

 

 

 

 

 

 

Alabama Public School & College Authority, Refunding
RB, Series A, 5.00%, 5/01/29

 

$

1,200

 

$

1,231,032

 

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

 

 

3,000

 

 

2,250,390

 

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

 

 

7,125

 

 

7,294,219

 

 

 

 

 

 

 

 

 

 

 

 

10,775,641

 

Alaska — 1.0%

 

 

 

 

 

 

 

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

 

 

3,925

 

 

4,395,137

 

Arizona — 0.6%

 

 

 

 

 

 

 

Salt Verde Financial Corp., RB, Senior, 5.00%,
12/01/32

 

 

2,970

 

 

2,655,774

 

California — 18.7%

 

 

 

 

 

 

 

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

 

 

4,150

 

 

3,141,425

 

Arcadia Unified School District, California, GO, CAB,
Election of 2006, Series A (FSA), 4.96%,
8/01/39 (b)

 

 

2,200

 

 

338,294

 

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

 

 

 

 

 

 

 

5.18%, 8/01/37

 

 

3,250

 

 

560,397

 

4.87%, 8/01/38

 

 

7,405

 

 

1,202,794

 

California Health Facilities Financing Authority, RB,
Saint Joseph Health System, Series A, 5.75%,
7/01/39

 

 

775

 

 

803,435

 

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

 

 

2,400

 

 

2,302,272

 

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

 

 

5,000

 

 

3,005,150

 

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

 

 

1,200

 

 

1,211,160

 

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

 

 

5,100

 

 

5,080,110

 

Coast Community College District, California, GO,
CAB, Election of 2002, Series C (FSA), 5.45%,
8/01/13 (a)

 

 

2,800

 

 

2,312,016

 

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

 

 

6,110

 

 

6,331,793

 

Fresno Unified School District, California, GO, Election
of 2001, Series E (FSA), 5.00%, 8/01/30

 

 

1,230

 

 

1,243,960

 

Golden State Tobacco Securitization Corp., California,
RB, Enhanced Asset Backed, Series B (Syncora),
5.50%, 6/01/13 (c)

 

 

10,000

 

 

11,260,600

 

Hartnell Community College District, California, GO,
Premium CAB, Election of 2002,
Series D, 7.04%, 8/01/34 (b)

 

 

4,125

 

 

1,938,379

 

Los Angeles Municipal Improvement Corp., RB,
Series B-1 (MBIA), 4.75%, 8/01/37

 

 

3,210

 

 

2,907,136

 

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

 

 

 

 

 

 

 

5.00%, 10/01/29

 

 

4,000

 

 

4,111,480

 

5.00%, 10/01/36

 

 

2,275

 

 

2,307,214

 

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

 

 

2,000

 

 

2,009,180

 

 

 

 

 

 

 

 

 

 

 

Par 

 

 

 

 

Municipal Bonds

 

(000)

 

Value

 

California (concluded)

 

 

 

 

 

 

 

Orange County Sanitation District, COP:

 

 

 

 

 

 

 

(MBIA), 5.00%, 2/01/33

 

$

2,750

 

$

2,784,485

 

Series B (FSA), 5.00%, 2/01/30

 

 

3,500

 

 

3,624,565

 

Series B (FSA), 5.00%, 2/01/31

 

 

1,200

 

 

1,236,696

 

Port of Oakland, RB, Series K, AMT (MBIA),
5.75%, 11/01/29

 

 

2,405

 

 

2,407,237

 

Poway Redevelopment Agency, California, TAN, Paguay
Redevelopment Project (AMBAC), 5.13%, 6/15/33

 

 

2,000

 

 

1,741,720

 

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

 

 

2,500

 

 

2,510,850

 

San Bernardino Community College District, California,
GO, CAB, Election, Series B, 6.42%, 8/01/34 (a)

 

 

10,000

 

 

5,779,000

 

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

 

 

2,825

 

 

2,905,795

 

San Mateo County Community College District, GO,
Election of 2001, Series A (MBIA), 5.00%, 9/01/26

 

 

2,725

 

 

2,828,332

 

State of California, GO:

 

 

 

 

 

 

 

5.13%, 6/01/27

 

 

30

 

 

29,981

 

5.50%, 4/01/28

 

 

5

 

 

5,090

 

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

 

 

3,150

 

 

3,233,664

 

 

 

 

 

 

 

 

 

 

 

 

81,154,210

 

Colorado — 1.4%

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

5.50%, 12/01/27

 

 

1,600

 

 

1,469,360

 

5.50%, 12/01/33

 

 

900

 

 

790,155

 

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

 

 

1,225

 

 

1,247,895

 

E-470 Public Highway Authority, Colorado, RB, CAB,
Series B (MBIA), 5.51%, 9/01/29 (b)

 

 

9,000

 

 

2,375,100

 

 

 

 

 

 

 

 

 

 

 

 

5,882,510

 

Florida — 6.3%

 

 

 

 

 

 

 

City of Miami, Florida, RB, Miami Revenues (MBIA),
5.00%, 1/01/37

 

 

1,100

 

 

1,071,224

 

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

 

 

4,050

 

 

4,049,717

 

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

 

 

3,300

 

 

3,718,407

 

County of Miami-Dade, Florida, RB, Miami International
Airport, AMT:

 

 

 

 

 

 

 

Series A (CIFG), 5.00%, 10/01/38

 

 

2,900

 

 

2,595,007

 

(Syncora), 5.00%, 10/01/40

 

 

8,200

 

 

7,669,542

 

County of Orange, Florida, RB, Series B (MBIA),
5.13%, 1/01/32

 

 

2,200

 

 

2,214,212

 

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

 

 

2,545

 

 

2,624,302

 

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

 

 

375

 

 

380,415

 

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

 

 

2,700

 

 

2,850,849

 

 

 

 

 

 

 

 

 

 

 

 

27,173,675

 

 

 

 

See Notes to Financial Statements.

14

SEMI-ANNUAL REPORT

OCTOBER 31, 2009


 

 

 

 

Schedule of Investments (continued)

BlackRock MuniYield Quality Fund, Inc. (MQY)

 

(Percentages shown are based on Net Assets)

 

 

 

 

 

 

 

 

 

 

Par 

 

 

 

 

Municipal Bonds

 

(000)

 

Value

 

Georgia — 0.7%

 

 

 

 

 

 

 

City of Augusta, Georgia, RB (FSA), 5.25%, 10/01/39

 

$

2,820

 

$

2,908,520

 

Hawaii — 0.5%

 

 

 

 

 

 

 

State of Hawaii, GO, Series CX (FSA), 5.50%, 2/01/21

 

 

2,000

 

 

2,146,500

 

Illinois — 21.9%

 

 

 

 

 

 

 

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

 

 

2,000

 

 

2,188,880

 

City of Chicago, Illinois, GO, CAB, City Colleges (FGIC),
5.88%, 1/01/31 (b)

 

 

13,000

 

 

4,021,420

 

City of Chicago, Illinois, GO, Refunding, Series A (FSA),
5.00%, 1/01/25

 

 

1,500

 

 

1,565,370

 

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

 

 

 

 

 

 

 

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

 

 

3,400

 

 

3,492,072

 

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

 

 

4,000

 

 

4,094,720

 

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

 

 

3,300

 

 

3,378,936

 

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

 

 

4,000

 

 

4,077,640

 

City of Chicago, Illinois, Refunding RB, General Airport
Third Lien, AMT:

 

 

 

 

 

 

 

Series A, (MBIA), 5.75%, 1/01/21

 

 

13,665

 

 

13,855,353

 

Series A, (MBIA), 5.50%, 1/01/22

 

 

5,000

 

 

5,030,000

 

Series A, (MBIA), 5.38%, 1/01/32

 

 

12,500

 

 

11,766,625

 

Series A-2, (FSA), 5.75%, 1/01/21

 

 

2,665

 

 

2,747,269

 

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

 

 

5,080

 

 

5,732,120

 

Illinois Sports Facilities Authority, RB, State Tax
Supported (AMBAC), 5.46%, 6/15/30 (a)

 

 

28,525

 

 

27,856,659

 

Metropolitan Pier & Exposition Authority, Illinois, RB,
McCormick Place Expansion Project (MBIA), 5.50%,
12/15/24

 

 

5,000

 

 

5,073,550

 

 

 

 

 

 

 

 

 

 

 

 

94,880,614

 

Indiana — 2.4%

 

 

 

 

 

 

 

Indiana Municipal Power Agency, Indiana, RB:

 

 

 

 

 

 

 

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

 

 

2,750

 

 

2,729,595

 

Series B, 5.75%, 1/01/34

 

 

550

 

 

564,685

 

Indianapolis Local Public Improvement Bond Bank,
RB, Airport Authority Project, Series B, AMT (MBIA):

 

 

 

 

 

 

 

5.25%, 1/01/28

 

 

2,370

 

 

2,320,941

 

5.25%, 1/01/30

 

 

5,055

 

 

4,913,763

 

 

 

 

 

 

 

 

 

 

 

 

10,528,984

 

Iowa — 1.1%

 

 

 

 

 

 

 

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

 

 

4,825

 

 

4,965,456

 

Louisiana — 0.9%

 

 

 

 

 

 

 

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

 

 

1,800

 

 

1,997,892

 

Louisiana State Transportation Authority, RB, CAB,
Senior Lien, LA 1 Project, Series B (AMBAC),
5.31%, 12/01/27 (b)

 

 

3,360

 

 

1,284,024

 

 

 

 

 

 

 

 

 

Rapides Finance Authority, Louisiana, RB, Cleco Power
LLC Project, AMT (AMBAC), 4.70%, 11/01/36

 

 

800

 

 

673,024

 

 

 

 

 

 

 

 

 

 

 

 

3,954,940

 

Maryland — 0.4%

 

 

 

 

 

 

 

Maryland Community Development Administration,
RB, Residential, Series A, AMT, 5.75%, 9/01/39

 

 

1,645

 

 

1,690,221

 

 

 

 

 

 

 

 

 

 

 

Par 

 

 

 

 

Municipal Bonds

 

(000)

 

Value

 

Massachusetts — 2.6%

 

 

 

 

 

 

 

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

 

$

4,000

 

$

4,016,360

 

Massachusetts HFA, Massachusetts, RB, S/F,
Series 128, AMT (FSA), 4.80%, 12/01/27

 

 

2,200

 

 

2,125,068

 

Massachusetts Port Authority, RB, Delta Air Lines Inc.
Project, Series A, AMT (AMBAC), 5.50%, 1/01/19

 

 

3,825

 

 

3,087,999

 

Massachusetts State Water Resource Authority,
Refunding RB, General, Series A (MBIA), 5.00%,
8/01/34

 

 

1,800

 

 

1,851,102

 

 

 

 

 

 

 

 

 

 

 

 

11,080,529

 

Michigan — 7.3%

 

 

 

 

 

 

 

City of Detroit, Michigan, RB, Second Lien, Series E
(FGIC), 5.75%, 7/01/31

 

 

8,300

 

 

8,920,259

 

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

 

 

4,650

 

 

4,212,017

 

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

 

 

2,140

 

 

2,140,407

 

Michigan Strategic Fund, Refunding RB, AMT (Syncora):

 

 

 

 

 

 

 

Detroit Edison Co. Project, Series A, 5.50%,
6/01/30

 

 

1,700

 

 

1,592,560

 

Detroit Edison Co. Project, Series C, 5.45%,
12/15/32

 

 

5,800

 

 

5,369,292

 

Detroit Edison Co., Pollution, Series C,
5.65%, 9/01/29

 

 

1,935

 

 

1,891,966

 

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

 

 

3,510

 

 

4,076,479

 

State of Michigan, RB, GAN (FSA), 5.25%, 9/15/26

 

 

3,350

 

 

3,503,564

 

 

 

 

 

 

 

 

 

 

 

 

31,706,544

 

Minnesota — 0.7%

 

 

 

 

 

 

 

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

 

 

2,700

 

 

3,039,741

 

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

 

 

167

 

 

168,399

 

 

 

 

 

 

 

 

 

 

 

 

3,208,140

 

Nebraska — 0.5%

 

 

 

 

 

 

 

County of Washington, Nebraska, RB, Cargill Inc.
Project, AMT, 5.90%, 11/01/27

 

 

2,300

 

 

2,325,668

 

Nevada — 8.9%

 

 

 

 

 

 

 

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

 

 

4,100

 

 

3,697,667

 

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

 

 

1,150

 

 

1,254,443

 

County of Clark, Nevada, RB, Southwest Gas Corp.
Project, AMT:

 

 

 

 

 

 

 

Series A, (FGIC), 4.75%, 9/01/36

 

 

45

 

 

37,074

 

Series D, (MBIA), 5.25%, 3/01/38

 

 

12,000

 

 

10,646,160

 

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

 

 

 

 

 

 

 

5.00%, 7/01/30

 

 

2,000

 

 

2,011,440

 

5.00%, 7/01/36

 

 

19,100

 

 

18,712,843

 

Las Vegas Valley Water District, GO, Refunding,
Series A (MBIA), 5.00%, 6/01/24

 

 

2,050

 

 

2,120,520

 

 

 

 

 

 

 

 

 

 

 

 

38,480,147

 

 

 

 

See Notes to Financial Statements.

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2009

15

 

 

 

 

Schedule of Investments (continued)

BlackRock MuniYield Quality Fund, Inc. (MQY)

 

(Percentages shown are based on Net Assets)

 

 

 

 

 

 

 

 

Municipal Bonds

 

Par 
(000)

 

Value

 

New Jersey — 8.1%

 

 

 

 

 

 

 

New Jersey EDA, RB, Cigarette Tax (Radian):

 

 

 

 

 

 

 

5.75%, 6/15/29

 

$

710

 

$

685,668

 

5.50%, 6/15/31

 

 

1,285

 

 

1,191,516

 

New Jersey EDA, RB, Motor Vehicle Surcharge,
Series A (MBIA), 5.25%, 7/01/31

 

 

20,065

 

 

20,311,800

 

New Jersey EDA, RB, School Facilities Construction,
Series O:

 

 

 

 

 

 

 

5.13%, 3/01/28

 

 

2,660

 

 

2,746,849

 

5.13%, 3/01/30

 

 

7,500

 

 

7,701,825

 

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

 

 

2,200

 

 

2,524,830

 

 

 

 

 

 

 

 

 

 

 

 

35,162,488

 

New York — 2.8%

 

 

 

 

 

 

 

City of New York, New York, GO, Series B (MBIA),
5.88%, 8/01/10 (c)

 

 

10,000

 

 

10,517,000

 

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

 

 

1,500

 

 

1,585,065

 

 

 

 

 

 

 

 

 

 

 

 

12,102,065

 

Ohio — 0.2%

 

 

 

 

 

 

 

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

 

 

750

 

 

709,148

 

Pennsylvania — 1.5%

 

 

 

 

 

 

 

Pennsylvania HFA, RB, S/F, Series 73A, AMT,
5.45%, 10/01/32

 

 

2,120

 

 

2,128,310

 

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

 

 

2,000

 

 

2,002,200

 

Pennsylvania Turnpike Commission, RB, CAB,
Sub-Series E, 6.37%, 12/01/38 (a)

 

 

4,100

 

 

2,550,159

 

 

 

 

 

 

 

 

 

 

 

 

6,680,669

 

Puerto Rico — 2.5%

 

 

 

 

 

 

 

Puerto Rico Electric Power Authority, Refunding RB,
Series VV (MBIA), 5.25%, 7/01/30

 

 

1,600

 

 

1,636,512

 

Puerto Rico Sales Tax Financing Corp., RB:

 

 

 

 

 

 

 

CAB, Series A (MBIA), 5.75%, 8/01/41 (b)

 

 

28,000

 

 

4,289,880

 

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

 

 

4,700

 

 

5,069,326

 

 

 

 

 

 

 

 

 

 

 

 

10,995,718

 

South Carolina — 0.9%

 

 

 

 

 

 

 

Berkeley County School District, RB, Securing Assets
For Education, 5.13%, 12/01/30

 

 

3,750

 

 

3,808,800

 

Texas — 15.7%

 

 

 

 

 

 

 

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

 

 

1,000

 

 

1,233,320

 

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

 

 

2,850

 

 

3,239,766

 

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

 

 

 

 

 

 

 

5.88%, 11/01/17

 

 

1,835

 

 

1,903,280

 

5.88%, 11/01/18

 

 

2,145

 

 

2,217,201

 

