UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-06660
Name of Fund: BlackRock MuniYield Quality Fund, Inc. (MQY)
Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809
Name and address of agent for service: Donald C. Burke, Chief Executive Officer,
BlackRock MuniYield Quality Fund, Inc., 800 Scudders Mill Road,
Plainsboro, NJ 08536. Mailing address: P.O. Box 9011, Princeton, NJ
08543-9011
Registrant's telephone number, including area code: (800) 882-0052, Option 4
Date of fiscal year end: 10/31/2007
Date of reporting period: 11/01/2006 - 10/31/2007
Item 1 - Report to Stockholders
EQUITIES FIXED INCOME REAL ESTATE
LIQUIDITY ALTERNATIVES BLACKROCK SOLUTIONS
Annual Report BLACKROCK
OCTOBER 31, 2007
BlackRock MuniYield Fund, Inc. (MYD)
BlackRock MuniYield Insured Fund, Inc. (MYI)
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
--------------------------------------------------------------------------------
A Letter to Shareholders .................................................. 3
Annual Report:
Fund Summaries ............................................................ 4
Financial Statements:
Schedules of Investments ................................................ 8
Statements of Net Assets ................................................ 30
Statements of Operations ................................................ 32
Statements of Changes in Net Assets ..................................... 33
Financial Highlights ...................................................... 37
Notes to Financial Statements ............................................. 41
Report of Independent Registered Public Accounting Firm ................... 46
Important Tax Information ................................................. 47
The Benefits and Risks of Leveraging ...................................... 48
Swap Agreements ........................................................... 48
Automatic Dividend Reinvestment Plan ...................................... 49
Officers and Directors .................................................... 50
Additional Information .................................................... 53
2 ANNUAL REPORT OCTOBER 31, 2007
A Letter to Shareholders
Dear Shareholder
The October reporting period was fairly tumultuous for financial markets, but
culminated in positive performance for most major benchmarks:
Total Returns as of October 31, 2007 6-month 12-month
==============================================================================================================
U.S. equities (S&P 500 Index) +5.49% +14.56%
--------------------------------------------------------------------------------------------------------------
Small cap U.S. equities (Russell 2000 Index) +2.25% + 9.27%
--------------------------------------------------------------------------------------------------------------
International equities (MSCI Europe, Australasia, Far East Index) +8.19% +24.91%
--------------------------------------------------------------------------------------------------------------
Fixed income (Lehman Brothers U.S. Aggregate Bond Index) +2.68% + 5.38%
--------------------------------------------------------------------------------------------------------------
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) +1.30% + 2.91%
--------------------------------------------------------------------------------------------------------------
High yield bonds (Lehman Brothers U.S. Corporate High Yield 2% Issuer Cap Index) -0.07% + 6.89%
--------------------------------------------------------------------------------------------------------------
Past performance is no guarantee of future results. Index performance shown for
illustrative purposes only. You cannot invest directly in an index.
Subprime mortgage woes dominated headlines for much of 2007, but intensified in
the summer and fall, spawning a widespread liquidity and credit crisis with
ramifications across global markets. The Federal Reserve Board (the "Fed") and
other countries' central banks stepped in to inject liquidity into the markets
and bolster investor confidence. The Fed cut the federal funds rate by 0.50% in
September and another 0.25% on the final day of the reporting period, bringing
its target rate to 4.50%. In taking action, the central bankers, who had long
deemed themselves inflation fighters, were seeking to stem the fallout from the
credit crunch and forestall a wider economic unraveling. By period-end, the Fed
had cited the risks between slower economic growth and faster inflation as
equally balanced.
Amid the volatility throughout the past year, equity markets have displayed
surprising resilience. Most recently, the credit turmoil dampened corporate
merger-and-acquisition (M&A) activity, a key source of strength for equity
markets. Still, market fundamentals have held firm, dividend payouts and share
buybacks have continued to grow, and valuations remain attractive. These
tailwinds generally have prevailed over the headwinds created by the slowing
U.S. economy, troubled housing market and, recently, a more difficult corporate
earnings backdrop. International markets fared even better than U.S. equities,
benefiting from robust M&A activity and generally stronger economies.
In fixed income markets, mixed economic signals and the credit woes resulted in
a flight to quality. At the height of the uncertainty, investors shunned bonds
associated with the housing and credit markets in favor of higher-quality
Treasury issues. The yield on 10-year Treasury issues, which touched 5.30% in
June (its highest level in five years), fell to 4.48% by period-end, while
prices correspondingly rose. The tax-exempt bond market has been challenged by a
combination of record-setting supply year-to-date, economic uncertainty and
concerns around the credit worthiness of bond insurers. This has brought
municipal bond prices to relatively attractive levels and, as such, demand
generally has remained firm.
As you navigate market volatility, we encourage you to review your investment
goals with your financial professional and to make portfolio changes, as needed.
For more market insight and commentary from BlackRock investment professionals,
we invite you to visit www.blackrock.com/funds. As always, we thank you for
entrusting BlackRock with your investment assets, and we look forward to
continuing to serve you in the months and years ahead.
Sincerely,
/s/ Robert C. Doll, Jr. /s/ Peter J. Hayes
Robert C. Doll, Jr. Peter J. Hayes
Vice Chairman, BlackRock, Inc. Managing Director, BlackRock, Inc.
3
THIS PAGE NOT PART OF YOUR FUND REPORT
Fund Summary as of October 31, 2007 BlackRock MuniYield Fund, Inc.
Investment Objective
BlackRock MuniYield Fund, Inc. (MYD) 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.
Fund Information
Symbol on New York Stock Exchange ............................ MYD
Initial Offering Date ........................................ November 29, 1991
Yield on Closing Market Price as of October 31, 2007 ($13.72)* 5.95%
Tax Equivalent Yield** ....................................... 9.15%
Current Monthly Distribution per share of Common Stock*** .... $ .068
Current Annualized Distribution per share of Common Stock*** . $ .816
Leverage as of October 31, 2007**** .......................... 34.58%
--------------------------------------------------------------------------------
* 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.
** Tax equivalent yield assumes the maximum federal tax rate of 35%.
*** The distribution is not constant and is subject to change. A portion of
the distribution may be deemed a tax return of capital or net realized
gain at fiscal year end.
**** As a percentage of managed assets, which is the total assets of the Fund
(including any assets attributable to Auction Market Preferred Stock that
may be outstanding) minus the sum of accrued liabilities (other than debt
representing financial leverage).
The table below summarizes the changes in the Fund's market price and net asset
value per share:
--------------------------------------------------------------------------------
10/31/07 10/31/06 Change High Low
--------------------------------------------------------------------------------
Market Price ................ $13.72 $15.76 (12.94%) $16.00 $13.05
Net Asset Value ............. $14.36 $14.98 (4.14%) $15.15 $13.93
--------------------------------------------------------------------------------
The following charts show the portfolio composition and credit quality
allocations of the Fund's long-term investments:
Portfolio Composition
Sector 10/31/07 10/31/06
--------------------------------------------------------------------------------
Transportation ............................................ 20% 18%
Hospital .................................................. 17 13
City, County & State ...................................... 15 19
Industrial & Pollution Control ............................ 15 16
Power ..................................................... 8 6
Sales Tax ................................................. 7 7
Education ................................................. 5 9
Housing ................................................... 4 3
Tobacco ................................................... 3 3
Lease Revenue ............................................. 3 3
Water & Sewer ............................................. 2 2
Resource Recovery ......................................... 1 1
--------------------------------------------------------------------------------
Credit Quality Allocations*
Credit Rating 10/31/07 10/31/06
--------------------------------------------------------------------------------
AAA/Aaa ................................................... 40% 41%
AA/Aa ..................................................... 17 13
A/A ....................................................... 11 10
BBB/Baa ................................................... 10 9
BB/Baa .................................................... 1 2
B/B ....................................................... 4 5
CCC/Caa ................................................... 2 2
CC/Ca ..................................................... --** --
NR ........................................................ 15 18
--------------------------------------------------------------------------------
* Using the higher of S&P's or Moody's ratings.
** Amount is less than 1%.
4 ANNUAL REPORT OCTOBER 31, 2007
Fund Summary as of October 31, 2007 BlackRock MuniYield Insured Fund, Inc.
Investment Objective
BlackRock MuniYield Insured Fund, Inc. (MYI) 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.
Fund Information
Symbol on New York Stock Exchange ............................. MYI
Initial Offering Date ......................................... March 27, 1992
Yield on Closing Market Price as of October 31, 2007 ($13.04)* 5.15%
Tax Equivalent Yield** ........................................ 7.92%
Current Monthly Distribution per share of Common Stock*** ..... $ .056
Current Annualized Distribution per share of Common Stock*** .. $ .672
Leverage as of October 31, 2007**** ........................... 36.71%
--------------------------------------------------------------------------------
* 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.
** Tax equivalent yield assumes the maximum federal tax rate of 35%.
*** The distribution is not constant and is subject to change. A portion of
the distribution may be deemed a tax return of capital or net realized
gain at fiscal year end.
**** As a percentage of managed assets, which is the total assets of the Fund
(including any assets attributable to Auction Market Preferred Stock that
may be outstanding) minus the sum of accrued liabilities (other than debt
representing financial leverage).
The table below summarizes the changes in the Fund's market price and net asset
value per share:
--------------------------------------------------------------------------------
10/31/07 10/31/06 Change High Low
--------------------------------------------------------------------------------
Market Price ........... $13.04 $14.36 (9.19%) $14.63 $12.83
Net Asset Value ........ $14.57 $15.30 (4.77%) $15.55 $13.91
--------------------------------------------------------------------------------
The following charts show the portfolio composition and credit quality
allocations of the Fund's long-term investments:
Portfolio Composition
Sector 10/31/07 10/31/06
--------------------------------------------------------------------------------
Transportation ............................................. 30% 29%
Hospital ................................................... 9 7
City, County & State ....................................... 16 24
Industrial & Pollution Control ............................. 3 6
Power ...................................................... 14 10
Sales Tax .................................................. 7 7
Education .................................................. 5 4
Housing .................................................... 7 4
Lease Revenue .............................................. 4 4
Water & Sewer .............................................. 4 5
Resource Recovery .......................................... 1 0
--------------------------------------------------------------------------------
Credit Quality Allocations*
Credit Rating 10/31/07 10/31/06
--------------------------------------------------------------------------------
AAA/Aaa .................................................... 83% 83%
AA/Aa ...................................................... 7 5
A/A ........................................................ 6 7
BBB/Baa .................................................... 2 2
NR ......................................................... 2 3
--------------------------------------------------------------------------------
* Using the higher of S&P's or Moody's ratings.
ANNUAL REPORT OCTOBER 31, 2007 5
Fund Summary as of October 31, 2007 BlackRock MuniYield Quality Fund, Inc.
Investment Objective
BlackRock MuniYield Quality Fund, Inc. (MQY) 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.
Fund Information
Symbol on New York Stock Exchange .............................. MQY
Initial Offering Date .......................................... June 26, 1992
Yield on Closing Market Price as of October 31, 2007 ($13.20)* . 5.18%
Tax Equivalent Yield** ......................................... 7.97%
Current Monthly Distribution per share of Common Stock*** ...... $ .057
Current Annualized Distribution per share of Common Stock*** ... $ .684
Leverage as of October 31, 2007**** ............................ 35.52%
--------------------------------------------------------------------------------
* 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.
** Tax equivalent yield assumes the maximum federal tax rate of 35%.
*** The distribution is not constant and is subject to change. A portion of
the distribution may be deemed a tax return of capital or net realized
gain at fiscal year end.
**** As a percentage of managed assets, which is the total assets of the Fund
(including any assets attributable to Auction Market Preferred Stock that
may be outstanding) minus the sum of accrued liabilities (other than debt
representing financial leverage).
The table below summarizes the changes in the Fund's market price and net asset
value per share:
--------------------------------------------------------------------------------
10/31/07 10/31/06 Change High Low
--------------------------------------------------------------------------------
Market Price ........... $13.20 $14.48 (8.84%) $14.80 $13.00
Net Asset Value ........ $14.88 $15.32 (2.87%) $15.50 $14.30
--------------------------------------------------------------------------------
The following charts show the portfolio composition and credit quality
allocations of the Fund's long-term investments:
Portfolio Composition
Sector 10/31/07 10/31/06
--------------------------------------------------------------------------------
City, County & State ....................................... 24% 23%
Transportation ............................................. 22 22
Water & Sewer .............................................. 9 9
Education .................................................. 9 10
Industrial & Pollution Control ............................. 9 5
Hospital ................................................... 8 7
Sales Tax .................................................. 8 7
Power ...................................................... 4 7
Lease Revenue .............................................. 3 7
Housing .................................................... 2 2
Tobacco .................................................... 2 1
--------------------------------------------------------------------------------
Credit Quality Allocations*
Credit Rating 10/31/07 10/31/06
--------------------------------------------------------------------------------
AAA/Aaa .................................................... 86% 86%
AA/Aa ...................................................... 7 6
A/A ........................................................ 5 6
BBB/Baa .................................................... --** 1
NR ......................................................... 2 1
--------------------------------------------------------------------------------
* Using the higher of S&P's or Moody's ratings.
** Amount is less than 1%.
6 ANNUAL REPORT OCTOBER 31, 2007
Fund Summary as of October 31, 2007 BlackRock MuniYield Quality Fund II, Inc.
Investment Objective
BlackRock MuniYield Quality Fund II, Inc. (MQT) 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.
Fund Information
Symbol on New York Stock Exchange ............................ MQT
Initial Offering Date ........................................ August 28, 1992
Yield on Closing Market Price as of October 31, 2007 ($11.60)* 5.17%
Tax Equivalent Yield** ....................................... 7.95%
Current Monthly Distribution per share of Common Stock*** .... $ .05
Current Annualized Distribution per share of Common Stock*** . $ .60
Leverage as of October 31, 2007**** .......................... 35.14%
--------------------------------------------------------------------------------
* 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.
** Tax equivalent yield assumes the maximum federal tax rate of 35%.
*** The distribution is not constant and is subject to change. A portion of
the distribution may be deemed a tax return of capital or net realized
gain at fiscal year end.
**** As a percentage of managed assets, which is the total assets of the Fund
(including any assets attributable to Auction Market Preferred Stock that
may be outstanding) minus the sum of accrued liabilities (other than debt
representing financial leverage).
The table below summarizes the changes in the Fund's market price and net asset
value per share:
--------------------------------------------------------------------------------
10/31/07 10/31/06 Change High Low
--------------------------------------------------------------------------------
Market Price ............ $11.60 $12.93 (10.29%) $12.99 $11.28
Net Asset Value ......... $13.17 $13.64 (3.45%) $13.81 $12.66
--------------------------------------------------------------------------------
The following charts show the portfolio composition and credit quality
allocations of the Fund's long-term investments:
Portfolio Composition
Sector 10/31/07 10/31/06
--------------------------------------------------------------------------------
Transportation ............................................ 27% 33%
City, County & State ...................................... 19 16
Power ..................................................... 9 6
Sales Tax ................................................. 8 8
Hospital .................................................. 7 5
Education ................................................. 7 10
Housing ................................................... 7 5
Water & Sewer ............................................. 5 4
Industrial & Pollution Control ............................ 5 6
Lease Revenue ............................................. 4 5
Tobacco ................................................... 2 2
--------------------------------------------------------------------------------
Credit Quality Allocations*
Credit Rating 10/31/07 10/31/06
--------------------------------------------------------------------------------
AAA/Aaa ................................................... 85% 87%
AA/Aa ..................................................... 9 6
A/A ....................................................... 6 7
BBB/Baa ................................................... --** --**
--------------------------------------------------------------------------------
* Using the higher of S&P's or Moody's ratings.
** Amount is less than 1%.
ANNUAL REPORT OCTOBER 31, 2007 7
Schedule of Investments as of October 31, 2007
BlackRock MuniYield Fund, Inc. (in Thousands)
Face
Amount Municipal Bonds Value
===============================================================================
Alabama -- 3.4%
Birmingham, Alabama, Special Care Facilities
Financing Authority, Revenue Refunding Bonds
(Ascension Health Credit), Series C-2:
$ 4,540 5% due 11/15/2036 $ 4,560
3,300 5% due 11/15/2039 3,311
5,250 Jefferson County, Alabama, Limited Obligation
School Warrants, Series A, 5.50% due 1/01/2022 5,623
Tuscaloosa, Alabama, Special Care Facilities
Financing Authority, Residential Care Facility
Revenue Bonds (Capstone Village, Inc. Project),
Series A:
2,200 5.625% due 8/01/2025 2,124
6,425 5.875% due 8/01/2036 6,350
===============================================================================
Arizona -- 12.6%
Arizona State Transportation Board, Highway
Revenue Bonds, Sub-Series A:
5,825 5% due 7/01/2021 6,138
7,030 5% due 7/01/2022 7,389
5,240 5% due 7/01/2023 5,469
3,300 Maricopa County, Arizona, IDA, Education Revenue
Bonds (Arizona Charter Schools Project 1),
Series A, 6.75% due 7/01/2029 3,212
Maricopa County, Arizona, IDA, M/F Housing Revenue
Refunding Bonds (CRS Pine Ridge Housing
Corporation), Series A-1 (e)(i):
5,000 6% due 10/20/2031 5,247
5,000 6.05% due 10/20/2036 5,204
Phoenix, Arizona, IDA, Airport Facility, Revenue
Refunding Bonds (America West Airlines Inc.
Project), AMT:
3,000 6.25% due 6/01/2019 3,010
5,090 6.30% due 4/01/2023 5,102
Phoenix, Arizona, IDA, M/F Housing Revenue Bonds
(Summit Apartments LLC Project) (i):
1,610 6.25% due 7/20/2022 1,715
1,425 6.45% due 7/20/2032 1,518
1,305 6.55% due 7/20/2037 1,396
Pima County, Arizona, IDA, Education Revenue
Refunding Bonds (Arizona Charter Schools
Project II), Series A:
570 6.75% due 7/01/2011 (k) 630
810 6.75% due 7/01/2031 842
Salt Verde Financial Corporation, Arizona, Senior
Gas Revenue Bonds:
10,020 5% due 12/01/2032 9,673
14,025 5% due 12/01/2037 13,415
Vistancia Community Facilities District, Arizona, GO:
3,000 5.50% due 7/15/2020 3,104
2,125 5.75% due 7/15/2024 2,213
5,900 Yavapai County, Arizona, IDA, Hospital Facility
Revenue Bonds (Yavapai Regional Medical Center),
Series A, 6% due 8/01/2033 6,137
===============================================================================
Arkansas -- 0.6%
University of Arkansas, University Construction
Revenue Bonds (UAMS Campus), Series B (j):
2,000 5% due 11/01/2020 2,118
1,600 5% due 11/01/2027 1,660
===============================================================================
California -- 14.5%
California State, GO:
8,760 5% due 2/01/2014 (k) 9,486
9,990 5% due 4/01/2014 (a)(k) 10,838
10 5% due 4/01/2031 (a) 10
11,335 California State, GO, Refunding, 5%
due 6/01/2032 11,513
California State Public Works Board, Lease
Revenue Bonds:
2,000 (Department of Corrections), Series C, 5%
due 6/01/2025 2,040
4,500 (Department of Mental Health -- Coalinga State
Hospital), Series A, 5.125% due 6/01/2029 4,599
California State, Various Purpose, GO:
6,800 5.25% due 11/01/2025 7,160
5,550 5.50% due 11/01/2033 5,866
Golden State Tobacco Securitization Corporation of
California, Tobacco Settlement Revenue Bonds (k):
5,500 Series A-3, 7.875% due 6/01/2013 6,667
7,500 Series A-4, 7.80% due 6/01/2013 9,066
5,965 Golden State Tobacco Securitization Corporation of
California, Tobacco Settlement Revenue Refunding
Bonds, Senior Series A-1, 5.125% due 6/01/2047 5,235
7,570 Los Angeles, California, Unified School District, GO,
Series A, 5% due 7/01/2013 (h)(k) 8,157
5,145 Santa Clara, California, Subordinated Electric
Revenue Bonds, Series A, 5% due 7/01/2022 (j) 5,393
7,465 University of California Revenue Bonds (Multiple
Purpose Projects), Series Q, 5% due 9/01/2021 (h) 7,841
===============================================================================
Portfolio Abbreviations
To simplify the listings of portfolio holdings in each Fund's Schedule of
Investments, we have abbreviated the names of many of the securities according
to the list at right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
DRIVERS Derivative Inverse Tax-Exempt Receipts
EDA Economic Development Authority
EDR Economic Development Revenue Bonds
GO General Obligation Bonds
HDA Housing Development Authority
HFA Housing Finance Agency
IDA Industrial Development Authority
IDB Industrial Development Board
IDR Industrial Development Revenue Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
PILOT Payment in Lieu of Taxes
RIB Residual Interest Bonds
S/F Single-Family
VRDN Variable Rate Demand Notes
8 ANNUAL REPORT OCTOBER 31, 2007
Schedule of Investments (continued)
BlackRock MuniYield Fund, Inc. (in Thousands)
Face
Amount Municipal Bonds Value
===============================================================================
Colorado -- 4.4%
$ 3,245 Colorado Educational and Cultural Facilities Authority,
Revenue Refunding Bonds (University of Denver
Project), Series B, 5.25% due 3/01/2016 (d)(k) $ 3,586
260 Colorado HFA, Revenue Refunding Bonds (S/F
Program), AMT, Series D-2, 6.90% due 4/01/2029 270
8,000 Denver, Colorado, City and County Airport Revenue
Bonds, AMT, Series D, 7.75% due 11/15/2013 (a) 8,893
Elk Valley, Colorado, Public Improvement Revenue
Bonds (Public Improvement Fee), Series A:
1,415 7.10% due 9/01/2014 1,492
5,065 7.35% due 9/01/2031 5,270
Plaza Metropolitan District Number 1, Colorado, Tax
Allocation Revenue Bonds (Public Improvement Fees):
6,850 8% due 12/01/2025 7,354
1,885 8.125% due 12/01/2025 1,857
===============================================================================
Connecticut -- 0.1%
350 Connecticut State Development Authority, IDR (AFCO
Cargo BDL-LLC Project), AMT, 7.35%
due 4/01/2010 361
===============================================================================
Delaware -- 0.3%
2,000 New Castle County, Delaware, PCR (General Motors
Corporation Project), VRDN, 7%
due 10/01/2008 (o) 2,000
===============================================================================
Florida -- 6.6%
4,240 Highlands County, Florida, Health Facilities Authority,
Hospital Revenue Bonds (Adventist Health System),
Series C, 5.25% due 11/15/2036 4,326
Hillsborough County, Florida, IDA, Exempt Facilities
Revenue Bonds (National Gypsum Company), AMT:
11,500 Series A, 7.125% due 4/01/2030 12,047
5,000 Series B, 7.125% due 4/01/2030 5,238
2,870 Hillsborough County, Florida, IDA, Hospital Revenue
Bonds (Tampa General Hospital Project), 5%
due 10/01/2036 2,822
4,705 Lee County, Florida, Revenue Bonds, 5%
due 10/01/2022 (a) 4,916
5,450 Midtown Miami, Florida, Community Development
District, Special Assessment Revenue Bonds,
Series B, 6.50% due 5/01/2037 5,487
1,100 Orange County, Florida, Health Facilities Authority,
Health Care Revenue Refunding Bonds (Orlando
Lutheran Towers), 5.375% due 7/01/2020 1,070
2,500 Orlando, Florida, Greater Orlando Aviation Authority,
Airport Facilities Revenue Bonds (JetBlue Airways
Corp.), AMT, 6.50% due 11/15/2036 2,537
4,620 Santa Rosa Bay Bridge Authority, Florida, Revenue
Bonds, 6.25% due 7/01/2028 4,484
===============================================================================
Georgia -- 1.5%
4,600 Atlanta, Georgia, Tax Allocation Bonds (Atlantic
Station Project), 7.90% due 12/01/2011 (k) 5,392
Brunswick and Glynn County, Georgia, Development
Authority, First Mortgage Revenue Bonds (Coastal
Community Retirement Corporation Project),
Series A (m):
2,285 7.125% due 1/01/2025 1,758
3,595 7.25% due 1/01/2035 2,746
===============================================================================
Idaho -- 1.6%
110 Idaho Housing Agency, S/F Mortgage Revenue
Refunding Bonds, AMT, Senior Series C-2, 7.15%
due 7/01/2023 113
10,000 Power County, Idaho, Industrial Development
Corporation, Solid Waste Disposal Revenue Bonds
(FMC Corporation Project), AMT, 6.45%
due 8/01/2032 10,407
===============================================================================
Illinois -- 3.6%
1,000 Bolingbrook, Illinois, Special Services Area Number 1,
Special Tax Bonds (Forest City Project), 5.90%
due 3/01/2027 1,046
13,200 Chicago, Illinois, O'Hare International Airport
Revenue Bonds, Third Lien, AMT, Series B-2, 6%
due 1/01/2029 (f) 14,277
Illinois State Finance Authority Revenue Bonds,
Series A:
1,750 (Friendship Village of Schaumburg), 5.625%
due 2/15/2037 1,646
2,155 (Landing At Plymouth Place Project), 6%
due 5/15/2037 2,157
4,000 Metropolitan Pier and Exposition Authority, Illinois,
Dedicated State Tax Revenue Bonds (McCormick
Place Expansion), Series A, 5.50%
due 6/15/2023 (j) 4,275
===============================================================================
Indiana -- 0.5%
2,850 Indiana Municipal Power Agency, Power Supply
System Revenue Bonds, Series A, 5%
due 1/01/2029 (d) 2,940
===============================================================================
Kansas -- 0.2%
1,250 Lenexa, Kansas, Health Care Facility Revenue Bonds
(Lakeview Village Inc.), Series C, 6.875%
due 5/15/2012 (k) 1,429
===============================================================================
Kentucky -- 0.5%
Kentucky Economic Development Finance Authority,
Health System Revenue Refunding Bonds (Norton
Healthcare, Inc.), Series A:
2,350 6.625% due 10/01/2010 (k) 2,573
650 6.625% due 10/01/2028 696
===============================================================================
Louisiana -- 5.8%
6,750 Louisiana Public Facilities Authority, Hospital
Revenue Bonds (Franciscan Missionaries of Our
Lady Health System, Inc.), Series A, 5.25%
due 8/15/2036 6,844
1,000 Louisiana Public Facilities Authority, Revenue
Refunding Bonds (Pennington Medical
Foundation Project), 5% due 7/01/2031 989
10,000 Louisiana State Citizens Property Insurance
Corporation, Assessment Revenue Bonds,
Series B, 5% due 6/01/2020 (a) 10,498
19,000 Port New Orleans, Louisiana, IDR, Refunding
(Continental Grain Company Project), 6.50%
due 1/01/2017 19,154
===============================================================================
ANNUAL REPORT OCTOBER 31, 2007 9
Schedule of Investments (continued)
BlackRock MuniYield Fund, Inc. (in Thousands)
Face
Amount Municipal Bonds Value
===============================================================================
Maryland -- 4.5%
Baltimore, Maryland, Convention Center Hotel
Revenue Bonds:
$ 5,615 Senior Series A, 5.25% due 9/01/2039 (f) $ 5,885
1,920 Sub-Series B, 5.875% due 9/01/2039 1,979
3,150 Baltimore, Maryland, Wastewater Project Revenue
Bonds, Series D, 5% due 7/01/2037 (a) 3,272
2,580 Maryland State Community Development
Administration, Department of Housing and
Community Development, Residential Revenue
Refunding Bonds, AMT, Series A, 4.65%
due 9/01/2032 2,421
3,000 Maryland State Energy Financing Administration,
Limited Obligation Revenue Bonds (Cogeneration --
AES Warrior Run), AMT, 7.40% due 9/01/2019 3,008
Maryland State Health and Higher Educational