5.88%, 11/01/19

 

 

2,385

 

 

2,460,867

 

 

 

 

 

 

 

 

 

Municipal Bonds

 

Par 
(000)

 

Value

 

Texas (concluded)

 

 

 

 

 

 

 

Gregg County Health Facilities Development Corp.,
Texas, RB, Good Shepherd Medical Center Project
(Radian) (c):

 

 

 

 

 

 

 

6.38%, 10/01/10

 

$

2,600

 

$

2,753,062

 

6.88%, 10/01/10

 

 

3,000

 

 

3,190,170

 

Harris County-Houston Sports Authority, RB, Senior
Lien, Series G (MBIA), 5.75%, 11/15/20

 

 

3,900

 

 

3,955,185

 

Lewisville ISD, Texas, GO, CAB, Refunding, School
Building (MBIA), 4.67%, 8/15/24 (b)

 

 

6,150

 

 

2,939,700

 

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

 

 

4,800

 

 

4,923,264

 

Mansfield ISD, Texas, GO, School Building, 5.00%,
2/15/33

 

 

2,300

 

 

2,388,044

 

North Harris County Regional Water Authority, RB,
Senior Lien (MBIA), 5.13%, 12/15/35

 

 

1,810

 

 

1,829,783

 

North Texas Tollway Authority, Refunding RB, First Tier:

 

 

 

 

 

 

 

CAB, System (AGC), 5.72%, 1/01/31 (b)

 

 

10,000

 

 

2,860,800

 

Series A, 6.00%, 1/01/28

 

 

3,380

 

 

3,557,315

 

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

 

 

12,300

 

 

12,410,577

 

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

 

 

 

 

 

 

 

5.75%, 8/15/38

 

 

7,200

 

 

7,226,856

 

5.00%, 8/15/42

 

 

10,000

 

 

9,061,300

 

 

 

 

 

 

 

 

 

 

 

 

68,150,490

 

Utah — 4.0%

 

 

 

 

 

 

 

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

 

 

15,000

 

 

17,326,500

 

Vermont — 0.4%

 

 

 

 

 

 

 

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

 

 

1,820

 

 

1,835,561

 

Washington — 1.8%

 

 

 

 

 

 

 

City of Tacoma, Washington, RB (MBIA), 5.00%,
12/01/32

 

 

5,100

 

 

5,156,406

 

County of King, Washington, GO, Sewer (MBIA),
5.00%, 1/01/35

 

 

100

 

 

102,370

 

Port of Tacoma, Washington, RB, Series A (AMBAC),
5.25%, 12/01/14 (c)

 

 

2,400

 

 

2,790,264

 

 

 

 

 

 

 

 

 

 

 

 

8,049,040

 

Wisconsin — 0.4%

 

 

 

 

 

 

 

Wisconsin Housing & EDA, Refunding RB, Series C,
AMT, 4.88%, 3/01/36

 

 

1,890

 

 

1,736,381

 

Total Municipal Bonds — 116.7%

 

 

 

 

 

506,470,070

 

 

 

 

See Notes to Financial Statements.

 

16

SEMI-ANNUAL REPORT

OCTOBER 31, 2009


 

 

 

 

Schedule of Investments (continued)

BlackRock MuniYield Quality Fund, Inc. (MQY)

 

(Percentages shown are based on Net Assets)

 

 

 

 

 

 

 

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (f)

 

Par 
(000)

 

Value

 

California — 8.5%

 

 

 

 

 

 

 

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

 

$

1,244

 

$

1,256,751

 

Golden State Tobacco Securitization Corp.,
California, RB, Enhanced Asset Bank, Series B
(CIFG), 5.63%, 6/01/13 (c)

 

 

14,160

 

 

16,006,181

 

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

 

 

2,639

 

 

2,981,818

 

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

 

 

509

 

 

533,868

 

San Diego County Water Authority, COP, Refunding:

 

 

 

 

 

 

 

Series 2008-A (FSA), 5.00%, 5/01/33

 

 

5,170

 

 

5,180,650

 

Series A (MBIA), 5.00%, 5/01/32

 

 

9,003

 

 

9,092,336

 

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

 

 

1,950

 

 

1,998,965

 

 

 

 

 

 

 

 

 

 

 

 

37,050,569

 

District of Columbia — 0.3%

 

 

 

 

 

 

 

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

 

 

1,320

 

 

1,453,016

 

Florida — 7.3%

 

 

 

 

 

 

 

City of Tallahassee, Florida, RB (MBIA), 5.00%,
10/01/37

 

 

6,000

 

 

6,046,560

 

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

 

 

6,300

 

 

6,743,772

 

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

 

 

2,399

 

 

2,457,732

 

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

 

 

4,310

 

 

4,529,336

 

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

 

 

11,350

 

 

11,728,296

 

 

 

 

 

 

 

 

 

 

 

 

31,505,696

 

Georgia — 3.5%

 

 

 

 

 

 

 

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

 

 

10,000

 

 

10,102,900

 

City of Augusta, Georgia, RB (FSA), 5.25%, 10/01/34

 

 

5,000

 

 

5,174,800

 

 

 

 

 

 

 

 

 

 

 

 

15,277,700

 

Illinois — 4.8%

 

 

 

 

 

 

 

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

 

 

14,429

 

 

15,102,910

 

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

 

 

1,999

 

 

2,137,793

 

Metropolitan Pier & Exposition Authority, Illinois,
Refunding RB, McCormick Place Expansion,
Series B (MBIA), 5.75%, 6/15/23

 

 

3,499

 

 

3,779,626

 

 

 

 

 

 

 

 

 

 

 

 

21,020,329

 

Massachusetts — 3.9%

 

 

 

 

 

 

 

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

 

 

16,500

 

 

17,042,427

 

Nevada — 1.9%

 

 

 

 

 

 

 

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

 

 

5,007

 

 

5,425,610

 

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

 

 

2,429

 

 

2,641,163

 

 

 

 

 

 

 

 

 

 

 

 

8,066,773

 

 

 

 

 

 

 

 

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (f)

 

Par 
(000)

 

Value

 

New Hampshire — 2.3%

 

 

 

 

 

 

 

New Hampshire Health & Education Facilities
Authority, RB, Dartmouth Hitchcock Obligation
(FSA), 5.50%, 8/01/27

 

$

10,000

 

$

10,182,900

 

New Jersey — 1.2%

 

 

 

 

 

 

 

New Jersey EDA, RB, Cigarette Tax (AGC),
5.50%, 6/15/24

 

 

5,150

 

 

5,337,821

 

New York — 4.1%

 

 

 

 

 

 

 

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

 

 

2,007

 

 

2,139,627

 

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

 

 

3,509

 

 

3,870,086

 

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

 

 

1,545

 

 

1,706,236

 

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

 

 

10,000

 

 

10,162,100

 

 

 

 

 

 

 

 

 

 

 

 

17,878,049

 

Ohio — 0.2%

 

 

 

 

 

 

 

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

 

 

780

 

 

808,345

 

South Carolina — 1.2%

 

 

 

 

 

 

 

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

 

 

4,695

 

 

5,015,152

 

Texas — 2.6%

 

 

 

 

 

 

 

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

 

 

5,900

 

 

6,238,778

 

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

 

 

4,750

 

 

4,940,855

 

 

 

 

 

 

 

 

 

 

 

 

11,179,633

 

Virginia — 0.9%

 

 

 

 

 

 

 

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

 

 

450

 

 

472,154

 

Virginia HDA, RB, Sub-Series H-1 (MBIA),
5.35%, 7/01/31

 

 

3,195

 

 

3,228,260

 

 

 

 

 

 

 

 

 

 

 

 

3,700,414

 

Washington — 0.6%

 

 

 

 

 

 

 

Central Puget Sound Regional Transportation Authority,
Washington, RB, Series A (FSA), 5.00%, 11/01/32

 

 

2,504

 

 

2,584,481

 

Total Municipal Bonds Transferred to
Tender Option Bond Trusts — 43.3%

 

 

 

 

 

188,103,305

 

Total Long-Term Investments
(Cost — $689,265,834) — 160.0%

 

 

 

 

 

694,573,375

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-Term Securities

 

Shares

 

 

 

 

FFI Institutional Tax-Exempt Fund, 0.23% (g)(h)

 

 

7,201,538

 

 

7,201,538

 

Total Short-Term Securities
(Cost — $7,201,538) — 1.7%

 

 

 

 

 

7,201,538

 

Total Investments (Cost — $696,467,372*) — 161.7%

 

 

 

 

 

701,774,913

 

Other Assets Less Liabilities — 1.2%

 

 

 

 

 

5,142,035

 

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

 

 

 

 

 

(96,194,865

)

Preferred Shares, at Redemption Value — (40.7)%

 

 

 

 

 

(176,650,423

)

 

 

 

 

 

Net Assets Applicable to Common Shares — 100.0%

 

 

 

 

$

434,071,660

 

 

 

 

 

 

 

 

 

See Notes to Financial Statements.

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2009

17


 

 

 

 

Schedule of Investments (concluded)

BlackRock MuniYield Quality Fund, Inc. (MQY)

 

 

*

The cost and unrealized appreciation (depreciation) of investments as of October 31, 2009, as computed for federal income tax purposes, were as follows:

 

 

 

 

 

Aggregate cost

 

$

600,850,803

 

 

 

Gross unrealized appreciation

 

$

21,702,701

 

Gross unrealized depreciation

 

 

(16,835,935

)

 

 

Net unrealized appreciation

 

$

4,866,766

 

 

 

 

 

(a)

Represents a step-up bond that pays an initial coupon rate for the first period and then a higher coupon rate for the following periods. Rate shown reflects the current yield as of report date.

 

 

(b)

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

 

 

(c)

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

 

 

(d)

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

 

 

 

 

 

 

 

 

Counterparty

 

Value

 

Unrealized
Depreciation

 

Morgan Stanley Capital Services, Inc.

 

$

1,957,043

 

$

(22,151

)

 

 

(e)

Security is collateralized by Municipal or US Treasury Obligations.

 

 

(f)

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

 

 

(g)

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

 

 

 

 

 

 

 

 

Affiliate

 

Net
Activity

 

Income

 

FFI Institutional Tax-Exempt Fund

 

$

(3,707,616

)

$

19,690

 

 

 

 

(h)

Represents the current yield as of report date.

 

 

•

Fair Value Measurements — Various inputs are used in determining the fair value of investments, which are as follows:

 

 

 

•

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

 

 

 

 

•

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

 

 

 

 

•

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

 

 

 

 

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

 

 

 

The following table summarizes the inputs used as of October 31, 2009 in determining the fair valuation of the Fund’s investments:

 

 

 

 

 

Valuation Inputs

 

Investments in
Securities

 

 

 

Assets

 

 

 

Level 1 — Short-Term Securities

 

$

7,201,538

 

Level 2 — Long-Term Investments1

 

 

694,573,375

 

Level 3

 

 

—

 

 

 

Total

 

$

701,774,913

 

 

 

 

 

1

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

 

 

 

See Notes to Financial Statements.

 

18

SEMI-ANNUAL REPORT

OCTOBER 31, 2009


 

 

 

 

Schedule of Investments October 31, 2009 (Unaudited)

BlackRock MuniYield Quality Fund II, Inc. (MQT)

 

(Percentages shown are based on Net Assets)

 

 

 

 

 

 

 

 

Municipal Bonds

 

Par 
(000)

 

Value

 

Alabama — 1.1%

 

 

 

 

 

 

 

Alabama Public School & College Authority,
Refunding RB, Series A, 5.00%, 5/01/29

 

$

800

 

$

820,688

 

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

 

 

650

 

 

689,637

 

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

 

 

2,000

 

 

1,500,260

 

 

 

 

 

 

 

 

 

 

 

 

3,010,585

 

California — 19.6%

 

 

 

 

 

 

 

Alameda Corridor Transportation Authority, Refunding
RB, CAB, Subordinate Lien, Series A (AMBAC),
5.39%, 10/01/25 (a)

 

 

7,150

 

 

5,412,336

 

Antelope Valley Community College District, GO,
Election of 2004, Series B (MBIA), 5.25%, 8/01/39

 

 

550

 

 

567,259

 

Arcadia Unified School District, California, GO, CAB,
Election of 2006, Series A (FSA), 4.96%,
8/01/39 (b)

 

 

1,400

 

 

215,278

 

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

 

 

 

 

 

 

 

5.18%, 8/01/37

 

 

2,100

 

 

362,103

 

4.87%, 8/01/38

 

 

4,800

 

 

779,664

 

California Health Facilities Financing Authority, RB:

 

 

 

 

 

 

 

Kaiser Permanente, Series A (FSA), 5.50%,
6/01/22 (c)

 

 

5,000

 

 

5,040,950

 

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

 

 

500

 

 

518,345

 

Coast Community College District, California, GO,
CAB, Election of 2002, Series C (FSA), 5.45%,
8/01/13 (a)

 

 

1,800

 

 

1,486,296

 

East Side Union High School District-Santa Clara
County, California, GO, CAB, Election of 2002,
Series E (Syncora), 5.15%, 8/01/29 (b)

 

 

15,000

 

 

4,511,250

 

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

 

 

4,000

 

 

4,145,200

 

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

 

 

2,770

 

 

2,930,106

 

Fresno Unified School District, California, GO, Election
of 2001, Series E (FSA), 5.00%, 8/01/30

 

 

800

 

 

809,080

 

John Swett Unified School District, GO, Series A (FSA),
5.50%, 8/01/26

 

 

2,815

 

 

2,932,329

 

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

 

 

 

 

 

 

 

5.00%, 10/01/29

 

 

2,600

 

 

2,672,462

 

5.00%, 10/01/36

 

 

1,475

 

 

1,495,886

 

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

 

 

11,975

 

 

3,913,310

 

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

 

 

2,300

 

 

2,328,842

 

Palm Springs Financing Authority, RB, Convention
Center Project, Series A (MBIA), 5.50%, 11/01/29

 

 

2,900

 

 

2,977,894

 

Port of Oakland, RB, Series K, AMT (MBIA), 5.75%,
11/01/29

 

 

2,000

 

 

2,001,860

 

Poway Redevelopment Agency, California, TAN, Paguay
Redevelopment Project (AMBAC), 5.13%, 6/15/33

 

 

1,250

 

 

1,088,575

 

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

 

 

1,600

 

 

1,606,944

 

 

 

 

 

 

 

 

 

Municipal Bonds

 

Par 
(000)

 

Value

 

California (concluded)

 

 

 

 

 

 

 

Sacramento Municipal Utility District, RB, Series N
(MBIA), 5.00%, 8/15/28

 

$

4,400

 

$

4,404,884

 

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

 

 

20

 

 

19,988

 

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

 

 

2,025

 

 

2,078,784

 

 

 

 

 

 

 

 

 

 

 

 

54,299,625

 

Colorado — 1.5%

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

5.50%, 12/01/27

 

 

1,200

 

 

1,102,020

 

5.50%, 12/01/33

 

 

675

 

 

592,616

 

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

 

 

780

 

 

794,578

 

E-470 Public Highway Authority, Colorado, RB, CAB,
Series B (MBIA), 5.62%, 9/01/32 (b)

 

 

7,500

 

 

1,572,300

 

 

 

 

 

 

 

 

 

 

 

 

4,061,514

 

Florida — 10.8%

 

 

 

 

 

 

 

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

 

 

1,400

 

 

1,430,212

 

City of Miami, Florida, RB, Miami Revenues (MBIA),
5.00%, 1/01/37

 

 

480

 

 

467,443

 

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

 

 

2,600

 

 

2,599,818

 

County of Miami-Dade, Florida, RB, Jackson Health
System (AGC), 5.63%, 6/01/34

 

 

2,000

 

 

2,071,060

 

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

 

 

12,550

 

 

11,738,141

 

County of Orange, Florida, RB, Series B (MBIA),
5.13%, 1/01/32

 

 

1,575

 

 

1,585,175

 

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

 

 

3,250

 

 

3,260,107

 

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

 

 

1,625

 

 

1,668,713

 

Orange County School Board, COP, Series A (AGC),
5.50%, 8/01/34

 

 

2,850

 

 

2,966,964

 

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

 

 

250

 

 

253,610

 

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

 

 

1,800

 

 

1,900,566

 

 

 

 

 

 

 

 

 

 

 

 

29,941,809

 

Georgia — 2.5%

 

 

 

 

 

 

 

City of Atlanta, Georgia, Refunding RB, General,
Series A (MBIA), 5.88%, 1/01/17

 

 

5,000

 

 

5,068,050

 

City of Augusta, Georgia, RB (FSA), 5.25%, 10/01/39

 

 

1,880

 

 

1,939,013

 

 

 

 

 

 

 

 

 

 

 

 

7,007,063

 

Illinois — 19.9%

 

 

 

 

 

 

 

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

 

 

2,500

 

 

2,736,100

 

City of Chicago, Illinois, GO, CAB, City Colleges (FGIC),
5.88%, 1/01/31 (b)

 

 

8,370

 

 

2,589,176

 

City of Chicago, Illinois, GO, Refunding, Series A (FSA),
5.00%, 1/01/25

 

 

5,000

 

 

5,217,900

 

 

 

 

See Notes to Financial Statements.

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2009

19


 

 

 

 

Schedule of Investments (continued)

BlackRock MuniYield Quality Fund II, Inc (MQT)

 

(Percentages shown are based on Net Assets)

 

 

 

 

 

 

 

 

Municipal Bonds

 

Par 
(000)

 

Value

 

Illinois (concluded)

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

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

 

$

5,200

 

$

5,340,816

 

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

 

 

2,200

 

 

2,252,624

 

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

 

 

4,000

 

 

4,077,640

 

City of Chicago, Illinois, Refunding RB, General Airport
Third Lien, Series A, AMT (MBIA), 5.50%, 1/01/22

 

 

9,150

 

 

9,204,900

 

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

 

 

2,460

 

 

2,775,790

 

Illinois Sports Facilities Authority, RB, State Tax
Supported (AMBAC), 5.47%, 6/15/30 (a)

 

 

21,675

 

 

21,167,155

 

 

 

 

 

 

 

 

 

 

 

 

55,362,101

 

Indiana — 0.1%

 

 

 

 

 

 

 

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

 

 

350

 

 

359,345

 

Iowa — 0.4%

 

 

 

 

 

 

 

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

 

 

1,175

 

 

1,209,204

 

Kentucky — 0.8%

 

 

 

 

 

 

 

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

 

 

2,000

 

 

2,146,800

 

Louisiana — 1.5%

 

 

 

 

 

 

 

Jefferson Parish Home Mortgage Authority, RB,
Series B-1, AMT (MBIA), 6.65%, 12/01/33

 

 

1,295

 

 

1,349,299

 

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

 

 

1,150

 

 

1,276,431

 

Rapides Finance Authority, Louisiana, RB, Cleco Power
LLC Project, AMT (AMBAC), 4.70%, 11/01/36

 

 

1,750

 

 

1,472,240

 

 

 

 

 

 

 

 

 

 

 

 

4,097,970

 

Maryland — 0.4%

 

 

 

 

 

 

 

Maryland Community Development Administration,
RB, Residential, Series A, AMT, 5.75%, 9/01/39

 

 

1,090

 

 

1,119,964

 

Massachusetts — 10.1%

 

 

 

 

 

 

 

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

 

 

20,000

 

 

19,308,200

 

Massachusetts HFA, Massachusetts, RB, S/F,
Series 128, AMT (FSA), 4.80%, 12/01/27

 

 

1,500

 

 

1,448,910

 

Massachusetts Port Authority, RB, Delta Air Lines Inc.
Project, Series A, AMT (AMBAC):

 

 

 

 

 

 

 

5.50%, 1/01/16

 

 

2,900

 

 

2,495,305

 

5.50%, 1/01/19

 

 

2,570

 

 

2,074,812

 

Massachusetts State Water Resource Authority,
Refunding RB, General, Series A (MBIA), 5.00%,
8/01/34

 

 

2,700

 

 

2,776,653

 

 

 

 

 

 

 

 

 

 

 

 

28,103,880

 

Michigan — 5.7%

 

 

 

 

 

 

 

City of Detroit, Michigan, RB, Second Lien:

 

 

 

 

 

 

 

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

 

 

350

 

 

376,519

 

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

 

 

200

 

 

234,718

 

Series E (FGIC), 5.75%, 7/01/31

 

 

2,200

 

 

2,364,406

 

City of Detroit, Michigan, RB, System, Second Lien:

 

 

 

 

 

 

 

Series A (FGIC), 5.50%, 7/01/36

 

 

4,500

 

 

4,672,440

 

Series B (MBIA), 5.00%, 7/01/36

 

 

3,000

 

 

2,717,430

 

 

 

 

 

 

 

 

 

Municipal Bonds

 

Par 
(000)

 

Value

 

Michigan (concluded)

 

 

 

 

 

 

 

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

 

$

1,000

 

$

1,000,190

 

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

 

 

 

 

 

 

 

Series A, 5.50%, 6/01/30

 

 

1,000

 

 

936,800

 

Series C, 5.45%, 12/15/32

 

 

3,900

 

 

3,610,386

 

 

 

 

 

 

 

 

 

 

 

 

15,912,889

 

Minnesota — 0.8%

 

 

 

 

 

 

 

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

 

 

1,800

 

 

2,026,494

 

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

 

 

108

 

 

108,257

 

 

 

 

 

 

 

 

 

 

 

 

2,134,751

 

Missouri — 2.0%

 

 

 

 

 

 

 

County of Saint Louis, Missouri, GO, Missouri Direct
Deposit Program (FGIC) (e):

 

 

 

 

 

 

 

5.75%, 3/01/10

 

 

4,000

 

 

4,113,320

 

6.00%, 3/01/10

 

 

1,500

 

 

1,543,740

 

 

 

 

 

 

 

 

 

 

 

 

5,657,060

 

Nevada — 3.4%

 

 

 

 

 

 

 

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

 

 

2,800

 

 

2,525,236

 

County of Clark, Nevada, RB, Southwest Gas Corp.
Project, Series A, AMT (FGIC), 4.75%, 9/01/36

 

 

40

 

 

32,955

 

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

 

 

 

 

 

 

 

5.00%, 7/01/30

 

 

1,500

 

 

1,508,580

 

5.00%, 7/01/36

 

 

2,700

 

 

2,645,271

 

County of Clark, Nevada, RB, System Subordinate Lien,
Series C (FSA), 5.00%, 7/01/26

 

 

1,275

 

 

1,304,363

 

Las Vegas Valley Water District, GO, Refunding,
Series A (MBIA), 5.00%, 6/01/24

 

 

1,350

 

 

1,396,440

 

 

 

 

 

 

 

 

 

 

 

 

9,412,845

 

New Jersey — 6.7%

 

 

 

 

 

 

 

New Jersey EDA, RB, Cigarette Tax (Radian):

 

 

 

 

 

 

 

5.75%, 6/15/29

 

 

870

 

 

840,185

 

5.50%, 6/15/31

 

 

400

 

 

370,900

 

New Jersey EDA, RB, Motor Vehicle Surcharge,
Series A (MBIA), 5.25%, 7/01/33

 

 

8,200

 

 

8,273,636

 

New Jersey EDA, RB, School Facilities Construction:

 

 

 

 

 

 

 

Series O, 5.13%, 3/01/28

 

 

3,380

 

 

3,490,357

 

Series P, 5.13%, 9/01/28

 

 

4,000

 

 

4,141,360

 

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

 

 

1,400

 

 

1,606,710

 

 

 

 

 

 

 

 

 

 

 

 

18,723,148

 

New Mexico — 2.3%

 

 

 

 

 

 

 

New Mexico State Transportation Commission, RB,
Senior, Subordinate Lien Series A (FSA), 6.00%,
6/15/10 (e)

 

 

6,295

 

 

6,513,751

 

 

 

 

See Notes to Financial Statements.

 

 

20

SEMI-ANNUAL REPORT

OCTOBER 31, 2009


 

 

 

 

Schedule of Investments (continued)

BlackRock MuniYield Quality Fund II, Inc. (MQT)

 

(Percentages shown are based on Net Assets)

 

 

 

 

 

 

 

 

Municipal Bonds

 

Par 
(000)

 

Value

 

New York — 2.3%

 

 

 

 

 

 

 

New York State Dormitory Authority, RB, State University
Educational Facilities (FGIC), 5.75%, 5/15/10 (e)

 

$

5,000

 

$

5,197,000

 

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

 

 

1,200

 

 

1,268,052

 

 

 

 

 

 

 

 

 

 

 

 

6,465,052

 

Ohio — 3.3%

 

 

 

 

 

 

 

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

 

 

2,500

 

 

2,363,825

 

Plain, Ohio, Local School District, GO (FGIC), 6.00%,
6/01/11 (e)

 

 

5,120

 

 

5,551,770

 

Plain, Ohio, Local School District, Refunding
GO (MBIA), 6.00%, 12/01/20

 

 

1,170

 

 

1,243,406

 

 

 

 

 

 

 

 

 

 

 

 

9,159,001

 

Pennsylvania — 1.6%

 

 

 

 

 

 

 

Delaware River Port Authority, Pennsylvania &
New Jersey, RB (FSA), 6.00%, 1/01/17

 

 

5

 

 

5,043

 

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

 

 

1,340

 

 

1,341,474

 

Pennsylvania Turnpike Commission, RB, CAB,
Sub-Series E, 6.37%, 12/01/38 (a)

 

 

2,600

 

 

1,617,174

 

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

 

 

1,300

 

 

1,404,364

 

 

 

 

 

 

 

 

 

 

 

 

4,368,055

 

Puerto Rico — 2.1%

 

 

 

 

 

 

 

Puerto Rico Electric Power Authority, Refunding RB,
Series VV (MBIA), 5.25%, 7/01/30

 

 

1,070

 

 

1,094,417

 

Puerto Rico Sales Tax Financing Corp., RB:

 

 

 

 

 

 

 

CAB, Series A (MBIA), 5.76%, 8/01/41 (b)

 

 

10,000

 

 

1,532,100

 

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

 

 

3,000

 

 

3,235,740

 

 

 

 

 

 

 

 

 

 

 

 

5,862,257

 

South Carolina — 0.9%

 

 

 

 

 

 

 

Berkeley County School District, RB, Securing Assets
For Education, 5.13%, 12/01/30

 

 

2,450

 

 

2,488,416

 

Tennessee — 0.8%

 

 

 

 

 

 

 

Tennessee Energy Acquisition Corp., Tennessee, RB,
Series A, 5.25%, 9/01/26

 

 

2,465

 

 

2,315,276

 

Texas — 12.6%

 

 

 

 

 

 

 

City of Corpus Christi, Texas, Refunding RB, Series A
(FSA), 6.00%, 7/15/10 (e)

 

 

2,000

 

 

2,080,280

 

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

 

 

5,000

 

 

4,986,800

 

Lewisville ISD, Texas, GO, CAB, Refunding, School
Building (MBIA), 4.67%, 8/15/24 (b)

 

 

3,915

 

 

1,871,370

 

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

 

 

3,000

 

 

3,077,040

 

Mansfield ISD, Texas, GO, School Building, 5.00%,
2/15/33

 

 

1,065

 

 

1,105,768

 

Matagorda County Navigation District No. 1, Texas,
Refunding RB, Central Power & Light, AMT (MBIA),
5.20%, 5/01/30

 

 

1,800

 

 

1,691,982

 

North Harris County Regional Water Authority, RB,
Senior Lien (MBIA), 5.13%, 12/15/35

 

 

2,045

 

 

2,067,352

 

North Texas Tollway Authority, Refunding RB, First Tier:

 

 

 

 

 

 

 

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

 

 

3,600

 

 

3,632,364

 

Series A, 6.00%, 1/01/28

 

 

2,415

 

 

2,541,691

 

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

 

 

3,400

 

 

3,600,838

 

 

 

 

 

 

 

 

 

Municipal Bonds

 

Par 
(000)

 

Value

 

Texas (concluded)

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

5.75%, 8/15/38

 

$

4,800

 

$

4,817,904

 

5.50%, 8/15/39

 

 

3,500

 

 

3,446,240

 

 

 

 

 

 

 

 

 

 

 

 

34,919,629

 

Vermont — 1.8%

 

 

 

 

 

 

 

Vermont HFA, Vermont, RB, AMT:

 

 

 

 

 

 

 

Multiple Purpose, Series C (FSA), 5.50%,
11/01/38

 

 

2,475

 

 

2,496,161

 

Series 27 (FSA), 4.85%, 11/01/32

 

 

2,670

 

 

2,535,165

 

 

 

 

 

 

 

 

 

 

 

 

5,031,326

 

Washington — 3.9%

 

 

 

 

 

 

 

Port of Seattle, Washington, RB, Series B, AMT
(MBIA), 6.00%, 2/01/16

 

 

7,470

 

 

7,569,650

 

Port of Tacoma, Washington, GO, Series B, AMT (AGC),
4.88%, 12/01/38

 

 

1,375

 

 

1,310,293

 

Port of Tacoma, Washington, RB, Series A (AMBAC),
5.25%, 12/01/14 (e)

 

 

1,600

 

 

1,860,176

 

 

 

 

 

 

 

 

 

 

 

 

10,740,119

 

Total Municipal Bonds — 118.9%

 

 

 

 

 

330,423,435

 

 

 

 

 

 

 

 

 

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (f)

 

 

 

 

 

 

 

Arizona — 0.4%

 

 

 

 

 

 

 

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

 

 

1,000

 

 

1,030,880

 

California — 3.8%

 

 

 

 

 

 

 

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

 

 

3,808

 

 

3,845,960

 

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

 

 

1,699

 

 

1,920,110

 

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

 

 

359

 

 

376,848

 

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

 

 

3,030

 

 

3,036,242

 

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

 

 

1,320

 

 

1,353,145

 

 

 

 

 

 

 

 

 

 

 

 

10,532,305

 

District of Columbia — 1.0%

 

 

 

 

 

 

 

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

 

 

855

 

 

941,158

 

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

 

 

1,580

 

 

1,766,271

 

 

 

 

 

 

 

 

 

 

 

 

2,707,429

 

Florida — 3.5%

 

 

 

 

 

 

 

City of Tallahassee, Florida, RB (MBIA), 5.00%,
10/01/37

 

 

4,000

 

 

4,031,040

 

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

 

 

4,200

 

 

4,495,848

 

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

 

 

1,190

 

 

1,218,625

 

 

 

 

 

 

 

 

 

 

 

 

9,745,513

 

 

 

 

See Notes to Financial Statements.