Facilities Authority, Revenue Refunding Bonds:
6,375 (Peninsula Regional Medical Center), 5%
due 7/01/2036 6,355
4,000 (University of Maryland Medical System), 6%
due 7/01/2012 (k) 4,420
500 Maryland State Industrial Development Financing
Authority, EDR (Our Lady of Good Counsel School),
Series A, 6% due 5/01/2035 511
1,500 Prince Georges County, Maryland, Special Obligation
Bonds (National Harbor Project), 5.20%
due 7/01/2034 1,433
===============================================================================
Massachusetts -- 2.9%
1,410 Massachusetts State College Building Authority,
Project Revenue Bonds, Series A, 5%
due 5/01/2031 (a) 1,464
3,500 Massachusetts State Development Finance Agency,
Human Service Provider Revenue Bonds (Seven
Hills Foundation & Affiliates), 5%
due 9/01/2035 (l) 3,423
2,750 Massachusetts State Development Finance Agency,
Revenue Refunding Bonds (Western New England
College), Series A, 5% due 9/01/2033 (b) 2,826
10,000 Massachusetts State Special Obligation Dedicated
Tax Revenue Bonds, 5.25% due 1/01/2014 (d)(k) 10,859
===============================================================================
Michigan -- 1.5%
6,060 Macomb County, Michigan, Hospital Finance
Authority, Hospital Revenue Bonds (Mount
Clemens General Hospital), Series B, 5.875%
due 11/15/2034 6,007
1,000 Michigan State Hospital Finance Authority, Revenue
Refunding Bonds (Henry Ford Health System),
Series A, 5.25% due 11/15/2032 1,018
2,500 Michigan State Strategic Fund, PCR, Refunding
(General Motors Corp.), 6.20% due 9/01/2020 2,468
===============================================================================
Minnesota -- 1.3%
Eden Prairie, Minnesota, M/F Housing Revenue
Bonds (Rolling Hills Project), Series A (i):
420 6% due 8/20/2021 456
2,000 6.20% due 2/20/2043 2,153
925 Minneapolis, Minnesota, M/F Housing Revenue
Bonds (Gaar Scott Loft Project), AMT, 5.95%
due 5/01/2030 949
4,500 Minnesota State Municipal Power Agency, Electric
Revenue Bonds, 5% due 10/01/2030 4,597
===============================================================================
Mississippi -- 0.7%
4,800 Mississippi Business Finance Corporation Revenue
Bonds (Northrop Grumman Ship System), 4.55%
due 12/01/2028 4,448
===============================================================================
Missouri -- 3.8%
2,690 Fenton, Missouri, Tax Increment Revenue Refunding
and Improvement Bonds (Gravois Bluffs), 7%
due 10/01/2011 (k) 3,051
Missouri State Highways and Transportation
Commission, First Lien State Road Revenue
Bonds, Series A:
5,000 5% due 5/01/2020 5,320
15,000 5% due 5/01/2021 15,917
===============================================================================
Nebraska -- 0.3%
Lincoln, Nebraska, Sanitation and Sewer
Revenue Bonds:
865 4.25% due 6/15/2024 849
905 4.25% due 6/15/2025 884
===============================================================================
New Hampshire -- 0.6%
3,425 New Hampshire Health and Education Facilities
Authority, Revenue Refunding Bonds (Elliot
Hospital), Series B, 5.60% due 10/01/2022 3,570
===============================================================================
New Jersey -- 16.8%
11,435 New Jersey EDA, Cigarette Tax Revenue Bonds,
5.50% due 6/15/2024 11,715
New Jersey EDA, First Mortgage Revenue Bonds,
Series A:
710 (Lions Gate Project), 5.75% due 1/01/2025 717
230 (Lions Gate Project), 5.875% due 1/01/2037 230
3,000 (The Presbyterian Home), 6.375%
due 11/01/2031 3,066
20,000 New Jersey EDA, Motor Vehicle Surcharge Revenue
Bonds, Series A, 5% due 7/01/2029 (j) 20,686
4,400 New Jersey EDA, Retirement Community Revenue
Bonds (Cedar Crest Village Inc. Facility), Series A,
7.25% due 11/15/2011 (k) 5,024
8,825 New Jersey EDA, School Facilities Construction
Revenue Bonds, Series O, 5.25% due 3/01/2023 9,439
New Jersey EDA, Special Facility Revenue Bonds
(Continental Airlines Inc. Project), AMT:
3,905 6.25% due 9/15/2019 3,934
14,000 6.25% due 9/15/2029 14,154
New Jersey Health Care Facilities Financing
Authority Revenue Bonds (Pascack Valley
Hospital Association) (q):
1,335 6% due 7/01/2013 727
1,835 6.625% due 7/01/2036 1,000
10 ANNUAL REPORT OCTOBER 31, 2007
Schedule of Investments (continued)
BlackRock MuniYield Fund, Inc. (in Thousands)
Face
Amount Municipal Bonds Value
===============================================================================
New Jersey (concluded)
New Jersey State Transportation Trust Fund Authority,
Transportation System Revenue Bonds:
$ 3,975 Series A, 5.50% due 12/15/2021 $ 4,480
6,600 Series A, 5.50% due 12/15/2022 7,450
13,110 Series C, 5.05% due 12/15/2035 (a)(m) 3,397
5,425 Series D, 5% due 6/15/2019 (h) 5,749
9,410 Series D, 5% due 6/15/2020 9,943
7,000 Series D, 5% due 6/15/2020 (h) 7,410
===============================================================================
New York -- 12.4%
2,200 Dutchess County, New York, IDA, Civic Facility
Revenue Refunding Bonds (Saint Francis Hospital),
Series A, 7.50% due 3/01/2029 2,386
2,400 Erie County, New York, IDA, Revenue Bonds (Orchard
Park CCRC, Inc. Project), Series A, 6%
due 11/15/2026 2,405
11,000 Metropolitan Transportation Authority, New York,
Transportation Revenue Refunding Bonds,
Series F, 5% due 11/15/2035 11,293
New York City, New York, City IDA, PILOT Revenue
Bonds (Queens Baseball Stadium Project) (a):
2,000 5% due 1/01/2022 2,116
2,175 5% due 1/01/2023 2,296
1,250 New York City, New York, City IDA, Special Facility
Revenue Bonds (British Airways Plc Project), AMT,
7.625% due 12/01/2032 1,355
2,500 New York City, New York, GO, Series O, 5%
due 6/01/2033 2,557
6,500 New York Liberty Development Corporation, Revenue
Bonds (Goldman Sachs Headquarters), 5.25%
due 10/01/2035 6,905
New York State Dormitory Authority, Non-State
Supported Debt, Revenue Refunding Bonds,
Series A:
3,145 (Mount Sinai Health), 6.75%
due 7/01/2010 (k) 3,438
1,855 (Mount Sinai-NYU Medical Center Health
System), 6.75% due 7/01/2020 1,958
5,000 New York State Dormitory Authority, State Personal
Income Tax Revenue Bonds (Education), Series F,
5% due 3/15/2035 5,155
8,360 New York State Dormitory Authority, Supported Debt
Revenue Refunding Bonds (Department of Health),
Series A, 5% due 7/01/2023 (c) 8,722
2,500 Suffolk County, New York, IDA, IDR, Refunding
(Nissequogue Cogeneration Partners Facility),
AMT, 5.50% due 1/01/2023 2,378
9,400 Tobacco Settlement Financing Corporation of New
York Revenue Bonds, Series C-1, 5.50%
due 6/01/2021 10,036
10,000 Triborough Bridge and Tunnel Authority, New York,
Subordinate Revenue Bonds, 5.25%
due 11/15/2030 10,441
Westchester County, New York, IDA, Continuing Care
Retirement, Mortgage Revenue Bonds (Kendal on
Hudson Project), Series A:
3,450 6.375% due 1/01/2024 3,598
2,895 6.50% due 1/01/2034 3,012
===============================================================================
North Carolina -- 1.8%
4,750 North Carolina Eastern Municipal Power Agency,
Power System Revenue Bonds, Series D, 6.75%
due 1/01/2026 5,030
145 North Carolina HFA, Home Ownership Revenue
Bonds, AMT, Series 8-A, 6.20% due 7/01/2016 148
635 North Carolina, HFA, S/F Revenue Bonds, Series II,
6.20% due 3/01/2016 (e) 660
North Carolina Medical Care Commission, Health
Care Facilities, First Mortgage Revenue Bonds:
1,000 (Arbor Acres Community Project), 6.375%
due 3/01/2012 (k) 1,106
5,000 (Presbyterian Homes Project), 5.40%
due 10/01/2027 4,940
===============================================================================
Ohio -- 3.7%
3,870 Buckeye Tobacco Settlement Financing Authority,
Ohio, Tobacco Settlement Asset-Backed Bonds,
Series A-2, 6.50% due 6/01/2047 4,015
3,000 Cincinnati, Ohio, City School District, GO (Classroom
Construction and Improvement), Refunding,
5.25% due 12/01/2020 (d) 3,330
5,065 Hamilton County, Ohio, Sewer System Improvement
Revenue Bonds (The Metropolitan Sewer District
of Greater Cincinnati), Series B, 5%
due 12/01/2028 (j) 5,273
2,175 Lucas County, Ohio, Health Care Facility Revenue
Refunding and Improvement Bonds (Sunset
Retirement Communities), Series A, 6.625%
due 8/15/2030 2,268
5,000 Mason, Ohio, City School District, GO (School
Improvement), 5% due 6/01/2014 (h)(k) 5,398
970 Port of Greater Cincinnati Development Authority,
Ohio, Special Assessment Revenue Bonds
(Cooperative Public Parking Infrastructure Project),
6.30% due 2/15/2024 1,014
Toledo-Lucas County, Ohio, Port Authority Revenue
Bonds (Saint Mary Woods Project), Series A:
750 6% due 5/15/2024 741
2,250 6% due 5/15/2034 2,199
===============================================================================
Oklahoma -- 0.8%
5,210 Oklahoma State Development Finance Authority,
Revenue Refunding Bonds (Saint John Health
System), 5% due 2/15/2042 5,210
===============================================================================
Oregon -- 1.4%
4,405 Oregon State Department of Administrative Services,
COP, Series A, 6% due 5/01/2010 (a)(k) 4,713
2,475 Oregon State, GO, Refunding (Veterans Welfare),
Series 80A, 5.70% due 10/01/2032 2,494
1,830 Portland, Oregon, Housing Authority, Housing
Revenue Bonds (Pine Square and University
Place), Series A, 5.875% due 1/01/2022 1,860
===============================================================================
Pennsylvania -- 4.8%
5,270 Pennsylvania Economic Development Financing
Authority, Exempt Facilities Revenue Bonds
(National Gypsum Company), AMT, Series A,
6.25% due 11/01/2027 5,390
2,450 Pennsylvania HFA, S/F Mortgage Revenue Refunding,
AMT, Series 97A, 4.60% due 10/01/2027 2,314
ANNUAL REPORT OCTOBER 31, 2007 11
Schedule of Investments (continued)
BlackRock MuniYield Fund, Inc. (in Thousands)
Face
Amount Municipal Bonds Value
===============================================================================
Pennsylvania (concluded)
$16,270 Pennsylvania State Higher Educational Facilities
Authority, Health Services Revenue Refunding
Bonds (Allegheny Delaware Valley Obligation),
Series C, 5.875% due 11/15/2016 (j) $16,458
1,265 Philadelphia, Pennsylvania, Authority for IDR,
Commercial Development, 7.75%
due 12/01/2017 1,267
5,000 Sayre, Pennsylvania, Health Care Facilities Authority,
Revenue Bonds (Guthrie Healthcare System),
Series B, 7.125% due 12/01/2011 (k) 5,993
===============================================================================
Rhode Island -- 1.1%
4,240 Central Falls, Rhode Island, Detention Facility
Corporation, Detention Facility, Revenue
Refunding Bonds, 7.25% due 7/15/2035 4,647
Woonsocket, Rhode Island, GO (d):
1,225 6% due 10/01/2017 1,318
1,195 6% due 10/01/2018 1,281
===============================================================================
South Dakota -- 0.8%
5,210 South Dakota State Health and Educational
Facilities Authority Revenue Bonds (Sanford
Health), 5% due 11/01/2040 5,217
===============================================================================
Tennessee -- 3.2%
4,065 Hardeman County, Tennessee, Correctional Facilities
Corporation Revenue Bonds, 7.75%
due 8/01/2017 4,150
5,000 McMinn County, Tennessee, IDB, Solid Waste
Revenue Bonds (Recycling Facility -- Calhoun
Newsprint), AMT, 7.40% due 12/01/2022 5,041
11,250 Shelby County, Tennessee, Health, Educational and
Housing Facility Board, Hospital Revenue
Refunding Bonds (Saint Jude Children's Research
Hospital), 5% due 7/01/2031 11,383
===============================================================================
Texas -- 16.4%
16,000 Alliance Airport Authority, Inc., Texas, Special
Facilities Revenue Refunding Bonds (American
Airlines Inc. Project), AMT, 5.75% due 12/01/2029 15,195
10,000 Austin, Texas, Convention Center Revenue Bonds
(Convention Enterprises Inc.), First Tier, Series A,
6.70% due 1/01/2011 (k) 10,948
Bexar County, Texas, Housing Finance Corporation,
M/F Housing Revenue Bonds (Water at Northern
Hills Apartments), Series A (j):
1,300 5.80% due 8/01/2021 1,325
2,460 6% due 8/01/2031 2,511
1,000 6.05% due 8/01/2036 1,021
3,755 Brazos River Authority, Texas, Revenue Refunding
Bonds (Reliant Energy Inc. Project), Series B,
7.75% due 12/01/2018 3,883
Gregg County, Texas, Health Facilities Development
Corporation, Hospital Revenue Bonds (Good
Shepherd Medical Center Project) (k)(l):
2,000 6.375% due 10/01/2010 2,178
3,000 6.875% due 10/01/2010 3,308
5,000 Guadalupe-Blanco River Authority, Texas, Sewage
and Solid Waste Disposal Facility Revenue Bonds
(E. I. du Pont de Nemours and Company Project),
AMT, 6.40% due 4/01/2026 5,038
3,900 Gulf Coast, Texas, IDA, Solid Waste Disposal
Revenue Bonds (Citgo Petroleum Corporation
Project), AMT, 7.50% due 5/01/2025 4,260
Houston, Texas, Airport System, Special Facilities
Revenue Bonds (Continental Airlines), AMT, Series E:
3,500 7.375% due 7/01/2022 3,700
3,000 7% due 7/01/2029 3,135
1,600 Houston, Texas, Industrial Development Corporation
Revenue Bonds (Air Cargo), AMT, 6.375%
due 1/01/2023 1,661
Lower Colorado River Authority, Texas, PCR (Samsung
Austin Semiconductor), AMT:
4,830 6.375% due 4/01/2027 4,909
3,330 6.95% due 4/01/2030 3,509
7,030 Matagorda County, Texas, Navigation District
Number 1, Revenue Refunding Bonds (Reliant
Energy Inc.), Series C, 8% due 5/01/2029 7,253
3,900 Port Corpus Christi, Texas, Individual Development
Corporation, Environmental Facilities Revenue
Bonds (Citgo Petroleum Corporation Project), AMT,
8.25% due 11/01/2031 3,986
SA Energy Acquisition Public Facilities Corporation,
Texas, Gas Supply Revenue Bonds:
6,955 5.50% due 8/01/2023 7,245
6,365 5.50% due 8/01/2025 6,607
6,500 Texas State Turnpike Authority, Central Texas Turnpike
System Revenue Bonds, First Tier, Series A, 5.50%
due 8/15/2039 (a) 6,900
7,020 Tyler, Texas, Waterworks and Sewer Revenue Bonds,
5.70% due 9/01/2010 (d)(k) 7,443
===============================================================================
Virginia -- 1.8%
James City County, Virginia, EDA, Residential Care
Facility, First Mortgage Revenue Refunding Bonds
(Williamsburg Landing, Inc.) Series A:
1,500 5.35% due 9/01/2026 1,475
2,000 5.50% due 9/01/2034 1,961
24,800 Pocahontas Parkway Association, Virginia, Toll Road
Revenue Bonds, Senior Series B, 6.67%
due 8/15/2008 (k)(m) 7,255
1,000 Winchester, Virginia, IDA, Residential Care Facilities,
Revenue Bonds (Westminster-Canterbury),
Series A, 5.20% due 1/01/2027 980
===============================================================================
Washington -- 0.3%
Vancouver, Washington, Housing Authority, Housing
Revenue Bonds (Teal Pointe Apartments Project), AMT:
945 6% due 9/01/2022 957
1,250 6.20% due 9/01/2032 1,265
===============================================================================
West Virginia -- 0.6%
4,000 Pleasants County, West Virginia, PCR, Refunding
(Allegheny Energy Supply Company, LLC), Series F,
5.25% due 10/15/2037 4,012
===============================================================================
12 ANNUAL REPORT OCTOBER 31, 2007
Schedule of Investments (concluded)
BlackRock MuniYield Fund, Inc. (in Thousands)
Face
Amount Municipal Bonds Value
===============================================================================
Wisconsin -- 1.4%
$ 690 Milwaukee, Wisconsin, Revenue Bonds (Air Cargo),
AMT, 6.50% due 1/01/2025 $ 720
700 Wisconsin State, GO, AMT, Series B, 6.20%
due 11/01/2026 (j) 708
7,925 Wisconsin State Health and Educational Facilities
Authority, Revenue Refunding Bonds (Franciscan
Sisters Healthcare), 5% due 9/01/2026 7,717
===============================================================================
Wyoming -- 0.8%
5,315 Wyoming Community Development Authority,
Housing Revenue Bonds, AMT, Series 3, 4.75%
due 12/01/2037 4,991
===============================================================================
Puerto Rico -- 3.6%
7,755 Puerto Rico Commonwealth Highway and
Transportation Authority, Transportation Revenue
Refunding Bonds, Series N, 5.25%
due 7/01/2034 (b) 8,524
7,100 Puerto Rico Electric Power Authority, Power Revenue
Refunding Bonds, Series UU, 5%
due 7/01/2023 (h) 7,553
55,160 Puerto Rico Sales Tax Financing Corporation, Sales
Tax Revenue Refunding Bonds, Series A, 5.06%
due 8/01/2047 (a)(m) 7,521
===============================================================================
U.S. Virgin Islands -- 1.0%
6,250 Virgin Islands Public Finance Authority, Refinery
Facilities Revenue Bonds (Hovensa Refinery), AMT,
6.125% due 7/01/2022 6,455
-------------------------------------------------------------------------------
Total Municipal Bonds
(Cost -- $906,895) -- 144.5% 935,663
===============================================================================
===============================================================================
Face
Amount Municipal Bonds Held in Trust (p) Value
===============================================================================
New York -- 3.3%
New York City, New York, GO, Refunding, Series A (d):
10,000 6.375% due 5/15/2014 10,758
10,000 6.375% due 5/15/2015 10,758
===============================================================================
South Carolina -- 2.8%
Charleston Educational Excellence Financing
Corporation, South Carolina, Revenue Bonds
(Charleston County School District) (b):
7,795 5.25% due 12/1/2028 8,241
6,920 5.25% due 12/1/2029 7,306
2,510 5.25% due 12/1/2030 2,647
===============================================================================
Puerto Rico -- 5.8%
30,000 Puerto Rico Commonwealth Highway and
Transportation Authority, Transportation Revenue
Bonds, Series B, 5.875% due 7/1/2035 (j) 32,182
5,000 Puerto Rico Electric Power Authority, Power Revenue
Bonds, Series HH, 5.75% due 7/01/2010 (h)(k) 5,345
-------------------------------------------------------------------------------
Total Municipal Bonds Held in Trust
(Cost -- $75,527) -- 11.9% 77,237
===============================================================================
===============================================================================
Shares
Held Short-Term Securities
===============================================================================
4,901 Merrill Lynch Institutional Tax-Exempt Fund,
3.32% (g)(n) 4,901
-------------------------------------------------------------------------------
Total Short-Term Securities
(Cost -- $4,901) -- 0.8% 4,901
===============================================================================
Total Investments (Cost -- $987,323*) -- 157.2% 1,017,801
Other Assets Less Liabilities -- 1.5% 9,660
Liability for Trust Certificates,
Including Interest Expense Payable -- (5.7%) (36,636)
Preferred Stock, at Redemption Value -- (53.0%) (343,251)
----------
Net Assets Applicable to Common Stock -- 100.0% $ 647,574
==========
* The cost and unrealized appreciation (depreciation) of investments as of
October 31, 2007, as computed for federal income tax purposes, were as
follows:
Aggregate cost ............................................. $ 951,463
=========
Gross unrealized appreciation .............................. $ 40,204
Gross unrealized depreciation .............................. (9,979)
---------
Net unrealized appreciation ................................ $ 30,225
=========
(a) AMBAC Insured.
(b) Assured Guaranty Insured.
(c) CIFG Insured.
(d) FGIC Insured.
(e) FHA Insured.
(f) XL Capital Insured.
(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:
--------------------------------------------------------------------------
Net Dividend
Affiliate Activity Income
--------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund (2,023) $291
--------------------------------------------------------------------------
(h) FSA Insured.
(i) GNMA Collateralized.
(j) MBIA Insured.
(k) Prerefunded.
(l) Radian Insured.
(m) Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase.
(n) Represents the current yield as of October 31, 2007.
(o) Security may have a maturity of more than one year at time of issuance,
but has variable rate and demand features that qualify it as a short-term
security. The rate disclosed is that currently in effect. This rate
changes periodically based upon prevailing market rates.
(p) Securities represent underlying bonds transferred to a separate
securitization trust established in a tender option bond transaction in
which the Fund may have acquired the residual interest certificates. These
securities serve as collateral in a financing transaction. See Note 1(c)
to the Financial Statements for details of municipal bonds held in trust.
(q) Non-income producing; issuer filed for bankruptcy or is in default of
interest payments.
See Notes to Financial Statements.
ANNUAL REPORT OCTOBER 31, 2007 13
Schedule of Investments as of October 31, 2007
BlackRock MuniYield Insured Fund, Inc. (in Thousands)
Face
Amount Municipal Bonds Value
===============================================================================
Alaska -- 0.4%
$ 3,695 Alaska Energy Authority, Power Revenue Refunding
Bonds (Bradley Lake), Fourth Series,) 6%
due 7/01/2018 (g)(r) $ 4,255
===============================================================================
Arizona -- 8.9%
21,355 Downtown Phoenix Hotel Corporation, Arizona,
Revenue Bonds, Senior Series A, 5%
due 7/01/2036 (c) 21,857
25,285 Glendale, Arizona, Transportation Excise Tax Revenue
Bonds, 4.50% due 7/01/2032 (b) 24,767
7,750 Maricopa County and Phoenix, Arizona, IDA, S/F
Mortgage Revenue Bonds, AMT, Series A-2, 5.80%
due 7/01/2040 (k)(l) 8,166
12,000 Phoenix, Arizona, Civic Improvement Corporation,
Wastewater System Revenue Refunding Bonds,
5% due 7/01/2037 (b) 12,418
Salt Verde Financial Corporation, Arizona, Senior
Gas Revenue Bonds:
2,625 5.50% due 12/01/2029 2,735
5,535 5% due 12/01/2032 5,343
12,750 5% due 12/01/2037 12,196
===============================================================================
California -- 30.7%
10,000 Alameda Corridor Transportation Authority, California,
Capital Appreciation Revenue Refunding Bonds,
Subordinate Lien, Series A, 5.40%
due 10/01/2024 (a)(o)(r) 8,386
11,155 Anaheim, California, Public Financing Authority,
Sewer Revenue Bonds, 4.75% due 2/01/2033 (b)(r) 11,221
5,000 Antioch, California, Public Finance Authority, Lease
Revenue Refunding Bonds (Municipal Facilities
Project), Series A, 5.50% due 1/01/2032 (b) 5,222
10,000 California Infrastructure and Economic Development
Bank, Bay Area Toll Bridges Revenue Bonds, First
Lien, Series A, 5% due 7/01/2025 (c)(i) 10,911
California State, GO (b):
630 5.50% due 4/01/2014 (f) 702
10 5.50% due 4/01/2030 11
California State Public Works Board, Lease
Revenue Bonds:
5,500 (Department of Corrections), Series C, 5.25%
due 6/01/2028 5,677
3,755 (Department of General Services), Series D,
5.25% due 6/01/2028 3,876
5,250 (Department of Mental Health -- Coalinga State
Hospital), Series A, 5.125% due 6/01/2029 5,366
18,435 California State University, Systemwide Revenue
Refunding Bonds, Series A, 5%
due 11/01/2037 (g) 19,141
12,000 California State, Various Purpose, GO, 5.25%
due 11/01/2029 12,526
25,000 California State, Various Purpose, GO, Refunding,
5% due 6/01/2034 (d) 25,661
7,740 California Statewide Communities Development
Authority, Health Facility Revenue Bonds (Memorial
Health Services), Series A, 6% due 10/01/2023 8,246
4,205 California Statewide Communities Development
Authority, Water Revenue Bonds (Pooled Financing
Program), Series C, 5.25% due 10/01/2034 (g) 4,375
5,800 Fairfield-Suisun, California, Unified School District,
GO (Election of 2002), 5.50% due 8/01/2028 (b) 6,239
10,000 Las Virgenes, California, Unified School District, GO,
Series A, 5% due 8/01/2031 (g) 10,402
16,000 Los Angeles, California, Department of Water and
Power, Waterworks Revenue Bonds, Sub-Series A-2,
5% due 7/01/2044 (a) 16,501
Los Angeles, California, Municipal Improvement
Corporation, Lease Revenue Bonds, Series B1 (c):
10,000 4.75% due 8/01/2032 10,030
15,000 4.75% due 8/01/2037 15,007
Los Angeles, California, Water and Power Revenue
Bonds (Power System) (g):
12,775 Series B, 5% due 7/01/2035 13,123
6,765 Sub-Series A-1, 5% due 7/01/2035 6,982
7,500 Modesto, California, Irrigation District, COP,
Refunding and Capital Improvements, Series A,
5% due 10/01/2036 (a) 7,700
10,365 Pasadena, California, Area Community College
District, GO (Election of 2002), Series B, 5%
due 8/01/2031 (a) 10,781
145 Port of Oakland, California, Revenue Bonds, AMT,
Series K, 5.75% due 11/01/2021 (c) 151
6,930 Riverside, California, Community College District, GO
(Election of 2004), Series C, 5%
due 8/01/2032 (b) 7,224
10,000 Riverside County, California, Public Financing
Authority, Tax Allocation Revenue Bonds
(Redevelopment Projects), 5%
due 10/01/2035 (e) 10,199
10,000 San Francisco, California, Bay Area Rapid Transit
District, Sales Tax Revenue Bonds, 5%
due 7/01/2036 (g) 10,285
8,170 San Francisco, California, Community College
District, GO (Election of 2001), Series C, 5%
due 6/15/2029 (g) 8,524
3,250 San Mateo, California, Union High School District,
COP (Phase One Projects), Series B, 4.486%
due 12/15/2043 (a)(o) 1,818
5,500 Santa Monica-Malibu Unified School District,
California, GO (Election of 2006), Series A, 5%
due 8/01/2032 (c) 5,734
10,000 Simi Valley, California, Unified School District, GO
(Election of 2004), Series C, 4.79%
due 8/01/2032 (g)(o) 3,044
Southern California Public Power Authority, Natural
Gas Project Number 1 Revenue Bonds, Series A:
3,000 5% due 11/01/2028 2,943
11,885 5% due 11/01/2033 11,532
8,310 Stockton, California, Public Financing Authority,
Lease Revenue Bonds (Parking & Capital Projects),
5.25% due 9/01/2034 (c) 8,651
12,000 University of California Revenue Bonds, Series D, 5%
due 5/15/2041 (c) 12,386
===============================================================================
Colorado -- 3.2%
15,000 Aurora, Colorado, Water Improvement Revenue Bonds,
First Lien, Series A, 5% due 8/01/2039 (a) 15,514
14 ANNUAL REPORT OCTOBER 31, 2007
Schedule of Investments (continued)
BlackRock MuniYield Insured Fund, Inc. (in Thousands)
Face
Amount Municipal Bonds Value
===============================================================================
Colorado (concluded)
$ 8,000 Colorado HFA, S/F Mortgage Revenue Refunding
Bonds, AMT, Series A-3, Class III, 4.80%
due 11/01/2037 (b) $ 7,586
8,705 Colorado Health Facilities, Hospital Revenue Bonds
(Parkview Medical Center Inc. Project), Series A,
5% due 9/01/2037 8,572
===============================================================================
Florida -- 1.1%
Miami-Dade County, Florida, Aviation Revenue
Refunding Bonds (Miami International Airport), AMT:
1,000 5.375% due 10/01/2027 (c) 1,031
10,000 Series A, 5% due 10/01/2038 (d) 10,000
===============================================================================
Georgia -- 1.3%
12,500 Atlanta, Georgia, Airport General Revenue Refunding
Bonds, Series B, 5.25% due 1/01/2033 (g) 13,027
===============================================================================
Hawaii -- 0.5%
2,000 Hawaii State, GO, Series CX, 5.50%
due 2/01/2021 (g) 2,136
3,000 Hawaii State Harbor System Revenue Bonds, AMT,
Series A, 5% due 1/01/2031 (g) 3,026
===============================================================================
Idaho -- 0.9%
Idaho Housing and Financing Association, S/F
Mortgage Revenue Bonds, AMT:
4,790 Series F-1, Class I, 5.20% due 1/01/2039 4,796
3,555 Series G-1, Class III, 5.125% due 1/01/2029 3,630
===============================================================================
Illinois -- 8.1%
15,400 Chicago, Illinois, GO, Series C, 5%
due 1/01/2035 (b) 15,776
1,500 Chicago, Illinois, O'Hare International Airport,
Revenue Refunding Bonds, Third Lien, AMT,
Series C-2, 5.25% due 1/01/2034 (e) 1,527
Illinois Municipal Electric Agency, Power Supply
Revenue Bonds, Series (c):
25,000 5% due 2/01/2035 25,783
15,000 5.25% due 2/01/2035 15,854
1,215 McLean and Woodford Counties, Illinois, Community
Unit School District Number 005, GO, Refunding,
6.375% due 12/01/2016 (g) 1,342
4,800 Metropolitan Pier and Exposition Authority, Illinois,
Dedicated State Tax Revenue Refunding Bonds
(McCormick Place Expansion Project), Series B,
5.75% due 6/15/2023 (b) 5,206
12,000 Northern Illinois Municipal Power Agency, Power
Project Revenue Refunding Bonds (Prairie State
Project), Series A, 5% due 1/01/2037 (b) 12,366
1,000 Regional Transportation Authority, Illinois, Revenue
Bonds, Series C, 7.75% due 6/01/2020 (c) 1,300
===============================================================================
Indiana -- 3.9%
1,100 Daviess County, Indiana, EDR (Daviess Community
Hospital Project), Refunding, VRDN, 5.50%
due 1/01/2029 (h)(m) 1,100
20,000 Indiana Bond Bank, Special Program Gas Revenue
Bonds, Series A, 5.25% due 10/15/2020 20,880
2,250 Indiana Health Facilities Financing Authority, Hospital
Revenue Bonds (Deaconess Hospital Obligated
Group), Series A, 5.375% due 3/01/2034 (a) 2,347
13,000 Indiana Transportation Finance Authority, Highway
Revenue Bonds, Series A, 5.25%
due 6/01/2014 (c)(f) 14,223
===============================================================================
Kentucky -- 2.1%
20,005 Louisville and Jefferson Counties, Kentucky,
Metropolitan Sewer District, Sewer and Drain
System Revenue Bonds, Series A, 5.25%
due 5/15/2037 (c) 20,995
===============================================================================
Louisiana -- 3.0%
3,750 Louisiana Local Government Environmental Facilities
and Community Development Authority, Revenue
Bonds (Capital Projects and Equipment Acquisition),
Series A, 6.30% due 7/01/2030 (a) 4,407
6,615 Louisiana Public Facilities Authority, Hospital Revenue
Bonds (Franciscan Missionaries of Our Lady Health
System, Inc.), Series A, 5.25% due 8/15/2036 6,707
4,270 Louisiana Public Facilities Authority Revenue Bonds
(Nineteenth Judicial District Court Building Project),
5.50% due 6/01/2041 (c) 4,610
10,000 Louisiana State, Gas and Fuels Tax Revenue Bonds,
Series A, 5% due 5/01/2036 (g) 10,321
3,545 New Orleans, Louisiana, GO (Public Improvements),
5% due 10/01/2033 (b) 3,631
===============================================================================
Maryland -- 2.6%
1,275 Maryland State Health and Higher Educational
Facilities Authority, Revenue Refunding Bonds
(Pickersgill Inc.), VRDN, Series A, 5.50%
due 1/01/2035 (h)(m) 1,275
24,750 Maryland State Transportation Authority,
Transportation Facilities Projects Revenue Bonds,
4.50% due 7/01/2037 (g) 23,903
===============================================================================
Massachusetts -- 9.2%
2,500 Massachusetts State, HFA, Housing Development
Revenue Refunding Bonds, Series B, 5.40%
due 12/01/2028 (b) 2,564
12,365 Massachusetts State, HFA, Rental Housing Mortgage
Revenue Bonds, AMT, Series A, 5.15%
due 7/01/2026 (g) 12,654
12,950 Massachusetts State, HFA, S/F Housing Revenue
Bonds, AMT, Series 128, 4.875%
due 12/01/2038 (g) 12,400
5,400 Massachusetts State Health and Educational
Facilities Authority Revenue Bonds (Lahey Clinic
Medical Center), Series D, 5.25% due 8/15/2037 5,482
10,000 Massachusetts State Health and Educational
Facilities Authority, Revenue Refunding Bonds
(Berklee College of Music), Series A, 5%
due 10/01/2037 10,148
7,550 Massachusetts State Port Authority Revenue Bonds,
Series A, 5% due 7/01/2033 (b) 7,733
Massachusetts State School Building Authority,
Dedicated Sales Tax Revenue Bonds, Series A (a):
16,060 4.50% due 8/15/2035 15,588
12,000 5% due 8/15/2037 12,451
10,000 Massachusetts State Special Obligation Dedicated
Tax Revenue Bonds, 5.75% due 1/01/2014 (c)(f) 11,132
===============================================================================
Michigan -- 3.5%
4,325 Michigan Higher Education Student Loan Authority,
Student Loan Revenue Bonds, AMT, Series XVII-Q,
5% due 3/01/2031 (a) 4,355
10,000 Michigan State, HDA, Rental Housing Revenue Bonds,
AMT, Series B, 4.95% due 4/01/2044 (g) 9,593
ANNUAL REPORT OCTOBER 31, 2007 15
Schedule of Investments (continued)
BlackRock MuniYield Insured Fund, Inc. (in Thousands)
Face
Amount Municipal Bonds Value