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2009

21


 

 

 

Schedule of Investments (continued)

BlackRock MuniYield Quality Fund II, Inc. (MQT)

 

(Percentages shown are based on Net Assets)

 

 

 

 

 

 

 

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (f)

 

Par 
(000)

 

Value

 

Georgia — 7.3%

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

Series B, 5.25%, 1/01/33

 

$

4,999

 

$

5,093,730

 

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

 

 

15,000

 

 

15,154,350

 

 

 

 

 

 

 

 

 

 

 

 

20,248,080

 

Illinois — 10.9%

 

 

 

 

 

 

 

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

 

 

2,549

 

 

2,668,319

 

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

 

 

10,000

 

 

12,461,728

 

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

 

 

3,499

 

 

3,741,138

 

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

 

 

3,500

 

 

3,570,665

 

Metropolitan Pier & Exposition Authority, Illinois,
Refunding RB, McCormick Place Expansion,
Series B (MBIA), 5.75%, 6/15/23

 

 

7,250

 

 

7,831,740

 

 

 

 

 

 

 

 

 

 

 

 

30,273,590

 

Louisiana — 1.7%

 

 

 

 

 

 

 

State of Louisiana, RB, Series A (FSA), 5.00%,
5/01/36

 

 

4,600

 

 

4,643,194

 

Massachusetts — 2.7%

 

 

 

 

 

 

 

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

 

 

7,195

 

 

7,431,435

 

Nevada — 1.9%

 

 

 

 

 

 

 

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

 

 

3,298

 

 

3,573,755

 

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

 

 

1,575

 

 

1,711,866

 

 

 

 

 

 

 

 

 

 

 

 

5,285,621

 

New Jersey — 0.7%

 

 

 

 

 

 

 

New Jersey EDA, RB, Cigarette Tax (AGC),
5.50%, 6/15/24

 

 

2,000

 

 

2,072,940

 

New York — 0.8%

 

 

 

 

 

 

 

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

 

 

1,049

 

 

1,157,718

 

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

 

 

1,005

 

 

1,109,882

 

 

 

 

 

 

 

 

 

 

 

 

2,267,600

 

Ohio — 0.2%

 

 

 

 

 

 

 

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

 

 

500

 

 

518,170

 

South Carolina — 2.7%

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

5.25%, 12/01/28

 

 

2,725

 

 

2,820,920

 

5.25%, 12/01/29

 

 

2,425

 

 

2,499,957

 

5.25%, 12/01/30

 

 

880

 

 

902,044

 

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

 

 

1,125

 

 

1,201,714

 

 

 

 

 

 

 

 

 

 

 

 

7,424,635

 

 

 

 

 

 

 

 

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (f)

 

Par 
(000)

 

Value

 

Texas — 2.7%

 

 

 

 

 

 

 

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

 

$

1,900

 

$

2,009,098

 

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

 

 

5,250

 

 

5,460,945

 

 

 

 

 

 

 

 

 

 

 

 

7,470,043

 

Virginia — 0.8%

 

 

 

 

 

 

 

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

 

 

300

 

 

314,769

 

Virginia HDA, RB, Sub-Series H-1 (MBIA),
5.35%, 7/01/31

 

 

1,995

 

 

2,015,768

 

 

 

 

 

 

 

 

 

 

 

 

2,330,537

 

Wisconsin — 0.4%

 

 

 

 

 

 

 

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

 

 

1,250

 

 

1,227,730

 

Total Municipal Bonds Transferred to
Tender Option Bond Trusts — 41.5%

 

 

 

 

 

115,209,702

 

Total Long-Term Investments
(Cost — $445,392,652) — 160.4%

 

 

 

 

 

445,633,137

 

 

 

Short-Term Securities

 

Shares

 

 

 

 

FFI Institutional Tax-Exempt Fund, 0.23% (g)(h)

 

 

6,001,616

 

 

6,001,616

 

Total Short-Term Securities
(Cost — $6,001,616) — 2.2%

 

 

 

 

 

6,001,616

 

Total Investments (Cost — $451,394,268*) — 162.6%

 

 

 

 

 

451,634,753

 

Other Assets Less Liabilities — 0.7%

 

 

 

 

 

1,941,986

 

Liability for Trust Certificates, Including Interest
Expense and Fees Payable — (21.3)%

 

 

 

 

 

(59,166,801

)

Preferred Shares, at Redemption Value — (42.0)%

 

 

 

 

 

(116,596,792

)

 

 

 

 

 

Net Assets Applicable to Common Shares — 100.0%

 

 

 

 

$

277,813,146

 

 

 

 

 

 

See Notes to Financial Statements.

 

 

 

22

SEMI-ANNUAL REPORT

OCTOBER 31, 2009


 

 

 

Schedule of Investments (concluded)

BlackRock MuniYield Quality Fund II, Inc. (MQT)

 

 

*

The cost and unrealized appreciation (depreciation) of investments as of October 31, 2009, as computed for federal income tax purposes, were as follows:

 

 

 

 

 

Aggregate cost

 

$

393,455,899

 

 

 

 

Gross unrealized appreciation

 

$

16,475,324

 

Gross unrealized depreciation

 

 

(17,376,341

)

 

 

 

Net unrealized depreciation

 

$

(901,017

)

 

 

 

 

 

(a)

Represents a step-up bond that pays an initial coupon rate for the first period and then a higher coupon rate for the following periods. Rate shown reflects the current yield as of report date.

 

 

(b)

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

 

 

(c)

Security is collateralized by Municipal or US Treasury Obligations.

 

 

(d)

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

 

 

 

 

 

 

 

 

Counterparty

 

Value

 

Unrealized
Depreciation

 

Citigroup Inc.

 

$

1,891,060

 

$

(8,068

)

Morgan Stanley Capital Services, Inc.

 

$

1,267,343

 

$

(7,922

)

 

 

 

 

(e)

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

 

 

(f)

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

 

 

(g)

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

 

 

 

 

 

 

 

 

Affiliate

 

Net
Activity

 

Income

 

FFI Institutional Tax-Exempt Fund

 

$

5,100,753

 

$

11,417

 

 

 

(h)

Represents the current yield as of report date.

 

 

 

•

Fair Value Measurements — Various inputs are used in determining the fair value of investments, which are as follows:

 

 

 

 

•

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

 

 

 

 

•

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

 

 

 

 

•

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

 

 

 

 

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

 

 

 

 

The following table summarizes the inputs used as of October 31, 2009 in determining the fair valuation of the Fund’s investments:

 

 

 

 

 

Valuation Inputs

 

 

Investments in
Securities

 

 

 

 

Assets

 

 

 

Level 1 — Short-Term Securities

 

$

6,001,616

 

Level 2 — Long-Term Investments1

 

 

445,633,137

 

Level 3

 

 

—

 

 

 

 

Total

 

$

451,634,753

 

 

 

 

 

 

 

 

1

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

See Notes to Financial Statements.

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2009

23

 

 

Statements of Assets and Liabilities

 

 

 

 

 

 

 

 

 

 

 

October 31, 2009 (Unaudited)

 

BlackRock
MuniYield
Fund, Inc.
(MYD)

 

BlackRock
MuniYield
Quality
Fund, Inc.
(MQY)

 

BlackRock
MuniYield
Quality
Fund II, Inc.
(MQT)

 

Assets

 

 

 

 

 

 

 

 

 

 

Investments at value — unaffiliated1

 

$

970,643,849

 

$

694,573,375

 

$

445,633,137

 

Investments at value — affiliated2

 

 

17,401,862

 

 

7,201,538

 

 

6,001,616

 

Cash

 

 

524,241

 

 

37,849

 

 

99,228

 

Interest receivable

 

 

15,613,619

 

 

10,007,694

 

 

6,432,968

 

Investments sold receivable

 

 

490,362

 

 

3,385,611

 

 

1,275,750

 

Income receivable — affiliated

 

 

334

 

 

204

 

 

—

 

Other assets

 

 

66,258

 

 

48,422

 

 

—

 

Prepaid expenses

 

 

61,770

 

 

45,581

 

 

31,813

 

 

 

Total assets

 

 

1,004,802,295

 

 

715,300,274

 

 

459,474,512

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accrued Liabilities

 

 

 

 

 

 

 

 

 

 

Investments purchased payable

 

 

39,736,521

 

 

5,838,216

 

 

4,242,064

 

Income dividends payable — Common Shares

 

 

3,134,829

 

 

2,114,555

 

 

1,386,750

 

Investment advisory fees payable

 

 

424,904

 

 

314,196

 

 

200,565

 

Interest expense and fees payable

 

 

104,756

 

 

137,521

 

 

86,930

 

Officer’s and Directors’ fees payable

 

 

67,908

 

 

49,917

 

 

907

 

Other affiliates payable

 

 

5,996

 

 

3,889

 

 

2,972

 

Other accrued expenses payable

 

 

91,863

 

 

62,553

 

 

64,515

 

 

 

Total accrued liabilities

 

 

43,566,777

 

 

8,520,847

 

 

5,984,703

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Liabilities

 

 

 

 

 

 

 

 

 

 

Trust certificates3

 

 

113,120,964

 

 

96,057,344

 

 

59,079,871

 

 

 

Total Liabilities

 

 

156,687,741

 

 

104,578,191

 

 

65,064,574

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred Shares at Redemption Value

 

 

 

 

 

 

 

 

 

 

$25,000 per share liquidation preference, plus unpaid dividends4,5

 

 

251,489,000

 

 

176,650,423

 

 

116,596,792

 

 

 

Net Assets Applicable to Common Shareholders

 

$

596,625,554

 

$

434,071,660

 

$

277,813,146

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Assets Applicable to Common Shareholders Consist of

 

 

 

 

 

 

 

 

 

 

Paid-in capital6

 

$

623,369,252

 

$

426,282,532

 

$

287,766,740

 

Undistributed net investment income

 

 

8,339,529

 

 

5,788,583

 

 

4,382,613

 

Accumulated net realized loss

 

 

(16,540,672

)

 

(3,306,996

)

 

(14,576,692

)

Net unrealized appreciation/depreciation

 

 

(18,542,555

)

 

5,307,541

 

 

240,485

 

 

 

Net Assets Applicable to Common Shareholders

 

$

596,625,554

 

$

434,071,660

 

$

277,813,146

 

 

 

Net asset value per Common Share

 

$

13.13

 

$

14.27

 

$

12.42

 

 

 

1 Investments at cost — unaffiliated

 

$

989,186,404

 

$

689,265,834

 

$

445,392,652

 

 

 

2 Investments at cost — affiliated

 

$

17,401,862

 

$

7,201,538

 

$

6,001,616

 

 

 

3 Represents short-term floating rate certificates issued by tender option bond trusts.

 

 

 

 

 

 

 

 

 

 

4 Preferred Shares outstanding:

 

 

 

 

 

 

 

 

 

 

Par value $0.05 per share

 

 

10,058

 

 

7,065

 

 

4,371

 

 

 

Par value $0.10 per share

 

 

—

 

 

—

 

 

292

 

 

 

5 Preferred Shares authorized

 

 

13,720

 

 

10,000

 

 

6,400

 

 

 

6 Common Shares outstanding, 200 million shares authorized, $0.10 par value

 

 

45,432,304

 

 

30,425,258

 

 

22,366,930

 

 

 

 

 

 

See Notes to Financial Statements.

24

SEMI-ANNUAL REPORT

OCTOBER 31, 2009


 

 

Statements of Operations

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended October 31, 2009 (Unaudited)

 

BlackRock
MuniYield
Fund, Inc.
(MYD)

 

BlackRock
MuniYield
Quality
Fund, Inc.
(MQY)

 

BlackRock
MuniYield
Quality
Fund II, Inc.
(MQT)

 

Investment Income

 

 

 

 

 

 

 

 

 

 

Interest

 

$

26,336,102

 

$

17,253,014

 

$

11,367,846

 

Income — affiliated

 

 

18,152

 

 

21,853

 

 

11,417

 

 

 

Total income

 

 

26,354,254

 

 

17,274,867

 

 

11,379,263

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

Investment advisory

 

 

2,308,386

 

 

1,753,072

 

 

1,123,490

 

Commissions for Preferred Shares

 

 

186,033

 

 

135,001

 

 

87,985

 

Accounting services

 

 

135,466

 

 

93,194

 

 

67,819

 

Professional

 

 

49,757

 

 

43,437

 

 

37,651

 

Transfer agent

 

 

47,319

 

 

25,535

 

 

24,845

 

Officer and Directors

 

 

42,085

 

 

28,282

 

 

16,633

 

Printing

 

 

25,360

 

 

19,666

 

 

14,912

 

Custodian

 

 

20,876

 

 

15,963

 

 

11,414

 

Registration

 

 

7,896

 

 

5,137

 

 

4,480

 

Miscellaneous

 

 

60,218

 

 

50,060

 

 

42,886

 

 

 

Total expenses excluding interest expense and fees

 

 

2,883,396

 

 

2,169,347

 

 

1,432,115

 

Interest expense and fees1

 

 

298,803

 

 

347,946

 

 

220,461

 

 

 

Total expenses

 

 

3,182,199

 

 

2,517,293

 

 

1,652,576

 

Less fees waived by advisor

 

 

(8,005

)

 

(10,179

)

 

(5,855

)

 

 

Total expenses after fees waived

 

 

3,174,194

 

 

2,507,114

 

 

1,646,721

 

 

 

Net investment income

 

 

23,180,060

 

 

14,767,753

 

 

9,732,542

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Realized and Unrealized Gain (Loss)

 

 

 

 

 

 

 

 

 

 

Realized loss from:

 

 

 

 

 

 

 

 

 

 

Investments

 

 

(513,581

)

 

(478,453

)

 

(1,860,486

)

Financial futures contracts

 

 

(265,456

)

 

—

 

 

—

 

 

 

 

 

 

(779,037

)

 

(478,453

)

 

(1,860,486

)

 

 

Net change in unrealized appreciation/depreciation on investments

 

 

69,633,026

 

 

28,736,349

 

 

19,784,984

 

 

 

Total realized and unrealized gain

 

 

68,853,989

 

 

28,257,896

 

 

17,924,498

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends to Preferred Shareholders From

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

(888,801

)

 

(671,235

)

 

(356,301

)

 

 

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

 

$

91,145,248

 

$

42,354,414

 

$

27,300,739

 

 

 

 

 

 

 

1

Related to tender option bond trusts.

 

 

 

See Notes to Financial Statements.

SEMI-ANNUAL REPORT

OCTOBER 31, 2009

25


 

 

 

Statements of Changes in Net Assets

BlackRock MuniYield Fund, Inc. (MYD)

 

 

 

 

 

 

 

 

 

 

 

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

 

Six Months
Ended
October 31,
2009
(Unaudited)

 

Period
November 1,
2008 to
April 30,
2009

 

Year Ended
October 31,
2008

 

Operations

 

 

 

 

 

 

 

 

 

 

Net investment income

 

$

23,180,060

 

$

22,185,193

 

$

46,456,245

 

Net realized loss

 

 

(779,037

)

 

(3,920,385

)

 

(6,301,395

)

Net change in unrealized appreciation/depreciation

 

 

69,633,026

 

 

38,914,225

 

 

(157,567,039

)

Dividends to Preferred Shareholders from net investment income

 

 

(888,801

)

 

(1,788,996

)

 

(12,071,923

)

 

 

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

 

 

91,145,248

 

 

55,390,037

 

 

(129,484,112

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends to Common Shareholders From

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

(18,580,717

)

 

(17,560,799

)

 

(36,001,360

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Share Transactions

 

 

 

 

 

 

 

 

 

 

Reinvestment of common dividends

 

 

471,303

 

 

815,938

 

 

2,855,713

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Assets Applicable to Common Shareholders

 

 

 

 

 

 

 

 

 

 

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

 

 

73,035,834

 

 

38,645,176

 

 

(162,629,759

)

Beginning of period

 

 

523,589,720

 

 

484,944,544

 

 

647,574,303

 

 

 

End of period

 

$

596,625,554

 

$

523,589,720

 

$

484,944,544

 

 

 

Undistributed net investment income

 

$

8,339,529

 

$

4,628,987

 

$

1,916,633

 

 

 

BlackRock MuniYield Quality Fund, Inc. (MQY)

 

 

 

 

 

 

 

 

 

 

 

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

 

Six Months
Ended
October 31,
2009
(Unaudited)

 

Period
November 1,
2008 to
April 30,
2009

 

Year Ended
October 31,
2008

 

Operations

 

 

 

 

 

 

 

 

 

 

Net investment income

 

$

14,767,753

 

$

13,886,963

 

$

29,446,444

 

Net realized loss

 

 

(478,453

)

 

(794,982

)

 

(1,309,516

)

Net change in unrealized appreciation/depreciation

 

 

28,736,349

 

 

46,913,056

 

 

(93,093,592

)

Dividends and distributions to Preferred Shareholders from:

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

(671,235

)

 

(1,262,709

)

 

(8,220,460

)

Net realized gain

 

 

—

 

 

—

 

 

(984,160

)

 

 

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

 

 

42,354,414

 

 

58,742,328

 

 

(74,161,284

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends and Distributions to Common Shareholders From

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

(12,078,827

)

 

(10,405,438

)

 

(20,810,877

)

Net realized gain

 

 

—

 

 

—

 

 

(2,225,942

)

 

 

Decrease in net assets resulting from dividends and distributions to Common Shareholders

 

 

(12,078,827

)

 

(10,405,438

)

 

(23,036,819

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Assets Applicable to Common Shareholders

 

 

 

 

 

 

 

 

 

 

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

 

 

30,275,587

 

 

48,336,890

 

 

(97,198,103

)

Beginning of period

 

 

403,796,073

 

 

355,459,183

 

 

452,657,286

 

 

 

End of period

 

$

434,071,660

 

$

403,796,073

 

$

355,459,183

 

 

 

Undistributed net investment income

 

$

5,788,583

 

$

3,770,892

 

$

1,484,576

 

 

 

 

 

 

See Notes to Financial Statements.