===============================================================================
Michigan (concluded)
$20,000 Wayne County, Michigan, Airport Authority Revenue
Bonds (Detroit Metropolitan Wayne County Airport),
AMT, 5% due 12/01/2029 (b) $20,238
===============================================================================
Missouri -- 2.1%
20,000 Missouri Joint Municipal Electric Utility Commission,
Power Project Revenue Bonds (Prairie State
Project), Series A, 5% due 1/01/2042 (a) 20,441
115 Missouri State Housing Development Commission,
S/F Mortgage Revenue Bonds (Homeownership
Loan Program), AMT, Series C-1, 7.15%
due 3/01/2032 (k) 123
===============================================================================
Nevada -- 4.7%
25,000 Clark County, Nevada, Airport System Subordinate
Lien Revenue Bonds, Series A-2, 5%
due 7/01/2030 (c) 25,682
12,675 Clark County, Nevada, IDR (Southwest Gas
Corporation Project), AMT, Series A, 5.25%
due 7/01/2034 (a) 12,924
6,000 Henderson, Nevada, Health Care Facilities Revenue
Bonds (Catholic Healthcare West), Series A,
5.625% due 7/01/2024 6,297
1,165 Reno, Nevada, Capital Improvement Revenue Bonds,
5.50% due 6/01/2019 (c) 1,247
===============================================================================
New Jersey -- 6.5%
16,000 Garden State Preservation Trust of New Jersey, Open
Space and Farmland Preservation Revenue Bonds,
Series A, 5.75% due 11/01/2028 (g) 18,868
New Jersey EDA, Cigarette Tax Revenue Bonds:
3,060 5.75% due 6/15/2029 3,205
2,610 5.50% due 6/15/2031 2,689
14,135 5.75% due 6/15/2034 14,855
15,000 New Jersey EDA, Motor Vehicle Surcharge Revenue
Bonds, Series A, 5.25% due 7/01/2033 (b) 15,755
20,000 New Jersey State Transportation Trust Fund Authority,
Transportation System Revenue Bonds, Series C,
4.96% due 12/15/2035 (a)(o) 5,183
2,880 Newark, New Jersey, Housing Authority, Port Authority --
Port Newark Marine Terminal Additional Rent-
Backed Revenue Bonds (City of Newark Redevel-
opment Projects), 5.50% due 1/01/2014 (b)(f) 3,175
===============================================================================
New Mexico -- 0.7%
1,605 New Mexico Educational Assistance Foundation,
Student Loan Revenue Refunding Bonds (Student
Loan Program), AMT, First Sub-Series A-2, 6.65%
due 11/01/2025 1,638
365 New Mexico Mortgage Finance Authority, S/F
Mortgage Revenue Bonds, AMT, Series C-2, 6.95%
due 9/01/2031 (k) 375
5,000 New Mexico Mortgage Financing Authority, S/F
Mortgage Program Revenue Bonds, AMT,
Series C-2, 5% due 7/01/2038 (k)(l) 4,885
===============================================================================
New York -- 10.5%
10,250 Long Island Power Authority, New York, Electric
System Revenue Bonds, Series A, 5.10%
due 9/01/2029 10,608
5,335 Metropolitan Transportation Authority, New York,
Commuter Facilities Revenue Refunding Bonds,
Series B, 5.125% due 7/01/2024 (a)(i) 5,448
New York City, New York, GO:
1,880 Series B, 5.875% due 8/01/2016 (b) 2,012
10,000 Series J, 5.25% due 5/15/2024 10,507
1,000 Series J, 5.25% due 5/15/2025 1,050
15,000 Series M, 5% due 4/01/2030 (n) 15,516
6,000 Sub-Series C-1, 5.25% due 8/15/2026 6,311
New York State Dormitory Authority, Non-State
Supported Debt Revenue Bonds (Presbyterian
Hospital of New York) (g):
20,000 5.25% due 2/15/2031 20,903
10,000 5% due 8/15/2036 10,224
19,500 Port Authority of New York and New Jersey,
Consolidated Revenue Bonds, AMT, 137th Series,
5.125% due 7/15/2030 (g) 20,099
===============================================================================
North Carolina -- 0.1%
1,200 North Carolina Medical Care Commission, Health
Care Facilities, First Mortgage Revenue Refunding
Bonds (Carol Woods Project), VRDN, 5%
due 4/01/2031 (h)(m) 1,200
===============================================================================
Ohio -- 0.8%
7,660 Trumbull County, Ohio, Health Care Facilities
Revenue Bonds (Shepherd of the Valley), VRDN,
5.10% due 10/01/2031 (h)(m) 7,660
===============================================================================
Oregon -- 2.2%
Clackamas County, Oregon, School District
Number 12, GO (North Clackamas), Series A (g):
10,000 4.50% due 6/15/2030 9,860
12,380 4.50% due 6/15/2032 12,109
===============================================================================
Pennsylvania -- 1.7%
250 Allegheny County, Pennsylvania, IDA, Health and
Housing Facilities, Senior Revenue Refunding
Bonds (Longwood at Oakmont Inc.), VRDN,
Series B, 5.05% due 7/01/2027 (h)(m) 250
4,800 Pennsylvania HFA, S/F Mortgage Revenue Refunding
Bonds, AMT, Series 99A, 5.25% due 10/01/2032 4,847
11,265 Philadelphia, Pennsylvania, Airport Revenue
Refunding Bonds (Philadelphia Airport System),
AMT, Series B, 5% due 6/15/2027 (g) 11,480
===============================================================================
South Carolina -- 5.3%
5,000 Berkeley County, South Carolina, School District,
Installment Lease Revenue Bonds (Securing
Assets for Education Project), 5.125%
due 12/01/2030 5,103
Charleston Educational Excellence Financing
Corporation, South Carolina, Revenue Bonds
(Charleston County School District) (n):
3,895 5.25% due 12/01/2028 4,118
3,465 5.25% due 12/01/2029 3,658
1,160 5.25% due 12/01/2030 1,223
16 ANNUAL REPORT OCTOBER 31, 2007
Schedule of Investments (continued)
BlackRock MuniYield Insured Fund, Inc. (in Thousands)
Face
Amount Municipal Bonds Value
===============================================================================
South Carolina (concluded)
Kershaw County, South Carolina, Public Schools
Foundation, Installment Power Revenue
Refunding Bonds (d):
$ 3,775 5% due 12/01/2030 $ 3,897
3,690 5% due 12/01/2031 3,801
930 South Carolina Housing Finance and Development
Authority, Mortgage Revenue Refunding Bonds,
AMT, Series A-2, 6.35% due 7/01/2019 (g) 959
10,800 South Carolina Jobs EDA, Hospital Revenue Bonds
(Oconee Memorial Hospital Project), VRDN,
Series A, 6% due 10/01/2036 (h)(m) 10,800
18,030 South Carolina Transportation Infrastructure Bank
Revenue Bonds, Series A, 5% due 10/01/2029 (a) 18,515
===============================================================================
Tennessee -- 3.2%
6,600 Sevier County, Tennessee, Public Building Authority,
Local Government Public Improvement Revenue
Bonds, VRDN, AMT, Series III-A, 3.60%
due 6/01/2028 (a)(h) 6,600
15,000 Tennessee Energy Acquisition Corporation, Gas
Revenue Bonds, Series A, 5.25% due 9/01/2026 15,088
Tennessee HDA, Revenue Bonds (Homeownership
Program), AMT, Series 2C :
1,795 6.05% due 7/01/2012 1,846
2,250 6.15% due 7/01/2014 2,296
Tennessee HDA, Revenue Refunding Bonds
(Homeownership Program), AMT, Series A (g):
3,050 5.25% due 7/01/2022 3,087
2,160 5.35% due 1/01/2026 2,184
===============================================================================
Texas -- 9.3%
5,000 Amarillo, Texas, GO, 5.25% due 5/15/2027 (b) 5,344
8,435 Canyon, Texas, Regional Water Authority, Contract
Revenue Bonds (Wells Ranch Project), 5%
due 8/01/2032 (a) 8,744
1,000 Dallas-Fort Worth, Texas, International Airport, Joint
Revenue Bonds, AMT, Series A, 5% due 11/01/2035 (g) 1,000
Harris County-Houston Sports Authority, Texas,
Revenue Refunding Bonds, Senior Lien, Series G (b):
1,665 5.75% due 11/15/2019 1,782
3,500 5.75% due 11/15/2020 3,745
10,000 5.25% due 11/15/2030 10,447
10,000 Harris County, Texas, Hospital District, Senior Lien
Revenue Refunding Bonds, Series A, 5.25%
due 2/15/2037 (b) 10,440
10,695 Houston, Texas, Combined Utility System, First Lien
Revenue Refunding Bonds, Series A, 5%
due 11/15/2036 (g) 11,053
6,250 Matagorda County, Texas, Navigation District
Number 1, PCR, Refunding (Central Power and
Light Company Project), AMT, 5.20%
due 5/01/2030 (b) 6,440
5,890 North Texas Thruway Authority, Dallas North Thruway
System Revenue Bonds, Series A, 5%
due 1/01/2035 (g) 6,032
10,385 Tarrant County, Texas, Health Facilities Development
Corporation, Hospital Revenue Refunding Bonds
(Cumberland Rest, Inc. Project), VRDN, Series,
4.95% due 8/15/2032 (h)(m) 10,385
4,775 Texas State Department of Housing and Community
Affairs, S/F Mortgage Revenue Bonds, AMT,
Series A, 5.45% due 9/01/2023 (b)(k) 4,861
10,000 Texas State Turnpike Authority, Central Texas Turnpike
System Revenue Bonds, First Tier, Series A, 5.50%
due 8/15/2039 (a) 10,616
===============================================================================
Vermont -- 0.4%
3,000 Vermont HFA, Revenue Refunding Bonds, AMT,
Series C, 5.50% due 11/01/2038 (g) 3,078
490 Vermont HFA, S/F Housing Revenue Bonds, AMT,
Series 12B, 6.30% due 11/01/2019 (g) 495
===============================================================================
Virginia -- 0.5%
2,750 Fairfax County, Virginia, EDA, Residential Care
Facilities, Mortgage Revenue Refunding Bonds
(Goodwin House, Inc.), 5.125% due 10/01/2042 2,634
2,500 Halifax County, Virginia, IDA, Exempt Facility Revenue
Refunding Bonds (Old Dominion Electric
Cooperative Project), AMT, 5.625%
due 6/01/2028 (a) 2,654
===============================================================================
Washington -- 11.3%
Bellevue, Washington, GO, Refunding (b):
2,545 5.25% due 12/01/2026 2,690
2,455 5.25% due 12/01/2027 2,588
2,850 5.25% due 12/01/2028 (r) 3,003
3,000 5.25% due 12/01/2029 3,157
17,600 5% due 12/01/2034 18,074
3,030 Chelan County, Washington, Public Utility District
Number 001, Consolidated Revenue Bonds
(Chelan Hydro System), AMT, Series A, 5.45%
due 7/01/2037 (a) 3,117
6,000 Chelan County, Washington, Public Utility District
Number 001, Consolidated Revenue Refunding
Bonds (Chelan Hydro System), AMT, Series C,
5.65% due 7/01/2032 (b) 6,333
15,785 King County, Washington, Sewer Revenue Bonds, 5%
due 1/01/2037 (g) 16,310
10,000 Radford Court Properties, Washington, Student
Housing Revenue Bonds, 5.75%
due 6/01/2032 (b)(r) 10,534
1,720 Seattle, Washington, Drain and Wastewater Utility
Revenue Bonds, 5.75% due 11/01/2009 (b)(f) 1,812
Skagit County, Washington, Public Hospital District,
GO, Series A (b):
4,945 5.25% due 12/01/2025 5,226
5,450 5.25% due 12/01/2026 5,753
5,300 Tacoma, Washington, Regional Water Supply System,
Water Revenue Bonds, 5% due 12/01/2032 (b) 5,414
7,250 Tacoma, Washington, Solid Waste Utility Revenue
Refunding Bonds, Series B, 5.50%
due 12/01/2007 (a)(f) 7,333
7,000 Washington State Health Care Facilities Authority
Revenue Bonds (Providence Health System),
Series A, 5.25% due 10/01/2021 (b) 7,291
12,035 Washington State, Motor Vehicle Fuel Tax, GO,
Series B, 5% due 7/01/2031 (g) 12,480
===============================================================================
ANNUAL REPORT OCTOBER 31, 2007 17
Schedule of Investments (continued)
BlackRock MuniYield Insured Fund, Inc. (in Thousands)
Face
Amount Municipal Bonds Value
===============================================================================
West Virginia -- 0.6%
$ 5,925 Harrison County, West Virginia, County Commission
for Solid Waste Disposal Revenue Bonds
(Monongahela Power), AMT, Series C, 6.75%
due 8/01/2024 (a) $ 5,939
===============================================================================
Wisconsin -- 0.4%
3,395 Wisconsin State Health and Educational Facilities
Authority Revenue Bonds (SynergyHealth Inc.),
6% due 11/15/2032 3,521
===============================================================================
Puerto Rico -- 0.4%
20,000 Puerto Rico Sales Tax Financing Corporation, Sales
Tax Revenue Refunding Bonds, Series A, 5.01%
due 8/01/2043 (b)(o) 3,446
-------------------------------------------------------------------------------
Total Municipal Bonds
(Cost -- $1,339,459) -- 140.1% 1,373,895
===============================================================================
===============================================================================
Municipal Bonds Held in Trust (j)
===============================================================================
California -- 7.6%
14,900 California State, Various Purpose, GO, 5.50%
due 11/01/2033 (b) 16,049
10,030 Gavilan, California, Joint Community College District,
GO (Election of 2004), Series A, 5.50%
due 8/01/2028 (a) 10,789
14,000 Port of Oakland, California, Revenue Bonds, AMT,
Series K, 5.75% due 11/01/2021 (c) 14,537
9,460 Port of Oakland, California, Revenue Refunding
Bonds, AMT, Series L, 5.375%
due 11/01/2027 (c) 9,844
San Jose, California, Airport Revenue Refunding
Bonds (a):
14,300 5% due 3/01/2037 14,655
7,965 Series A, 5.50% due 3/01/2032 8,163
===============================================================================
Florida -- 3.7%
Miami-Dade County, Florida, Aviation Revenue
Refunding Bonds (Miami International Airport), AMT:
10,750 5.375% due 10/01/2025 (c) 11,088
25,000 Series A, 5% due 10/01/2039 (b) 25,047
===============================================================================
Illinois -- 8.3%
16,400 Chicago, Illinois, O'Hare International Airport,
General Airport Revenue Refunding Bonds, Third Lien,
AMT, Series C-2, 5.25% due 1/01/2030 (g) 16,762
Chicago, Illinois, O'Hare International Airport
Revenue Bonds, Third Lien, AMT, Series B-2 (b):
16,680 5.25% due 1/01/2027 17,120
26,230 6% due 1/01/2027 28,429
17,200 6% due 1/01/2029 18,604
===============================================================================
Louisiana -- 1.6%
15,000 Louisiana Public Facilities Authority, Mortgage
Revenue Refunding Bonds (Baton Rouge General
Medical Center Project), 5.25%
due 7/01/2033 (b) 15,519
===============================================================================
Massachusetts -- 2.0%
19,755 Massachusetts State Port Authority Special Facilities
Revenue Refunding Bonds, 5%
due 7/01/2038 (c) 19,568
===============================================================================
Michigan -- 1.4%
Michigan State Strategic Fund, Limited Obligation
Revenue Refunding Bonds (Detroit Edison
Company Pollution Control Project), AMT (e):
8,000 Series A, 5.50% due 6/01/2030 8,339
5,000 Series C, 5.65% due 9/01/2029 5,179
===============================================================================
Oklahoma -- 0.9%
8,680 Oklahoma State Industries Authority Revenue
Refunding Bonds (Health System-Obligation
Group), Series A, 5.75% due 8/15/2029 (b) 9,060
===============================================================================
Pennsylvania -- 1.7%
15,600 Pennsylvania State Turnpike Commission, Turnpike
Revenue Bonds, Series A, 5.50%
due 12/01/2031 (a) 16,937
===============================================================================
Texas -- 7.0%
21,000 Dallas-Fort Worth, Texas, International Airport Revenue
Bonds, AMT, Series A, 5.50% due 11/01/2033 (b) 21,803
15,000 Dallas-Fort Worth, Texas, International Airport,
Revenue Refunding and Improvement Bonds, AMT,
Series A, 5.625% due 11/01/2026 (c) 15,712
30,000 Houston, Texas, Airport System Revenue Refunding
Bonds, Sub-Lien, Series B, 5.50%
due 7/01/2030 (g) 31,560
===============================================================================
Washington -- 2.1%
20,565 Port Seattle, Washington, Revenue Refunding Bonds,
Series B, AMT, 5.20% due 7/01/2029 (b) 20,975
-------------------------------------------------------------------------------
Total Municipal Bonds Held in Trust
(Cost -- $348,712) -- 36.3% 355,739
===============================================================================
===============================================================================
Shares
Held Short-Term Securities
===============================================================================
4,902 Merrill Lynch Institutional Tax-Exempt Fund,
3.32% (p)(q) 4,902
-------------------------------------------------------------------------------
Total Short-Term Securities
(Cost -- $4,902) -- 0.5% 4,902
===============================================================================
Total Investments (Cost -- $1,693,073*) -- 176.9% 1,734,536
Liabilities in Excess of Other Assets -- (1.1%) (10,556)
Liability for Trust Certificates,
Including Interest Expense Payable -- (17.6%) (172,699)
Preferred Stock, at Redemption Value -- (58.2%) (570,540)
----------
Net Assets Applicable to Common Stock -- 100.0% $ 980,741
==========
18 ANNUAL REPORT OCTOBER 31, 2007
Schedule of Investments (concluded)
BlackRock MuniYield Insured Fund, Inc. (in Thousands)
* The cost and unrealized appreciation (depreciation) of investments as of
October 31, 2007, as computed for federal income tax purposes, were as
follows:
Aggregate cost ........................................... $ 1,527,641
===========
Gross unrealized appreciation ............................ $ 39,669
Gross unrealized depreciation ............................ (3,412)
-----------
Net unrealized appreciation .............................. $ 36,257
===========
(a) AMBAC Insured.
(b) MBIA Insured.
(c) FGIC Insured.
(d) CIFG Insured.
(e) XL Capital Insured.
(f) Prerefunded.
(g) FSA Insured.
(h) Security may have a maturity of more than one year at time of issuance,
but has variable rate and demand features that qualify it as a short-term
security. The rate disclosed is that currently in effect. This rate
changes periodically based upon prevailing market rates.
(i) Escrowed to maturity.
(j) Securities represent underlying bonds transferred to a separate
securitization trust established in a tender option bond transaction in
which the Fund may have acquired the residual interest certificates. These
securities serve as collateral in a financing transaction. See Note 1(c)
to the Financial Statements for details of municipal bonds held in trust.
(k) FNMA/GNMA Collateralized.
(l) FHLMC Collateralized.
(m) Radian Insured.
(n) Assured Guaranty Insured.
(o) Represents a zero coupon or step-up bond; the interest rate shown is the
effective yield at the time of purchase.
(p) Represents the current yield as of October 31, 2007.
(q) 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:
--------------------------------------------------------------------------
Net Dividend
Affiliate Activity Income
--------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund 4,902 $222
--------------------------------------------------------------------------
(r) All or a portion of security held as collateral in connection with open
forward interest rate swaps.
o Forward interest rate swaps outstanding as of October 31, 2007 were as
follows:
--------------------------------------------------------------------------
Notional Unrealized
Amount Appreciation
--------------------------------------------------------------------------
Pay fixed rate of 3.56% and receive a floating
rate based on 1-week (SIFMA) Municipal
Swap Index rate
Broker, Goldman Sachs
Expires January 2016 $ 60,000 $ 95
Pay fixed rate of 3.653% and receive a
floating rate based on 1-week (SIFMA)
Municipal Swap Index rate
Broker, JPMorgan Chase
Expires January 2018 $275,000 547
--------------------------------------------------------------------------
Total $642
====
See Notes to Financial Statements.
ANNUAL REPORT OCTOBER 31, 2007 19
Schedule of Investments as of October 31, 2007
BlackRock MuniYield Quality Fund, Inc. (in Thousands)
Face
Amount Municipal Bonds Value
===============================================================================
Alabama -- 2.3%
$ 3,000 Jefferson County, Alabama, Limited Obligation
School Warrants, Series A, 4.75%
due 1/01/2025 $ 3,025
7,275 University of Alabama, General Revenue Bonds,
Series A, 5% due 7/01/2034 (g) 7,440
===============================================================================
Arizona -- 0.7%
3,320 Salt Verde Financial Corporation, Arizona, Senior
Gas Revenue Bonds, 5% due 12/01/2032 3,205
===============================================================================
California -- 20.9%
4,150 Alameda Corridor Transportation Authority, California,
Capital Appreciation Revenue Refunding Bonds,
Subordinate Lien, Series A, 5.45%
due 10/01/2025 (a)(m) 3,478
1,250 Anaheim, California, Public Financing Authority,
Electric System Distribution Facilities Revenue
Bonds, Series A, 5% due 10/01/2031 (f)(r) 1,289
2,200 Arcadia, California, Unified School District, Capital
Appreciation, GO (Election of 2006), Series A,
4.96% due 8/01/2039 (f)(m) 430
Cabrillo, California, Community College District, GO
(Election of 2004), Series B (g)(m):
3,250 5.20% due 8/01/2037 701
7,405 4.87% due 8/01/2038 1,514
California State, GO:
2,790 5.50% due 4/01/2014 (h) 3,106
5 5.50% due 4/01/2028 5
California State, GO, Refunding:
4,450 5.25% due 9/01/2010 (h) 4,671
30 5.125% due 6/01/2027 31
5,700 5.25% due 2/01/2033 (j) 5,892
2,500 5% due 6/01/2037 2,532
3,450 California State University, Systemwide Revenue
Bonds, Series A, 5% due 11/01/2035 (d) 3,545
California State, Various Purpose, GO:
10,000 5.25% due 11/01/2029 10,439
3,200 5.50% due 11/01/2033 3,382
1,200 Chino Valley, California, Unified School District, GO
(Election of 2002), Series C, 5.25%
due 8/01/2030 (g) 1,271
3,525 Coachella Valley, California, Unified School District,
GO (Election of 2005), Series A, 5%
due 8/01/2028 (d) 3,672
2,150 East Side Union High School District, California,
Santa Clara County, GO (Election of 2002),
Series D, 5% due 8/01/2026 (b) 2,248
1,230 Fresno, California, Unified School District, GO
(Election of 2001), Series E, 5%
due 8/01/2030 (f) 1,282
1,600 Golden State Tobacco Securitization Corporation of
California, Tobacco Settlement Revenue Bonds
Series B, 5.50% due 6/01/2013 (b)(h) 1,752
3,410 Los Angeles, California, Municipal Improvement
Corporation, Lease Revenue Bonds, Series B1,
4.75% due 8/01/2037 (d) 3,412
Metropolitan Water District of Southern California,
Waterworks Revenue Bonds, Series B-1 (d):
4,000 5% due 10/01/2029 4,141
2,275 5% due 10/01/2036 2,336
2,000 Mount Diablo, California, Unified School District, GO
(Election of 2002), 5% due 7/01/2027 (d) 2,079
2,750 Orange County, California, Sanitation District, COP,
5% due 2/01/2033 (d) 2,799
2,000 Poway, California, Redevelopment Agency, Tax
Allocation Refunding Bonds (Paguay Redevelop-
ment Project), 5.125% due 6/15/2033 (a) 2,055
2,100 Sacramento, California, Unified School District, GO
(Election of 2002), 5% due 7/01/2030 (g) 2,180
9,000 San Diego County, California, Water Authority, Water
Revenue Refunding Bonds, COP, Series A, 5%
due 5/01/2032 (g) 9,218
5,300 San Jose, California, Airport Revenue Refunding
Bonds, AMT, Series A, 5.50% due 3/01/2032 (a) 5,609
2,725 San Mateo County, California, Community College
District, GO (Election of 2001), Series A, 5%
due 9/01/2026 (d) 2,834
1,500 Southern California Public Power Authority, Natural
Gas Project Number 1 Revenue Bonds, Series A,
5% due 11/01/2033 1,455
1,950 Tamalpais, California, Union High School District, GO
(Election of 2001), 5% due 8/01/2028 (f) 2,016
3,150 Ventura County, California, Community College
District, GO (Election of 2002), Series B, 5%
due 8/01/2030 (g) 3,271
===============================================================================
Colorado -- 3.9%
1,650 Colorado Health Facilities Authority Revenue Bonds
(Catholic Health Initiatives), Series A, 5.50%
due 3/01/2032 (c) 1,754
Colorado Health Facilities Authority Revenue Bonds
(Covenant Retirement Communities Inc.),
Series A (j) :
1,600 5.50% due 12/01/2027 1,640
1,000 5.50% due 12/01/2033 1,017
9,000 E-470 Public Highway Authority, Colorado, Capital
Appreciation Revenue Refunding Bonds, Series B,
5.485% due 9/01/2029 (g)(m) 2,890
11,125 Northwest Parkway, Colorado, Public Highway
Authority, Capital Appreciation Revenue Bonds,
Senior Convertible, Series C, 5.345%
due 6/15/2025 (f)(m) 10,295
===============================================================================
District of Columbia -- 1.8%
5,700 District of Columbia, GO, Series A, 4.75%
due 6/01/2036 (d) 5,700
District of Columbia, Revenue Refunding Bonds
(Catholic University of America)(a):
1,930 5.625% due 10/01/2009 (h) 2,024
570 5.625% due 10/01/2029 593
===============================================================================
Florida -- 2.4%
2,235 Beacon Tradeport Community Development District,
Florida, Special Assessment Revenue Refunding
Bonds (Commercial Project), Series A, 5.625%
due 5/01/2032 (j) 2,310
5,415 Highlands County, Florida, Health Facilities Authority,
Hospital Revenue Bonds (Adventist Health System),
Series C, 5.25% due 11/15/2036 5,524
3,000 Miami-Dade County, Florida, Aviation Revenue
Refunding Bonds (Miami International Airport),
AMT, Series A, 5% due 10/01/2038 (k) 3,000
===============================================================================
20 ANNUAL REPORT OCTOBER 31, 2007
Schedule of Investments (continued)
BlackRock MuniYield Quality Fund, Inc. (in Thousands)
Face
Amount Municipal Bonds Value
===============================================================================
Georgia -- 5.5%
$ 3,500 Atlanta, Georgia, Airport Passenger Facility Charge
and Subordinate Lien General Revenue Refunding
Bonds, Series C, 5% due 1/01/2033 (f) $ 3,583
Atlanta, Georgia, Water and Wastewater
Revenue Bonds:
4,270 5% due 11/01/2034 (f) 4,379
1,200 Series A, 5% due 11/01/2033 (g) 1,221
2,525 Series A, 5% due 11/01/2039 (g) 2,562
Augusta, Georgia, Water and Sewer Revenue
Bonds (f):
5,000 5.25% due 10/01/2034 5,237
2,820 5.25% due 10/01/2039 2,943
4,785 Monroe County, Georgia, Development Authority,
PCR, Refunding (Oglethorpe Power Corporation --
Scherer), Series A, 6.80% due 1/01/2011 5,198
===============================================================================
Hawaii -- 0.5%
2,000 Hawaii State, GO, Series CX, 5.50%
due 2/01/2021 (f) 2,136
===============================================================================
Illinois -- 15.8%
Chicago, Illinois, GO (Lakefront Millennium Parking
Facilities)(g)(h):
5,000 5.125% due 1/01/2009 5,191
2,500 5.75% due 1/01/2012 2,755
Chicago, Illinois, O'Hare International Airport
Revenue Bonds, Third Lien, AMT, Series B-2 :
3,400 5.75% due 1/01/2023 (f) 3,634
4,000 5.75% due 1/01/2024 (f) 4,269
3,300 6% due 1/01/2029 (b) 3,569
Chicago, Illinois, O'Hare International Airport,
Revenue Refunding Bonds, AMT:
2,665 3rd Lien, Series A-2, 5.75%
due 1/01/2021 (f) 2,857
3 DRIVERS, Series 250, 7.665%
due 1/01/2021 (g)(i) 3
5,080 Cook County, Illinois, Capital Improvement, GO,
Series C, 5.50% due 11/15/2012 (a)(h) 5,536
Illinois Sports Facilities Authority, State Tax
Supported Revenue Bonds (a):
28,525 5.212% due 6/15/2030 (m) 26,823
5,500 5% due 6/15/2032 5,630
Metropolitan Pier and Exposition Authority, Illinois,
Dedicated State Tax Revenue Refunding Bonds
(McCormick Place Expansion Project):
7,000 5.50% due 12/15/2024 (d) 7,290
3,500 Series B, 5.75% due 6/15/2023 (g) 3,796
===============================================================================
Indiana -- 2.6%
Indianapolis, Indiana, Local Public Improvement
Bond Bank, Revenue Refunding Bonds
(Indianapolis Airport Authority Project), AMT,
Series B (g):
6,470 5.25% due 1/01/2028 6,691
5,055 5.25% due 1/01/2030 5,210
===============================================================================
Louisiana -- 4.6%
5,100 Louisiana Local Government Environmental
Facilities and Community Development Authority,
Revenue Bonds (Capital Projects and Equipment
Acquisition), Series A, 6.30% due 7/01/2030 (a) 5,994
2,800 Louisiana State Citizens Property Insurance
Corporation, Assessment Revenue Bonds,
Series B, 5% due 6/01/2023 (a) 2,917
7,300 Louisiana State, Gas and Fuels Tax Revenue Bonds,
Series A, 4.75% due 5/01/2039 (f) 7,305
4,675 Louisiana State Transportation Authority, Senior Lien
Toll Revenue Capital Appreciation Bonds, Series B,
5.31% due 12/01/2027 (a)(m) 1,650
800 Rapides Financing Authority, Louisiana, Revenue
Bonds (Cleco Power LLC Project), AMT, 4.70%
due 11/01/2036 (a) 752
1,900 Terrebonne Parish, Louisiana, Hospital Service
District Number 1, Hospital Revenue Bonds
(Terrebonne General Medical Center Project),
5.50% due 4/01/2033 (a) 2,027
===============================================================================
Maryland -- 1.6%
7,115 Baltimore, Maryland, Convention Center Hotel
Revenue Bonds, Senior Series A, 5.25%
due 9/01/2039 (b) 7,457
===============================================================================
Massachusetts -- 8.5%
3,730 Massachusetts Bay, Massachusetts, Transportation
Authority, General Transportation System Revenue
Refunding Bonds, Series A, 7% due 3/01/2011 (g) 4,128
3,550 Massachusetts Bay Transportation Authority, Revenue
Refunding Bonds (General Transportation System),
Series A, 7% due 3/01/2014 (g) 4,118
Massachusetts Bay Transportation Authority, Sales
Tax Revenue Refunding Bonds, Senior Series A-2 (m):
11,400 4.80% due 7/01/2032 3,314
13,400 5.209% due 7/01/2035 3,324
4,000 Massachusetts State, HFA, Rental Housing Mortgage
Revenue Bonds, AMT, Series C, 5.60%
due 1/01/2045 (f) 4,153
2,200 Massachusetts State, HFA, S/F Housing Revenue
Bonds, AMT, Series 128, 4.80%
due 12/01/2027 (f) 2,134
1,240 Massachusetts State Health and Educational
Facilities Authority Revenue Bonds (Lahey Clinic
Medical Center), Series D, 5.25% due 8/15/2037 1,259
2 Massachusetts State Port Authority, Special Facilities
Revenue Bonds, DRIVERS, AMT, Series 501,
7.16% due 7/01/2009 (a)(i) 3
14,400 Massachusetts State School Building Authority,
Dedicated Sales Tax Revenue Bonds, Series A, 5%
due 8/15/2030 (f) 14,944
1,210 Massachusetts State Water Resource Authority,
General Revenue Refunding Bonds, Series B,
5.125% due 8/01/2027 (g) 1,266
===============================================================================
ANNUAL REPORT OCTOBER 31, 2007 21
Schedule of Investments (continued)
BlackRock MuniYield Quality Fund, Inc. (in Thousands)
Face
Amount Municipal Bonds Value
===============================================================================
Michigan -- 3.5%
$ 2,350 Detroit, Michigan, Sewage Disposal System, Second
Lien Revenue Bonds, Series B, 5%
due 7/01/2036 (d) $ 2,416
2,300 Michigan Higher Education Student Loan Authority,
Student Loan Revenue Refunding Bonds, AMT,
Series XVII-G, 5.20% due 9/01/2020 (a) 2,368
Michigan State Strategic Fund, Limited Obligation
Revenue Refunding Bonds (Detroit Edison
Company Pollution Control Project), AMT (b):
1,700 Series A, 5.50% due 6/01/2030 1,772
3,300 Series C, 5.65% due 9/01/2029 3,418
5,800 Series C, 5.45% due 12/15/2032 5,978
===============================================================================
Minnesota -- 0.9%
4,177 Dakota County, Minnesota, Community Development
Agency, S/F Mortgage Revenue Bonds (Mortgage-
Backed Securities Program), Series B, 5.15%
due 12/01/2038 (o)(p) 4,177
===============================================================================
Nebraska -- 4.0%
6,315 Municipal Energy Agency of Nebraska, Power Supply
System Revenue Bonds, Series A, 5%
due 4/01/2033 (f) 6,462
8,800 Public Power Generation Agency, Nebraska, Revenue
Bonds (Whelan Energy Center Unit 2), Series A,
5% due 1/01/2032 (a) 9,114
2,300 Washington County, Nebraska, Wastewater Facilities
Revenue Bonds (Cargill Inc. Project), AMT, 5.90%
due 11/01/2027 2,451
===============================================================================
Nevada -- 10.2%
4,100 Carson City, Nevada, Hospital Revenue Bonds
(Carson-Tahoe Hospital Project), Series A, 5.50%
due 9/01/2033 (j) 4,179
Clark County, Nevada, Airport System Subordinate
Lien Revenue Bonds, Series A-2 (d):
2,000 5% due 7/01/2030 2,055
19,100 5% due 7/01/2036 19,511
Clark County, Nevada, IDR (Southwest Gas
Corporation Project), AMT (d):
2,300 Series A, 4.75% due 9/01/2036 2,186
12,000 Series D, 5.25% due 3/01/2038 12,254
5,710 Washoe County, Nevada, School District, GO,
5.875% due 12/01/2009 (f)(h) 5,987
===============================================================================
New Hampshire -- 3.5%
10,000 New Hampshire Health and Education Facilities
Authority Revenue Bonds (Dartmouth-Hitchcock
Obligation Group), 5.50% due 8/01/2027 10,598
5,000 New Hampshire State Business Finance Authority,
PCR, Refunding (Public Service Company), AMT,
Series D, 6% due 5/01/2021 (g) 5,147
===============================================================================
New Jersey -- 4.4%
New Jersey EDA, Cigarette Tax Revenue Bonds:
910 5.75% due 6/15/2029 953
1,385 5.50% due 6/15/2031 1,427
5,500 New Jersey EDA, Motor Vehicle Surcharge Revenue
Bonds, Series A, 5.25% due 7/01/2031 (g) 5,783
New Jersey EDA, School Facilities Construction
Revenue Bonds, Series O:
3,860 5.125% due 3/01/2028 4,024
7,500 5.125% due 3/01/2030 7,804
===============================================================================
New York -- 5.9%
3,000 Metropolitan Transportation Authority, New York,
Revenue Bonds, Series B, 5% due 11/15/2035 (g) 3,100
8,990 Metropolitan Transportation Authority, New York,
Transportation Revenue Bonds, Series A, 5%
due 11/15/2032 (d) 9,237
10,000 New York State Thruway Authority, General Revenue
Refunding Bonds, Series G, 5% due 1/01/2032 (f) 10,367
3,570 Tobacco Settlement Financing Corporation of New
York Revenue Bonds, Series A-1, 5.25%
due 6/01/2022 (a) 3,786
===============================================================================
Ohio -- 0.5%
2,000 Jackson, Ohio, Hospital Facilities Revenue Bonds
(Consolidated Health System -- Jackson Hospital),
6.125% due 10/01/2009 (h)(j) 2,114
===============================================================================
Oklahoma -- 0.5%
Tulsa, Oklahoma, Airports Improvement Trust, General
Revenue Bonds (Tulsa International Airport), AMT,
Series B (d):
1,000 6% due 6/01/2019 1,044
1,000 6.125% due 6/01/2026 1,047
===============================================================================
Pennsylvania -- 3.6%
2,000 Pennsylvania HFA, S/F Mortgage Revenue Refunding
Bonds, AMT, Series 99A, 5.25% due 10/01/2032 2,020
7,000 Pennsylvania State Public School Building Authority,
School Lease Revenue Bonds (The School District
of Philadelphia Project), 5% due 6/01/2013 (f)(h) 7,499
6,250 Philadelphia, Pennsylvania, Authority for Industrial
Development, Lease Revenue Bonds, Series B,
5.50% due 10/01/2011 (f)(h) 6,751
===============================================================================
South Carolina -- 3.6%
3,750 Berkeley County, South Carolina, School District,
Installment Lease Revenue Bonds (Securing Assets
for Education Project), 5.125% due 12/01/2030 3,828
3,200 Kershaw County, South Carolina, Public Schools
Foundation, Installment Power Revenue Refunding
Bonds, 5% due 12/01/2029 (k) 3,308
8,900 South Carolina Transportation Infrastructure Bank
Revenue Bonds, Series A, 5% due 10/01/2033 (a) 9,109
===============================================================================
Tennessee -- 2.7%
5,000 Memphis-Shelby County, Tennessee, Airport Authority,
Airport Revenue Bonds, AMT, Series D, 6.25%
due 3/01/2018 (a) 5,273
2,535 Tennessee Energy Acquisition Corporation, Gas
Revenue Bonds, Series A, 5.25% due 9/01/2026 2,550
Tennessee HDA, Homeownership Revenue Bonds,
AMT, Series 2-C (a):
2,075 6.10% due 7/01/2013 2,135
2,340 6.20% due 7/01/2015 2,389
===============================================================================
Texas -- 12.4%
2,000 Austin, Texas, Convention Center Revenue Bonds
(Convention Enterprises Inc.), Trust Certificates,
Second Tier, Series B, 6% due 1/01/2011 (h) 2,148
1,000 Bell County, Texas, Health Facilities Development
Revenue Bonds (Lutheran General Health Care
System), 6.50% due 7/01/2019 (c) 1,195
22 ANNUAL REPORT OCTOBER 31, 2007
Schedule of Investments (continued)
BlackRock MuniYield Quality Fund, Inc. (in Thousands)
Face
Amount Municipal Bonds Value
===============================================================================
Texas (concluded)
Dallas-Fort Worth, Texas, International Airport
Revenue Refunding and Improvement Bonds, AMT,
Series A (d):
$ 1,835 5.875% due 11/01/2017 $ 1,948
2,145 5.875% due 11/01/2018 2,274
2,385 5.875% due 11/01/2019 2,528
Gregg County, Texas, Health Facilities Development
Corporation, Hospital Revenue Bonds (Good
Shepherd Medical Center Project) (h)(j):
2,600 6.375% due 10/01/2010 2,831
6,000 6.875% due 10/01/2010 6,615
4,000 Harris County-Houston Sports Authority, Texas,
Revenue Refunding Bonds, Senior Lien, Series G,
5.75% due 11/15/2020 (g) 4,280
Leander, Texas, Independent School District, Capital
Appreciation, GO, Refunding (School Building) (m):
9,250 5.46% due 8/15/2028 (d) 3,102
13,350 5.58% due 8/15/2035 2,978
6,150 Lewisville, Texas, Independent School District,
Capital Appreciation and School Building, GO,
Refunding, 4.748% due 8/15/2024 (d)(m) 2,693
7,150 North Harris County, Texas, Regional Water Authority,
Senior Lien Revenue Bonds, 5.125%
due 12/15/2035 (g) 7,390
1,225 North Texas Thruway Authority, Dallas North Thruway
System Revenue Bonds, Series A, 5%
due 1/01/2035 (f) 1,255
2,094 Texas State Affordable Housing Corporation, S/F
Mortgage Revenue Bonds (Professional Educators
Home Loan Program), AMT, Series A-1, 5.50%
due 12/01/2039 (o)(p) 2,217
7,200 Texas State Turnpike Authority, Central Texas Turnpike
System Revenue Bonds, First Tier, Series A, 5.75%
due 8/15/2038 (a) 7,724
4,600 Travis County, Texas, Health Facilities Development
Corporation, Revenue Refunding Bonds
(Ascension Health Credit), Series A, 6.25%
due 11/15/2009 (g)(h) 4,892
===============================================================================
Utah -- 3.8%
15,000 Salt Lake City, Utah, Hospital Revenue Refunding
Bonds (IHC Hospitals Inc.), 6.30%
due 2/15/2015 (g) 17,017
===============================================================================
Vermont -- 0.2%
1,000 Vermont HFA, Revenue Refunding Bonds, AMT,
Series C, 5.50% due 11/01/2038 (f) 1,026
===============================================================================
Virginia -- 0.7%
3,100 Halifax County, Virginia, IDA, Exempt Facility Revenue
Refunding Bonds (Old Dominion Electric
Cooperative Project), AMT, 5.625%
due 6/01/2028 (a) 3,291
===============================================================================
Washington -- 2.7%
2,400 Port of Tacoma, Washington, Revenue Refunding
Bonds, Series A, 5.25% due 12/01/2014 (a)(h) 2,641
5,100 Tacoma, Washington, Regional Water Supply System,
Water Revenue Bonds, 5% due 12/01/2032 (g) 5,210
4,125 Washington State, GO, Series A and AT-6, 6.25%
due 2/01/2011 (f) 4,306
-------------------------------------------------------------------------------
Total Municipal Bonds
(Cost -- $589,388) -- 134.2% 607,502
===============================================================================
===============================================================================
Municipal Bonds Held in Trust (n)
===============================================================================
California -- 5.9%
Golden State Tobacco Securitization Corporation of
California, Tobacco Settlement Revenue Bonds,
Series B (h):
10,000 5.50% due 6/01/2013 (b) 10,948
14,160 5.625% due 6/01/2013 (k) 15,591
===============================================================================
Florida -- 1.6%
1,900 Miami-Dade County, Florida, Aviation Revenue
Refunding Bonds (Miami International Airport),
AMT, Series A, 5% due 10/01/2040 (b) 1,902
5,200 Orange County, Florida, Sales Tax Revenue Refunding
Bonds, Series B, 5.125% due 1/01/2032 (d) 5,387
===============================================================================
Georgia -- 2.2%
10,000 Atlanta, Georgia, Airport Passenger Facility Charge,
Subordinate Lien Revenue Refunding Bonds,
Series C, 5% due 1/01/2033 (f) 10,238
===============================================================================
Illinois -- 9.4%
10,000 Chicago, Illinois, Board of Education, GO (Chicago
Reform Project), 5.75% due 12/1/2027 (a) 10,216
Chicago, Illinois, O'Hare International Airport,
General Airport Revenue Refunding Bonds,
Third Lien, AMT, Series A (g):
13,665 5.75% due 1/01/2021 14,434
5,000 5.50% due 1/01/2022 5,224
12,500 5.375% due 1/01/2032 12,687
===============================================================================
Massachusetts -- 0.9%
3,825 Massachusetts State Port Authority, Special Facilities
Revenue Bonds (Delta Air Lines Inc. Project), AMT,
Series A, 5.50% due 1/01/2019 (a) 4,013
===============================================================================
New Jersey -- 6.5%
New Jersey EDA, Cigarette Tax Revenue Bonds (e):
7,150 5.50% due 6/15/2024 7,521
6,000 5.50% due 6/15/2031 6,397
14,660 New Jersey EDA, Motor Vehicle Surcharge Revenue
Bonds, Series A, 5.25% due 7/01/2031 (g) 15,416
===============================================================================
ANNUAL REPORT OCTOBER 31, 2007 23
Schedule of Investments (concluded)
BlackRock MuniYield Quality Fund, Inc. (in Thousands)
Face
Amount Municipal Bonds Held in Trust (n) Value
===============================================================================
New York -- 3.3%
$13,840 New York City, New York, GO, Series B, 5.875%
due 8/01/2016 (g) $ 14,808
===============================================================================
Oregon -- 3.5%
15,000 Portland, Oregon, Sewer System Revenue Bonds,
Series A, 5.75% due 8/01/2010 (d)(h) 15,900
===============================================================================
Texas -- 2.5%
10,470 Denton, Texas, Utility System Revenue Bonds,
Series A, 6% due 12/01/2010 (f)(h) 11,244
-------------------------------------------------------------------------------
Total Municipal Bonds Held in Trust
(Cost -- $157,350) -- 35.8% 161,926
===============================================================================
===============================================================================
Shares
Held Short-Term Securities Value
===============================================================================
1,008 Merrill Lynch Institutional Tax-Exempt Fund,
3.32% (l)(q) 1,008
-------------------------------------------------------------------------------
Total Short-Term Securities
(Cost -- $1,008) -- 0.2% 1,008
===============================================================================
Total Investments (Cost -- $747,744*) -- 170.2% 770,436
Other Assets Less Liabilities -- 2.2% 9,990
Liability for Trust Certificates,
Including Interest Expense Payable -- (17.1%) (77,605)
Preferred Stock, at Redemption Value -- (55.3%) (250,164)
----------
Net Assets Applicable to Common Stock -- 100.0% $ 452,657
==========
* The cost and unrealized appreciation (depreciation) of investments as of
October 31, 2007, as computed for federal income tax purposes, were as
follows:
Aggregate cost ............................................. $ 671,668
=========
Gross unrealized appreciation .............................. $ 24,134
Gross unrealized depreciation .............................. (2,051)
---------
Net unrealized appreciation ................................ $ 22,083
=========
(a) AMBAC Insured.
(b) XL Capital Insured.
(c) Escrowed to maturity.
(d) FGIC Insured.
(e) Assured Guaranty Insured.
(f) FSA Insured.
(g) MBIA Insured.
(h) Prerefunded.
(i) The rate disclosed is that currently in effect. This rate changes
periodically and inversely based upon prevailing market rates.
(j) Radian Insured.
(k) CIFG Insured.
(l) 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:
--------------------------------------------------------------------------
Net Dividend
Affiliate Activity Income
--------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund (5,708) $158
--------------------------------------------------------------------------
(m) Represents a zero coupon or step-up bond; the interest rate shown is the
effective yield at the time of purchase.
(n) Securities represent underlying bonds transferred to a separate
securitization trust established in a tender option bond transaction in
which the Fund may have acquired the residual interest certificates. These
securities serve as collateral in a financing transaction. See Note 1(c)
to the Financial Statements for details of municipal bonds held in trust.
(o) FNMA/GNMA Collateralized.
(p) FHLMC Collateralized.
(q) Represents the current yield as of October 31, 2007.
(r) All or a portion of security held as collateral in connection with open
forward interest rate swaps.
o Forward interest rate swaps outstanding as of October 31, 2007 were as
follows:
--------------------------------------------------------------------------
Notional Unrealized
Amount Appreciation
--------------------------------------------------------------------------
Pay fixed rate of 3.838% and receive a
floating rate based on 1-week (SIFMA)
Municipal Swap Index rate
Broker, JPMorgan Chase
Expires January 2023 $15,000 $59
--------------------------------------------------------------------------
See Notes to Financial Statements.
24 ANNUAL REPORT OCTOBER 31, 2007
Schedule of Investments as of October 31, 2007
BlackRock MuniYield Quality Fund II, Inc. (in Thousands)
Face
Amount Municipal Bonds Value
===============================================================================
Alabama -- 1.7%
$ 2,000 Jefferson County, Alabama, Limited Obligation
School Warrants, Series A, 4.75% due 1/01/2025 $ 2,017
2,950 University of Alabama, General Revenue Bonds,
Series A, 5% due 7/01/2034 (i) 3,017
===============================================================================
Arizona -- 2.4%
7,500 Salt Verde Financial Corporation, Arizona, Senior
Gas Revenue Bonds, 5% due 12/01/2037 7,174
===============================================================================
California -- 28.0%
7,150 Alameda Corridor Transportation Authority, California,
Capital Appreciation Revenue Refunding Bonds,
Subordinate Lien, Series A, 5.33%
due 10/01/2025 (a)(n)(r) 5,992
3,800 Anaheim, California, Public Financing Authority,
Electric System Distribution Facilities Revenue
Bonds, Series A, 5% due 10/01/2031 (f) 3,918
550 Antelope Valley, California, Community College
District, GO (Election of 2004), Series B, 5.25%
due 8/01/2039 (i) 584
1,400 Arcadia, California, Unified School District, Capital
Appreciation, GO (Election of 2006), Series A,
4.96% due 8/01/2039 (f)(n) 274
Cabrillo, California, Community College District, GO
(Election of 2004), Series B (i)(n):
2,100 5.20% due 8/01/2037 453
4,800 4.87% due 8/01/2038 981
2,500 California Health Facilities Financing Authority
Revenue Bonds (Kaiser Permanente), RIB,
Series 26, 7.22% due 6/01/2022 (f)(j) 2,651
California State, GO, Refunding:
2,200 5.25% due 9/01/2010 (g) 2,309
20 5.125% due 6/01/2027 21
3,900 5.25% due 2/01/2033 (k) 4,031
5,700 5% due 6/01/2037 (h) 5,884
1,600 California State Public Works Board, Lease Revenue
Bonds (Department of Corrections), Series C, 5%
due 6/01/2025 1,632
2,200 California State University, Systemwide Revenue
Bonds, Series A, 5% due 11/01/2035 (c) 2,261
California State, Various Purpose, GO:
2,750 5.25% due 11/01/2029 2,871
6,500 5.50% due 11/01/2033 6,870
15,000 East Side Union High School District, California,
Santa Clara County, Capital Appreciation, GO
(Election of 2002), Series E, 5.15%
due 8/01/2029 (h)(n) 4,979
1,370 East Side Union High School District, California,
Santa Clara County, GO (Election of 2002),
Series D, 5% due 8/01/2026 (h) 1,433
2,770 Fairfield-Suisun, California, Unified School District,
GO (Election of 2002), 5.50% due 8/01/2028 (i) 2,980
800 Fresno, California, Unified School District, GO
(Election of 2001), Series E, 5%
due 8/01/2030 (f) 834
Golden State Tobacco Securitization Corporation of
California, Tobacco Settlement Revenue Bonds,
Series B (g):
2,300 5.50% due 6/01/2013 (h) 2,518
3,725 5.625% due 6/01/2013 (b) 4,101
2,815 John Swett Unified School District, California, GO,
Series A, 5.50% due 8/01/2026 (f) 2,988
Metropolitan Water District of Southern California,
Waterworks Revenue Bonds, Series B-1 (c):
2,600 5% due 10/01/2029 2,691
1,475 5% due 10/01/2036 1,515
2,300 Orange County, California, Sanitation District, COP,
5% due 2/01/2033 (c) 2,341
2,900 Palm Springs, California, Financing Authority, Lease
Revenue Refunding Bonds (Convention Center
Project), Series A, 5.50% due 11/01/2029 (i) 3,140
1,250 Poway, California, Redevelopment Agency, Tax
Allocation Refunding Bonds (Paguay Redevelop-
ment Project), 5.125% due 6/15/2033 (a)(r) 1,284
5,000 Sacramento, California, Municipal Utility District,
Electric Revenue Bonds, Series N, 5%
due 8/15/2028 (i) 5,165
1,350 Sacramento, California, Unified School District, GO
(Election of 2002), 5% due 7/01/2030 (i) 1,401
900 Southern California Public Power Authority, Natural
Gas Project Number 1 Revenue Bonds, Series A,
5% due 11/01/2028 883
1,325 Tamalpais, California, Union High School District, GO
(Election of 2001), 5% due 8/01/2028 (f) 1,370
2,025 Ventura County, California, Community College
District, GO (Election of 2002), Series B, 5%
due 8/01/2030 (i) 2,103
===============================================================================
Colorado -- 5.8%
1,150 Colorado Health Facilities Authority Revenue Bonds
(Catholic Health Initiatives), Series A, 5.50%
due 3/01/2032 (d) 1,222
Colorado Health Facilities Authority Revenue Bonds
(Covenant Retirement Communities Inc.),
Series A (k):
1,200 5.50% due 12/01/2027 1,230
675 5.50% due 12/01/2033 687
7,500 E-470 Public Highway Authority, Colorado, Capital
Appreciation Revenue Refunding Bonds, Series B,
5.607% due 9/01/2032 (i)(n) 2,015
10,975 Northwest Parkway, Colorado, Public Highway
Authority, Capital Appreciation Revenue Bonds,
Senior Convertible, Series C, 5.327%
due 6/15/2025 (f)(n) 10,156
1,735 Northwest Parkway, Colorado, Public Highway
Authority Revenue Bonds, Series A, 5.50%
due 6/15/2021 (a) 1,857
===============================================================================
District of Columbia -- 1.0%
2,900 District of Columbia, GO, Series A, 4.75%
due 6/01/2036 (c) 2,900
===============================================================================
Florida -- 2.5%
3,050 Highlands County, Florida, Health Facilities Authority,
Hospital Revenue Bonds (Adventist Health System),
Series C, 5.25% due 11/15/2036 3,112
1,700 Highlands County, Florida, Health Facilities Authority,
Hospital Revenue Refunding Bonds (Adventist
Health System), Series G, 5.125%
due 11/15/2032 1,715
ANNUAL REPORT OCTOBER 31, 2007 25
Schedule of Investments (continued)
BlackRock MuniYield Quality Fund II, Inc. (in Thousands)
Face
Amount Municipal Bonds Value
===============================================================================
Florida (concluded)
$ 2,600 Peace River/Manasota Regional Water Supply
Authority, Florida, Utility System Revenue Bonds,
Series A, 5% due 10/01/2030 (f) $ 2,673
===============================================================================
Georgia -- 7.1%
5,000 Atlanta, Georgia, Airport General Revenue Refunding
Bonds, Series B, 5.25% due 1/01/2033 (f) 5,211
5,000 Atlanta, Georgia, Airport Revenue Refunding Bonds,
Series A, 5.875% due 1/01/2017 (c) 5,286
2,850 Atlanta, Georgia, Water and Wastewater Revenue
Bonds, 5% due 11/01/2034 (f) 2,923
Atlanta, Georgia, Water and Wastewater Revenue
Bonds, Series A (i):
800 5% due 11/01/2033 814
4,610 5% due 11/01/2039 4,679
1,880 Augusta, Georgia, Water and Sewer Revenue Bonds,
5.25% due 10/01/2039 (f) 1,962
===============================================================================
Illinois -- 16.0%
Chicago, Illinois, O'Hare International Airport
Revenue Bonds, Third Lien, AMT, Series B-2:
5,200 5.75% due 1/01/2023 (f) 5,558
2,200 6% due 1/01/2029 (h) 2,380
2,460 Cook County, Illinois, Capital Improvement, GO,
Series C, 5.50% due 11/15/2012 (a)(g) 2,681
10,000 Illinois Regional Transportation Authority Revenue
Bonds, 6.50% due 7/01/2026 (i) 12,624
21,675 Illinois Sports Facilities Authority, State Tax
Supported Revenue Bonds, 5.264%
due 6/15/2030 (a)(n) 20,382
3,500 Metropolitan Pier and Exposition Authority, Illinois,
Dedicated State Tax Revenue Bonds (McCormick
Place Expansion), Series A, 5%
due 12/15/2028 (i) 3,596
===============================================================================
Louisiana -- 6.7%
1,655 Jefferson Parish, Louisiana, Home Mortgage
Authority, S/F Mortgage Revenue Bonds, AMT,
Series B-1, 6.65% due 12/01/2033 (e)(i) 1,728
5,500 Lafayette, Louisiana, Utilities Revenue Bonds, 5%
due 11/01/2028 (i) 5,684
2,300 Louisiana Local Government Environmental Facilities
and Community Development Authority, Revenue
Bonds (Capital Projects and Equipment Acquisition),
Series A, 6.30% due 7/01/2030 (a) 2,703
1,800 Louisiana State Citizens Property Insurance
Corporation, Assessment Revenue Bonds, Series B,
5% due 6/01/2023 (a) 1,875
3,500 Louisiana State, Gas and Fuels Tax Revenue Bonds,
Series A, 4.75% due 5/01/2039 (f) 3,502
3,185 Louisiana State Transportation Authority, Senior Lien
Toll Revenue Capital Appreciation Bonds, Series B,
5.31% due 12/01/2027 (a)(n) 1,124
1,750 Rapides Financing Authority, Louisiana, Revenue
Bonds (Cleco Power LLC Project), AMT, 4.70%
due 11/01/2036 (a) 1,646
1,300 Terrebonne Parish, Louisiana, Hospital Service
District Number 1, Hospital Revenue Bonds
(Terrebonne General Medical Center Project),
5.50% due 4/01/2033 (a) 1,387
===============================================================================
Massachusetts -- 3.6%
2,290 Massachusetts Bay Transportation Authority, Sales
Tax Revenue Refunding Bonds, Senior Series A-2,
5.12% due 7/01/2035 (n) 568
1,500 Massachusetts State, HFA, S/F Housing Revenue
Bonds, AMT, Series 128, 4.80%
due 12/01/2027 (f) 1,455
1,750 Massachusetts State Health and Educational
Facilities Authority Revenue Bonds (Lahey Clinic
Medical Center), Series D, 5.25% due 8/15/2037 1,777
5,800 Massachusetts State School Building Authority,
Dedicated Sales Tax Revenue Bonds, Series A, 5%
due 8/15/2030 (f) 6,019
840 Massachusetts State Water Resource Authority,
General Revenue Refunding Bonds, Series B,
5.125% due 8/01/2027 (i) 879
===============================================================================
Michigan -- 3.7%
1,500 Detroit, Michigan, Sewage Disposal System, Second
Lien Revenue Bonds, Series B, 5%
due 7/01/2036 (c) 1,542
1,000 Michigan Higher Education Student Loan Authority,
Student Loan Revenue Refunding Bonds, AMT,
Series XVII-G, 5.20% due 9/01/2020 (a) 1,030
3,335 Michigan State Hospital Finance Authority, Hospital
Revenue Refunding Bonds (Sparrow Obligated
Group), 5% due 11/15/2036 3,305
Michigan State Strategic Fund, Limited Obligation
Revenue Refunding Bonds (Detroit Edison
Company Pollution Control Project), AMT (h):
1,000 Series A, 5.50% due 6/01/2030 1,042
3,900 Series C, 5.45% due 12/15/2032 4,020
===============================================================================
Minnesota -- 0.9%
2,685 Dakota County, Minnesota, Community Development
Agency, S/F Mortgage Revenue Bonds (Mortgage-
Backed Securities Program), Series B, 5.15%
due 12/01/2038 (e)(q) 2,685
===============================================================================
Missouri -- 2.0%
Saint Louis County, Missouri, Pattonville R-3 School
District, GO (Missouri Direct Deposit
Program) (c)(g):
4,000 5.75% due 3/01/2010 4,242
1,500 6% due 3/01/2010 1,599
===============================================================================
Nebraska -- 0.4%
1,300 Municipal Energy Agency of Nebraska, Power Supply
System Revenue Bonds, Series A, 5%
due 4/01/2033 (f) 1,330
===============================================================================
Nevada -- 3.1%
2,800 Carson City, Nevada, Hospital Revenue Bonds
(Carson-Tahoe Hospital Project), Series A, 5.50%
due 9/01/2033 (k) 2,854
Clark County, Nevada, Airport System Subordinate
Lien Revenue Bonds, Series A-2 (c):
1,500 5% due 7/01/2030 1,541
2,700 5% due 7/01/2036 2,758
2,200 Clark County, Nevada, IDR (Southwest Gas Corp.
Project), AMT, Series A, 4.75% due 9/01/2036 (c) 2,091
===============================================================================
26 ANNUAL REPORT OCTOBER 31, 2007
Schedule of Investments (continued)
BlackRock MuniYield Quality Fund II, Inc. (in Thousands)
Face
Amount Municipal Bonds Value
===============================================================================
New Jersey -- 6.0%
New Jersey EDA, Cigarette Tax Revenue Bonds:
$ 1,070 5.75% due 6/15/2029 $ 1,121
500 5.50% due 6/15/2031 515
New Jersey EDA, Motor Vehicle Surcharge Revenue
Bonds, Series A (i):
2,400 5% due 7/01/2029 2,482
4,800 5.25% due 7/01/2033 5,042
New Jersey EDA, School Facilities Construction
Revenue Bonds:
4,250 Series O, 5.125% due 3/01/2028 4,430
4,000 Series P, 5.125% due 9/01/2028 4,169
===============================================================================
New Mexico -- 2.3%
6,295 New Mexico State Highway Commission, Tax Revenue
Bonds, Senior Sub-Lien, Series A, 6%
due 6/15/2010 (f)(g) 6,692
===============================================================================
New York -- 8.0%
1,800 Metropolitan Transportation Authority, New York,
Transportation Revenue Bonds, Series A, 5%
due 11/15/2032 (c) 1,849
9,280 Nassau Health Care Corporation, New York, Health
System Revenue Bonds, 5.75%
due 8/01/2009 (f)(g) 9,822
5,000 New York State Dormitory Authority, Revenue
Refunding Bonds (State University Educational
Facilities), 5.75% due 5/15/2010 (c)(g) 5,329
6,115 Tobacco Settlement Financing Corporation of New York
Revenue Bonds, Series A-1, 5.25%
due 6/01/2022 (a) 6,484
===============================================================================
Ohio -- 4.3%
6,150 Ohio State Air Quality, Development Authority Revenue
Bonds (Dayton Power and Light Company Project),
4.80% due 9/01/2036 (c) 5,908
Plain, Ohio, Local School District, GO, Refunding (c):
5,120 6% due 6/01/2011 (g) 5,546
1,170 6% due 12/01/2020 1,259
===============================================================================
Pennsylvania -- 3.2%
1,340 Pennsylvania HFA, S/F Mortgage Revenue Refunding
Bonds, AMT, Series 99A, 5.25% due 10/01/2032 1,353
2,000 Pennsylvania State Public School Building Authority,
School Lease Revenue Bonds (The School District
of Philadelphia Project), 5% due 6/01/2013 (f)(g) 2,143
3,230 Philadelphia, Pennsylvania, Authority for Industrial
Development, Lease Revenue Bonds, Series B,
5.50% due 10/01/2011 (f)(g) 3,489
2,350 Philadelphia, Pennsylvania, Gas Works Revenue
Refunding Bonds, 1998 General Ordinance, 7th
Series, 5% due 10/01/2032 (a) 2,420
===============================================================================
Rhode Island -- 1.4%
4,010 Rhode Island State Health and Educational Building
Corporation, Higher Education Facilities Revenue
Bonds (University of Rhode Island), Series A, 5.70%
due 9/15/2009 (g)(i) 4,210
===============================================================================
South Carolina -- 4.8%
2,450 Berkeley County, South Carolina, School District,
Installment Lease Revenue Bonds (Securing Assets
for Education Project), 5.125% due 12/01/2030 2,501
2,075 Kershaw County, South Carolina, Public Schools
Foundation, Installment Power Revenue Refunding
Bonds, 5% due 12/01/2029 (b) 2,145
3,000 Scago Educational Facilities Corporation for Pickens
County School District, South Carolina, Revenue
Bonds, 5% due 12/01/2031 (f) 3,079
6,100 South Carolina Transportation Infrastructure Bank
Revenue Bonds, Series A, 5% due 10/01/2033 (a) 6,243
===============================================================================
Tennessee -- 1.1%
Tennessee Energy Acquisition Corporation, Gas
Revenue Bonds:
1,670 Series A, 5.25% due 9/01/2026 1,680
1,500 Series C, 5% due 2/01/2027 1,458
===============================================================================
Texas -- 11.9%
2,000 Corpus Christi, Texas, Utility System Revenue Refunding
Bonds, Series A, 6% due 7/15/2010 (f)(g) 2,131
4,000 Gregg County, Texas, Health Facilities Development
Corporation, Hospital Revenue Bonds (Good
Shepherd Medical Center Project), 6.875%
due 10/01/2010 (g)(k) 4,410
Leander, Texas, Independent School District, Capital
Appreciation, GO, Refunding (School Building) (n):
9,345 5.51% due 8/15/2030 (c) 2,798
8,800 5.58% due 8/15/2035 1,963
3,915 Lewisville, Texas, Independent School District, Capital
Appreciation and School Building, GO, Refunding,
4.67% due 8/15/2024 (c)(n) 1,714
3,500 Lower Colorado River Authority, Texas, PCR (Samsung
Austin Semiconductor), AMT, 6.375% due 4/01/2027 3,557
2,250 Matagorda County, Texas, Navigation District Number 1,
PCR, Refunding (Central Power and Light Company
Project), AMT, 5.20% due 5/01/2030 (i) 2,319
4,925 North Harris County, Texas, Regional Water Authority,
Senior Lien Revenue Bonds, 5.125%
due 12/15/2035 (i) 5,090
800 North Texas Thruway Authority, Dallas North Thruway
System Revenue Bonds, Series A, 5%
due 1/01/2035 (f) 819
1,296 Texas State Affordable Housing Corporation, S/F
Mortgage Revenue Bonds (Professional Educators
Home Loan Program), AMT, Series A-1, 5.50%
due 12/01/2039 (e)(q) 1,372
Texas State Turnpike Authority, Central Texas Turnpike
System Revenue Bonds, First Tier, Series A (a):
4,800 5.75% due 8/15/2038 5,149
3,600 5.50% due 8/15/2039 3,822
===============================================================================
Vermont -- 1.2%
700 Vermont HFA, Revenue Refunding Bonds, AMT, Series C,
5.50% due 11/01/2038 (f) 718
2,755 Vermont HFA, S/F Housing Revenue Bonds, AMT,
Series 27, 4.85% due 11/01/2032 (f) 2,655
===============================================================================
ANNUAL REPORT OCTOBER 31, 2007 27
Schedule of Investments (continued)
BlackRock MuniYield Quality Fund II, Inc. (in Thousands)
Face
Amount Municipal Bonds Value
===============================================================================
Virginia -- 0.8%
$ 2,100 Halifax County, Virginia, IDA, Exempt Facility Revenue
Refunding Bonds (Old Dominion Electric
Cooperative Project), AMT, 5.625%
due 6/01/2028 (a) $ 2,229
===============================================================================
Washington -- 5.5%
7,470 Port of Seattle, Washington, Revenue Bonds, AMT,
Series B, 6% due 2/01/2016 (i) 7,851
1,600 Port of Tacoma, Washington, Revenue Refunding
Bonds, Series A, 5.25% due 12/01/2014 (a)(g) 1,761
6,150 Seattle, Washington, Municipal Light and Power
Revenue Bonds, 6% due 10/01/2009 (g)(i) 6,497
-------------------------------------------------------------------------------
Total Municipal Bonds
(Cost -- $385,799) -- 135.4% 398,939
===============================================================================
===============================================================================
Municipal Bonds Held in Trust (o)
===============================================================================
Delaware -- 2.4%
6,670 Delaware River Port Authority of Pennsylvania and
New Jersey Revenue Bonds, 6%
due 1/01/2017 (f) 6,996
===============================================================================
Florida -- 1.7%
1,250 Miami-Dade County, Florida, Aviation Revenue
Refunding Bonds (Miami International Airport),
AMT, Series A, 5% due 10/01/2040 (h) 1,252
3,575 Orange County, Florida, Sales Tax Revenue Refunding
Bonds, Series B, 5.125% due 1/01/2032 (c) 3,709
===============================================================================
Georgia --5.9%
17,000 Atlanta, Georgia, Airport Passenger Facility Charge,
Subordinate Lien Revenue Refunding Bonds,
Series C, 5% due 1/01/2033 (f) 17,405
===============================================================================
Illinois --6.0%
9,500 Chicago, Illinois, O'Hare International Airport,
General Airport Revenue Refunding Bonds, Third
Lien, AMT, Series A, 5.50% due 1/01/2022 (i) 9,926
7,250 Metropolitan Pier and Exposition Authority, Illinois,
Dedicated State Tax Revenue Refunding Bonds
(McCormick Place Expansion Project), Series B,
5.75% due 6/15/2023 (i) 7,863
===============================================================================
Massachusetts -- 8.8%
20,000 Massachusetts State HFA, Housing Revenue Bonds
(Rental Mortgage), AMT, Series F, 5.25%
due 1/01/2046 (f) 20,171
Massachusetts State Port Authority, Special
Facilities Revenue Bonds (Delta Air Lines Inc.