26

SEMI-ANNUAL REPORT

OCTOBER 31, 2009


 

 

 

Statements of Changes in Net Assets

BlackRock MuniYield Quality Fund II, Inc. (MQT)

 

 

 

 

 

 

 

 

 

 

 

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

 

Six Months
Ended
October 31,
2009
(Unaudited)

 

Period
November 1,
2008 to
April 30,
2009

 

Year Ended
October 31,
2008

 

Operations

 

 

 

 

 

 

 

 

 

 

Net investment income

 

$

9,732,542

 

$

9,157,790

 

$

19,297,921

 

Net realized loss

 

 

(1,860,486

)

 

(4,247,291

)

 

(1,157,479

)

Net change in unrealized appreciation/depreciation

 

 

19,784,984

 

 

33,306,545

 

 

(66,060,322

)

Dividends to Preferred Shareholders from net investment income

 

 

(356,301

)

 

(795,547

)

 

(5,769,792

)

 

 

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

 

 

27,300,739

 

 

37,421,497

 

 

(53,689,672

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends to Common Shareholders From

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

(7,750,141

)

 

(6,710,079

)

 

(13,420,158

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Assets Applicable to Common Shareholders

 

 

 

 

 

 

 

 

 

 

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

 

 

19,550,598

 

 

30,711,418

 

 

(67,109,830

)

Beginning of period

 

 

258,262,548

 

 

227,551,130

 

 

294,660,960

 

 

 

End of period

 

$

277,813,146

 

$

258,262,548

 

$

227,551,130

 

 

 

Undistributed net investment income

 

$

4,382,613

 

$

2,756,513

 

$

1,161,024

 

 

 

 

 

 

See Notes to Financial Statements.

SEMI-ANNUAL REPORT

OCTOBER 31, 2009

27


 

 

Statements of Cash Flows

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended October 31, 2009 (Unaudited)

 

BlackRock
MuniYield
Fund, Inc.
(MYD)

 

BlackRock
MuniYield
Quality
Fund, Inc.
(MQY)

 

BlackRock
MuniYield
Quality
Fund II, Inc.
(MQT)

 

Cash (Used for) Provided by Operating Activities

 

 

 

 

 

 

 

 

 

 

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

 

$

92,034,049

 

$

43,025,649

 

$

27,657,040

 

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

 

 

 

 

 

 

 

 

 

 

Decrease (increase) in interest receivable

 

 

(229,023

)

 

95,716

 

 

144,721

 

Increase in other assets

 

 

(27,010

)

 

(19,846

)

 

—

 

Increase in income receivable — affiliated

 

 

(38

)

 

(31

)

 

—

 

Increase in prepaid expenses

 

 

(1

)

 

(1

)

 

—

 

Increase in investment advisory fees payable

 

 

76,741

 

 

43,340

 

 

25,201

 

Decrease in interest expense and fees payable

 

 

(71,283

)

 

(138,326

)

 

(108,024

)

Increase (decrease) in other affiliates payable

 

 

1,120

 

 

(163

)

 

628

 

Decrease in other accrued expenses payable

 

 

(56,697

)

 

(71,104

)

 

(26,913

)

Increase in Officer’s and Directors’ fees payable

 

 

27,000

 

 

20,100

 

 

255

 

Net realized and unrealized gain

 

 

(69,119,445

)

 

(28,257,896

)

 

(17,924,498

)

Amortization of premium and discount on investments

 

 

595,933

 

 

(371,661

)

 

(793,460

)

Proceeds from sales of long-term investments

 

 

187,754,141

 

 

81,423,056

 

 

56,739,081

 

Purchases of long-term investments

 

 

(204,160,758

)

 

(91,462,752

)

 

(63,362,573

)

Net (purchases) proceeds of short-term securities

 

 

(15,296,831

)

 

3,707,616

 

 

2,699,247

 

 

 

Cash (used for) provided by operating activities

 

 

(8,472,102

)

 

7,993,697

 

 

5,050,705

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Provided by (Used for) Financing Activities

 

 

 

 

 

 

 

 

 

 

Payments on redemption of Preferred Shares

 

 

(20,050,000

)

 

(15,375,000

)

 

(11,675,000

)

Cash receipts from trust certificates

 

 

42,983,888

 

 

21,925,758

 

 

16,623,821

 

Cash payments from trust certificates

 

 

—

 

 

(2,200,000

)

 

(2,100,000

)

Cash dividends paid to Common Shareholders

 

 

(17,879,668

)

 

(11,698,512

)

 

(7,481,738

)

Cash dividends paid to Preferred Shareholders

 

 

(897,062

)

 

(680,441

)

 

(362,167

)

 

 

Cash provided by (used for) financing activities

 

 

4,157,158

 

 

(8,028,195

)

 

(4,995,084

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash

 

 

(4,314,944

)

 

(34,498

)

 

55,621

 

Cash at beginning of period

 

 

4,839,185

 

 

72,347

 

 

43,607

 

 

 

Cash at end of period

 

$

524,241

 

$

37,849

 

$

99,228

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Flow Information

 

 

 

 

 

 

 

 

 

 

Cash paid during the period for interest

 

$

370,086

 

$

486,272

 

$

328,485

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noncash Financing Activities

 

 

 

 

 

 

 

 

 

 

Capital shares issued in reinvestment of dividends paid to shareholders

 

$

471,303

 

 

—

 

 

—

 

 

 

 

 

 

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

 

 

 

See Notes to Financial Statements.

28

SEMI-ANNUAL REPORT

OCTOBER 31, 2009

 

 

 

Financial Highlights

BlackRock MuniYield Fund, Inc. (MYD)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six
Months
Ended
October 31,
2009
(Unaudited)

 

Period
November 1,
2008 to,
April 30,
2009

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended October 31,

 

 

 

 

 

 

 

 

 

2008

 

2007

 

2006

 

2005

 

2004

 

Per Share Operating Performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, beginning of period

 

$

11.53

 

$

10.70

 

$

14.36

 

$

14.98

 

$

14.48

 

$

14.31

 

$

13.85

 

 

 

Net investment income1

 

 

0.51

 

 

0.49

 

 

1.03

 

 

1.05

 

 

1.08

 

 

1.11

 

 

1.09

 

Net realized and unrealized gain (loss)

 

 

1.52

 

 

0.77

 

 

(3.62

)

 

(0.57

)

 

0.61

 

 

0.21

 

 

0.41

 

Dividends and distributions to Preferred Shareholders from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

(0.02

)

 

(0.04

)

 

(0.27

)

 

(0.28

)

 

(0.25

)

 

(0.16

)

 

(0.07

)

Net realized gain

 

 

—

 

 

—

 

 

—

 

 

—

 

 

(0.00

)2

 

—

 

 

—

 

 

 

Net increase from investment operations

 

 

2.01

 

 

1.22

 

 

(2.86

)

 

0.20

 

 

1.44

 

 

1.16

 

 

1.43

 

 

 

Dividends and distributions to Common Shareholders from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

(0.41

)

 

(0.39

)

 

(0.80

)

 

(0.82

)

 

(0.94

)

 

(0.99

)

 

(0.96

)

Net realized gain

 

 

—

 

 

—

 

 

—

 

 

—

 

 

(0.00

)2

 

—

 

 

—

 

 

 

Total dividends and distributions to Common Shareholders

 

 

(0.41

)

 

(0.39

)

 

(0.80

)

 

(0.82

)

 

(0.94

)

 

(0.99

)

 

(0.96

)

 

 

Capital charges with respect to issuance of Preferred Shares

 

 

—

 

 

—

 

 

—

 

 

—

 

 

0.00

3

 

(0.00

)2

 

(0.01

)

 

 

Net asset value, end of period

 

$

13.13

 

$

11.53

 

$

10.70

 

$

14.36

 

$

14.98

 

$

14.48

 

$

14.31

 

 

 

Market price, end of period

 

$

12.49

 

$

11.45

 

$

9.66

 

$

13.72

 

$

15.76

 

$

14.20

 

$

13.74

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Investment Return4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Based on net asset value

 

 

17.73

%5

 

11.76

%5

 

(20.69

)%

 

1.40

%

 

10.30

%

 

8.38

%

 

11.04

%

 

 

Based on market price

 

 

12.77

%5

 

22.93

%5

 

(25.06

)%

 

(7.91

)%

 

18.33

%

 

10.69

%

 

11.11

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios to Average Net Assets Applicable to Common Shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total expenses6

 

 

1.12

%7

 

1.25

%7

 

1.38

%

 

1.23

%

 

1.29

%

 

1.26

%

 

1.14

%

 

 

Total expenses after fees waived6

 

 

1.12

%7

 

1.25

%7

 

1.38

%

 

1.22

%

 

1.29

%

 

1.26

%

 

1.13

%

 

 

Total expenses after fees waived and excluding interest expense and fees6,8

 

 

1.01

%7

 

1.09

%7

 

1.06

%

 

1.01

%

 

1.01

%

 

1.02

%

 

0.97

%

 

 

Net investment income6

 

 

8.15

%7

 

9.20

%7

 

7.65

%

 

7.14

%

 

7.35

%

 

7.55

%

 

7.75

%

 

 

Dividends to Preferred Shareholders

 

 

0.31

%7

 

0.74

%7

 

1.99

%

 

1.88

%

 

1.71

%

 

1.10

%

 

0.51

%

 

 

Net investment income to Common Shareholders

 

 

7.84

%7

 

8.46

%7

 

5.66

%

 

5.26

%

 

5.64

%

 

6.45

%

 

7.24

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

596,626

 

$

523,590

 

$

484,945

 

$

647,574

 

$

672,367

 

$

644,825

 

$

636,019

 

 

 

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

 

$

251,450

 

$

271,500

 

$

271,500

 

$

343,000

 

$

343,000

 

$

343,000

 

$

343,000

 

 

 

Portfolio turnover

 

 

20

%

 

7

%

 

20

%

 

18

%

 

32

%

 

30

%

 

22

%

 

 

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

 

$

84,322

 

$

73,217

 

$

69,695

 

$

72,218

 

$

74,034

 

$

72,008

 

$

71,358

 

 

 

 

 

 

 

1

Based on average shares outstanding.

 

 

 

 

2

Amount is less than $(0.01) per share.

 

 

 

 

3

Amount is less than $0.01 per share.

 

 

 

 

4

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

 

 

 

 

5

Aggregate total investment return.

 

 

 

 

6

Do not reflect the effect of dividends to Preferred Shareholders.

 

 

 

 

7

Annualized.

 

 

 

 

8

Interest expense and fees relate to tender option bond trusts. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to tender option bond trusts.

 

 

 

See Notes to Financial Statements.

SEMI-ANNUAL REPORT

OCTOBER 31, 2009

29


 

 

 

Financial Highlights

BlackRock MuniYield Quality Fund, Inc. (MQY)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six
Months
Ended
October 31,
2009
(Unaudited)

 

Period
November 1,
2008 to
April 30,
2009

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended October 31,

 

 

 

 

 

 

 

 

 

2008

 

2007

 

2006

 

2005

 

2004

 

Per Share Operating Performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, beginning of period

 

$

13.27

 

$

11.68

 

$

14.88

 

$

15.32

 

$

15.02

 

$

15.54

 

$

15.36

 

 

 

Net investment income1

 

 

0.49

 

 

0.46

 

 

0.97

 

 

0.97

 

 

0.99

 

 

0.99

 

 

1.03

 

Net realized and unrealized gain (loss)

 

 

0.93

 

 

1.51

 

 

(3.12

)

 

(0.42

)

 

0.37

 

 

(0.39

)

 

0.19

 

Dividends and distributions to Preferred Shareholders from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

(0.02

)

 

(0.04

)

 

(0.27

)

 

(0.30

)

 

(0.27

)

 

(0.14

)

 

(0.07

)

Net realized gain

 

 

—

 

 

—

 

 

(0.03

)

 

—

 

 

—

 

 

—

 

 

—

 

 

 

Net increase (decrease) from investment operations

 

 

1.40

 

 

1.93

 

 

(2.45

)

 

0.25

 

 

1.09

 

 

0.46

 

 

1.15

 

 

 

Dividends and distributions to Common Shareholders from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

(0.40

)

 

(0.34

)

 

(0.68

)

 

(0.69

)

 

(0.79

)

 

(0.96

)

 

(0.97

)

Net realized gain

 

 

—

 

 

—

 

 

(0.07

)

 

—

 

 

—

 

 

—

 

 

—

 

 

 

Total dividends and distributions to Common Shareholders

 

 

(0.40

)

 

(0.34

)

 

(0.75

)

 

(0.69

)

 

(0.79

)

 

(0.96

)

 

(0.97

)

 

 

Capital charges with respect to issuance of Preferred Shares

 

 

—

 

 

—

 

 

—

 

 

—

 

 

(0.00

)2

 

(0.02

)

 

—

 

 

 

Net asset value, end of period

 

$

14.27

 

$

13.27

 

$

11.68

 

$

14.88

 

$

15.32

 

$

15.02

 

$

15.54

 

 

 

Market price, end of period

 

$

13.24

 

$

12.32

 

$

10.90

 

$

13.20

 

$

14.48

 

$

14.27

 

$

14.83

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Investment Return3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Based on net asset value

 

 

10.79

%4

 

17.07

%4

 

(16.79

)%

 

2.00

%

 

7.78

%

 

3.10

%

 

8.26

%

 

 

Based on market price

 

 

10.72

%4

 

16.47

%4

 

(12.47

)%

 

(4.26

)%

 

7.22

%

 

2.64

%

 

10.58

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios to Average Net Assets Applicable to Common Shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total expenses5

 

 

1.19

%6

 

1.43

%6

 

1.76

%

 

1.71

%

 

1.76

%

 

1.45

%

 

1.25

%

 

 

Total expenses after fees waived5

 

 

1.18

%6

 

1.42

%6

 

1.75

%

 

1.71

%

 

1.75

%

 

1.44

%

 

1.25

%

 

 

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

 

 

1.02

%6

 

1.13

%6

 

1.10

%

 

1.04

%

 

1.04

%

 

0.96

%

 

0.94

%

 

 

Net investment income5

 

 

6.96

%6

 

7.58

%6

 

6.89

%

 

6.46

%

 

6.61

%

 

6.46

%

 

6.74

%

 

 

Dividends to Preferred Shareholders

 

 

0.32

%6

 

0.69

%6

 

1.92

%

 

2.01

%

 

1.80

%

 

0.93

%

 

0.45

%

 

 

Net investment income to Common Shareholders

 

 

6.64

%6

 

6.89

%6

 

4.97

%

 

4.45

%

 

4.81

%

 

5.53

%

 

6.29

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

434,072

 

$

403,796

 

$

355,459

 

$

452,657

 

$

466,002

 

$

456,886

 

$

472,848

 

 

 

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

 

$

176,625

 

$

192,000

 

$

192,000

 

$

250,000

 

$

250,000

 

$

250,000

 

$

200,000

 

 

 

Portfolio turnover

 

 

12

%

 

13

%

 

20

%

 

24

%

 

33

%

 

29

%

 

28

%

 

 

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

 

$

86,443

 

$

77,582

 

$

71,318

 

$

70,282

 

$

71,614

 

$

70,701

 

$

84,114

 

 

 

 

 

 

 

1

Based on average shares outstanding.

 

 

 

 

2

Amount is less than $(0.01) per share.

 

 

 

 

3

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

 

 

 

 

4

Aggregate total investment return.

 

 

 

 

5

Do not reflect the effect of dividends to Preferred Shareholders.

 

 

 

 

6

Annualized.

 

 

 

 

7

Interest expense and fees relate to tender option bond trusts. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to tender option bond trusts.

 

 

 

See Notes to Financial Statements.

30

SEMI-ANNUAL REPORT

OCTOBER 31, 2009


 

 

 

Financial Highlights

BlackRock MuniYield Quality Fund II, Inc. (MQT)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six
Months
Ended
October 31,
2009
(Unaudited)

 

Period
November 1,
2008 to
April 30,
2009

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended October 31,

 

 

 

 

 

 

 

 

 

2008

 

2007

 

2006

 

2005

 

2004

 

Per Share Operating Performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, beginning of period

 

$

11.55

 

$

10.17

 

$

13.17

 

$

13.64

 

$

13.36

 

$

13.72

 

$

13.44

 

 

 

Net investment income1

 

 

0.44

 

 

0.41

 

 

0.86

 

 

0.86

 

 

0.86

 

 

0.89

 

 

0.94

 

Net realized and unrealized gain (loss)

 

 

0.80

 

 

1.31

 

 

(3.00

)

 

(0.46

)

 

0.37

 

 

(0.25

)

 

0.27

 

Dividends to Preferred Shareholders from net investment income

 

 

(0.02

)

 

(0.04

)

 

(0.26

)

 

(0.26

)

 

(0.24

)

 

(0.14

)

 

(0.07

)

 

 

Net increase (decrease) from investment operations

 

 

1.22

 

 

1.68

 

 

(2.40

)

 

0.14

 

 

0.99

 

 

0.50

 

 

1.14

 

 

 

Dividends to Common Shareholders from net investment income

 

 

(0.35

)

 

(0.30

)

 

(0.60

)

 

(0.61

)

 

(0.71

)

 

(0.85

)

 

(0.86

)

 

 

Capital charges with respect to issuance of Preferred Shares

 

 

—

 

 

—

 

 

—

 

 

—

 

 

0.00

2

 

(0.01

)

 

—

 

 

 

Net asset value, end of the period

 

$

12.42

 

$

11.55

 

$

10.17

 

$

13.17

 

$

13.64

 

$

13.36

 

$

13.72

 

 

 

Market price, end of the period

 

$

11.58

 

$

10.16

 

$

8.75

 

$

11.60

 

$

12.93

 

$

12.86

 

$

12.69

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Investment Return3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Based on net asset value

 

 

10.90

%4

 

17.27

%4

 

(18.42

)%

 

1.39

%

 

7.98

%

 

3.98

%

 

9.32

%

 

 

Based on market price

 

 

17.55

%4

 

19.90

%4

 

(20.31

)%

 

(5.79

)%

 

6.34

%

 

8.21

%

 

11.57

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios to Average Net Assets Applicable to Common Shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total expenses5

 

 

1.22

%6

 

1.52

%6

 

1.80

%

 

1.73

%

 

1.66

%

 

1.49

%

 

1.22

%

 

 

Total expenses after fees waived5

 

 

1.22

%6

 

1.52

%6

 

1.79

%

 

1.72

%

 

1.66

%

 

1.49

%

 

1.21

%

 

 

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

 

 

1.05

%6

 

1.18

%6

 

1.12

%

 

1.06

%

 

1.05

%

 

1.03

%

 

1.01

%

 

 

Net investment income5

 

 

7.19

%6

 

7.86

%6

 

6.96

%

 

6.39

%

 

6.44

%

 

6.51

%

 

7.00

%

 

 

Dividends to Preferred Shareholders

 

 

0.26

%6

 

0.68

%6

 

2.08

%

 

1.97

%

 

1.78

%

 

1.03

%

 

0.51

%

 

 

Net investment income to Common Shareholders

 

 

6.93

%6

 

7.18

%6

 

4.88

%

 

4.42

%

 

4.66

%

 

5.48

%

 

6.49

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

277,813

 

$

258,263

 

$

227,551

 

$

294,661

 

$

305,111

 

$

298,722

 

$

306,764

 

 

 

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

 

$

116,575

 

$

128,250

 

$

128,250

 

$

160,000

 

$

160,000

 

$

160,000

 

$

150,000

 

 

 

Portfolio turnover

 

 

13

%

 

9

%

 

17

%

 

20

%

 

37

%

 

29

%

 

27

%

 

 

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

 

$

84,583

 

$

75,349

 

$

69,420

 

$

71,065

 

$

72,693

 

$

71,676

 

$

76,139

 

 

 

 

 

 

 

1

Based on average shares outstanding.

 

 

 

 

2

Amount is less than $0.01 per share.

 

 

 

 

3

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

 

 

 

 

4

Aggregate total investment return.

 

 

 

 

5

Do not reflect the effect of dividends to Preferred Shareholders.

 

 

 

 

6

Annualized.

 

 

 

 

7

Interest expense and fees relate to tender option bond trusts. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to tender option bond trusts.

 

 

 

See Notes to Financial Statements.

SEMI-ANNUAL REPORT

OCTOBER 31, 2009

31

 

 

Notes to Financial Statements (Unaudited)

1. Organization and Significant Accounting Policies:

BlackRock MuniYield Fund, Inc. (“MYD”), BlackRock MuniYield Quality Fund, Inc. (“MQY”) and BlackRock MuniYield Quality Fund II, Inc. (“MQT”) (collectively the “Funds”) are registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as non-diversified, closed-end management investment companies. The Funds are organized as Maryland corporations. The Funds’ financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require the use of management accruals and estimates. Actual results may differ from these estimates. The Funds determine and make available for publication the net asset value of their Common Shares on a daily basis.

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

Valuation: 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 selected under the supervision of each Fund’s Board of Directors (the “Board”). In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from dealers, pricing matrixes, market transactions in comparable investments and information with respect to various relationships between investments. Financial futures contracts traded on exchanges are valued at their last sale price. Short-term securities with maturities less than 60 days may be valued at amortized cost, which approximates fair value. Investments in open-end investment companies are valued at net asset value each business day.

In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the market value of such investment or are not available, the investment will be valued by a method approved by each Fund’s Board as reflecting fair value (“Fair Value Assets”). When determining the price for Fair Value Assets, the investment advisor and/or the sub-advisor seeks to determine the price that each Fund might reasonably expect to receive from the current sale of that asset in an arm’s length transaction. Fair value determinations shall be based upon all available factors that the investment advisor and/or sub-advisor deems relevant. The pricing of all Fair Value Assets is subsequently reported to the Board or a committee thereof.

Forward Commitments and When-Issued Delayed Delivery Securities:

The Funds may purchase securities on a when-issued basis and may purchase or sell securities on a forward commitment basis. Settlement of such transactions normally occurs within a month or more after the purchase or sale commitment is made. The Funds may purchase securities under such conditions with the intention of actually acquiring them, but may enter into a separate agreement to sell the securities before the settlement date. Since the value of securities purchased may fluctuate prior to settlement, the Funds may be required to pay more at settlement than the security is worth. In addition, the purchaser is not entitled to any of the interest earned prior to settlement. When purchasing a security on a delayed delivery basis, the Funds assume the rights and risks of ownership of the security, including the risk of price and yield fluctuations. In the event of default by the counterparty, the Funds’ maximum amount of loss is the unrealized gain of the commitment, which is shown on the Schedules of Investments, if any.

Municipal Bonds Transferred to Tender Option Bond Trusts: The Funds leverage their assets through the use of tender option bond trusts (“TOBs”). A TOB is established by a third party sponsor forming a special purpose entity, into which one or more funds, or an agent on behalf of the funds, transfers municipal bonds. Other funds managed by the investment advisor may also contribute municipal bonds to a TOB into which a Fund has contributed bonds. A TOB typically issues two classes of beneficial interests: short-term floating rate certificates, which are sold to third party investors, and residual certificates (“TOB Residuals”), which are generally issued to the participating funds that made the transfer. The TOB Residuals held by a Fund include the right of the Fund (1) to cause the holders of a proportional share of the floating rate certificates to tender their certificates at par, and (2) to transfer, within seven days, a corresponding share of the municipal bonds from the TOB to the Funds. The TOB may also be terminated without the consent of the Fund upon the occurrence of certain events as defined in the TOB agreements. Such termination events may include the bankruptcy or default of the municipal bond, a substantial downgrade in credit quality of the municipal bond, the inability of the TOB to obtain quarterly or annual renewal of the liquidity support agreement, a substantial decline in market value of the municipal bond or the inability to remarket the short-term floating rate certificates to third party investors.

The cash received by the TOB from the sale of the short-term floating rate certificates, less transaction expenses, is paid to the Fund, which typically invests the cash in additional municipal bonds. Each Fund’s transfer of the municipal bonds to a TOB is accounted for as a secured borrowing, therefore the municipal bonds deposited into a TOB are presented in the Funds’ Schedules of Investments and the proceeds from the issuance of the short-term floating rate certificates are shown as trust certificates in the Statements of Assets and Liabilities.

Interest income from the underlying security is recorded by the Funds on an accrual basis. Interest expense incurred on the secured borrowing and other expenses related to remarketing, administration and trustee services to a TOB are reported as expenses of the Funds. The floating rate certificates have interest rates that generally reset weekly and their holders have the option to tender certificates to the TOB for redemption at par at each reset date. At October 31, 2009, the aggregate value of the underlying municipal bonds transferred to TOBs, the related liability for

 

 

 

32

SEMI-ANNUAL REPORT

OCTOBER 31, 2009


 

 

Notes to Financial Statements (continued)

trust certificates and the range of interest rates on the liability for trust certificates were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

Underlying
Municipal
Bonds
Transferred
to TOBs

 

Liability
for Trust
Certificates

 

Range of
Interest
Rates

 

MYD

 

$

223,617,381

 

$

113,120,964

 

 

0.20% – 0.49

%

MQY

 

$

188,103,305

 

$

96,057,344

 

 

0.24% – 0.85

%

MQT

 

$

115,209,702

 

$

59,079,871

 

 

0.21% – 0.85

%

For the six months ended October 31, 2009, the Funds’ average trust certificates outstanding and the daily weighted average interest rate, including fees, were as follows:

 

 

 

 

 

 

 

 

 

 

Average Trust
Certificates
Outstanding

 

Daily Weighted
Average
Interest Rate

 

MYD

 

$

90,042,524

 

 

0.33%

 

MQY

 

$

90,045,669

 

 

0.39%

 

MQT

 

$

54,704,402

 

 

0.40%

 

Should short-term interest rates rise, the Funds’ investments in TOBs may adversely affect the Funds’ investment income and distributions to Common Shareholders. Also, fluctuations in the market value of municipal bonds deposited into the TOB may adversely affect the Funds’ net asset value per share.

Zero-Coupon Bonds: Each Fund may invest in zero-coupon bonds, which are normally issued at a significant discount from face value and do not provide periodic interest payments. Zero-coupon bonds may experience greater volatility in market value than similar maturity debt obligations which provide regular interest payments.

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

Investment Transactions and Investment Income: For financial reporting purposes, investment transactions are recorded on the dates the transactions are entered into (the trade dates). Realized gains and losses on investment transactions are determined on the identified cost basis. Dividend income is recorded on the ex-dividend dates. Interest income is recognized on the accrual method. Each Fund amortizes all premiums and discounts on debt securities.

Dividends and Distributions: Dividends from net investment income are declared and paid monthly. Distributions of capital gains are recorded on the ex-dividend dates. Dividends and distributions to Preferred Shareholders are accrued and determined as described in Note 6.

Income Taxes: It is each Fund’s policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no federal income tax provision is required.

Each Fund files US federal and various state and local tax returns. No income tax returns are currently under examination. The statutes of limitations on the Funds’ US federal tax returns remain open for each of the three years ended October 31, 2008 and the period ended April 30, 2009. The statutes of limitations on each of the Funds’ state and local tax returns may remain open for an additional year depending upon the jurisdiction.

Recent Accounting Standards: In June 2009, amended guidance was issued by the Financial Accounting Standards Board for transfers of financial assets. This guidance is intended to improve the relevance, representational faithfulness and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement, if any, in transferred financial assets. The amended guidance is effective for financial statements for fiscal years and interim periods beginning after November 15, 2009. Earlier application is prohibited. The recognition and measurement provisions of this guidance must be applied to transfers occurring on or after the effective date. Additionally, the enhanced disclosure provisions of the amended guidance should be applied to transfers that occurred both before and after the effective date of this guidance. The impact of this guidance on the Funds’ financial statements and disclosures, if any, is currently being assessed.

 

 

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2009

33


 

 

Notes to Financial Statements (continued)

Deferred Compensation and BlackRock Closed-End Share Equivalent Investment Plan: Under the deferred compensation plan approved by each Fund’s Board, non-interested 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 other certain BlackRock Closed-End Funds selected by the Independent Directors. This has approximately the same economic effect for the Independent Directors as if the Independent Directors had invested the deferred amounts directly in other certain BlackRock Closed-End Funds.

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

Other: Expenses directly related to a Fund are charged to that Fund. Other operating expenses shared by several funds are pro rated among those funds on the basis of relative net assets or other appropriate methods.

2. Derivative Financial Instruments:

The Funds may engage in various portfolio investment strategies both to increase the returns of the Funds and to economically hedge, or protect, their exposure to interest rate risk. Losses may arise if the value of the contract decreases due to an unfavorable change in the value of the underlying security, or if the counterparty does not perform under the contract. To the extent amounts due to the Funds from their counterparties are not fully collateralized, contractually or otherwise, the Funds bear the risk of loss from counterparty non-performance. See Note 1 “Segregation and Collateralization” for information with respect to collateral practices. Counterparty risk related to exchange-traded financial futures contracts is minimal because of the protection against defaults provided by the exchange on which they trade.

Financial Futures Contracts: The Funds may purchase or sell financial futures contracts and options on financial futures contracts to gain exposure to, or economically hedge against, changes in interest rates (interest rate risk). Financial futures contracts are contracts for delayed delivery of securities at a specific future date and at a specific price or yield. Pursuant to the contract, the Funds agree to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as margin variation and are recognized by the Funds as unrealized gains or losses. When the contract is closed, the Funds record a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The use of financial futures transactions involves the risk of an imperfect correlation in the movements in the price of financial futures contracts, interest rates and the underlying assets.

 

 

 

 

 

Derivative Instruments Categorized by Risk Exposure:

 

 

 

 

 

MYD

 

 

 

 

 

The Effect of Derivative Instruments on the Statements of Operations
Six Months Ended October 31, 2009*

Net Realized Loss From

 

 

Financial Futures
Contracts

 

Interest rate contracts

 

$

(265,456

)

 

 

 

 

*

As of October 31, 2009, there were no financial futures contracts outstanding. During the six months ended October 31, 2009, the Fund had limited activity in these transactions.

 

 

 

34

SEMI-ANNUAL REPORT

OCTOBER 31, 2009


 

 

Notes to Financial Statements (continued)

3. Investment Advisory Agreement and Other Transactions with Affiliates:

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

Each Fund entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the “Manager”), the Funds’ investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services.

The Manager is responsible for the management of each Fund’s portfolio and provides the necessary personnel, facilities, equipment and certain other services necessary to the operations of each Fund. For such services, each Fund pays a monthly fee at an annual rate of 0.50% of the respective Fund’s average daily net assets. Average daily net assets is the average daily value of the Funds’ total assets minus the sum of its accrued liabilities.

The Manager has voluntarily agreed to waive its advisory fee by the amount of investment advisory fees the Funds pay to the Manager indirectly through its investment in affiliated money market funds. This amount is included in fees waived by advisor in the Statements of Operations.

The Manager has entered into a separate sub-advisory agreement with BlackRock Investment Management, LLC (“BIM”), an affiliate of the Manager, under which the Manager pays BIM, for services it provides, a monthly fee that is a percentage of the investment advisory fee paid by the Funds to the Manager.

For the six months ended October 31, 2009, the Funds reimbursed the Manager for certain accounting services, which are included in accounting services in the Statements of Operations:

 

 

 

 

 

 

 

Reimbursement

 

MYD

 

 

$9,252

 

MQY

 

 

$6,180

 

MQT

 

 

$4,640

 

Certain officers and/or directors of the Funds are officers and/or directors of BlackRock or its affiliates. The Funds reimburse the Manager for compensation paid to the Funds’ Chief Compliance Officer.

4. Investments:

Purchases and sales of investments, excluding short term securities, for the six months ended October 31, 2009 were as follows:

 

 

 

 

 

 

 

 

 

 

Purchases

 

Sales

 

MYD

 

$

235,299,753

 

$

182,911,998

 

MQY

 

$

91,892,295

 

$

81,866,758

 

MQT

 

$

65,525,018

 

$

54,168,695

 

5. Market and Credit Risk:

Many municipalities insure repayment of their bonds, which reduces the risk of loss due to issuer default. The market value of these bonds may fluctuate for other reasons, including market perception of the value of such insurance, and there is no guarantee that the insurer will meet its obligation.

In the normal course of business, the Funds invest in securities and enter into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (credit risk). The value of securities held by the Funds may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Funds; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to credit risk, the Funds may be exposed to counterparty risk, or the risk that an entity with which the Funds have unsettled or open transactions may default. Financial assets, which potentially expose the Funds to credit and counterparty risks, consist principally of investments and cash due from counterparties. The extent of the Funds’ exposure to credit and counterparty risks with respect to these financial assets is approximated by their value recorded in the Funds’ Statements of Assets and Liabilities, less any collateral held by the Funds.

 

 

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2009

35

 

Notes to Financial Statements (continued)

6. 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 is $0.05 except MQT Series D, which is $0.10. Each Board is authorized, however, to reclassify any unissued shares of Common Shares without approval of Common Shareholders. In this regard, the Boards have reclassified 13,720 shares of MYD, 10,000 shares of MQY and 6,400 shares of MQT of unissued Common Shares as Preferred Shares.