Project), AMT, Series A (a):
2,900 5.50% due 1/01/2016 3,042
2,670 5.50% due 1/01/2019 2,801
===============================================================================
New Jersey -- 3.1%
New Jersey EDA, Cigarette Tax Revenue Bonds (l):
4,600 5.50%, due 6/15/2024 4,870
4,000 5.50%, due 6/15/2031 4,234
===============================================================================
South Carolina -- 5.7%
Charleston Educational Excellence Financing
Corporation, South Carolina, Revenue Bonds
(Charleston County School District) (l):
2,725 5.25% due 12/01/2028 2,881
2,425 5.25% due 12/01/2029 2,560
880 5.25% due 12/01/2030 928
10,000 South Carolina Transportation Infrastructure Bank
Revenue Bonds, Series A, 5% due 10/01/2033 (a) 10,234
-------------------------------------------------------------------------------
Total Municipal Bonds Held in Trust
(Cost -- $98,934) -- 33.6% 98,872
===============================================================================
===============================================================================
Shares
Held Short-Term Securities
===============================================================================
1,307 Merrill Lynch Institutional Tax-Exempt Fund,
3.32% (m)(p) 1,307
-------------------------------------------------------------------------------
Total Short-Term Securities
(Cost -- $1,307) -- 0.4% 1,307
===============================================================================
Total Investments (Cost -- $486,040*) -- 169.4% 499,118
Other Assets Less Liabilities -- 1.4% 3,977
Liability for Trust Certificates,
Including Interest Expense Payable -- (16.4%) (48,280)
Preferred Stock, at Redemption Value -- (54.4%) (160,154)
----------
Net Assets Applicable to Common Stock -- 100.0% $ 294,661
==========
28 ANNUAL REPORT OCTOBER 31, 2007
Schedule of Investments (concluded)
BlackRock MuniYield Quality Fund II, Inc. (in Thousands)
* The cost and unrealized appreciation (depreciation) of investments as of
October 31, 2007, as computed for federal income tax purposes, were as
follows:
Aggregate cost ............................................. $ 438,581
=========
Gross unrealized appreciation .............................. $ 15,023
Gross unrealized depreciation .............................. (2,211)
---------
Net unrealized appreciation ................................ $ 12,812
=========
(a) AMBAC Insured.
(b) CIFG Insured.
(c) FGIC Insured.
(d) Escrowed to maturity.
(e) FNMA/GNMA Collateralized.
(f) FSA Insured.
(g) Prerefunded.
(h) XL Capital Insured.
(i) MBIA Insured.
(j) The rate disclosed is that currently in effect. This rate changes
periodically and inversely based upon prevailing market rates.
(k) Radian Insured.
(l) Assured Guaranty Insured.
(m) 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:
--------------------------------------------------------------------------
Net Dividend
Affiliate Activity Income
--------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund (4,608) $112
--------------------------------------------------------------------------
(n) Represents a zero coupon or step-up bond; the interest rate shown is the
effective yield at the time of purchase.
(o) Securities represent underlying bonds transferred to a separate
securitization trust established in a tender option bond transaction in
which the Fund may have acquired the residual interest certificates. These
securities serve as collateral in a financing transaction. See Note 1(c)
to the Financial Statements for details of municipal bonds held in trust.
(p) Represents the current yield as of October 31, 2007.
(q) FHLMC Collateralized.
(r) All or a portion of security held as collateral in connection with open
forward interest rate swaps.
o Forward interest rate swaps outstanding as of October 31, 2007 were as
follows:
--------------------------------------------------------------------------
Notional Unrealized
Amount Appreciation
--------------------------------------------------------------------------
Pay fixed rate of 3.607% and receive a
floating rate based on 1-week (SIFMA)
Municipal Swap Index rate
Broker, JPMorgan Chase
Expires January 2018 $10,000 $ 55
Pay fixed rate of 3.8235% and receive a
floating rate based on 1-week (SIFMA)
Municipal Swap Index rate
Broker, JPMorgan Chase
Expires December 2022 $17,000 77
--------------------------------------------------------------------------
Total $132
====
See Notes to Financial Statements.
ANNUAL REPORT OCTOBER 31, 2007 29
Statements of Net Assets
BlackRock BlackRock BlackRock
BlackRock MuniYield MuniYield MuniYield
MuniYield Insured Quality Quality
As of October 31, 2007 Fund, Inc. Fund, Inc. Fund, Inc. Fund II, Inc.
===================================================================================================================================
Assets
-----------------------------------------------------------------------------------------------------------------------------------
Investments in unaffiliated securities, at value* ... $ 1,012,899,282 $ 1,729,633,426 $ 769,428,414 $ 497,810,745
Investments in affiliated securities, at value** .... 4,901,373 4,902,353 1,007,671 1,307,180
Cash ................................................ 95,830 97,535 19,528 94,458
Interest receivable ................................. 17,217,399 24,344,847 11,116,500 7,091,648
Receivable for securities sold ...................... 55,517 31,582,357 6,816 4,316
Receivable for municipal bonds held in trust ........ -- -- 949,278 4,089,903
Unrealized appreciation on forward interest
rate swaps ........................................ -- 641,525 59,400 131,815
Prepaid expenses and other assets ................... 3,764 5,470 2,929 2,235
--------------------------------------------------------------------------
Total assets ........................................ 1,035,173,165 1,791,207,513 782,590,536 510,532,300
--------------------------------------------------------------------------
===================================================================================================================================
Liabilities
-----------------------------------------------------------------------------------------------------------------------------------
Trust certificates .................................. 36,112,500 170,637,500 76,685,000 47,725,000
Interest expense payable ............................ 523,104 2,061,617 920,451 555,019
Payable for securities purchased .................... 4,045,155 54,194,348 -- 6,021,226
Payable to investment adviser ....................... 419,896 661,426 298,517 193,259
Payable for swaps ................................... -- 8,352,358 -- --
Dividends payable to Common Stock shareholders ...... 3,067,298 3,768,975 1,734,240 1,118,347
Payable to other affiliates ......................... 5,780 9,076 6,108 2,644
Accrued expenses and other liabilities .............. 174,007 241,625 125,126 101,479
--------------------------------------------------------------------------
Total liabilities ................................... 44,347,740 239,926,925 79,769,442 55,716,974
--------------------------------------------------------------------------
===================================================================================================================================
Preferred Stock
-----------------------------------------------------------------------------------------------------------------------------------
Preferred Stock, at redemption value, par value $.05
and $.10 per share*** of AMPS@ at $25,000 per
share liquidation preference ...................... 343,251,122 570,539,980 250,163,808 160,154,366
--------------------------------------------------------------------------
===================================================================================================================================
Net Assets Applicable to Common Stock
-----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Stock ............... $ 647,574,303 $ 980,740,608 $ 452,657,286 $ 294,660,960
==========================================================================
30 ANNUAL REPORT OCTOBER 31, 2007
Statements of Net Assets (concluded)
BlackRock BlackRock BlackRock
BlackRock MuniYield MuniYield MuniYield
MuniYield Insured Quality Quality
As of October 31, 2007 Fund, Inc. Fund, Inc. Fund, Inc. Fund II, Inc.
===================================================================================================================================
Net Assets Consist of
-----------------------------------------------------------------------------------------------------------------------------------
Undistributed investment income -- net .............. $ 3,865,248 $ 9,065,982 $ 1,287,484 $ 1,064,864
Undistributed (accumulated) realized capital
gains (losses) -- net ............................. (33,397,601) (20,184,393) 2,358,514 (33,425,602)
Unrealized appreciation -- net ...................... 30,477,233 42,104,288 22,751,728 13,209,278
--------------------------------------------------------------------------
Total accumulated earnings (losses) -- net .......... 944,880 30,985,877 26,397,726 (19,151,460)
Common Stock, par value $.10 per share+ ............. 4,510,733 6,730,313 3,042,526 2,236,693
Paid-in capital in excess of par .................... 642,118,690 943,024,418 423,217,034 311,575,727
--------------------------------------------------------------------------
Net assets applicable to Common Stock ............... $ 647,574,303 $ 980,740,608 $ 452,657,286 $ 294,660,960
==========================================================================
Net asset value per share of Common Stock ........... $ 14.36 $ 14.57 $ 14.88 $ 13.17
==========================================================================
Market price ........................................ $ 13.72 $ 13.04 $ 13.20 $ 11.60
==========================================================================
* Identified cost on unaffiliated securities ..... $ 982,422,049 $ 1,688,170,663 $ 746,736,086 $ 484,733,282
==========================================================================
** Identified cost on affiliated securities ....... $ 4,901,373 $ 4,902,353 $ 1,007,671 $ 1,307,180
==========================================================================
*** Preferred Stock authorized, issued and
outstanding:
Series A Shares, $.05 per share ........... 1,800 -- 2,000 2,000
==========================================================================
Series A Shares, $.10 per share ........... -- 2,200 -- --
==========================================================================
Series B Shares, $.05 per share ........... 1,800 -- 2,000 2,000
==========================================================================
Series B Shares, $.10 per share ........... -- 2,200 -- --
==========================================================================
Series C Shares, $.05 per share ........... 1,800 -- 2,000 2,000
==========================================================================
Series C Shares, $.10 per share ........... -- 2,200 -- --
==========================================================================
Series D Shares, $.05 per share ........... 1,800 -- 2,000 --
==========================================================================
Series D Shares, $.10 per share ........... -- 2,200 -- 400
==========================================================================
Series E Shares, $.05 per share ........... 2,800 -- 2,000 --
==========================================================================
Series E Shares, $.10 per share ........... -- 4,000 -- --
==========================================================================
Series F Shares, $.05 per share ........... 1,720 -- -- --
==========================================================================
Series F Shares, $.10 per share ........... -- 2,400 -- --
==========================================================================
Series G Shares, $.05 per share ........... 2,000 -- -- --
==========================================================================
Series G Shares, $.10 per share ........... -- 2,400 -- --
==========================================================================
Series H Shares, $.10 per share ........... -- 2,600 -- --
==========================================================================
Series I Shares, $.10 per share ........... -- 2,600 -- --
==========================================================================
+ Common Stock issued and outstanding ............ 45,107,330 67,303,125 30,425,258 22,366,930
==========================================================================
@ Auction Market Preferred Stock.
See Notes to Financial Statements.
ANNUAL REPORT OCTOBER 31, 2007 31
Statements of Operations
BlackRock BlackRock BlackRock
BlackRock MuniYield MuniYield MuniYield
MuniYield Insured Quality Quality
For the Year Ended October 31, 2007 Fund, Inc. Fund, Inc. Fund, Inc. Fund II, Inc.
===================================================================================================================================
Investment Income
-----------------------------------------------------------------------------------------------------------------------------------
Interest ............................................ $ 55,059,104 $ 86,746,322 $ 37,253,307 $ 24,219,393
Dividends from affiliates ........................... 290,618 222,053 158,160 112,059
--------------------------------------------------------------------------
Total income ........................................ 55,349,722 86,968,375 37,411,467 24,331,452
--------------------------------------------------------------------------
===================================================================================================================================
Expenses
-----------------------------------------------------------------------------------------------------------------------------------
Investment advisory fees ............................ 5,024,254 7,896,713 3,540,372 2,298,652
Interest expense and fees ........................... 1,412,196 6,875,689 3,048,274 1,989,003
Accounting services ................................. 276,558 356,750 207,403 156,772
Commission fees ..................................... 880,496 1,443,298 647,820 414,574
Transfer agent fees ................................. 115,747 152,087 80,234 72,015
Professional fees ................................... 127,020 121,396 95,712 86,808
Custodian fees ...................................... 46,802 79,230 37,698 25,640
Printing and shareholder reports .................... 51,887 80,291 36,356 24,900
Pricing fees ........................................ 34,139 37,299 25,936 20,541
Directors' fees and expenses ........................ 37,164 52,028 29,498 23,106
Listing fees ........................................ 16,507 23,482 10,672 9,436
Other ............................................... 98,331 120,610 54,690
--------------------------------------------------------------------------
Total expenses before reimbursement ................. 8,121,101 17,238,873 7,838,938 5,176,137
Reimbursement of expenses ........................... (16,677) (11,868) (8,835) (6,332)
--------------------------------------------------------------------------
Total expenses after reimbursement .................. 8,104,424 17,227,005 7,830,103 5,169,805
--------------------------------------------------------------------------
Investment income -- net ............................ 47,245,298 69,741,370 29,581,364 19,161,647
--------------------------------------------------------------------------
===================================================================================================================================
Realized & Unrealized Gain (Loss) -- Net
-----------------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) on:
Investments -- net .............................. 6,979,422 (2,406,263) 3,780,217 2,031,078
Forward interest rate swaps -- net .............. 353,000 (1,476,132) 2,001 (1,507,800)
--------------------------------------------------------------------------
Total realized gain (loss) -- net ................... 7,332,422 (3,882,395) 3,782,218 523,278
--------------------------------------------------------------------------
Change in unrealized appreciation/depreciation on:
Investments -- net .............................. (33,393,239) (49,385,551) (16,654,242) (12,095,145)
Forward interest rate swaps -- net .............. -- 413,713 70,235 1,432,411
--------------------------------------------------------------------------
Total change in unrealized
appreciation/depreciation -- net .................. (33,393,239) (48,971,838) (16,584,007) (10,662,734)
--------------------------------------------------------------------------
Total realized and unrealized loss -- net ........... (26,060,817) (52,854,233) (12,801,789) (10,139,456)
--------------------------------------------------------------------------
===================================================================================================================================
Dividends to Preferred Stock Shareholders
-----------------------------------------------------------------------------------------------------------------------------------
Investment income -- net ............................ (12,440,786) (20,832,026) (9,191,938) (5,918,044)
--------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Resulting
from Operations ................................... $ 8,743,695 $ (3,944,889) $ 7,587,637 $ 3,104,147
==========================================================================
See Notes to Financial Statements.
32 ANNUAL REPORT OCTOBER 31, 2007
Statements of Changes in Net Assets BlackRock MuniYield Fund, Inc.
For the Year Ended October 31,
-------------------------------
Increase (Decrease) in Net Assets: 2007 2006
===================================================================================================================================
Operations
-----------------------------------------------------------------------------------------------------------------------------------
Investment income -- net ....................................................................... $ 47,245,298 $ 48,122,220
Realized gain -- net ........................................................................... 7,332,422 11,351,444
Change in unrealized appreciation/depreciation -- net .......................................... (33,393,239) 16,345,769
Dividends and distributions to Preferred Stock shareholders .................................... (12,440,786) (11,212,348)
-------------------------------
Net increase in net assets resulting from operations ........................................... 8,743,695 64,607,085
-------------------------------
===================================================================================================================================
Dividends & Distributions to Common Stock Shareholders
-----------------------------------------------------------------------------------------------------------------------------------
Investment income -- net ....................................................................... (37,039,818) (42,053,117)
Realized gain -- net ........................................................................... -- (137,799)
-------------------------------
Net decrease in net assets resulting from dividends and distributions
to Common Stock shareholders ................................................................. (37,039,818) (42,190,916)
-------------------------------
===================================================================================================================================
Stock Transactions
-----------------------------------------------------------------------------------------------------------------------------------
Value of shares issued to Common Stock shareholders in reinvestment
of dividends and distributions ............................................................... 3,503,564 5,095,713
Adjustment of offering costs resulting from the issuance of Preferred Stock .................... -- 30,397
-------------------------------
Net increase in net assets derived from stock transactions ..................................... 3,503,564 5,126,110
-------------------------------
===================================================================================================================================
Net Assets Applicable to Common Stock
-----------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets applicable to Common Stock ............................. (24,792,559) 27,542,279
Beginning of year .............................................................................. 672,366,862 644,824,583
-------------------------------
End of year* ................................................................................... $ 647,574,303 $ 672,366,862
===============================
* Undistributed investment income -- net ..................................................... $ 3,865,248 $ 6,100,554
===============================
See Notes to Financial Statements.
ANNUAL REPORT OCTOBER 31, 2007 33
Statements of Changes in Net Assets BlackRock MuniYield Insured Fund, Inc.
For the Year Ended October 31,
-------------------------------
Increase (Decrease) in Net Assets: 2007 2006
===================================================================================================================================
Operations
-----------------------------------------------------------------------------------------------------------------------------------
Investment income -- net ....................................................................... $ 69,741,370 $ 65,901,797
Realized loss -- net ........................................................................... (3,882,395) (894,104)
Change in unrealized appreciation/depreciation -- net .......................................... (48,971,838) 32,084,422
Dividends and distributions to Preferred Stock shareholders .................................... (20,832,026) (19,896,916)
-------------------------------
Net increase (decrease) in net assets resulting from operations ................................ (3,944,889) 77,195,199
-------------------------------
===================================================================================================================================
Dividends & Distributions to Common Stock Shareholders
-----------------------------------------------------------------------------------------------------------------------------------
Investment income -- net ....................................................................... (45,362,306) (52,496,438)
Realized gain -- net ........................................................................... -- (22,672,673)
-------------------------------
Net decrease in net assets resulting from dividends and distributions
to Common Stock shareholders ................................................................. (45,362,306) (75,169,111)
-------------------------------
===================================================================================================================================
Net Assets Applicable to Common Stock
-----------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets applicable to Common Stock ............................. (49,307,195) 2,026,088
Beginning of year .............................................................................. 1,030,047,803 1,028,021,715
------------------------------
End of year* ................................................................................... $ 980,740,608 $1,030,047,803
===============================
* Undistributed investment income -- net ................................................... $ 9,065,982 $ 5,518,944
===============================
See Notes to Financial Statements.
34 ANNUAL REPORT OCTOBER 31, 2007
Statements of Changes in Net Assets BlackRock MuniYield Quality Fund, Inc.
For the Year Ended October 31,
-------------------------------
Increase (Decrease) in Net Assets: 2007 2006
===================================================================================================================================
Operations
-----------------------------------------------------------------------------------------------------------------------------------
Investment income -- net ....................................................................... $ 29,581,364 $ 30,209,734
Realized gain -- net ........................................................................... 3,782,218 3,133,924
Change in unrealized appreciation/depreciation -- net .......................................... (16,584,007) 7,934,032
Dividends to Preferred Stock shareholders ...................................................... (9,191,938) (8,213,090)
-------------------------------
Net increase in net assets resulting from operations ........................................... 7,587,637 33,064,600
-------------------------------
===================================================================================================================================
Dividends to Common Stock Shareholders
-----------------------------------------------------------------------------------------------------------------------------------
Investment income -- net ....................................................................... (20,932,577) (23,944,678)
-------------------------------
===================================================================================================================================
Stock Transactions
-----------------------------------------------------------------------------------------------------------------------------------
Offering and underwriting costs, including adjustments, resulting from
the issuance of Preferred Stock .............................................................. -- (4,076)
-------------------------------
===================================================================================================================================
Net Assets Applicable to Common Stock
-----------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets applicable to Common Stock ............................. (13,344,940) 9,115,846
Beginning of year .............................................................................. 466,002,226 456,886,380
-------------------------------
End of year* ................................................................................... $ 452,657,286 $ 466,002,226
===============================
* Undistributed investment income -- net ..................................................... $ 1,287,484 $ 1,835,414
===============================
See Notes to Financial Statements.
ANNUAL REPORT OCTOBER 31, 2007 35
Statements of Changes in Net Assets BlackRock MuniYield Quality Fund II, Inc.
For the Year Ended October 31,
-------------------------------
Increase (Decrease) in Net Assets: 2007 2006
===================================================================================================================================
Operations
-----------------------------------------------------------------------------------------------------------------------------------
Investment income -- net ....................................................................... $ 19,161,647 $ 19,260,899
Realized gain -- net ........................................................................... 523,278 3,512,017
Change in unrealized appreciation/depreciation -- net .......................................... (10,662,734) 4,732,128
Dividends to Preferred Stock shareholders ...................................................... (5,918,044) (5,311,655)
-------------------------------
Net increase in net assets resulting from operations ........................................... 3,104,147 22,193,389
-------------------------------
===================================================================================================================================
Dividends to Common Stock Shareholders
-----------------------------------------------------------------------------------------------------------------------------------
Investment income -- net ....................................................................... (13,554,360) (15,858,153)
-------------------------------
===================================================================================================================================
Stock Transactions
-----------------------------------------------------------------------------------------------------------------------------------
Offering and underwriting costs, including adjustments, resulting from
the issuance of Preferred Stock .............................................................. -- 54,002
-------------------------------
===================================================================================================================================
Net Assets Applicable to Common Stock
-----------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets applicable to Common Stock ............................. (10,450,213) 6,389,238
Beginning of year .............................................................................. 305,111,173 298,721,935
-------------------------------
End of year* ................................................................................... $ 294,660,960 $ 305,111,173
===============================
* Undistributed investment income -- net ................................................... $ 1,064,864 $ 1,375,621
===============================
See Notes to Financial Statements.
36 ANNUAL REPORT OCTOBER 31, 2007
Financial Highlights BlackRock MuniYield Fund, Inc.
For the Year Ended October 31,
The following per share data and ratios have been derived ------------------------------------------------------------
from information provided in the financial statements. 2007 2006 2005 2004 2003
==================================================================================================================================
Per Share Operating Performance
----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year .............................. $ 14.98 $ 14.48 $ 14.31 $ 13.85 $ 13.28
------------------------------------------------------------
Investment income -- net* 1.05 1.08 1.11 1.09 1.06
Realized and unrealized gain (loss) -- net ...................... (.57) .61 .21 .41 .52
Dividends and distributions to Preferred Stock shareholders:
Investment income -- net .................................... (.28) (.25) (.16) (.07) (.07)
Realized gain -- net ........................................ -- --+ -- -- --
------------------------------------------------------------
Total from investment operations ................................ .20 1.44 1.16 1.43 1.51
------------------------------------------------------------
Less dividends and distributions to Common Stock shareholders:
Investment income -- net .................................... (.82) (.94) (.99) (.96) (.94)
Realized gain -- net ........................................ -- --+ -- -- --
------------------------------------------------------------
Total dividends and distributions to Common Stock shareholders .. (.82) (.94) (.99) (.96) (.94)
------------------------------------------------------------
Offering and underwriting costs, including adjustments,
resulting from the issuance of Preferred Stock ................ -- --@ --+ (.01) --
------------------------------------------------------------
Net asset value, end of year .................................... $ 14.36 $ 14.98 $ 14.48 $ 14.31 $ 13.85
============================================================
Market price per share, end of year ............................. $ 13.72 $ 15.76 $ 14.20 $ 13.74 $ 13.29
============================================================
==================================================================================================================================
Total Investment Return**
----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share .............................. 1.40% 10.30% 8.38% 11.04% 11.99%
============================================================
Based on market price per share ................................. (7.91%) 18.33% 10.69% 11.11% 10.80%
============================================================
==================================================================================================================================
Ratios Based on Average Net Assets Applicable to Common Stock
----------------------------------------------------------------------------------------------------------------------------------
Total expenses, net of reimbursement and excluding interest
expense and fees*** ........................................... 1.01% 1.01% 1.02% .97% .99%
============================================================
Total expenses, net of reimbursement*** ......................... 1.22% 1.29% 1.26% 1.13% 1.14%
============================================================
Total expenses*** ............................................... 1.23% 1.29% 1.26% 1.14% 1.14%
============================================================
Total investment income -- net*** ............................... 7.14% 7.35% 7.55% 7.75% 7.86%
============================================================
Amount of dividends to Preferred Stock shareholders ............. 1.88% 1.71% 1.10% .51% .50%
============================================================
Investment income -- net, to Common Stock shareholders .......... 5.26% 5.64% 6.45% 7.24% 7.36%
============================================================
==================================================================================================================================
Supplemental Data
----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Stock, end of year
(in thousands) ................................................ $647,574 $672,367 $644,825 $636,019 $615,169
============================================================
Preferred Stock outstanding at liquidation preference,
end of year (in thousands) .................................... $343,000 $343,000 $343,000 $343,000 $293,000
============================================================
Portfolio turnover .............................................. 18% 32% 30% 22% 56%
============================================================
==================================================================================================================================
Leverage
----------------------------------------------------------------------------------------------------------------------------------
Asset coverage per $1,000 ....................................... $ 2,888 $ 2,960 $ 2,880 $ 2,854 $ 3,100
============================================================
* Based on average shares outstanding.
** Total investment returns based on market value, which can be significantly
greater or lesser than the net asset value, may result in substantially
different returns. Total investment returns exclude the effects of sales
charges.
*** Do not reflect the effect of dividends to Preferred Stock shareholders.
+ Amount is less than $(.01) per share.
@ Amount is less than $.01 per share.
See Notes to Financial Statements.
ANNUAL REPORT OCTOBER 31, 2007 37
Financial Highlights BlackRock MuniYield Insured Fund, Inc.
For the Year Ended October 31,
The following per share data and ratios have been derived --------------------------------------------------------------
from information provided in the financial statements. 2007 2006 2005 2004 2003
===================================================================================================================================
Per Share Operating Performance
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year .............................. $ 15.30 $ 15.27 $ 15.59 $ 15.36 $ 15.15
--------------------------------------------------------------
Investment income -- net* ....................................... 1.04 .98 1.04 1.04 1.08
Realized and unrealized gain (loss) -- net ...................... (.79) .46 (.22) .25 .16
Dividends and distributions to Preferred Stock shareholders:
Investment income -- net .................................... (.31) (.25) (.16) (.07) (.08)
Realized gain -- net ........................................ -- (.04) (.02) -- --
--------------------------------------------------------------
Total from investment operations ................................ (.06) 1.15 .64 1.22 1.16
--------------------------------------------------------------
Less dividends and distributions to Common Stock shareholders:
Investment income -- net .................................... (.67) (.78) (.95) (.97) (.95)
Realized gain -- net ........................................ -- (.34) (.01) -- --
--------------------------------------------------------------
Total dividends and distributions to Common Stock shareholders .. (.67) (1.12) (.96) (.97) (.95)
--------------------------------------------------------------
Offering and underwriting costs, including adjustments,
resulting from the issuance of Preferred Stock ................ -- -- --+ (.02) --
--------------------------------------------------------------
Net asset value, end of year .................................... $ 14.57 $ 15.30 $ 15.27 $ 15.59 $ 15.36
==============================================================
Market price per share, end of year ............................. $ 13.04 $ 14.36 $ 14.70 $ 14.57 $ 14.51
==============================================================
===================================================================================================================================
Total Investment Return**
-----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share .............................. (.06%) 8.09% 4.54% 8.52% 8.18%
==============================================================
Based on market price per share ................................. (4.70%) 5.38% 7.69% 7.36% 8.19%
==============================================================
===================================================================================================================================
Ratios Based on Average Net Assets Applicable to Common Stock
-----------------------------------------------------------------------------------------------------------------------------------
Total expenses, net of reimbursement and excluding interest
expense and fees*** ........................................... 1.03% 1.02% 1.01% .95% .94%
==============================================================
Total expenses, net of reimbursement*** ......................... 1.71% 1.67% 1.60% 1.19% 1.18%
==============================================================
Total expenses*** ............................................... 1.71% 1.67% 1.60% 1.19% 1.18%
==============================================================
Total investment income -- net*** ............................... 6.94% 6.52% 6.62% 6.77% 6.99%
==============================================================
Amount of dividends to Preferred Stock shareholders ............. 2.06% 1.67% 1.05% .51% .49%
==============================================================
Investment income -- net, to Common Stock shareholders .......... 4.88% 4.85% 5.57% 6.26% 6.50%
==============================================================
===================================================================================================================================
Supplemental Data
-----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Stock, end of year
(in thousands) ................................................ $980,741 $1,030,048 $1,028,022 $1,049,423 $953,662
==============================================================
Preferred Stock outstanding at liquidation preference,
end of year (in thousands) .................................... $570,000 $ 570,000 $ 570,000 $ 570,000 $440,000
==============================================================
Portfolio turnover .............................................. 117% 95% 105% 122% 95%
==============================================================
===================================================================================================================================
Leverage
-----------------------------------------------------------------------------------------------------------------------------------
Asset coverage per $1,000 ....................................... $ 2,721 $ 2,807 $ 2,804 $ 2,841 $ 3,167
==============================================================
* Based on average shares outstanding.
** Total investment returns based on market value, which can be significantly
greater or lesser than the net asset value, may result in substantially
different returns. Total investment returns exclude the effects of sales
charges.
*** Do not reflect the effect of dividends to Preferred Stock shareholders.
+ Amount is less than $.01 per share.
See Notes to Financial Statements.
38 ANNUAL REPORT OCTOBER 31, 2007
Financial Highlights BlackRock MuniYield Quality Fund, Inc.