Common Shares

Shares issued and outstanding for MYD during the six months ended October 31, 2009, the period ended April 30, 2009 and the year ended October 31, 2008 increased by the following amounts as a result of dividend reinvestment:

 

 

 

 

 

 

 

 

 

 

Six Months
Ended
October 31,
2009

 

Period
November 1, 2008
to April 30,
2009

 

Year Ended
October 31,
2008

 

MYD

 

40,375

 

73,715

 

210,884

 

Shares issued and outstanding remained constant for MQY and MQT during the six months ended October 31, 2009, the period ended April 30, 2009 and the year ended October 31, 2008.

Preferred Shares

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

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

The holders of Preferred Shares have voting rights equal to the holders of Common Shares (one vote per share) and will vote together with holders of Common Shares (one vote per share) as a single class. However, the holders of Preferred Shares, voting as a separate class, are also entitled to elect two Directors for each Fund. In addition, the 1940 Act requires that along with approval by shareholders that might otherwise be required, the approval of the holders of a majority of any outstanding Preferred Shares, voting separately as a class would be required to (a) adopt any plan of reorganization that would adversely affect the Preferred Shares, (b) change a Fund’s sub-classification as a closed-end investment company or change its fundamental investment restrictions or (c) change its business so as to cease to be an investment company.

The Funds had the following series of Preferred Shares outstanding, effective yields and reset frequency as of October 31, 2009:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series

 

Preferred
Shares

 

Effective
Yield

 

Reset
Frequency Days

 

MYD

 

A

 

1,320

 

 

0.46%

 

28

 

 

 

 

B

 

1,320

 

 

0.43%

 

28

 

 

 

 

C

 

1,320

 

 

0.40%

 

28

 

 

 

 

D

 

1,320

 

 

0.44%

 

28

 

 

 

 

E

 

2,052

 

 

0.43%

 

7

 

 

 

 

F

 

1,260

 

 

0.43%

 

7

 

 

 

 

G

 

1,466

 

 

1.49%

 

7

 

 

MQY

 

A

 

1,413

 

 

0.43%

 

28

 

 

 

 

B

 

1,413

 

 

0.43%

 

7

 

 

 

 

C

 

1,413

 

 

0.40%

 

28

 

 

 

 

D

 

1,413

 

 

0.41%

 

7

 

 

 

 

E

 

1,413

 

 

1.49%

 

7

 

 

MQT

 

A

 

1,457

 

 

0.43%

 

28

 

 

 

 

B

 

1,457

 

 

0.50%

 

28

 

 

 

 

C

 

1,457

 

 

0.43%

 

7

 

 

 

 

D

 

292

 

 

1.49%

 

7

 

 

Dividends on seven-day and 28-day Preferred Shares are cumulative at a rate which is reset every seven or 28 days, respectively, based on the results of an auction. If the Preferred Shares fail to clear the auction on an auction date, each Fund is required to pay the maximum applicable rate on the Preferred Shares to holders of such shares for successive dividend periods until such time as the shares are successfully auctioned. The maximum applicable rate on all series of Preferred Shares (except MYD Series G, MQY Series E and MQT Series D) is the higher of 110% of the AA commercial paper rate or 110% of 90% of the Kenny S&P 30-day High Grade Index rate divided by 1.00 minus the marginal tax rate. The maximum applicable rate on the Preferred Shares of MYD Series G, MQY Series E and MQT Series D is the higher of 110% of the Telerate/BBA LIBOR or

 

 

 

36

SEMI-ANNUAL REPORT

OCTOBER 31, 2009


 

Notes to Financial Statements (continued)

110% of 90% of the Kenney S&P 30-day High Grade Index rate divided by 1.00 minus the marginal tax rate. The low, high and average dividend rates on the Preferred Shares for each Fund for the six months ended October 31, 2009 were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

Series

 

Low

 

High

 

Average

 

MYD

 

A

 

0.44%

 

0.72%

 

0.53%

 

 

 

B

 

0.40%

 

0.75%

 

0.51%

 

 

 

C

 

0.40%

 

0.79%

 

0.55%

 

 

 

D

 

0.44%

 

0.79%

 

0.53%

 

 

 

E

 

0.40%

 

0.79%

 

0.51%

 

 

 

F

 

0.38%

 

0.79%

 

0.51%

 

 

 

G

 

1.42%

 

1.79%

 

1.54%

 

MQY

 

A

 

0.43%

 

0.72%

 

0.53%

 

 

 

B

 

0.40%

 

0.79%

 

0.50%

 

 

 

C

 

0.40%

 

0.79%

 

0.52%

 

 

 

D

 

0.35%

 

0.76%

 

0.48%

 

 

 

E

 

1.42%

 

1.79%

 

1.55%

 

MQT

 

A

 

0.43%

 

0.72%

 

0.50%

 

 

 

B

 

0.35%

 

0.73%

 

0.49%

 

 

 

C

 

0.35%

 

0.76%

 

0.50%

 

 

 

D

 

1.46%

 

1.82%

 

1.56%

 

Since February 13, 2008, the Preferred Shares of the Funds failed to clear any of their auctions. As a result, the Preferred Shares dividend rates were reset to the maximum applicable rate, which ranged from 0.35% to 1.82% for the six months ended October 31, 2009. A failed auction is not an event of default for the Funds but it has a negative impact on the liquidity of Preferred Shares. A failed auction occurs when there are more sellers of a fund’s auction rate preferred shares than buyers. It is impossible to predict how long this imbalance will last. A successful auction for the Funds’ Preferred Shares may not occur for some time, if ever, and even if liquidity does resume, Preferred Shareholders may not have the ability to sell the Preferred Shares at their liquidation preference.

The Funds may not declare dividends or make other distributions on Common Shares or purchase any such shares if, at the time of the declaration, distribution or purchase, asset coverage with respect to the outstanding Preferred Shares is less than 200%.

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

During the six months ended October 31, 2009, the Funds announced the following redemptions of Preferred Shares at a price of $25,000 per share plus any accrued and unpaid dividends through the redemption date:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series

 

Redemption
Date

 

Shares
Redeemed

 

Aggregate
Principal

 

MYD

 

A

 

7/29/09

 

105

 

 

$

2,625,000

 

 

 

B

 

7/08/09

 

105

 

 

$

2,625,000

 

 

 

C

 

7/22/09

 

105

 

 

$

2,625,000

 

 

 

D

 

7/15/09

 

105

 

 

$

2,625,000

 

 

 

E

 

7/08/09

 

164

 

 

$

4,100,000

 

 

 

F

 

7/09/09

 

101

 

 

$

2,525,000

 

 

 

G

 

7/06/09

 

117

 

 

$

2,925,000

 

MQY

 

A

 

8/04/09

 

123

 

 

$

3,075,000

 

 

 

B

 

7/14/09

 

123

 

 

$

3,075,000

 

 

 

C

 

7/17/09

 

123

 

 

$

3,075,000

 

 

 

D

 

7/10/09

 

123

 

 

$

3,075,000

 

 

 

E

 

7/06/09

 

123

 

 

$

3,075,000

 

MQT

 

A

 

8/03/09

 

146

 

 

$

3,650,000

 

 

 

B

 

7/13/09

 

146

 

 

$

3,650,000

 

 

 

C

 

7/13/09

 

146

 

 

$

3,650,000

 

 

 

D

 

7/07/09

 

29

 

 

$

725,000

 

During the year ended October 31, 2008, the Funds announced the following redemptions of Preferred Shares at a price of $25,000 per share plus any accrued and unpaid dividends through the redemption date:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series

 

Redemption
Date

 

Shares
Redeemed

 

Aggregate
Principal

 

MYD

 

A

 

7/02/2008

 

375

 

 

$

9,375,000

 

 

 

B

 

7/09/2008

 

375

 

 

$

9,375,000

 

 

 

C

 

6/25/2008

 

375

 

 

$

9,375,000

 

 

 

D

 

6/18/2008

 

375

 

 

$

9,375,000

 

 

 

E

 

6/18/2008

 

584

 

 

$

14,600,000

 

 

 

F

 

6/26/2008

 

359

 

 

$

8,975,000

 

 

 

G

 

6/23/2008

 

417

 

 

$

10,425,000

 

MQY

 

A

 

7/08/2008

 

464

 

 

$

11,600,000

 

 

 

B

 

6/24/2008

 

464

 

 

$

11,600,000

 

 

 

C

 

7/18/2008

 

464

 

 

$

11,600,000

 

 

 

D

 

6/27/2008

 

464

 

 

$

11,600,000

 

 

 

E

 

6/23/2008

 

464

 

 

$

11,600,000

 

MQT

 

A

 

7/07/2008

 

397

 

 

$

9,925,000

 

 

 

B

 

7/14/2008

 

397

 

 

$

9,925,000

 

 

 

C

 

6/30/2008

 

397

 

 

$

9,925,000

 

 

 

D

 

6/24/2008

 

79

 

 

$

1,975,000

 

The Funds financed the Preferred Share redemptions with cash received from TOB transactions.

Preferred Shares issued and outstanding for the period November 1, 2008 to April 30, 2009 remained constant.

 

 

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2009

37


 

Notes to Financial Statements (concluded)

7. Capital Loss Carryforwards:

As of April 30, 2009, the Funds had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates:

 

 

 

 

 

 

 

 

 

 

 

Expires April 30,

 

MYD

 

MQY

 

MQT

 

2010

 

$

189,274

 

 

—

 

$

1,105,212

 

2012

 

 

—

 

 

—

 

 

5,561,802

 

2016

 

 

11,743,926

 

$

2,229,309

 

 

493,401

 

2017

 

 

4,065,755

 

 

704,337

 

 

3,726,056

 

 

 

Total

 

$

15,998,955

 

$

2,933,646

 

$

10,886,471

 

 

 

8. Subsequent Events:

Management’s evaluation of the impact of all subsequent events on the Funds’ financial statements was completed through December 23, 2009, the date the financial statements were issued and the following items were noted:

Each Fund paid a net investment income dividend on December 1, 2009 to Common Shareholders of record on November 13, 2009 as follows:

 

 

 

 

 

 

Common
Dividend
Per Share

 

MYD

 

$0.0690

 

MQY

 

$0.0695

 

MQT

 

$0.0620

 

The dividends declared on Preferred Shares for the period November 1, 2009 to November 30, 2009 were as follows:

 

 

 

 

 

 

 

 

 

Series

 

Dividends
Declared

 

MYD

 

A

 

$

104,555

 

 

 

B

 

$

100,552

 

 

 

C

 

$

106,104

 

 

 

D

 

$

101,855

 

 

 

E

 

$

154,876

 

 

 

F

 

$

94,456

 

 

 

G

 

$

341,076

 

MQY

 

A

 

$

12,167

 

 

 

B

 

$

11,446

 

 

 

C

 

$

9,995

 

 

 

D

 

$

11,550

 

 

 

E

 

$

41,299

 

MQT

 

A

 

$

101,707

 

 

 

B

 

$

121,816

 

 

 

C

 

$

109,164

 

 

 

D

 

$

68,471

 

 

 

 

38

SEMI-ANNUAL REPORT

OCTOBER 31, 2009

 

 

Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements

The Board of Directors (each, a “Board” and, collectively, the “Boards,” and the members of which are referred to as “Board Members”) of each of BlackRock MuniYield Fund, Inc. (“MYD”), BlackRock MuniYield Quality Fund, Inc. (“MQY”) and BlackRock MuniYield Quality Fund II, Inc. (“MQT,” and together with MYD and MQY, each a “Fund,” and, collectively, the “Funds”) met on April 14, 2009 and May 28 – 29, 2009 to consider the approval of its respective Fund’s investment advisory agreement (each, an “Advisory Agreement”) with BlackRock Advisors, LLC (the “Manager”), each Fund’s investment advisor. Each Board also considered the approval of the sub-advisory agreement (each, a “Sub-Advisory Agreement”) between its respective Fund, the Manager and BlackRock Investment Management, LLC (the “Sub-Advisor”).The Manager and the Sub-Advisor are referred to herein as “BlackRock.” The Advisory Agreements and the Sub-Advisory Agreements are referred to herein as the “Agreements.” Unless otherwise indicated, references to actions taken by the “Board” or the “Boards” shall mean each Board acting independently with respect to its respective Fund.

Activities and Composition of the Boards

Each Board consists of twelve individuals, ten of whom are not “interested persons” of the Funds as defined in the Investment Company Act of 1940, as amended (the “1940 Act”) (the “Independent Board Members”). The Board Members of each Fund are responsible for the oversight of the operations of such Fund and perform the various duties imposed on the directors of investment companies by the 1940 Act. The Independent Board Members have retained independent legal counsel to assist them in connection with their duties. The Chairman of each Board is an Independent Board Member. Each Board has established five standing committees: an Audit Committee, a Governance and Nominating Committee, a Compliance Committee, a Performance Oversight Committee and an Executive Committee, each of which is composed of Independent Board Members (except for the Executive Committee, which has one interested Board Member) and is chaired by an Independent Board Member. In addition, each Board has established an Ad Hoc Committee on Auction Market Preferred Shares.

The Agreements

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

Throughout the year, the Boards, acting directly and through their committees, consider at each of their meetings factors that are relevant to their annual consideration of the renewal of the Agreements, including the services and support provided by BlackRock to the Funds and their shareholders. Among the matters the Boards considered were: (a) investment performance for one-, three- and five-year periods, as applicable, against peer funds, and applicable benchmarks, if any, as well as senior management and portfolio managers’ analysis of the reasons for any out performance or underperformance against each Fund’s peers; (b) fees, including advisory and other amounts paid to BlackRock and its affiliates by the Funds for services such as call center and fund accounting; (c) the Funds operating expenses; (d) the resources devoted to, and compliance reports relating to, the Funds’ investment objectives, policies and restrictions; (e) the Funds’ compliance with their Code of Ethics and compliance policies and procedures; (f) the nature, cost and character of non-investment management services provided by BlackRock and its affiliates; (g) BlackRock’s and other service providers’ internal controls; (h) BlackRock’s implementation of the proxy voting policies approved by the Boards; (i) execution quality of portfolio transactions; (j) BlackRock’s implementation of the Funds’ valuation and liquidity procedures; and (k) periodic updates on BlackRock’s business.

Board Considerations in Approving the Agreements

The Approval Process: Prior to the April 14, 2009 meeting, each Board requested and received materials specifically relating to the Agreements. Each Board is engaged in an ongoing process with BlackRock to continuously review the nature and scope of the information provided to better assist their deliberations. The materials provided in connection with the April meeting included (a) information independently compiled and prepared by Lipper, Inc. (“Lipper”) on Fund fees and expenses, and the investment performance of each Fund as compared with a peer group of funds as determined by Lipper and a customized peer group selected by BlackRock (collectively, “Peers”); (b) information on the profitability of the Agreements to BlackRock and a discussion of fall-out benefits to BlackRock and its affiliates and significant shareholders; (c) a general analysis provided by BlackRock concerning investment advisory fees charged to other clients, such as institutional clients and open-end funds, under similar investment mandates, as well as the performance of such other clients; (d) the impact of economies of scale; (e) a summary of aggregate amounts paid by each Fund to BlackRock; and (f) an internal comparison of management fees classified by Lipper, if applicable.

At an in-person meeting held on April 14, 2009, each Board reviewed materials relating to its consideration of the Agreements. As a result of the discussions that occurred during the April 14, 2009 meeting, the Boards presented BlackRock with questions and requests for additional

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2009

39


 

 

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

information and BlackRock responded to these requests with additional written information in advance of the May 28 – 29, 2009 Board meeting.

At an in-person meeting held on May 28 – 29, 2009, each Fund’s Board, including the Independent Board Members, unanimously approved the continuation of the Advisory Agreement between the Manager and such Fund and the Sub-Advisory Agreement between such Fund, the Manager and the Sub-Advisor, each for a one-year term ending June 30, 2010. The Boards considered all factors they believed relevant with respect to the Funds, including, among other factors: (a) the nature, extent and quality of the services provided by BlackRock; (b) the investment performance of the Funds and BlackRock portfolio management; (c) the advisory fee and the cost of the services and profits to be realized by BlackRock and certain affiliates from their relationship with the Funds; (d) economies of scale; and (e) other factors.

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

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

Each Board considered, among other factors, the number, education and experience of BlackRock’s investment personnel generally and its respective Fund’s portfolio management team, investments by portfolio managers in the funds they manage, BlackRock’s portfolio trading capabilities, BlackRock’s use of technology, BlackRock’s commitment to compliance and BlackRock’s approach to training and retaining portfolio managers and other research, advisory and management personnel. Each Board also reviewed a general description of BlackRock’s compensation structure with respect to its respective Fund’s portfolio management team and BlackRock’s ability to attract and retain high-quality talent.