For the Year Ended October 31,
The following per share data and ratios have been derived ------------------------------------------------------------
from information provided in the financial statements. 2007 2006 2005 2004 2003
==================================================================================================================================
Per Share Operating Performance
----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year .............................. $ 15.32 $ 15.02 $ 15.54 $ 15.36 $ 15.19
------------------------------------------------------------
Investment income -- net* ....................................... .97 .99 .99 1.03 1.07
Realized and unrealized gain (loss) -- net ...................... (.42) .37 (.39) .19 .13
Dividends to Preferred Stock shareholders from investment
income -- net ................................................. (.30) (.27) (.14) (.07) (.07)
------------------------------------------------------------
Total from investment operations ................................ .25 1.09 .46 1.15 1.13
------------------------------------------------------------
Less dividends to Common Stock shareholders from investment
income -- net ................................................. (.69) (.79) (.96) (.97) (.96)
------------------------------------------------------------
Offering and underwriting costs, including adjustments,
resulting from the issuance of Preferred Stock ................ -- --+ (.02) -- --
------------------------------------------------------------
Net asset value, end of year .................................... $ 14.88 $ 15.32 $ 15.02 $ 15.54 $ 15.36
============================================================
Market price per share, end of year ............................. $ 13.20 $ 14.48 $ 14.27 $ 14.83 $ 14.35
============================================================
==================================================================================================================================
Total Investment Return**
----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share .............................. 2.00% 7.78% 3.10% 8.26% 8.13%
============================================================
Based on market price per share ................................. (4.26%) 7.22% 2.64% 10.58% 11.68%
============================================================
==================================================================================================================================
Ratios Based on Average Net Assets Applicable to Common Stock
----------------------------------------------------------------------------------------------------------------------------------
Total expenses, net of reimbursement and excluding interest
expense and fees*** ........................................... 1.04% 1.04% .96% .94% .94%
============================================================
Total expenses, net of reimbursement*** ......................... 1.71% 1.75% 1.44% 1.25% 1.24%
============================================================
Total expenses*** ............................................... 1.71% 1.76% 1.45% 1.25% 1.24%
============================================================
Total investment income -- net*** ............................... 6.46% 6.61% 6.46% 6.74% 6.89%
============================================================
Amount of dividends to Preferred Stock shareholders ............. 2.01% 1.80% .93% .45% .42%
============================================================
Investment income -- net, to Common Stock shareholders .......... 4.45% 4.81% 5.53% 6.29% 6.47%
============================================================
==================================================================================================================================
Supplemental Data
----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Stock, end of year
(in thousands) ................................................ $452,657 $466,002 $456,886 $472,848 $467,370
============================================================
Preferred Stock outstanding at liquidation preference,
end of year (in thousands) .................................... $250,000 $250,000 $250,000 $200,000 $200,000
============================================================
Portfolio turnover .............................................. 24% 33% 29% 28% 30%
============================================================
==================================================================================================================================
Leverage
----------------------------------------------------------------------------------------------------------------------------------
Asset coverage per $1,000 ....................................... $ 2,811 $ 2,864 $ 2,828 $ 3,364 $ 3,337
============================================================
* Based on average shares outstanding.
** Total investment returns based on market value, which can be significantly
greater or lesser than the net asset value, may result in substantially
different returns. Total investment returns exclude the effects of sales
charges.
*** Do not reflect the effect of dividends to Preferred Stock shareholders.
+ Amount is less than $(.01) per share.
See Notes to Financial Statements.
ANNUAL REPORT OCTOBER 31, 2007 39
Financial Highlights BlackRock MuniYield Quality Fund II, Inc.
For the Year Ended October 31,
The following per share data and ratios have been derived ------------------------------------------------------------
from information provided in the financial statements. 2007 2006 2005 2004 2003
==================================================================================================================================
Per Share Operating Performance
----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year .............................. $ 13.64 $ 13.36 $ 13.72 $ 13.44 $ 13.27
------------------------------------------------------------
Investment income -- net* ....................................... .86 .86 .89 .94 .97
Realized and unrealized gain (loss) -- net ...................... (.46) .37 (.25) .27 .09
Dividends to Preferred Stock shareholders from investment
income -- net ................................................. (.26) (.24) (.14) (.07) (.07)
------------------------------------------------------------
Total from investment operations ................................ .14 .99 .50 1.14 .99
------------------------------------------------------------
Less dividends to Common Stock shareholders from investment
income -- net ................................................. (.61) (.71) (.85) (.86) (.82)
------------------------------------------------------------
Offering and underwriting costs, including adjustments,
resulting from the issuance of Preferred Stock ................ -- --+ (.01) -- --
------------------------------------------------------------
Net asset value, end of year .................................... $ 13.17 $ 13.64 $ 13.36 $ 13.72 $ 13.44
============================================================
Market price per share, end of year ............................. $ 11.60 $ 12.93 $ 12.86 $ 12.69 $ 12.18
============================================================
==================================================================================================================================
Total Investment Return**
----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share .............................. 1.39% 7.98% 3.98% 9.32% 8.28%
============================================================
Based on market price per share ................................. (5.79%) 6.34% 8.21% 11.57% 10.83%
============================================================
==================================================================================================================================
Ratios Based on Average Net Assets Applicable to Common Stock
----------------------------------------------------------------------------------------------------------------------------------
Total expenses, net of reimbursement and excluding interest
expense and fees*** ........................................... 1.06% 1.05% 1.03% 1.01% 1.03%
============================================================
Total expenses, net of reimbursement*** ......................... 1.72% 1.66% 1.49% 1.21% 1.30%
============================================================
Total expenses*** ............................................... 1.73% 1.66% 1.49% 1.22% 1.31%
============================================================
Total investment income -- net*** ............................... 6.39% 6.44% 6.51% 7.00% 7.17%
============================================================
Amount of dividends to Preferred Stock shareholders ............. 1.97% 1.78% 1.03% .51% .50%
============================================================
Investment income -- net, to Common Stock shareholders .......... 4.42% 4.66% 5.48% 6.49% 6.67%
============================================================
==================================================================================================================================
Supplemental Data
----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Stock, end of year
(in thousands) ................................................ $294,661 $305,111 $298,722 $306,764 $300,502
============================================================
Preferred Stock outstanding at liquidation preference,
end of year (in thousands) .................................... $160,000 $160,000 $160,000 $150,000 $150,000
============================================================
Portfolio turnover .............................................. 20% 37% 29% 27% 35%
============================================================
==================================================================================================================================
Leverage
----------------------------------------------------------------------------------------------------------------------------------
Asset coverage per $1,000 ....................................... $ 2,842 $ 2,907 $ 2,867 $ 3,045 $ 3,003
============================================================
* Based on average shares outstanding.
** Total investment returns based on market value, which can be significantly
greater or lesser than the net asset value, may result in substantially
different returns. Total investment returns exclude the effects of sales
charges.
*** Do not reflect the effect of dividends to Preferred Stock shareholders.
+ Amount is less than $.01 per share.
See Notes to Financial Statements.
40 ANNUAL REPORT OCTOBER 31, 2007
Notes to Financial Statements
1. Significant Accounting Policies:
BlackRock MuniYield Fund, Inc., BlackRock MuniYield Insured Fund, Inc.,
BlackRock MuniYield Quality Fund, Inc. and BlackRock MuniYield Quality Fund II,
Inc. (the "Funds" or individually as the "Fund"), are registered under the
Investment Company Act of 1940, as amended, as non-diversified, closed-end
management investment companies. The Funds' financial statements are prepared in
conformity with U.S. generally accepted accounting principles, 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 Stock on a daily basis. The Funds' Common Stock
shares are listed on the New York Stock Exchange under the symbol MYD for
BlackRock MuniYield Fund, Inc., MYI for BlackRock MuniYield Insured Fund, Inc.,
MQY for BlackRock MuniYield Quality Fund, Inc. and MQT for BlackRock MuniYield
Quality Fund II, Inc. The following is a summary of significant accounting
policies followed by the Funds.
(a) Valuation of investments -- Municipal bonds are traded primarily in the
over-the-counter ("OTC") markets and are valued at the last available bid price
in the OTC market or on the basis of values as obtained by a pricing service.
Pricing services use valuation matrixes that incorporate both dealer-supplied
valuations and valuation models. The procedures of the pricing service and its
valuations are reviewed by the officers of each of the Funds under the general
direction of the respective Board of Directors. Such valuations and procedures
are reviewed periodically by the Boards of Directors of the Funds. Financial
futures contracts and options thereon, which are traded on exchanges, are valued
at their closing prices as of the close of such exchanges. Effective September
4, 2007, exchange-traded options are valued at the mean between the last bid and
ask prices at the close of the options market in which the options trade and
previously were valued at the last sales price as of the close of options
trading on the applicable exchanges. Options traded in the OTC market are valued
at the last asked price (options written) or the last bid price (options
purchased). Swap agreements are valued by quoted fair values received daily by
the Funds' pricing service. Investments in open-end investment companies are
valued at their net asset value each business day. Securities and other assets
for which market quotations are not readily available are valued at fair value
as determined in good faith by or under the direction of each Fund's Board of
Directors.
(b) Derivative financial instruments -- Each Fund may engage in various
portfolio investment strategies both to increase the return of the Fund and to
hedge, or protect, its exposure to interest rate movements and movements in the
securities markets. Losses may arise due to changes in the value of the contract
due to an unfavorable change in the price of the underlying security or if the
counterparty does not perform under the contract. The counterparty for certain
instruments may pledge cash or securities as collateral.
o Financial futures contracts -- Each Fund may purchase or sell financial
futures contracts and options on such financial futures contracts.
Financial futures contracts are contracts for delayed delivery of
securities at a specific future date and at a specific price or yield.
Upon entering into a contract, the Fund deposits and maintains as
collateral such initial margin as required by the exchange on which the
transaction is effected. Pursuant to the contract, the Fund agrees to
receive from or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are known
as variation margin and are recorded by the Fund as unrealized gains or
losses. When the contract is closed, the Fund records 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.
o Options -- Each Fund may purchase and write call and put options. When the
Fund writes an option, an amount equal to the premium received by the Fund
is reflected as an asset and an equivalent liability. The amount of the
liability is subsequently marked-to-market to reflect the current market
value of the option written. When a security is purchased or sold through
an exercise of an option, the related premium paid (or received) is added
to (or deducted from) the basis of the security acquired or deducted from
(or added to) the proceeds of the security sold. When an option expires
(or the Fund enters into a closing transaction), the Fund realizes a gain
or loss on the option to the extent of the premiums received or paid (or
gain or loss to the extent the cost of the closing transaction exceeds the
premium paid or received).
Written and purchased options are non-income producing investments.
o Forward interest rate swaps -- Each Fund may enter into forward interest
rate swaps. In a forward interest rate swap, the Fund and the counterparty
agree to make periodic net payments on a specified notional contract
amount, commencing on a specified future effective date, unless terminated
earlier. When the agreement is closed, the Fund records a realized gain or
loss in an amount equal to the value of the agreement.
o Swaps -- Each Fund may enter into swap agreements, which are OTC contracts
in which the Fund and a counterparty agree to make periodic net payments
on a specified notional amount. The net payments can be made for a set
period of time or may be triggered by a predetermined credit event. The
net periodic payments may be based on a fixed or variable interest rate;
the change in market value of a specified security, basket of securities,
or index; or the return generated by a security. These periodic payments
received or made by the Fund are recorded in the accompanying Statements
of Operations as realized gains or losses, respectively. Gains or losses
are also realized upon termination of the swap agreements. Swaps are
marked-to-market daily and changes in value are recorded as unrealized
appreciation (depreciation). Risks include changes in the returns of the
underlying
ANNUAL REPORT OCTOBER 31, 2007 41
Notes to Financial Statements (continued)
instruments, failure of the counterparties to perform under the contracts'
terms and the possible lack of liquidity with respect to the swap
agreements.
(c) Municipal bonds held in trust -- Certain Funds invest in leveraged residual
certificates ("TOB Residuals") issued by tender option bond trusts ("TOBs"). A
TOB is established by a third party sponsor forming a special purpose entity,
into which a Fund, or an agent on behalf of the Fund, transfers municipal
securities. A TOB typically issues two classes of beneficial interests:
short-term floating rate certificates, which are sold to third party investors,
and residual certificates, which are generally issued to the Fund which made the
transfer or to affiliates of the Fund. Each Fund's transfers of the municipal
securities to a TOB do not qualify for sale treatment under Statement of
Financial Accounting Standards No. 140 ("FAS 140") "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities," therefore the
municipal securities deposited into a TOB are presented in the Funds' schedules
of investments and the proceeds from the transactions are reported as liability
for trust certificates. Similarly, proceeds from residual certificates issued to
affiliates, if any, from the transaction are included in the liability for trust
certificates. 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 a Fund. 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. The
residual interests held by the Funds include the right of the Funds (1) to cause
the holders of a proportional share of floating rate certificates to tender
their certificates at par, and (2) to transfer a corresponding share of the
municipal securities from the TOB to the Funds. At October 31, 2007, the
aggregate value of the underlying municipal securities transferred to TOBs and
the liability for trust certificates were:
--------------------------------------------------------------------------------
Underlying
Municipal
Liability Range of Bonds
for Trust Interest Transferred
Certificates Rates to TOBs
--------------------------------------------------------------------------------
BlackRock MuniYield
Fund, Inc. ............... $ 36,112,500 3.693% -- 3.72% $ 77,237,013
BlackRock MuniYield
Insured Fund, Inc. ....... $170,637,500 3.525% -- 3.758% $355,738,664
BlackRock MuniYield
Quality Fund, Inc. ....... $ 76,685,000 3.686% -- 3.758% $161,925,912
BlackRock MuniYield
Quality Fund II, Inc. .... $ 47,725,000 3.701% -- 3.758% $ 98,871,863
--------------------------------------------------------------------------------
Financial transactions executed through TOBs generally will underperform the
market for fixed rate municipal bonds in a rising interest rate environment, but
tend to outperform the market for fixed rate bonds when interest rates decline
or remain relatively stable. Should short-term interest rates rise, a Fund's
investments in TOB Residuals likely will adversely affect a Fund's investment
income -- net and distributions to shareholders. Fluctuations in the market
value of municipal securities deposited into the TOB may adversely affect the
Funds' net asset values per share.
While the Funds' investment policies and restrictions expressly permit
investments in inverse floating rate securities such as TOB Residuals, they
generally do not allow the Funds to borrow money for purposes of making
investments. The Funds' management believes that the Funds' restrictions on
borrowings do not apply to the secured borrowings deemed to have occurred for
accounting purposes.
(d) 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.
(e) Security transactions and investment income -- Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Realized gains and losses on security transactions are determined on the
identified cost basis. Dividend income is recorded on the ex-dividend dates.
Interest income is recognized on the accrual basis. The Funds amortize all
premiums and discounts on debt securities.
(f) Dividends and distributions -- Dividends from net investment income are
declared and paid monthly. Distributions of capital gains are recorded on the
ex-dividend dates.
(g) Offering costs -- Direct expenses relating to the public offering of certain
Funds' Preferred Stock were charged to capital at the time of issuance of the
shares. Any adjustments to estimates of offering costs were recorded back to
capital.
(h) Recent accounting pronouncements -- In July 2006, the Financial Accounting
Standards Board ("FASB") issued Interpretation No. 48 ("FIN 48"), "Accounting
for Uncertainty in Income Taxes -- an interpretation of FASB Statement No. 109."
FIN 48 prescribes the minimum recognition threshold a tax position must meet in
connection with accounting for uncertainties in income tax positions taken or
expected to be taken by an entity, including mutual funds, before being measured
and recognized in the financial statements. Adoption of FIN 48 is required for
the last net asset value calculation in the first required financial statement
reporting period for fiscal years beginning after December 15, 2006. The impact
on each of the Fund's financial statements, if any, is currently being assessed.
In September 2006, Statement of Financial Accounting Standards No. 157, "Fair
Value Measurements" ("FAS 157"), was issued and is effective for fiscal years
beginning after November 15, 2007. FAS 157 defines fair value, establishes a
framework for measuring fair value and expands disclosures about fair value
measurements. At this time, management is evaluating the implications of FAS 157
and its impact on each of the Fund's financial statements, if any, has not been
determined.
42 ANNUAL REPORT OCTOBER 31, 2007
Notes to Financial Statements (continued)
In addition, in February 2007, Statement of Financial Accounting Standards No.
159, "The Fair Value Option for Financial Assets and Financial Liabilities"
("FAS 159"), was issued and is effective for fiscal years beginning after
November 15, 2007. Early adoption is permitted as of the beginning of a fiscal
year that begins on or before November 15, 2007, provided the entity also elects
to apply the provisions of FAS 157. FAS 159 permits entities to choose to
measure many financial instruments and certain other items at fair value that
are not currently required to be measured at fair value. FAS 159 also
establishes presentation and disclosure requirements designed to facilitate
comparisons between entities that choose different measurement attributes for
similar types of assets and liabilities. At this time, management is evaluating
the implications of FAS 159 and its impact on each of the Fund's financial
statements, if any, has not been determined.
(i) Reclassifications -- U.S. generally accepted accounting principles require
that certain components of net assets be adjusted to reflect permanent
differences between financial and tax reporting. Accordingly, for BlackRock
MuniYield Insured Fund, Inc., during the current year, $5,774,510 has been
reclassified between accumulated net realized capital losses and paid-in capital
in excess of par as a result of permanent differences attributable to the
difference between the book and tax treatment of residual interests in tender
option bonds.
Accordingly, for BlackRock MuniYield Quality Fund, Inc., during the current
year, $4,779 has been reclassified between undistributed net investment income
and accumulated net realized capital losses as a result of permanent differences
attributable to amortization methods on fixed income securities. These
reclassifications have no effect on net assets or net asset values per share.
2. Investment Advisory Agreement and Transactions with Affiliates:
Each Fund has entered into an Investment Advisory Agreement with BlackRock
Advisors, LLC (the "Manager"), an indirect, wholly owned subsidiary of
BlackRock, Inc. Merrill Lynch & Co., Inc. ("Merrill Lynch") and The PNC
Financial Services Group, Inc. are the principal owners of BlackRock, Inc.
The Manager is responsible for the management of each of the Fund's portfolios
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 .50% of the Fund's average daily net
assets, including proceeds from the issuance of Preferred Stock. The Manager has
agreed to reimburse its management fee by the amount of management fees each
Fund pays to the Manager indirectly through its investment in Merrill Lynch
Institutional Tax-Exempt Fund. The reimbursements for the year ended October 31,
2007 were as follows:
--------------------------------------------------------------------------------
Reimbursement
by the Manager
--------------------------------------------------------------------------------
BlackRock MuniYield Fund, Inc. ............................. $16,677
BlackRock MuniYield Insured Fund, Inc. ..................... $11,868
BlackRock MuniYield Quality Fund, Inc. ..................... $ 8,835
BlackRock MuniYield Quality Fund II, Inc. .................. $ 6,332
--------------------------------------------------------------------------------
In addition, the Manager has entered into a sub-advisory agreement with
BlackRock Investment Management, LLC, an affiliate of the Manager, under which
the Manager pays the sub-adviser for services it provides a monthly fee at an
annual rate that is a percentage of the management fee paid by each Fund to the
Manager.
The Funds reimbursed the Manager for certain accounting services. The
reimbursements for the year ended October 31, 2007 were as follows:
--------------------------------------------------------------------------------
Reimbursement
to the Manager
--------------------------------------------------------------------------------
BlackRock MuniYield Fund, Inc. ............................. $18,788
BlackRock MuniYield Insured Fund, Inc. ..................... $29,566
BlackRock MuniYield Quality Fund, Inc. ..................... $15,264
BlackRock MuniYield Quality Fund II, Inc. .................. $ 8,596
--------------------------------------------------------------------------------
Certain officers and/or directors of the Funds are officers and/or directors of
BlackRock, Inc. or its affiliates.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
year ended October 31, 2007, were as follows:
--------------------------------------------------------------------------------
Total Total
Purchases Sales
--------------------------------------------------------------------------------
BlackRock MuniYield Fund, Inc. ............. $ 199,223,147 $ 187,386,883
BlackRock MuniYield Insured Fund, Inc. ..... $2,056,030,296 $2,075,137,090
BlackRock MuniYield Quality Fund, Inc. ..... $ 191,560,403 $ 192,836,875
BlackRock MuniYield Quality Fund II, Inc. .. $ 100,167,877 $ 99,991,247
--------------------------------------------------------------------------------
4. Stock Transactions:
Each Fund is authorized to issue 200,000,000 shares of stock, including
Preferred Stock, par value $.10 per share, all of which were initially
classified as Common Stock. Each Board of Directors is authorized, however, to
reclassify any unissued shares of stock without approval of the holders of
Common Stock.
Common Stock
BlackRock MuniYield Fund, Inc.
Shares issued and outstanding during the years ended October 31, 2007 and
October 31, 2006 increased by 236,501 and 346,987, respectively, as a result of
dividend reinvestment.
ANNUAL REPORT OCTOBER 31, 2007 43
Notes to Financial Statements (continued)
BlackRock MuniYield Insured Fund, Inc., BlackRock MuniYield Quality, Inc. and
BlackRock MuniYield Quality Fund II, Inc.
Shares issued and outstanding during the years ended October 31, 2007 and
October 31, 2006 remained constant.
Preferred Stock
Auction Market Preferred Stock are redeemable shares of Preferred Stock of the
Funds, with a liquidation preference of $25,000 per share, plus accrued and
unpaid dividends that entitle their holders to receive cash dividends at an
annual rate that may vary for the successive dividend periods. The yields in
effect at October 31, 2007 were as follows:
--------------------------------------------------------------------------------
BlackRock BlackRock BlackRock
BlackRock MuniYield MuniYield MuniYield
MuniYield Insured Quality Quality
Fund, Inc. Fund, Inc. Fund, Inc. Fund II, Inc.
--------------------------------------------------------------------------------
Series A ........ 3.65% 3.70% 3.50% 3.90%
Series B ........ 3.75% 3.65% 3.55% 3.90%
Series C ........ 3.48% 3.89% 3.70% 3.29%
Series D ........ 3.55% 3.55% 3.60% 3.55%
Series E ........ 3.55% 3.55% 3.30% --
Series F ........ 3.58% 3.85% -- --
Series G ........ 3.29% 3.10% -- --
Series H ........ -- 3.60% -- --
Series I ........ -- 3.29% -- --
--------------------------------------------------------------------------------
Shares issued and outstanding for each of the Funds during the years ended
October 31, 2007 and October 31, 2006 remained constant.
Each Fund pays commissions to certain broker-dealers at the end of each auction
at an annual rate ranging from .25% to .375%, calculated on the proceeds of each
auction. For the year ended October 31, 2007, Merrill Lynch, Pierce, Fenner &
Smith Incorporated, a wholly owned subsidiary of Merrill Lynch, earned
commissions as follows:
--------------------------------------------------------------------------------
Commissions
--------------------------------------------------------------------------------
BlackRock MuniYield Fund, Inc. ................................. $336,827
BlackRock MuniYield Insured Fund, Inc. ......................... $472,650
BlackRock MuniYield Quality Fund, Inc. ......................... $260,234
BlackRock MuniYield Quality Fund II, Inc. ...................... $199,431
--------------------------------------------------------------------------------
5. Distributions to Shareholders:
Each Fund paid a tax-exempt income dividend to holders of Common Stock on
December 3, 2007 to shareholders of record on November 15, 2007. The amount of
the tax-exempt income dividend per share was as follows:
--------------------------------------------------------------------------------
Per Share
Amount
--------------------------------------------------------------------------------
BlackRock MuniYield Fund, Inc. ................................. $.068000
BlackRock MuniYield Insured Fund, Inc. ......................... $.056000
BlackRock MuniYield Quality Fund, Inc. ......................... $.057000
BlackRock MuniYield Quality Fund II, Inc. ...................... $.050000
--------------------------------------------------------------------------------
The tax character of distributions paid during the fiscal years ended October
31, 2007 and October 31, 2006 was as follows:
--------------------------------------------------------------------------------
BlackRock MuniYield Fund, Inc. 10/31/2007 10/31/2006
--------------------------------------------------------------------------------
Distributions paid from:
Tax-exempt income .............................. $49,480,604 $53,242,140
Ordinary income ................................ -- 161,124
--------------------------
Total distributions .............................. $49,480,604 $53,403,264
==========================
--------------------------------------------------------------------------------
BlackRock MuniYield Insured Fund, Inc. 10/31/2007 10/31/2006
--------------------------------------------------------------------------------
Distributions paid from:
Tax-exempt income .............................. $66,194,332 $69,395,892
Ordinary income ................................ -- 5,734,611
Long term capital gain ......................... -- 19,935,524
--------------------------
Total distributions .............................. $66,194,332 $95,066,027
==========================
--------------------------------------------------------------------------------
BlackRock MuniYield Quality Fund, Inc. 10/31/2007 10/31/2006
--------------------------------------------------------------------------------
Distributions paid from:
Tax-exempt income .............................. $30,124,515 $32,157,768
--------------------------
Total distributions .............................. $30,124,515 $32,157,768
==========================
--------------------------------------------------------------------------------
BlackRock MuniYield Quality Fund II, Inc. 10/31/2007 10/31/2006
--------------------------------------------------------------------------------
Distributions paid from:
Tax-exempt income .............................. $19,472,404 $21,169,808
--------------------------
Total distributions .............................. $19,472,404 $21,169,808
==========================
As of October 31, 2007, the components of accumulated earnings/losses on a tax
basis were as follows:
-----------------------------------------------------------------------------
BlackRock MuniYield Fund, Inc.
-----------------------------------------------------------------------------
Undistributed tax-exempt income -- net ...................... $ 2,556,548
Undistributed long-term capital gains -- net ................ --
------------
Total undistributed earnings -- net ......................... 2,556,548
Capital loss carryforward ................................... (27,592,398)*
Unrealized gains -- net ..................................... 25,980,730**
------------
Total accumulated earnings -- net ........................... $ 944,880
============
* At October 31, 2007, the Fund had a net capital loss carryforward of
$27,592,398, of which $21,402,887 expires in 2008, $6,000,235 expires in
2009 and $189,276 expires in 2010. This amount will be available to offset
like amounts of any future taxable gains.
** The difference between book-basis and tax-basis net unrealized gains is
attributable primarily to the tax deferral of losses on wash sales, the
tax deferral of losses on straddles, the difference between book and tax
amortization methods for premiums and discounts on fixed income securities
and the difference between the book and tax treatment of residual
interests in tender option bonds.
44 ANNUAL REPORT OCTOBER 31, 2007
Notes to Financial Statements (concluded)
-----------------------------------------------------------------------------
BlackRock MuniYield Insured Fund, Inc.
-----------------------------------------------------------------------------
Undistributed tax-exempt income -- net ...................... $ 3,875,921
Undistributed long-term capital gains -- net ................ --
------------
Total undistributed earnings -- net ......................... 3,875,921
Capital loss carryforward ................................... (7,469,073)*
Unrealized gains -- net ..................................... 34,579,029**
------------
Total accumulated earnings -- net ........................... $ 30,985,877
============
* At October 31, 2007, the Fund had a net capital loss carryforward of
$7,469,073, of which $1,489,118 expires in 2014 and $5,979,955 expires in
2015. This amount will be available to offset like amounts of any future
taxable gains.
** The difference between book-basis and tax-basis net unrealized gains is
attributable primarily to the tax deferral of losses on straddles, the
difference between book and tax amortization methods for premiums and
discounts on fixed income securities and the difference between the book
and tax treatment of residual interests in tender option bonds.
-----------------------------------------------------------------------------
BlackRock MuniYield Quality Fund, Inc.
-----------------------------------------------------------------------------
Undistributed tax-exempt income -- net ...................... $ 1,521,403
Undistributed long-term capital gains -- net ................ 3,210,001
------------
Total undistributed earnings -- net ......................... 4,731,404
Capital loss carryforward ................................... --
Unrealized gains -- net ..................................... 21,666,322*
------------
Total accumulated earnings -- net ........................... $ 26,397,726
============
* The difference between book-basis and tax-basis net unrealized gains is
attributable primarily to the tax deferral of losses on wash sales, the
tax deferral of losses on straddles, the difference between book and tax
amortization methods for premiums and discounts on fixed income securities
and the difference between the book and tax treatment of residual
interests in tender option bonds.
-----------------------------------------------------------------------------
BlackRock MuniYield Quality Fund II, Inc.
-----------------------------------------------------------------------------
Undistributed tax-exempt income -- net ...................... $ 968,933
Undistributed long-term capital gains -- net ................ --
------------
Total undistributed earnings -- net ......................... 968,933
Capital loss carryforward ................................... (32,574,400)*
Unrealized gains -- net ..................................... 12,454,007**
------------
Total accumulated losses -- net ............................. $(19,151,460)
============
* At October 31, 2007, the Fund had a net capital loss carryforward of
$32,574,400, of which $25,942,904 expires in 2008, $1,096,837 expires in
2010 and $5,534,659 expires in 2012. This amount will be available to
offset like amounts of any future taxable gains.
** The difference between book-basis and tax-basis net unrealized gains is
attributable primarily to the tax deferral of losses on, the tax deferral
of losses on the difference between the book and tax treatment of residual
interests in tender option bonds.
6. Restatement Information:
Subsequent to the initial issuance of BlackRock MuniYield Insured Fund, Inc.'s
October 31, 2006 financial statements, the Fund determined that the criteria for
sale accounting in FAS 140 had not been met for certain transfers of municipal
bonds and that these transfers should have been accounted for as secured
borrowings rather than as sales. As a result, certain financial highlights for
each of the three years in the period ended October 31, 2005 have been restated
to give effect to recording the transfers of the municipal bonds as secured
borrowings, including recording interest on the bonds as interest income and
interest on the secured borrowings as interest expense.
------------------------------------------------------------------------------------------------------------------------------------
Financial Highlights for BlackRock MuniYield Insured Fund, Inc.
For the Years Ended October 31, 2005, 2004 and 2003
------------------------------------------------------------------------------------------------------------------------------------
2005 2004 2003
------------------------- ------------------------- -------------------------
Previously Previously Previously
Reported Restated Reported Restated Reported Restated
------------------------------------------------------------------------------------------------------------------------------------
Total expenses, net of reimbursement*** . 1.01% 1.60% .95% 1.19% .94% 1.18%
Total expenses*** ....................... 1.01% 1.60% .95% 1.19% .95% 1.18%
Portfolio turnover ...................... 123.85% 105% 144.40% 122% 114.05% 95%
------------------------------------------------------------------------------------------------------------------------------------
*** Do not reflect the effect of dividends to Preferred Stock shareholders.
ANNUAL REPORT OCTOBER 31, 2007 45
Report of Independent Registered Public Accounting Firm
To the Shareholders and Boards of Directors of BlackRock MuniYield Fund, Inc.,
BlackRock MuniYield Insured Fund, Inc., BlackRock MuniYield Quality Fund, Inc.
and BlackRock MuniYield Quality Fund II, Inc.:
We have audited each of the accompanying statements of net assets, including the
schedules of investments, of BlackRock MuniYield Fund, Inc., BlackRock MuniYield
Quality Fund, Inc., and BlackRock MuniYield Quality Fund II, Inc. as of October
31, 2007, and the related statements of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended for each of the respective funds. We have also audited the
accompanying statement of net assets, including the schedule of investments, of
BlackRock MuniYield Insured Fund, Inc. as of October 31, 2007, and the related
statement of operations for the year then ended, and the statements of changes
in net assets and the financial highlights for each of the two years in the
period then ended. The above-referenced funds are hereinafter referred to
collectively as the "Funds." These financial statements and financial highlights
are the responsibility of the Funds' management. Our responsibility is to
express an opinion on the financial statements and financial highlights of each
of the Funds based on our audits. The financial highlights of BlackRock
MuniYield Insured Fund, Inc. for each of the three years in the period ended
October 31, 2005 (before the restatement described in Note 6) were audited by
other auditors whose report, dated December 9, 2005, expressed a qualified
opinion on those financial highlights because of the errors described in Note 6.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Funds
are not required to have, nor were we engaged to perform, audits of their
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Funds' internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of October 31, 2007, by correspondence with the custodian
and brokers; where replies were not received from brokers, we performed other
auditing procedures. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial highlights of BlackRock
MuniYield Fund, Inc., BlackRock MuniYield Quality Fund, Inc. and BlackRock
MuniYield Quality Fund II, Inc. referred to above present fairly, in all
material respects, the respective financial positions of each of those funds as
of October 31, 2007, the results of their operations for the year then ended,
the changes in their net assets for each of the two years in the period then
ended, and their financial highlights for each of the five years in the period
then ended, in conformity with accounting principles generally accepted in the
United States of America. Additionally, in our opinion, the financial statements
and financial highlights of BlackRock MuniYield Insured Fund, Inc. as of October
31, 2007 and for each of the two years in the period then ended, present fairly,
in all material respects, its financial position as of October 31, 2007, the
results of its operations for the year then ended, and the changes in its net
assets and the financial highlights for each of the two years in the period then
ended, in conformity with accounting principles generally accepted in the United
States of America.
We also have audited the adjustments, applied by management, to restate certain
financial highlights of BlackRock MuniYield Insured Fund, Inc. (the "Insured
Fund") for each of the three years in the period ended October 31, 2005, to
correct the errors described in Note 6. These adjustments are the responsibility
of the Insured Fund's management. The audit procedures that we performed with
respect to the adjustments included such tests as we considered necessary in the
circumstances and were designed to obtain reasonable assurance about whether the
adjustments are appropriate and have been properly applied, in all material
respects, to the restated information in Insured Fund's financial highlights for
each of the three years in the period ended October 31, 2005. We did not perform
any audit procedures designed to assess whether any additional adjustments or
disclosures to the Insured Fund's financial highlights for each of the three
years in the period ended October 31, 2005 might be necessary in order for such
financial highlights to be presented in conformity with accounting principles
generally accepted in the United States of America. In our opinion, the
adjustments to the financial highlights of the Insured Fund for each of the
three years in the period ended October 31, 2005, for the restatement described
in Note 6 are appropriate and have been properly applied, in all material
respects. However, we were not engaged to audit, review, or apply any procedures
to the Insured Fund's financial highlights for each of the three years in the
period ended October 31, 2005, other than with respect to the adjustments
described in Note 6 and, accordingly, we do not express an opinion or any other
form of assurance on the Insured Fund's financial highlights for each of the
three years in the period ended October 31, 2005.
Deloitte & Touche LLP
Princeton, New Jersey
December 26, 2007
46 ANNUAL REPORT OCTOBER 31, 2007
Important Tax Information
All of the net investment income distributions paid by BlackRock MuniYield Fund,
Inc., BlackRock MuniYield Insured Fund, Inc., BlackRock MuniYield Quality Fund,
Inc. and BlackRock MuniYield Quality Fund II, Inc. during the taxable year ended
October 31, 2007 qualify as tax-exempt interest dividends for federal income tax
purposes.
ANNUAL REPORT OCTOBER 31, 2007 47
The Benefits and Risks of Leveraging
The Funds utilize leverage to seek to enhance the yield and net asset value of
their Common Stock. However, these objectives cannot be achieved in all interest
rate environments. To leverage, each Fund issues Preferred Stock, which pays
dividends at prevailing short-term interest rates, and invests the proceeds in
long-term municipal bonds. The interest earned on these investments, net of
dividends to Preferred Stock, is paid to Common Stock shareholders in the form
of dividends, and the value of these portfolio holdings is reflected in the per
share net asset value of each Fund's Common Stock. However, in order to benefit
Common Stock shareholders, the yield curve must be positively sloped; that is,
short-term interest rates must be lower than long-term interest rates. At the
same time, a period of generally declining interest rates will benefit Common
Stock shareholders. If either of these conditions change, then the risks of
leveraging will begin to outweigh the benefits.
To illustrate these concepts, assume a fund's Common Stock capitalization of
$100 million and the issuance of Preferred Stock 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 approximately 3%
and long-term interest rates are approximately 6%, the yield curve has a
strongly positive slope. The fund pays dividends on the $50 million of Preferred
Stock based on the lower short-term interest rates. At the same time, the fund's
total portfolio of $150 million earns the income based on long-term interest
rates.
In this case, the dividends paid to Preferred Stock shareholders are
significantly lower than the income earned on the fund's long-term investments,
and therefore the Common Stock shareholders are the beneficiaries of the
incremental yield. However, if short-term interest rates rise, narrowing the
differential between short-term and long-term interest rates, the incremental
yield pickup on the Common Stock will be reduced or eliminated completely. At
the same time, the market value of the fund's Common Stock (that is, its price
as listed on the New York Stock Exchange) may, as a result, decline.
Furthermore, if long-term interest rates rise, the Common Stock's net asset
value will reflect the full decline in the price of the portfolio's investments,
since the value of the fund's Preferred Stock does not fluctuate. In addition to
the decline in net asset value, the market value of the fund's Common Stock may
also decline.
As of October 31, 2007, BlackRock MuniYield Fund, Inc., BlackRock MuniYield
Insured Fund, Inc., BlackRock MuniYield Quality Fund, Inc. and BlackRock
MuniYield Quality Fund II, Inc. had leverage amounts, due to Auction Market
Preferred Stock, of 34.58%, 36.71%, 35.52% and 35.14% of total net assets,
respectively, before the deduction of Preferred Stock.
As a part of their investment strategy, the Funds may invest in certain
securities whose potential income return is inversely related to changes in a
floating interest rate ("inverse floaters"). In general, income on inverse
floaters will decrease when short-term interest rates increase and increase when
short-term interest rates decrease. Investments in inverse floaters may be
characterized as derivative securities and may subject the Funds to the risks of
reduced or eliminated interest payments and losses of invested principal. In
addition, inverse floaters have the effect of providing investment leverage and,
as a result, the market value of such securities will generally be more volatile
than that of fixed rate, tax-exempt securities. To the extent the Funds invest
in inverse floaters, the market value of each Fund's portfolio and the net asset
value of each Fund's shares may also be more volatile than if the Funds did not
invest in these securities. To the extent the Funds invest in inverse floaters,
the market value of the Funds' portfolio and net asset value of the Funds'
shares may also be more volatile than if the Funds did not invest in these
securities. (See Note 1(c) to Financial Statements for details of municipal
bonds held in trust.)
Swap Agreements
The Funds may invest in swap agreements, which are over-the-counter contracts in
which one party agrees to make periodic payments based on the change in market
value of a specified bond, basket of bonds, or index in return for periodic
payments based on a fixed or variable interest rate or the change in market
value of a different bond, basket of bonds or index. Swap agreements may be used
to obtain exposure to a bond or market without owning or taking physical custody
of securities. Swap agreements involve the risk that the party with whom each
Fund has entered into a swap will default on its obligation to pay the Fund and
the risk that the Fund will not be able to meet its obligations to pay the other
party to the agreement.
48 ANNUAL REPORT OCTOBER 31, 2007
Automatic Dividend Reinvestment Plan
How the Plan Works -- The Funds offer a Dividend Reinvestment Plan (the "Plan")
under which income and capital gains dividends paid by each Fund are
automatically reinvested in additional shares of Common Stock of each Fund. The
Plan is administered on behalf of the shareholders by The Bank of New York
Mellon for BlackRock MuniYield Fund, Inc. and BlackRock MuniYield Quality Fund
II, Inc. and Computershare Trust Company, N.A. for BlackRock MuniYield Insured
Fund, Inc. and BlackRock MuniYield Quality Fund, Inc. (individually, the "Plan
Agent" or together, the "Plan Agents"). Under the Plan, whenever the Funds
declare a dividend, participants in the Plan will receive the equivalent in
shares of Common Stock of each Fund. The Plan Agents will acquire the shares for
the participant's account either (i) through receipt of additional unissued but
authorized shares of each Fund ("newly issued shares") or (ii) by purchase of
outstanding shares of Common Stock on the open market on the New York Stock
Exchange or elsewhere. If, on the dividend payment date, each Fund's net asset
value per share is equal to or less than the market price per share plus
estimated brokerage commissions (a condition often referred to as a "market
premium"), the Plan Agents will invest the dividend amount in newly issued
shares. If the Funds' net asset value per share is greater than the market price
per share (a condition often referred to as a "market discount"), the Plan
Agents will invest the dividend amount by purchasing on the open market
additional shares. If the Plan Agents are unable to invest the full dividend
amount in open market purchases, or if the market discount shifts to a market
premium during the purchase period, the Plan Agents will invest any uninvested
portion in newly issued shares. The shares acquired are credited to each
shareholder's account. The amount credited is determined by dividing the dollar
amount of the dividend by either (i) when the shares are newly issued, the net
asset value per share on the date the shares are issued or (ii) when shares are
purchased in the open market, the average purchase price per share.
Participation in the Plan -- Participation in the Plan is automatic, that is, a
shareholder is automatically enrolled in the Plan when he or she purchases
shares of Common Stock of the Funds unless the shareholder specifically elects
not to participate in the Plan. Shareholders who elect not to participate will
receive all dividend distributions in cash. Shareholders who do not wish to
participate in the Plan, must advise their Plan Agent in writing (at the address
set forth below) that they elect not to participate in the Plan. Participation
in the Plan is completely voluntary and may be terminated or resumed at any time
without penalty by writing to the Plan Agent.
Benefits of the Plan -- The Plan provides an easy, convenient way for
shareholders to make additional, regular investments in the Funds. The Plan
promotes a long-term strategy of investing at a lower cost. All shares acquired
pursuant to the Plan receive voting rights. In addition, if the market price
plus commissions of each Fund's shares is above the net asset value,
participants in the Plan will receive shares of the Funds for less than they
could otherwise purchase them and with a cash value greater than the value of
any cash distribution they would have received. However, there may not be enough
shares available in the market to make distributions in shares at prices below
the net asset value. Also, since each Fund does not redeem shares, the price on
resale may be more or less than the net asset value.
Plan Fees -- There are no enrollment fees or brokerage fees for participating in
the Plan. The Plan Agents' service fees for handling the reinvestment of
distributions are paid for by the Funds. However, brokerage commissions may be
incurred when the Funds purchase shares on the open market and shareholders will
pay a pro rata share of any such commissions.
Tax Implications -- The automatic reinvestment of dividends and distributions
will not relieve participants of any federal, state or local income tax that may
be payable (or required to be withheld) on such dividends. Therefore, income and
capital gains may still be realized even though shareholders do not receive
cash. The value of shares acquired pursuant to the Plan will generally be
excluded from gross income to the extent that the cash amount reinvested would
be excluded from gross income. If, when the Funds' shares are trading at a
market premium, the Funds issue shares pursuant to the Plan that have a greater
fair market value than the amount of cash reinvested, it is possible that all or
a portion of the discount from the market value (which may not exceed 5% of the
fair market value of each Fund's shares) could be viewed as a taxable
distribution. If the discount is viewed as a taxable distribution, it is also
possible that the taxable character of this discount would be allocable to all
the shareholders, including shareholders who do not participate in the Plan.
Thus, shareholders who do not participate in the Plan might be required to
report as ordinary income a portion of their distributions equal to their
allocable share of the discount.
Contact Information -- All correspondence concerning the Plan, including any
questions about the Plan, should be directed to the Plan Agent at The Bank of
New York Mellon, Church Street Station, P.O. Box 11258, New York, NY 10286-1258,
Telephone: 800-432-8224 for BlackRock MuniYield Fund, Inc. and BlackRock
MuniYield Quality Fund II, Inc. and Computershare Trust Company, N.A., P.O. Box
43010, Providence, RI 02940-3010, Telephone: 800-426-5523 for BlackRock
MuniYield Insured Fund, Inc. and BlackRock MuniYield Quality Fund, Inc.
ANNUAL REPORT OCTOBER 31, 2007 49
Officers and Directors as of October 31, 2007
Number of
Funds and
Portfolios in
Position(s) Length of Fund Complex Other Public
Name, Address Held with Time Overseen by Directorships
and Year of Birth Funds Served Principal Occupation(s) During Past 5 Years Director Held by Director
====================================================================================================================================
Interested Director
------------------------------------------------------------------------------------------------------------------------------------
Robert C. Doll, Jr.* Fund 2005 to Vice Chairman and Director of BlackRock, 120 Funds None
P.O. Box 9011 President present Inc., Global Chief Investment Officer for 161 Portfolios
Princeton, NJ 08543-9011 and Equities, Chairman of the BlackRock Retail
1954 Director Operating Committee, and member of the
BlackRock Executive Committee since 2006;
President of the funds advised by Merrill
Lynch Investment Managers, L.P. ("MLIM") and
its affiliates ("MLIM/FAM-advised funds")
from 2005 to 2006 and Chief Investment
Officer thereof from 2001 to 2006; President
of MLIM and Fund Asset Management, L.P.
("FAM") from 2001 to 2006; Co-Head (Americas
Region) thereof from 2000 to 2001 and Senior
Vice President from 1999 to 2001; President
and Director of Princeton Services, Inc.
("Princeton Services") and President of
Princeton Administrators, L.P. ("Princeton
Administrators") from 2001 to 2006; Chief
Investment Officer of OppenheimerFunds, Inc.
in 1999 and Executive Vice President thereof
from 1991 to 1999.
---------------------------------------------------------------------------------------------------------
* Mr. Doll is a director, trustee or member of an advisory board of certain other investment
companies for which BlackRock Advisors, LLC and its affiliates act as investment adviser. Mr.
Doll is an "interested person," as described in the Investment Company Act, of the Fund based on
his positions with BlackRock, Inc. and its affiliates. Directors serve until their resignation,
removal or death, or until December 31 of the year in which they turn 72. As Fund President, Mr.
Doll serves at the pleasure of the Boards of Directors.
====================================================================================================================================
Independent Directors*
------------------------------------------------------------------------------------------------------------------------------------
James H. Bodurtha** Director 2002 to Director, The China Business Group, Inc. 37 Funds None
P.O. Box 9095 2007 since 1996 and Executive Vice President 57 Portfolios
Princeton, NJ 08543-9095 thereof from 1996 to 2003; Chairman of the
1944 Board, Berkshire Holding Corporation since
1980; Partner, Squire, Sanders & Dempsey
from 1980 to 1993.
------------------------------------------------------------------------------------------------------------------------------------
Kenneth A. Froot Director 2005 to Professor, Harvard University since 1992; 37 Funds None
P.O. Box 9095 2007 Professor, Massachusetts Institute of 57 Portfolios
Princeton, NJ 08543-9095 Technology from 1986 to 1992.
1957
------------------------------------------------------------------------------------------------------------------------------------
50 ANNUAL REPORT OCTOBER 31, 2007
Officers and Directors as of October 31, 2007 (continued)
Number of
Funds and
Portfolios in
Position(s) Length of Fund Complex Other Public
Name, Address Held with Time Overseen by Directorships
and Year of Birth Funds Served Principal Occupation(s) During Past 5 Years Director Held by Director
====================================================================================================================================
Independent Directors* (concluded)
------------------------------------------------------------------------------------------------------------------------------------
Joe Grills** Director 1994 to Member of the Committee of Investment of 37 Funds Kimco Realty
P.O. Box 9095 2007 Employee Benefit Assets of the Association 57 Portfolios Corporation
Princeton, NJ 08543-9095 of Financial Professionals ("CIEBA") since
1935 1986; Member of CIEBA's Executive Committee
since 1988 and its Chairman from 1991 to
1992; Assistant Treasurer of International
Business Machines Corporation ("IBM") and
Chief Investment Officer of IBM Retirement
Funds from 1986 to 1993; Member of the
Investment Advisory Committee of the State
of New York Common Retirement Fund from 1989
to 2006; Member of the Investment Advisory
Committee of the Howard Hughes Medical
Institute from 1997 to 2000; Director, Duke
University Management Company from 1992 to
2004, Vice Chairman thereof from 1998 to
2004, and Director Emeritus thereof since
2004; Director, LaSalle Street Fund from
1995 to 2001; Director, Kimco Realty
Corporation since 1997; Member of the
Investment Advisory Committee of the
Virginia Retirement System since 1998, Vice
Chairman thereof from 2002 to 2005, and
Chairman thereof since 2005; Director,
Montpelier Foundation since 1998, its Vice
Chairman from 2000 to 2006, and Chairman,
thereof, since 2006; Member of the
Investment Committee of the Woodberry Forest
School since 2000; Member of the Investment
Committee of the National Trust for Historic
Preservation since 2000.
------------------------------------------------------------------------------------------------------------------------------------
Herbert I. London Director 2002 to Professor Emeritus, New York University 37 Funds None
P.O. Box 9095 2007 since 2005; John M. Olin Professor of 57 Portfolios
Princeton, NJ 08543-9095 Humanities, New York University from 1993 to
1939 2005; and Professor thereof from 1980 to
2005; President, Hudson Institute since 1997
and Trustee thereof since 1980; Dean,
Gallatin Division of New York University
from 1976 to 1993; Distinguished Fellow,
Herman Kahn Chair, Hudson Institute from
1984 to 1985; Chairman of the Board of
Directors of Vigilant Research, Inc. since
2006; Member of the Board of Directors for
Grantham University since 2006; Director of
AIMS Worldwide, Inc. since 2006; Director of
Reflex Security since 2006; Director of
InnoCentive, Inc. since 2006; Director of
Cerego, LLC since 2005; Director, Damon
Corp. from 1991 to 1995; Overseer, Center
for Naval Analyses from 1983 to 1993.
------------------------------------------------------------------------------------------------------------------------------------
Roberta Cooper Ramo Director 2002 to Shareholder, Modrall, Sperling, Roehl, 37 Funds None
P.O. Box 9095 2007 Harris & Sisk, P.A. since 1993; President, 57 Portfolios
Princeton, NJ 08543-9095 American Bar Association from 1995 to 1996
1942 and Member of the Board of Governors thereof
from 1994 to 1997; Shareholder, Poole, Kelly
and Ramo, Attorneys at Law P.C. from 1977 to
1993; Director of ECMC Group (service
provider to students, schools and lenders)
since 2001; Director, United New Mexico Bank
(now Wells Fargo) from 1983 to 1988;
Director, First National Bank of New Mexico
(now Wells Fargo) from 1975 to 1976; Vice
President, American Law Institute from 2004
to 2007 and President elect thereof since
2007.
------------------------------------------------------------------------------------------------------------------------------------
Robert S. Salomon, Jr. Director 1996 to Principal of STI Management (investment 37 Funds None
P.O. Box 9095 present adviser) from 1994 to 2005; Chairman and CEO 57 Portfolios
Princeton, NJ 08543-9095 of Salomon Brothers Asset Management Inc.
1936 from 1992 to 1995; Chairman of Salomon
Brothers Equity Mutual Funds from 1992 to
1995; regular columnist with Forbes Magazine
from 1992 to 2002; Director of Stock
Research and U.S. Equity Strategist at
Salomon Brothers Inc. from 1975 to 1991;
Trustee, Commonfund from 1980 to 2001.
---------------------------------------------------------------------------------------------------------
* Directors serve until their resignation, removal or death, or until December 31 of the year in
which they turn 72.
** Co-Chairman of each Board of Directors and Audit Committee.
------------------------------------------------------------------------------------------------------------------------------------
ANNUAL REPORT OCTOBER 31, 2007 51
Officers and Directors as of October 31, 2007 (concluded)
Position(s) Length of
Name, Address Held with Time
and Year of Birth Funds Served Principal Occupation(s) During Past 5 Years
====================================================================================================================================
Fund Officers*
------------------------------------------------------------------------------------------------------------------------------------
Donald C. Burke Vice 1993 to Managing Director of BlackRock, Inc. since 2006; Managing Director of Merrill Lynch
P.O. Box 9011 President present Investment Managers, L.P. ("MLIM") and Fund Asset Management, L.P. ("FAM") in 2006;
Princeton, NJ 08543-9011 and and First Vice President of MLIM and FAM from 1997 to 2005 and Treasurer thereof from
1960 Treasurer 1999 to 1999 to 2006; Vice President of MLIM and FAM from 1990 to 1997.
present
------------------------------------------------------------------------------------------------------------------------------------
Karen Clark Chief 2004 to Managing Director of BlackRock, Inc. and Chief Compliance Officer of certain
P.O. Box 9011 Compliance present BlackRock-advised funds since 2007; Director of BlackRock, Inc. from 2005 to 2007;
Princeton, NJ 08543-9011 Officer Principal and Senior Compliance Officer, State Street Global Advisors, from 2001 to
1965 2005; Principal Consultant, PricewaterhouseCoopers, LLP from 1998 to 2001; Branch
Chief, Division of Investment Management and Office of Compliance Inspections and
Examinations, U.S. Securities and Exchange Commission, from 1993 to 1998.
------------------------------------------------------------------------------------------------------------------------------------
Howard Surloff Secretary 2007 to Managing Director, of BlackRock Inc. and General Counsel of U.S. Funds at
P.O. Box 9011 present BlackRock, Inc. since 2006; General Counsel (U.S.) of Goldman Sachs Asset
Princeton, NJ 08543-9011 Management from 1993 to 2006.
1960
---------------------------------------------------------------------------------------------------------
* Officers of the Funds serve at the pleasure of the Boards of Directors.
------------------------------------------------------------------------------------------------------------------------------------
Accounting Agent
State Street Bank and
Trust Company
Princeton, NJ 08540
Independent Registered Public Accounting Firm
Deloitte & Touche LLP
Princeton, NJ 08540
Legal Counsel
Sidley Austin llp
New York, NY 10019
Address of the Funds
P.O. Box 9011
Princeton, NJ 08543-9011
BlackRock MuniYield Fund, Inc. and
BlackRock MuniYield Quality Fund II, Inc.
Custodian
The Bank of New York Mellon
One Wall Street
New York, NY 10286
Transfer Agents
Common Stock:
The Bank of New York Mellon
101 Barclay Street -- 11 East
New York, NY 10286
Preferred Stock:
The Bank of New York Mellon
101 Barclay Street -- 7 West
New York, NY 10286
BlackRock MuniYield Insured Fund, Inc. and
BlackRock MuniYield Quality Fund, Inc.
Custodian
State Street Bank and
Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agents
Common Stock:
Computershare Trust Company, N.A.
P.O. Box 43010
Providence, RI 02940-3010
Preferred Stock:
The Bank of New York Mellon
101 Barclay Street -- 7 West
New York, NY 10286
52 ANNUAL REPORT OCTOBER 31, 2007
Additional Information
Proxy Results BlackRock MuniYield Fund, Inc.
During the six-month period ended October 31, 2007, the Common Stock and Auction
Market Preferred Stock (Series A-G) shareholders of BlackRock MuniYield Fund,
Inc. voted on the following proposal, which was approved at an annual
shareholders' meeting on August 16, 2007. This proposal was part of the
reorganization of the Fund's Board of Directors to take effect on or about
November 1, 2007. A description of the proposal and number of shares voted are
as follows:
-------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
-------------------------------------------------------------------------------------------------------------------------
To elect the Fund's Directors: G. Nicholas Beckwith, III 41,532,263 776,464
Richard E. Cavanagh 41,536,688 772,039
Richard S. Davis 41,540,343 768,384
Kent Dixon 41,523,130 785,567
Kathleen F. Feldstein 41,532,394 776,333
James T. Flynn 41,540,412 768,315
Henry Gabbay 41,536,027 772,700
Jerrold B. Harris 41,527,833 780,894
R. Glenn Hubbard 41,525,722 783,005
Karen P. Robards 41,542,013 766,714
Robert S. Salomon, Jr. 41,521,786 786,941
-------------------------------------------------------------------------------------------------------------------------
During the six-month period ended October 31, 2007, the Auction Market Preferred
Stock shareholders (Series A-G) of BlackRock MuniYield Fund, Inc. voted on the
following proposal, which was approved at an annual shareholders' meeting on
August 16, 2007. This proposal was part of the reorganization of the Fund's
Board of Directors to take effect on or about November 1, 2007. A description of
the proposal and number of shares voted for each Director are as follows:
-------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
-------------------------------------------------------------------------------------------------------------------------
To elect the Fund's Directors: Frank J. Fabozzi and W. Carl Kester 12,114 4
-------------------------------------------------------------------------------------------------------------------------
ANNUAL REPORT OCTOBER 31, 2007 53
Additional Information (continued)
Proxy Results BlackRock MuniYield Insured Fund, Inc.
During the six-month period ended October 31, 2007, the Common Stock and Auction
Market Preferred Stock (Series A-I) shareholders of BlackRock MuniYield Insured
Fund, Inc. voted on the following proposal, which was approved at an annual
shareholders' meeting on August 16, 2007. This proposal was part of the
reorganization of the Fund's Board of Directors to take effect on or about
November 1, 2007. A description of the proposal and number of shares voted are
as follows:
-------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
-------------------------------------------------------------------------------------------------------------------------
To elect the Fund's Directors: G. Nicholas Beckwith, III 61,441,439 1,921,558
Richard E. Cavanagh 61,443,751 1,919,246
Richard S. Davis 61,448,953 1,914,044
Kent Dixon 61,446,483 1,916,514
Kathleen F. Feldstein 61,410,475 1,952,522
James T. Flynn 61,447,823 1,915,174
Henry Gabbay 61,781,151 1,581,846
Jerrold B. Harris 61,429,525 1,933,472
R. Glenn Hubbard 61,445,004 1,917,993
Karen P. Robards 61,412,875 1,950,122
Robert S. Salomon, Jr. 61,440,782 1,922,215
-------------------------------------------------------------------------------------------------------------------------
During the six-month period ended October 31, 2007, the Auction Market Preferred
Stock shareholders (Series A-I) of BlackRock MuniYield Insured Fund, Inc. voted
on the following proposal, which was approved at an annual shareholders' meeting
on August 16, 2007. This proposal was part of the reorganization of the Fund's
Board of Directors to take effect on or about November 1, 2007. A description of
the proposal and number of shares voted are as follows:
-------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
-------------------------------------------------------------------------------------------------------------------------
To elect the Fund's Directors: Frank J. Fabozzi 19,977 1
W. Carl Kester 19,974 4
-------------------------------------------------------------------------------------------------------------------------
54 ANNUAL REPORT OCTOBER 31, 2007
Additional Information (continued)
Proxy Results BlackRock MuniYield Quality Fund, Inc.
During the six-month period ended October 31, 2007, the Common Stock and Auction
Market Preferred Stock (Series A-E) shareholders of BlackRock MuniYield Quality
Fund, Inc. voted on the following proposal, which was approved at an annual
shareholders' meeting on August 16, 2007. This proposal was part of the
reorganization of the Fund's Board of Directors to take effect on or about
November 1, 2007. A description of the proposal and number of shares voted are
as follows:
-------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
-------------------------------------------------------------------------------------------------------------------------
To elect the Fund's Directors: G. Nicholas Beckwith, III 27,630,614 838,544
Richard E. Cavanagh 27,634,403 834,755
Richard S. Davis 27,627,434 841,724
Kent Dixon 27,630,797 838,361
Kathleen F. Feldstein 27,630,955 838,203
James T. Flynn 27,633,660 835,498
Henry Gabbay 27,664,345 804,813
Jerrold B. Harris 27,630,046 839,112
R. Glenn Hubbard 27,631,818 837,340
Karen P. Robards 27,630,315 838,843
Robert S. Salomon, Jr. 27,626,820 842,338
-------------------------------------------------------------------------------------------------------------------------
During the six-month period ended October 31, 2007, the Auction Market Preferred
Stock shareholders (Series A-E) of BlackRock MuniYield Quality Fund, Inc. voted
on the following proposal, which was approved at an annual shareholders' meeting
on August 16, 2007. This proposal was part of the reorganization of the Fund's
Board of Directors to take effect on or about November 1, 2007. A description of
the proposal and number of shares voted for each Director are as follows:
-------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
-------------------------------------------------------------------------------------------------------------------------
To elect the Fund's Directors: Frank J. Fabozzi and W. Carl Kester 8,342 113
-------------------------------------------------------------------------------------------------------------------------
ANNUAL REPORT OCTOBER 31, 2007 55
Additional Information (continued)
Proxy Results BlackRock MuniYield Quality Fund II, Inc.
During the six-month period ended October 31, 2007, the Common Stock and Auction
Market Preferred Stock (Series A-D) shareholders of BlackRock MuniYield Quality
Fund II, Inc. voted on the following proposal, which was approved at an annual
shareholders' meeting on August 16, 2007. This proposal was part of the
reorganization of the Fund's Board of Directors to take effect on or about
November 1, 2007. A description of the proposal and number of shares voted are
as follows:
-------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
-------------------------------------------------------------------------------------------------------------------------
To elect the Fund's Directors: G. Nicholas Beckwith, III 19,873,916 530,654
Richard E. Cavanagh 19,876,814 527,756
Richard S. Davis 19,871,108 533,462
Kent Dixon 19,877,814 526,756
Kathleen F. Feldstein 19,880,904 523,666
James T. Flynn 19,881,506 523,064
Henry Gabbay 20,093,970 310,600
Jerrold B. Harris 19,877,314 527,256
R. Glenn Hubbard 19,869,344 535,226
Karen P. Robards 19,890,952 513,618
Robert S. Salomon, Jr. 19,878,606 525,964
-------------------------------------------------------------------------------------------------------------------------
During the six-month period ended October 31, 2007, the Auction Market Preferred
Stock shareholders (Series A-D) of BlackRock MuniYield Quality Fund II, Inc.
voted on the following proposal, which was approved at an annual shareholders'
meeting on August 16, 2007. This proposal was part of the reorganization of the
Fund's Board of Directors to take effect on or about November 1, 2007. A
description of the proposal and number of shares voted for each Director are as
follows:
-------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
-------------------------------------------------------------------------------------------------------------------------
To elect the Fund's Directors: Frank J. Fabozzi and W. Carl Kester 5,834 52
-------------------------------------------------------------------------------------------------------------------------
56 ANNUAL REPORT OCTOBER 31, 2007
Additional Information (continued)
Dividend Policy
The Funds' dividend policy is to distribute all or a portion of their net
investment income to their shareholders on a monthly basis. In order to provide
shareholders with a more stable level of dividend distributions, the Funds may
at times pay out less than the entire amount of net investment income earned in
any particular month and may at times in any 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 Statements of Net Assets, which comprises
part of the Financial Information included in this report.
Fund Certifications
In May 2007, BlackRock MuniYield Fund, Inc., BlackRock MuniYield Insured Fund,
Inc., BlackRock MuniYield Quality Fund, Inc. and BlackRock MuniYield Quality
Fund II, Inc. filed their Chief Executive Officer Certification for the prior
year with the New York Stock Exchange pursuant to Section 303A.12(a) of the New
York Stock Exchange Corporate Governance Listing Standards.
The Funds' Chief Executive Officer and Chief Financial Officer Certifications
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 were filed with the
Funds' Forms N-CSR and are available on the Securities and Exchange Commission's
Web site at http://www.sec.gov.
ANNUAL REPORT OCTOBER 31, 2007 57
Additional Information (concluded)
Availability of Quarterly Schedules of Investments
The Funds file their complete schedules 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
Web site at http://www.sec.gov. The Funds' Forms N-Q 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
1-800-SEC-0330.
Electronic Delivery
Electronic copies of most financial reports and prospectuses are available on
the Funds' Web sites. Shareholders can sign up for e-mail notifications of
quarterly statements, annual and semi-annual reports and prospectuses by
enrolling in the Funds' electronic delivery program.
Shareholders Who Hold Accounts with Investment Advisers, Banks or Brokerages:
Please contact your financial advisor to enroll. Please note that not all
investment advisers, banks or brokerages may offer this service.
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 Web sites.
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.
58 ANNUAL REPORT OCTOBER 31, 2007
This report, including the financial information herein, is transmitted to
shareholders of BlackRock MuniYield Fund, Inc., BlackRock MuniYield Insured
Fund, Inc., BlackRock MuniYield Quality Fund, Inc. and BlackRock MuniYield
Quality Fund II, Inc. for their information. This 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
Stock and intend to remain leveraged by issuing Preferred Stock to provide the
Common Stock shareholders with potentially higher rates of return. Leverage
creates risks for Common Stock shareholders, including the likelihood of greater
volatility of net asset value and market price of shares of the Common Stock,
and the risk that fluctuations in the short-term dividend rates of the Preferred
Stock may affect the yield to Common Stock shareholders. Statements and other
information herein are as dated and are subject to change.
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 1-800-441-7762; (2) at
www.blackrock.com; and (3) on the Securities and Exchange Commission's Web site
at http://www.sec.gov. 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 (1) at www.blackrock.com and (2) on the Securities
and Exchange Commission's Web site at http://www.sec.gov.
BlackRock MuniYield Fund, Inc.
BlackRock MuniYield Insured Fund, Inc.
BlackRock MuniYield Quality Fund, Inc.
BlackRock MuniYield Quality Fund II, Inc.
P.O. Box 9011
Princeton, NJ 08543-9011
BLACKROCK
#MYQII-10/07
Item 2 - Code of Ethics - The registrant (or the "Fund") has adopted a code
of ethics, as of the end of the period covered by this report,
applicable to the registrant's principal executive officer,
principal financial officer and principal accounting officer, or
persons performing similar functions. During the period covered by
this report, there have been no amendments to or waivers granted
under the code of ethics. A copy of the code of ethics is available
without charge at www.blackrock.com.
Item 3 - Audit Committee Financial Expert - The registrant's board of
directors or trustees, as applicable (the "board of directors") has
determined that (i) the registrant has the following audit committee
financial experts serving on its audit committee and (ii) each audit
committee financial expert is independent:
Joe Grills (term ended effective November 1, 2007)
Robert S. Salomon, Jr.
Kent Dixon (term began effective November 1, 2007)
Frank J. Fabozzi (term began effective November 1, 2007)
W. Carl Kester (term began effective November 1, 2007)
James T. Flynn (term began effective November 1, 2007)
Karen P. Robards (term began effective November 1, 2007)
The registrant's board of directors has determined that W. Carl
Kester and Karen P. Robards qualify as financial experts pursuant to
Item 3(c)(4) of Form N-CSR.