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

B. The Investment Performance of the Funds and BlackRock: Each Board, including its Independent Board Members, also reviewed and considered the performance history of its respective Fund. In preparation for the April 14, 2009 meeting, the Boards were provided with reports, independently prepared by Lipper, which included a comprehensive analysis of each Fund’s performance. The Boards also reviewed a narrative and statistical analysis of the Lipper data that was prepared by BlackRock, which analyzed various factors that affect Lipper’s rankings. In connection with its review, each Board received and reviewed information regarding the investment performance of its respective Fund as compared to a representative group of similar funds as determined by Lipper and to all funds in such Fund’s applicable Lipper category and customized peer group selected by BlackRock. Each Board was provided with a description of the methodology used by Lipper to select peer funds. Each Board regularly reviews the performance of its respective Fund throughout the year.

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

 

 

 

40

SEMI-ANNUAL REPORT

OCTOBER 31, 2009


 

 

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

The Board of each of MQY and MQT noted that MQY and MQT performed below the median of their respective customized Lipper peer group composite in the one- and three-year periods reported, and MQY and MQT performed above the median of their respective customized Lipper peer group composite in the five-year period reported. The Board of each of MQY and MQT, and BlackRock reviewed the reasons for MQY’s and MQT’s respective underperformance during these periods compared with their respective Peers. The Board of each of MQY and MQT was informed that, among other things, over-exposure to the long-end of the municipal curve, an overweight on insured bonds with weaker underlying credits and the underperformance of municipal cash relative to MQY’s and MQT’s respective Bond Market Association hedges all negatively impacted MQY’s and MQT’s respective performance.

For MQY and MQT, the Board of each respective Fund and BlackRock discussed BlackRock’s commitment to providing the resources necessary to assist the portfolio managers and to improve each such Fund’s performance.

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

The Boards received and reviewed statements relating to BlackRock’s financial condition and profitability with respect to the services it provided the Funds. The Boards were also provided with a profitability analysis that detailed the revenues earned and the expenses incurred by BlackRock for services provided to the Funds. The Boards reviewed BlackRock’s profitability with respect to the Funds and other funds the Boards currently oversee for the year ended December 31, 2008 compared to available aggregate profitability data provided for the year ended December 31, 2007. The Boards reviewed BlackRock’s profitability with respect to other fund complexes managed by the Manager and/or its affiliates. The Boards reviewed BlackRock’s assumptions and methodology of allocating expenses in the profitability analysis, noting the inherent limitations in allocating costs among various advisory products. The Boards recognized that profitability may be affected by numerous factors including, among other things, fee waivers by the Manager, the types of funds managed, expense allocations and business mix, and therefore comparability of profitability is somewhat limited.

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

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

Each Board noted that its respective Fund paid contractual management fees, which do not take into account any expense reimbursement or fee waivers, lower than or equal to the median contractual management fees paid by such Fund’s Peers.

D. Economies of Scale: Each Board, including its Independent Board Members, considered the extent to which economies of scale might be realized as the assets of its respective Fund increase and whether there should be changes in the advisory fee rate or structure in order to enable such Fund to participate in these economies of scale, for example through the use of breakpoints in the advisory fee based upon the assets of such Fund. The Boards considered that the funds in the BlackRock fund complex share some common resources and, as a result, an increase in the overall size of the complex could permit each fund to incur lower expenses than it would otherwise as a stand-alone entity. The Boards also considered BlackRock’s overall operations and its efforts to expand the scale of, and improve the quality of, its operations.

The Boards noted that most closed-end fund complexes do not have fund level breakpoints because closed-end funds generally do not experience substantial growth after the initial public offering and each fund is managed independently, consistent with its own investment objectives. The Boards noted that only one closed-end fund in the Fund Complex has

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2009

41


 

 

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

breakpoints in its fee structure. Information provided by Lipper also revealed that only one closed-end fund complex used a complex-level breakpoint structure.

E. Other Factors: The Boards also took into account other ancillary or “fallout” benefits that BlackRock or its affiliates and significant shareholders may derive from their relationship with the Funds, both tangible and intangible, such as BlackRock’s ability to leverage its investment professionals who manage other portfolios, an increase in BlackRock’s profile in the investment advisory community, and the engagement of BlackRock’s affiliates and significant shareholders as service providers to the Funds, including for administrative and distribution services. The Boards also noted that BlackRock may use third-party research obtained by soft dollars generated by certain mutual fund transactions to assist itself in managing all or a number of its other client accounts.

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

Conclusion

Each Board, including its Independent Board Members, unanimously approved the continuation of the Advisory Agreement between its respective Fund and the Manager for a one-year term ending June 30, 2010 and the Sub-Advisory Agreement between such Fund, the Manager and the Sub-Advisor for a one-year term ending June 30, 2010. Based upon its evaluation of all these factors in their totality, each Board, including its Independent Board Members, was satisfied that the terms of the Agreements were fair and reasonable and in the best interest of its respective Fund and its shareholders. In arriving at a decision to approve the Agreements, each Board did not identify any single factor or group of factors as all-important or controlling, but considered all factors together, and different Board Members may have attributed different weights to the various factors considered. The Independent Board Members were also assisted by the advice of independent legal counsel in making this determination. The contractual fee arrangements for each Fund reflect the results of several years of review by such Fund’s Board Members and predecessor Board Members, and discussions between such Board Members (and predecessor Board Members) and BlackRock. Certain aspects of the arrangements may be the subject of more attention in some years than in others, and the Board Members’ conclusions may be based in part on their consideration of these arrangements in prior years.

 

 

 

42

SEMI-ANNUAL REPORT

OCTOBER 31, 2009


 

 

Officers and Directors

 

Richard E. Cavanagh, Chairman of the Board and Director

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

G. Nicholas Beckwith, III, Director

Richard S. Davis, Director

Kent Dixon, Director and Member of the Audit Committee

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

Kathleen F. Feldstein, Director

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

Henry Gabbay, Director

Jerold B. Harris, Director

R. Glenn Hubbard, Director

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

Anne F. Ackerley, President and Chief Executive Officer

Brendan Kyne, Vice President

Neal J. Andrews, Chief Financial Officer

Jay M. Fife, Treasurer

Brian P. Kindelan, Chief Compliance Officer

Howard B. Surloff, Secretary

 

Investment Advisor

BlackRock Advisors, LLC

Wilmington, DE 19809

 

Sub-Advisor

BlackRock Investment Management, LLC

Plainsboro, NJ 08536

 

Custodians

The Bank of New York Mellon1

New York, NY 10286

State Street Bank and Trust Company2

Boston, MA 02101

 

Transfer Agent

Common Shares:

BNY Mellon Shareowner Services1

Jersey City, NJ 07310

Computershare Trust Company, N.A.2

Providence, RI 02940

 

Auction Agent

Preferred Shares:

The Bank of New York Mellon

New York, NY 10286

 

Accounting Agent

State Street Bank and Trust Company

Princeton, NJ 08540

 

Independent Registered Public Accounting Firm

Deloitte & Touche LLP

Princeton, NJ 08540

 

Legal Counsel

Skadden, Arps, Slate, Meagher & Flom LLP

New York, NY 10036

 

Address of the Funds

100 Bellevue Parkway

Wilmington, DE 19809

 

1 For MYD and MQT.

2 For MQY.

 

 

 

 

 

 

 

Effective July 31, 2009, Donald C. Burke, President and Chief Executive Officer of the Funds retired. The Funds’ Board wishes Mr. Burke well in his retirement.

Effective August 1, 2009, Anne F. Ackerley became President and Chief Executive Officer of the Funds, and Brendan Kyne became Vice President of the Funds.

 

 

 

 

 

 

 

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2009

43


 

 

Additional Information

 

Proxy Results

The Annual Meeting of Shareholders was held on August 26, 2009 for shareholders of record on June 29, 2009 to elect director nominees of each Fund:

Approved the Directors as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

G. Nicholas Beckwith, III

 

Richard E. Cavanagh

 

Richard S. Davis

 

 

 

 

 

 

 

 

 

Votes

 

 

 

Votes

 

 

 

Votes

 

 

 

Votes For

 

Withheld

 

Votes For

 

Withheld

 

Votes For

 

Withheld

 

MYD

 

40,884,444

 

1,697,703

 

40,840,393

 

1,741,754

 

40,927,283

 

1,654,864

 

MQY

 

27,197,093

 

1,341,425

 

27,241,381

 

1,297,137

 

27,058,284

 

1,480,234

 

MQT

 

19,188,366

 

928,274

 

19,266,647

 

849,993

 

18,939,615

 

1,177,025

 

 

 

 

 

 

 

 

 

 

 

Kent Dixon

 

Frank J. Fabozzi

 

Kathleen F. Feldstein

 

 

 

 

 

 

 

 

 

Votes

 

 

 

Votes

 

 

 

Votes

 

 

 

Votes For

 

Withheld

 

Votes For

 

Withheld

 

Votes For

 

Withheld

 

MYD

 

40,811,518

 

1,770,629

 

6,225

1

42

1

40,802,610

 

1,779,537

 

MQY

 

27,170,870

 

1,367,648

 

5,621

1

9

1

27,215,777

 

1,322,741

 

MQT

 

19,165,957

 

950,683

 

2,910

1

52

1

19,238,979

 

877,661

 

 

 

 

 

 

 

 

 

 

 

James T. Flynn

 

Henry Gabbay

 

Jerrold B. Harris

 

 

 

 

 

 

 

 

 

Votes

 

 

 

Votes

 

 

 

Votes

 

 

 

Votes For

 

Withheld

 

Votes For

 

Withheld

 

Votes For

 

Withheld

 

MYD

 

40,897,638

 

1,684,509

 

40,851,314

 

1,730,833

 

40,917,445

 

1,664,702

 

MQY

 

27,250,773

 

1,287,745

 

27,014,800

 

1,523,718

 

27,260,081

 

1,278,437

 

MQT

 

19,189,997

 

926,643

 

18,942,079

 

1,174,561

 

19,232,337

 

884,303

 

 

 

 

 

 

 

 

 

 

 

R. Glenn Hubbard

 

W. Carl Kester

 

Karen P. Robards

 

 

 

 

 

 

 

 

 

Votes

 

 

 

Votes

 

 

 

Votes

 

 

 

Votes For

 

Withheld

 

Votes For

 

Withheld

 

Votes For

 

Withheld

 

MYD

 

40,844,994

 

1,737,153

 

6,225

1

42

1

40,746,563

 

1,835,584

 

MQY

 

27,174,266

 

1,364,252

 

5,621

1

9

1

27,188,247

 

1,350,271

 

MQT

 

19,305,391

 

811,249

 

2,910

1

52

1

19,221,492

 

895,148

 

1     Voted on by holders of Preferred Shares only.

 

Dividend Policy

The Funds’ dividend policy is to distribute all or a portion of their net investment income to their shareholders on a monthly basis. In order to provide shareholders with a more stable level of dividend distributions, the Funds may at times pay out less than the entire amount of net investment income earned in any particular month and may at times in any particular month pay out such accumulated but undistributed income in addition to net investment income earned in that month. As a result, the dividends paid by the Funds for any particular month may be more or less than the amount of net investment income earned by the Funds during such month. The Funds’ current accumulated but undistributed net investment income, if any, is disclosed in the Statement of Assets and Liabilities, which comprises part of the financial information included in this report.

 

 

 

44

SEMI-ANNUAL REPORT

OCTOBER 31, 2009


 

 

Additional Information (continued)

 

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 were not approved by the shareholders or in the principal risk factors associated with investment in the Funds. There have been no changes in the persons who are primarily responsible for the day-to-day management of the Funds’ portfolio.

Quarterly performance, semi-annual and annual reports and other information regarding the Funds may be found on BlackRock’s website, which can be accessed at http://www.blackrock.com. This reference to BlackRock’s website is intended to allow investors public access to information regarding the Funds and does not, and is not intended to, incorporate BlackRock’s website into this report.

Electronic Delivery

Electronic copies of most financial reports are available on the Funds’ websites or shareholders can sign up for e-mail notifications of quarterly statements, annual and semi-annual reports by enrolling in the Funds’ electronic delivery program.

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

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

Householding

The Funds will mail only one copy of shareholder documents, including annual and semi-annual reports and proxy statements, to shareholders with multiple accounts at the same address. This practice is commonly called “householding” and it 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 contact the Funds at (800) 441-7762.

Availability of Quarterly Schedule of Investments

Each Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the SEC’s website at http://www.sec.gov and may also be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling (202) 551-8090. Each Fund’s Form N-Q may also be obtained upon request and without charge by calling (800) 441-7762.

Availability of Proxy Voting Policies and Procedures

A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available (1) without charge, upon request, by calling toll-free (800) 441-7762; (2) at 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 www.blackrock.com or by calling (800) 441-7762 and (2) on the SEC’s website at http://www.sec.gov.

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2009

45


 

 

Additional Information (concluded)

 

BlackRock Privacy Principles

BlackRock is committed to maintaining the privacy of its current and former fund investors and individual clients (collectively, “Clients”) and to safeguarding their non-public personal information. The following information is provided to help you understand what personal information BlackRock collects, how we protect that information and why in certain cases we share such information with select parties.

If you are located in a jurisdiction where specific laws, rules or regulations require BlackRock to provide you with additional or different privacy-related rights beyond what is set forth below, then BlackRock will comply with those specific laws, rules or regulations.

BlackRock obtains or verifies personal non-public information from and about you from different sources, including the following: (i) information we receive from you or, if applicable, your financial intermediary, on applications, forms or other documents; (ii) information about your transactions with us, our affiliates, or others; (iii) information we receive from a consumer reporting agency; and (iv) from visits to our websites.

BlackRock does not sell or disclose to non-affiliated third parties any non-public personal information about its Clients, except as permitted by law or as is necessary to respond to regulatory requests or to service Client accounts. These non-affiliated third parties are required to protect the confidentiality and security of this information and to use it only for its intended purpose.

We may share information with our affiliates to service your account or to provide you with information about other BlackRock products or services that may be of interest to you. In addition, BlackRock restricts access to non-public personal information about its Clients to those BlackRock employees with a legitimate business need for the information. BlackRock maintains physical, electronic and procedural safeguards that are designed to protect the non-public personal information of its Clients, including procedures relating to the proper storage and disposal of such information.

 

 

 

46

SEMI-ANNUAL REPORT

OCTOBER 31, 2009

(PAPERLESS LOGO)

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

(BLACKROCK LOGO)

#MYQII-10/09


 

 

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 – Not Applicable to this semi-annual report

 

 

Item 9 –

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

 

 

Item 10 –

Submission of Matters to a Vote of Security Holders – The registrant’s Nominating and Governance Committee will consider nominees to the board of directors recommended by shareholders when a vacancy becomes available. Shareholders who wish to recommend a nominee should send nominations that include biographical information and set forth the qualifications of the proposed nominee to the registrant’s Secretary. There have been no material changes to these procedures.

 

 

Item 11 –

Controls and Procedures

 

 

11(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 13(a)-15(b) under the Securities Exchange Act of 1934, as amended.

 

 

11(b) –

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

 

 

Item 12 –

Exhibits attached hereto

 

 

12(a)(1) –

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

 

 

12(a)(2) –

Certifications – Attached hereto

 

 

12(a)(3) –

Not Applicable


 

 

12(b) –

Certifications – Attached hereto

 

 

 

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

 

 

 

BlackRock MuniYield Quality Fund, Inc.

 

 

By:

/s/ Anne F. Ackerley

 

 

 

 

Anne F. Ackerley

 

 

Chief Executive Officer of

 

 

BlackRock MuniYield Quality Fund, Inc.

 

 

 

Date: December 21, 2009

 

 

 

 

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/ Anne F. Ackerley

 

 

 

 

Anne F. Ackerley

 

 

Chief Executive Officer (principal executive officer) of

 

BlackRock MuniYield Quality Fund, Inc.

 

 

 

Date: December 21, 2009

 

 

 

 

By:

/s/ Neal J. Andrews

 

 

 

 

Neal J. Andrews

 

 

Chief Financial Officer (principal financial officer) of

 

BlackRock MuniYield Quality Fund, Inc.

 

 

 

Date: December 21, 2009