Prof. Kester has a thorough understanding of generally accepted
accounting principles, financial statements and internal control
over financial reporting as well as audit committee functions. Prof.
Kester has been involved in providing valuation and other financial
consulting services to corporate clients since 1978. Prof. Kester's
financial consulting services present a breadth and level of
complexity of accounting issues that are generally comparable to the
breadth and complexity of issues that can reasonably be expected to
be raised by the registrant's financial statements.
Ms. Robards has a thorough understanding of generally accepted
accounting principles, financial statements and internal control
over financial reporting as well as audit committee functions. Ms.
Robards has been President of Robards & Company, a financial
advisory firm, since 1987. Ms. Robards was formerly an investment
banker for more than 10 years where she was responsible for
evaluating and assessing the performance of companies based on their
financial results. Ms. Robards has over 30 years of experience
analyzing financial statements. She also is the member of the Audit
Committees of one publicly held company and a non-profit
organization.
Under applicable securities laws, a person determined to be an audit
committee financial expert will not be deemed an "expert" for any
purpose, including without limitation for the purposes of Section 11
of the Securities Act of 1933, as a result of being designated or
identified as an audit committee financial expert. The designation
or identification as an audit committee financial expert does not
impose on such person any duties, obligations, or liabilities
greater than the duties, obligations, and liabilities imposed on
such person as a member of the audit committee and board of
directors in the absence of such designation or identification.
Item 4 - Principal Accountant Fees and Services
----------------------------------------------------------------------------------------------------------------------------------
(a) Audit Fees (b) Audit-Related Fees(1) (c) Tax Fees(2) (d) All Other Fees(3)
----------------------------------------------------------------------------------------------------------------------------------
Current Previous Current Previous Current Previous Current Previous
Fiscal Year Fiscal Fiscal Year Fiscal Fiscal Year Fiscal Fiscal Year Fiscal
Entity Name End Year End End Year End End Year End End Year End
----------------------------------------------------------------------------------------------------------------------------------
BlackRock MuniYield
Quality Fund, Inc. $55,450 $30,600 $3,500 $3,500 $6,100 $6,000 $1,042 $0
----------------------------------------------------------------------------------------------------------------------------------
1 The nature of the services include assurance and related services reasonably
related to the performance of the audit of financial statements not included in
Audit Fees.
2 The nature of the services include tax compliance, tax advice and tax
planning.
3 The nature of the services include a review of compliance procedures and
attestation thereto.
(e)(1) Audit Committee Pre-Approval Policies and Procedures:
The registrant's audit committee (the "Committee") has adopted
policies and procedures with regard to the pre-approval of services.
Audit, audit-related and tax compliance services provided to the
registrant on an annual basis require specific pre-approval by the
Committee. The Committee also must approve other non-audit services
provided to the registrant and those non-audit services provided to
the registrant's affiliated service providers that relate directly
to the operations and the financial reporting of the registrant.
Certain of these non-audit services that the Committee believes are
a) consistent with the SEC's auditor independence rules and b)
routine and recurring services that will not impair the independence
of the independent accountants may be approved by the Committee
without consideration on a specific case-by-case basis ("general
pre-approval"). However, such services will only be deemed
pre-approved provided that any individual project does not exceed
$5,000 attributable to the registrant or $50,000 for all of the
registrants the Committee oversees. Any proposed services exceeding
the pre-approved cost levels will require specific pre-approval by
the Committee, as will any other services not subject to general
pre-approval (e.g., unanticipated but permissible services). The
Committee is informed of each service approved subject to general
pre-approval at the next regularly scheduled in-person board
meeting.
(e)(2) None of the services described in each of Items 4(b) through
(d) were approved by the audit committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not Applicable
(g) Affiliates' Aggregate Non-Audit Fees:
--------------------------------------------------------------------
Current Fiscal Previous Fiscal
Entity Name Year End Year End
--------------------------------------------------------------------
BlackRock MuniYield Quality
Fund, Inc. $295,142 $2,928,083
--------------------------------------------------------------------
(h) The registrant's audit committee has considered and determined
that the provision of non-audit services that were rendered to the
registrant's investment adviser (not including any non-affiliated
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by the registrant's investment
adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services
to the registrant that were not pre-approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with
maintaining the principal accountant's independence.
Regulation S-X Rule 2-01(c)(7)(ii) - $284,500, 0%
Item 5 - Audit Committee of Listed Registrants - The following individuals
are members of the registrant's separately-designated standing audit
committee established in accordance with Section 3(a)(58)(A) of the
Exchange Act (15 U.S.C. 78c(a)(58)(A)):
James H. Bodurtha (term ended effective November 1, 2007)
Kenneth A. Froot (term ended effective November 1, 2007)
Joe Grills (term ended effective November 1, 2007)
Herbert I. London (term ended effective November 1, 2007)
Roberta Cooper Ramo (term ended effective November 1, 2007)
Robert S. Salomon, Jr.
Kent Dixon (term began effective November 1, 2007)
Frank J. Fabozzi (term began effective November 1, 2007)
W. Carl Kester (term began effective November 1, 2007)
James T. Flynn (term began effective November 1, 2007)
Karen P. Robards (term began effective November 1, 2007)
Item 6 - Schedule of Investments - The registrant's Schedule of Investments
is included as part of the Report to Stockholders filed under Item 1
of this form.
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - The registrant has delegated the
voting of proxies relating to Fund portfolio securities to its
investment adviser, BlackRock Advisors, LLC and its sub-adviser, as
applicable. The Proxy Voting Policies and Procedures of the adviser
and sub-adviser are attached hereto as Exhibit 99.PROXYPOL.
Information about how the Fund voted proxies relating to securities
held in the Fund's portfolio during the most recent 12 month period
ended June 30 is available without charge (1) at www.blackrock.com
and (2) on the Commission's web site at http://www.sec.gov.
Proxy Voting Policies and Procedures
For BlackRock Advisors, LLC
And Its Affiliated SEC Registered Investment Advisers
September 30, 2006
Table of Contents
Page
----
Introduction.................................................................
Scope of Committee Responsibilities..........................................
Special Circumstances........................................................
Voting Guidelines............................................................
Boards of Directors....................................................
Auditors...............................................................
Compensation and Benefits..............................................
Capital Structure......................................................
Corporate Charter and By-Laws..........................................
Corporate Meetings.....................................................
Investment Companies...................................................
Environmental and Social Issues........................................
Notice to Clients............................................................
Proxy Voting Policies and Procedures
These Proxy Voting Policies and Procedures ("Policy") for BlackRock
Advisors, LLC and its affiliated U.S. registered investment advisers(1)
("BlackRock") reflect our duty as a fiduciary under the Investment Advisers Act
of 1940 (the "Advisers Act") to vote proxies in the best interests of our
clients. BlackRock serves as the investment manager for investment companies,
other commingled investment vehicles and/or separate accounts of institutional
and other clients. The right to vote proxies for securities held in such
accounts belongs to BlackRock's clients. Certain clients of BlackRock have
retained the right to vote such proxies in general or in specific
circumstances.(2) Other clients, however, have delegated to BlackRock the right
to vote proxies for securities held in their accounts as part of BlackRock's
authority to manage, acquire and dispose of account assets.
When BlackRock votes proxies for a client that has delegated to BlackRock
proxy voting authority, BlackRock acts as the client's agent. Under the Advisers
Act, an investment adviser is a fiduciary that owes each of its clients a duty
of care and loyalty with respect to all services the adviser undertakes on the
client's behalf, including proxy voting. BlackRock is therefore subject to a
fiduciary duty to vote proxies in a manner BlackRock believes is consistent with
the client's best interests,(3) whether or not the client's proxy voting is
subject to the fiduciary standards of the Employee Retirement Income Security
Act of 1974 ("ERISA").(4) When voting proxies for client accounts (including
investment companies), BlackRock's primary objective is to make voting decisions
solely in the best interests of clients and ERISA clients' plan beneficiaries
and participants. In fulfilling its obligations to clients, BlackRock will seek
to act in a manner that it believes is most likely to enhance the economic value
of the underlying securities held in client accounts.(5) It is imperative that
BlackRock considers the interests of its clients, and not the interests of
BlackRock, when voting proxies and that real (or perceived) material conflicts
that may arise between BlackRock's interest and those of BlackRock's clients are
properly addressed and resolved.
----------
(1) The Policy does not apply to BlackRock Asset Management U.K. Limited and
BlackRock Investment Managers International Limited, which are U.S. registered
investment advisers based in the United Kingdom.
(2) In certain situations, a client may direct BlackRock to vote in accordance
with the client's proxy voting policies. In these situations, BlackRock will
seek to comply with such policies to the extent it would not be inconsistent
with other BlackRock legal responsibilities.
(3) Letter from Harvey L. Pitt, Chairman, SEC, to John P.M. Higgins, President,
Ram Trust Services (February 12, 2002) (Section 206 of the Investment Advisers
Act imposes a fiduciary responsibility to vote proxies fairly and in the best
interests of clients); SEC Release No. IA-2106 (February 3, 2003).
(4) DOL Interpretative Bulletin of Sections 402, 403 and 404 of ERISA at 29
C.F.R. 2509.94-2.
(5) Other considerations, such as social, labor, environmental or other
policies, may be of interest to particular clients. While BlackRock is cognizant
of the importance of such considerations, when voting proxies it will generally
take such matters into account only to the extent that they have a direct
bearing on the economic value of the underlying securities. To the extent that a
BlackRock client desires to pursue a particular social, labor, environmental or
other agenda through the proxy votes made for its securities held through
BlackRock as investment adviser, BlackRock encourages the client to consider
retaining direct proxy voting authority or to appoint independently a special
proxy voting fiduciary other than BlackRock.
1
Advisers Act Rule 206(4)-6 was adopted by the SEC in 2003 and requires,
among other things, that an investment adviser that exercises voting authority
over clients' proxy voting adopt policies and procedures reasonably designed to
ensure that the adviser votes proxies in the best interests of clients,
discloses to its clients information about those policies and procedures and
also discloses to clients how they may obtain information on how the adviser has
voted their proxies.
In light of such fiduciary duties, the requirements of Rule 206(4)-6, and
given the complexity of the issues that may be raised in connection with proxy
votes, BlackRock has adopted these policies and procedures. BlackRock's Equity
Investment Policy Oversight Committee, or a sub-committee thereof (the
"Committee"), addresses proxy voting issues on behalf of BlackRock and its
clients.(6) The Committee is comprised of senior members of BlackRock's
Portfolio Management Group and advised by BlackRock's Legal and Compliance
Department.
----------
(6) Subject to the Proxy Voting Policies of Merrill Lynch Bank & Trust Company
FSB, the Committee may also function jointly as the Proxy Voting Committee for
Merrill Lynch Bank & Trust Company FSB trust accounts managed by personnel
dually-employed by BlackRock.
2
I. Scope of Committee Responsibilities
The Committee shall have the responsibility for determining how to address
proxy votes made on behalf of all BlackRock clients, except for clients who have
retained the right to vote their own proxies, either generally or on any
specific matter. In so doing, the Committee shall seek to ensure that proxy
votes are made in the best interests of clients, and that proxy votes are
determined in a manner free from unwarranted or inappropriate influences. The
Committee shall also oversee the overall administration of proxy voting for
BlackRock accounts.(7)
The Committee shall establish BlackRock's proxy voting guidelines, with
such advice, participation and research as the Committee deems appropriate from
portfolio managers, proxy voting services or other knowledgeable interested
parties. As it is anticipated that there will not necessarily be a "right" way
to vote proxies on any given issue applicable to all facts and circumstances,
the Committee shall also be responsible for determining how the proxy voting
guidelines will be applied to specific proxy votes, in light of each issuer's
unique structure, management, strategic options and, in certain circumstances,
probable economic and other anticipated consequences of alternative actions. In
so doing, the Committee may determine to vote a particular proxy in a manner
contrary to its generally stated guidelines.
The Committee may determine that the subject matter of certain proxy
issues are not suitable for general voting guidelines and requires a
case-by-case determination, in which case the Committee may elect not to adopt a
specific voting guideline applicable to such issues. BlackRock believes that
certain proxy voting issues - such as approval of mergers and other significant
corporate transactions - require investment analysis akin to investment
decisions, and are therefore not suitable for general guidelines. The Committee
may elect to adopt a common BlackRock position on certain proxy votes that are
akin to investment decisions, or determine to permit portfolio managers to make
individual decisions on how best to maximize economic value for the accounts for
which they are responsible (similar to normal buy/sell investment decisions made
by such portfolio managers).(8)
While it is expected that BlackRock, as a fiduciary, will generally seek
to vote proxies over which BlackRock exercises voting authority in a uniform
manner for all BlackRock clients, the Committee, in conjunction with the
portfolio manager of an account, may determine that the specific circumstances
of such account require that such account's proxies be voted differently due to
such account's investment objective or other factors that differentiate it from
other accounts. In addition, on proxy votes that are akin to investment
decisions, BlackRock believes portfolio managers may from time to time
----------
(7) The Committee may delegate day-to-day administrative responsibilities to
other BlackRock personnel and/or outside service providers, as appropriate.
(8) The Committee will normally defer to portfolio managers on proxy votes that
are akin to investment decisions except for proxy votes that involve a material
conflict of interest, in which case it will determine, in its discretion, the
appropriate voting process so as to address such conflict.
3
legitimately reach differing but equally valid views, as fiduciaries for
BlackRock's clients, on how best to maximize economic value in respect of a
particular investment.
The Committee will also be responsible for ensuring the maintenance of
records of each proxy vote, as required by Advisers Act Rule 204-2.(9) All
records will be maintained in accordance with applicable law. Except as may be
required by applicable legal requirements, or as otherwise set forth herein, the
Committee's determinations and records shall be treated as proprietary,
nonpublic and confidential.
The Committee shall be assisted by other BlackRock personnel, as may be
appropriate. In particular, the Committee has delegated to the BlackRock
Operations Department responsibility for monitoring corporate actions and
ensuring that proxy votes are submitted in a timely fashion. The Operations
Department shall ensure that proxy voting issues are promptly brought to the
Committee's attention and that the Committee's proxy voting decisions are
appropriately disseminated and implemented.
To assist BlackRock in voting proxies, the Committee may retain the
services of a firm providing such services. BlackRock has currently retained
Institutional Shareholder Services ("ISS") in that role. ISS is an independent
adviser that specializes in providing a variety of fiduciary-level proxy-related
services to institutional investment managers, plan sponsors, custodians,
consultants, and other institutional investors. The services provided to
BlackRock may include, but are not limited to, in-depth research, voting
recommendations (which the Committee is not obligated to follow), vote
execution, and recordkeeping.
----------
(9) The Committee may delegate the actual maintenance of such records to an
outside service provider. Currently, the Committee has delegated the maintenance
of such records to Institutional Shareholder Services.
4
II. Special Circumstances
Routine Consents. BlackRock may be asked from time to time to consent to
an amendment to, or grant a waiver under, a loan agreement, partnership
agreement, indenture or other governing document of a specific financial
instrument held by BlackRock clients. BlackRock will generally treat such
requests for consents not as "proxies" subject to these Proxy Voting Policies
and Procedures but as investment matters to be dealt with by the responsible
BlackRock investment professionals would, provided that such consents (i) do not
relate to the election of a board of directors or appointment of auditors of a
public company, and (ii) either (A) would not otherwise materially affect the
structure, management or control of a public company, or (B) relate to a company
in which BlackRock clients hold only interests in bank loans or debt securities
and are consistent with customary standards and practices for such instruments.
Securities on Loan. Registered investment companies that are advised by
BlackRock as well as certain of our advisory clients may participate in
securities lending programs. Under most securities lending arrangements,
securities on loan may not be voted by the lender (unless the loan is recalled).
BlackRock believes that each client has the right to determine whether
participating in a securities lending program enhances returns, to contract with
the securities lending agent of its choice and to structure a securities lending
program, through its lending agent, that balances any tension between loaning
and voting securities in a matter that satisfies such client. If client has
decided to participate in a securities lending program, BlackRock will therefore
defer to the client's determination and not attempt to seek recalls solely for
the purpose of voting routine proxies as this could impact the returns received
from securities lending and make the client a less desirable lender in a
marketplace. Where a client retains a lending agent that is unaffiliated with
BlackRock, BlackRock will generally not seek to vote proxies relating to
securities on loan because BlackRock does not have a contractual right to recall
such loaned securities for the purpose of voting proxies. Where BlackRock or an
affiliate acts as the lending agent, BlackRock will also generally not seek to
recall loaned securities for proxy voting purposes, unless the portfolio manager
responsible for the account or the Committee determines that voting the proxy is
in the client's best interest and requests that the security be recalled.
Voting Proxies for Non-US Companies. While the proxy voting process is
well established in the United States, voting proxies of non-US companies
frequently involves logistical issues which can affect BlackRock's ability to
vote such proxies, as well as the desirability of voting such proxies. These
issues include (but are not limited to): (i) untimely notice of shareholder
meetings, (ii) restrictions on a foreigner's ability to exercise votes, (iii)
requirements to vote proxies in person, (iv) "shareblocking" (requirements that
investors who exercise their voting rights surrender the right to dispose of
their holdings for some specified period in proximity to the shareholder
meeting), (v) potential difficulties in translating the proxy, and (vi)
requirements to provide local agents with unrestricted powers of attorney to
facilitate voting instructions.
5
As a consequence, BlackRock votes proxies of non-US companies only on a
"best-efforts" basis. In addition, the Committee may determine that it is
generally in the best interests of BlackRock clients not to vote proxies of
companies in certain countries if the Committee determines that the costs
(including but not limited to opportunity costs associated with shareblocking
constraints) associated with exercising a vote generally are expected to
outweigh the benefit the client will derive by voting on the issuer's proposal.
If the Committee so determines in the case of a particular country, the
Committee (upon advice from BlackRock portfolio managers) may override such
determination with respect to a particular issuer's shareholder meeting if the
Committee believes the benefits of seeking to exercise a vote at such meeting
outweighs the costs, in which case BlackRock will seek to vote on a best-efforts
basis.
Securities Sold After Record Date. With respect to votes in connection
with securities held on a particular record date but sold from a client account
prior to the holding of the related meeting, BlackRock may take no action on
proposals to be voted on in such meeting.
Conflicts of Interest. From time to time, BlackRock may be required to
vote proxies in respect of an issuer that is an affiliate of BlackRock (a
"BlackRock Affiliate"), or a money management or other client of BlackRock (a
"BlackRock Client").(10) In such event, provided that the Committee is aware of
the real or potential conflict, the following procedures apply:
o The Committee intends to adhere to the voting guidelines set forth
herein for all proxy issues including matters involving BlackRock
Affiliates and BlackRock Clients. The Committee may, in its
discretion for the purposes of ensuring that an independent
determination is reached, retain an independent fiduciary to advise
the Committee on how to vote or to cast votes on behalf of
BlackRock's clients; and
o if the Committee determines not to retain an independent fiduciary,
or does not desire to follow the advice of such independent
fiduciary, the Committee shall determine how to vote the proxy after
consulting with the BlackRock Legal and Compliance Department and
concluding that the vote cast is in the client's best interest
notwithstanding the conflict.
----------
(10) Such issuers may include investment companies for which BlackRock provides
investment advisory, administrative and/or other services.
6
III. Voting Guidelines
The Committee has determined that it is appropriate and in the best
interests of BlackRock's clients to adopt the following voting guidelines, which
represent the Committee's usual voting position on certain recurring proxy
issues that are not expected to involve unusual circumstances. With respect to
any particular proxy issue, however, the Committee may elect to vote differently
than a voting guideline if the Committee determines that doing so is, in the
Committee's judgment, in the best interest of its clients. The guidelines may be
reviewed at any time upon the request of any Committee member and may be amended
or deleted upon the vote of a majority of voting Committee members present at a
Committee meeting for which there is a quorum.
7
A. Boards of Directors
These proposals concern those issues submitted to shareholders relating to
the composition of the Board of Directors of companies other than investment
companies. As a general matter, the Committee believes that a company's Board of
Directors (rather than shareholders) is most likely to have access to important,
nonpublic information regarding a company's business and prospects, and is
therefore best-positioned to set corporate policy and oversee management. The
Committee therefore believes that the foundation of good corporate governance is
the election of qualified, independent corporate directors who are likely to
diligently represent the interests of shareholders and oversee management of the
corporation in a manner that will seek to maximize shareholder value over time.
In individual cases, the Committee may look at a Director nominee's history of
representing shareholder interests as a director of other companies, or other
factors to the extent the Committee deems relevant.
The Committee's general policy is to vote:
--------------------------------------------------------------------------------
# VOTE and DESCRIPTION
--------------------------------------------------------------------------------
A.1 FOR nominees for director of United States companies in uncontested
elections, except for nominees who
o have missed at least two meetings and, as a result, attended less
than 75% of meetings of the Board of Directors and its committees
the previous year, unless the nominee missed the meeting(s) due to
illness or company business
o voted to implement or renew a "dead-hand" poison pill
o ignored a shareholder proposal that was approved by either a
majority of the shares outstanding in any year or by the majority of
votes cast for two consecutive years
o failed to act on takeover offers where the majority of the
shareholders have tendered their shares
o are corporate insiders who serve on the audit, compensation or
nominating committees or on a full Board that does not have such
committees composed exclusively of independent directors
o on a case-by-case basis, have served as directors of other companies
with allegedly poor corporate governance
o sit on more than six boards of public companies
--------------------------------------------------------------------------------
A.2 FOR nominees for directors of non-U.S. companies in uncontested elections,
except for nominees from whom the Committee determines to withhold votes
due to the nominees' poor records of representing shareholder interests,
on a case-by-case basis
--------------------------------------------------------------------------------
A.3 FOR proposals to declassify Boards of Directors, except where there exists
a legitimate purpose for classifying boards
--------------------------------------------------------------------------------
A.4 AGAINST proposals to classify Boards of Directors, except where there
exists a legitimate purpose for classifying boards
--------------------------------------------------------------------------------
8
--------------------------------------------------------------------------------
A.5 AGAINST proposals supporting cumulative voting
--------------------------------------------------------------------------------
A.6 FOR proposals eliminating cumulative voting
--------------------------------------------------------------------------------
A.7 FOR proposals supporting confidential voting
--------------------------------------------------------------------------------
A.8 FOR proposals seeking election of supervisory board members
--------------------------------------------------------------------------------
A.9 AGAINST shareholder proposals seeking additional representation of women
and/or minorities generally (i.e., not specific individuals) to a Board of
Directors
--------------------------------------------------------------------------------
A.10 AGAINST shareholder proposals for term limits for directors
--------------------------------------------------------------------------------
A.11 FOR shareholder proposals to establish a mandatory retirement age for
directors who attain the age of 72 or older
--------------------------------------------------------------------------------
A.12 AGAINST shareholder proposals requiring directors to own a minimum amount
of company stock
--------------------------------------------------------------------------------
A.13 FOR proposals requiring a majority of independent directors on a Board of
Directors
--------------------------------------------------------------------------------
A.14 FOR proposals to allow a Board of Directors to delegate powers to a
committee or committees
--------------------------------------------------------------------------------
A.15 FOR proposals to require audit, compensation and/or nominating committees
of a Board of Directors to consist exclusively of independent directors
--------------------------------------------------------------------------------
A.16 AGAINST shareholder proposals seeking to prohibit a single person from
occupying the roles of chairman and chief executive officer
--------------------------------------------------------------------------------
A.17 FOR proposals to elect account inspectors
--------------------------------------------------------------------------------
A.18 FOR proposals to fix the membership of a Board of Directors at a specified
size
--------------------------------------------------------------------------------
A.19 FOR proposals permitting shareholder ability to nominate directors
directly
--------------------------------------------------------------------------------
A.20 AGAINST proposals to eliminate shareholder ability to nominate directors
directly
--------------------------------------------------------------------------------
A.21 FOR proposals permitting shareholder ability to remove directors directly
--------------------------------------------------------------------------------
A.22 AGAINST proposals to eliminate shareholder ability to remove directors
directly
--------------------------------------------------------------------------------
9
B. Auditors
These proposals concern those issues submitted to shareholders related to
the selection of auditors. As a general matter, the Committee believes that
corporate auditors have a responsibility to represent the interests of
shareholders and provide an independent view on the propriety of financial
reporting decisions of corporate management. While the Committee will generally
defer to a corporation's choice of auditor, in individual cases, the Committee
may look at an auditors' history of representing shareholder interests as
auditor of other companies, to the extent the Committee deems relevant.
The Committee's general policy is to vote:
--------------------------------------------------------------------------------
B.1 FOR approval of independent auditors, except for
o auditors that have a financial interest in, or material association
with, the company they are auditing, and are therefore believed by
the Committee not to be independent
o auditors who have rendered an opinion to any company which in the
Committee's opinion is either not consistent with best accounting
practices or not indicative of the company's financial situation
o on a case-by-case basis, auditors who in the Committee's opinion
provide a significant amount of non-audit services to the company
--------------------------------------------------------------------------------
B.2 FOR proposals seeking authorization to fix the remuneration of auditors
--------------------------------------------------------------------------------
B.3 FOR approving internal statutory auditors
--------------------------------------------------------------------------------
B.4 FOR proposals for audit firm rotation, except for proposals that would
require rotation after a period of less than 5 years
--------------------------------------------------------------------------------
10
C. Compensation and Benefits
These proposals concern those issues submitted to shareholders related to
management compensation and employee benefits. As a general matter, the
Committee favors disclosure of a company's compensation and benefit policies and
opposes excessive compensation, but believes that compensation matters are
normally best determined by a corporation's board of directors, rather than
shareholders. Proposals to "micro-manage" a company's compensation practices or
to set arbitrary restrictions on compensation or benefits will therefore
generally not be supported.
The Committee's general policy is to vote:
--------------------------------------------------------------------------------
C.1 IN ACCORDANCE WITH THE RECOMMENDATION OF ISS on compensation plans if the
ISS recommendation is based solely on whether or not the company's plan
satisfies the allowable cap as calculated by ISS. If the recommendation of
ISS is based on factors other than whether the plan satisfies the
allowable cap the Committee will analyze the particular proposed plan.
This policy applies to amendments of plans as well as to initial
approvals.
--------------------------------------------------------------------------------
C.2 FOR proposals to eliminate retirement benefits for outside directors
--------------------------------------------------------------------------------
C.3 AGAINST proposals to establish retirement benefits for outside directors
--------------------------------------------------------------------------------
C.4 FOR proposals approving the remuneration of directors or of supervisory
board members
--------------------------------------------------------------------------------
C.5 AGAINST proposals to reprice stock options
--------------------------------------------------------------------------------
C.6 FOR proposals to approve employee stock purchase plans that apply to all
employees. This policy applies to proposals to amend ESPPs if the plan as
amended applies to all employees.
--------------------------------------------------------------------------------
C.7 FOR proposals to pay retirement bonuses to directors of Japanese companies
unless the directors have served less than three years
--------------------------------------------------------------------------------
C.8 AGAINST proposals seeking to pay outside directors only in stock
--------------------------------------------------------------------------------
C.9 FOR proposals seeking further disclosure of executive pay or requiring
companies to report on their supplemental executive retirement benefits
--------------------------------------------------------------------------------
C.10 AGAINST proposals to ban all future stock or stock option grants to
executives
--------------------------------------------------------------------------------
C.11 AGAINST option plans or grants that apply to directors or employees of
"related companies" without adequate disclosure of the corporate
relationship and justification of the option policy
--------------------------------------------------------------------------------
C.12 FOR proposals to exclude pension plan income in the calculation of
earnings used in determining executive bonuses/compensation
--------------------------------------------------------------------------------
11
D. Capital Structure
These proposals relate to various requests, principally from management,
for approval of amendments that would alter the capital structure of a company,
such as an increase in authorized shares. As a general matter, the Committee
will support requests that it believes enhance the rights of common shareholders
and oppose requests that appear to be unreasonably dilutive.
The Committee's general policy is to vote:
--------------------------------------------------------------------------------
D.1 AGAINST proposals seeking authorization to issue shares without preemptive
rights except for issuances up to 10% of a non-US company's total
outstanding capital
--------------------------------------------------------------------------------
D.2 FOR management proposals seeking preemptive rights or seeking
authorization to issue shares with preemptive rights
--------------------------------------------------------------------------------
D.3 FOR management proposals approving share repurchase programs
--------------------------------------------------------------------------------
D.4 FOR management proposals to split a company's stock
--------------------------------------------------------------------------------
D.5 FOR management proposals to denominate or authorize denomination of
securities or other obligations or assets in Euros
--------------------------------------------------------------------------------
D.6 FOR proposals requiring a company to expense stock options (unless the
company has already publicly committed to do so by a certain date).
--------------------------------------------------------------------------------
12
E. Corporate Charter and By-Laws
These proposals relate to various requests for approval of amendments to a
corporation's charter or by-laws, principally for the purpose of adopting or
redeeming "poison pills". As a general matter, the Committee opposes poison pill
provisions.
The Committee's general policy is to vote:
--------------------------------------------------------------------------------
E.1 AGAINST proposals seeking to adopt a poison pill
--------------------------------------------------------------------------------
E.2 FOR proposals seeking to redeem a poison pill
--------------------------------------------------------------------------------
E.3 FOR proposals seeking to have poison pills submitted to shareholders for
ratification
--------------------------------------------------------------------------------
E.4 FOR management proposals to change the company's name
--------------------------------------------------------------------------------
13
F. Corporate Meetings
These are routine proposals relating to various requests regarding the
formalities of corporate meetings.
The Committee's general policy is to vote:
--------------------------------------------------------------------------------
F.1 AGAINST proposals that seek authority to act on "any other business that
may arise"
--------------------------------------------------------------------------------
F.2 FOR proposals designating two shareholders to keep minutes of the meeting
--------------------------------------------------------------------------------
F.3 FOR proposals concerning accepting or approving financial statements and
statutory reports
--------------------------------------------------------------------------------
F.4 FOR proposals approving the discharge of management and the supervisory
board
--------------------------------------------------------------------------------
F.5 FOR proposals approving the allocation of income and the dividend
--------------------------------------------------------------------------------
F.6 FOR proposals seeking authorization to file required documents/other
formalities
--------------------------------------------------------------------------------
F.7 FOR proposals to authorize the corporate board to ratify and execute
approved resolutions
--------------------------------------------------------------------------------
F.8 FOR proposals appointing inspectors of elections
--------------------------------------------------------------------------------
F.9 FOR proposals electing a chair of the meeting
--------------------------------------------------------------------------------
F.10 FOR proposals to permit "virtual" shareholder meetings over the Internet
--------------------------------------------------------------------------------
F.11 AGAINST proposals to require rotating sites for shareholder meetings
--------------------------------------------------------------------------------
14
G. Investment Companies
These proposals relate to proxy issues that are associated solely with
holdings of shares of investment companies, including, but not limited to,
investment companies for which BlackRock provides investment advisory,
administrative and/or other services. As with other types of companies, the
Committee believes that a fund's Board of Directors (rather than its
shareholders) is best-positioned to set fund policy and oversee management.
However, the Committee opposes granting Boards of Directors authority over
certain matters, such as changes to a fund's investment objective, that the
Investment Company Act of 1940 envisions will be approved directly by
shareholders.
The Committee's general policy is to vote:
--------------------------------------------------------------------------------
G.1 FOR nominees for director of mutual funds in uncontested elections, except
for nominees who
o have missed at least two meetings and, as a result, attended less
than 75% of meetings of the Board of Directors and its committees
the previous year, unless the nominee missed the meeting due to
illness or fund business
o ignore a shareholder proposal that was approved by either a majority
of the shares outstanding in any year or by the majority of votes
cast for two consecutive years
o are interested directors who serve on the audit or nominating
committees or on a full Board that does not have such committees
composed exclusively of independent directors
o on a case-by-case basis, have served as directors of companies with
allegedly poor corporate governance
--------------------------------------------------------------------------------
G.2 FOR the establishment of new series or classes of shares
--------------------------------------------------------------------------------
G.3 AGAINST proposals to change a fund's investment objective to
nonfundamental
--------------------------------------------------------------------------------
G.4 FOR proposals to establish a master-feeder structure or authorizing the
Board to approve a master-feeder structure without a further shareholder
vote
--------------------------------------------------------------------------------
G.5 AGAINST a shareholder proposal for the establishment of a director
ownership requirement
--------------------------------------------------------------------------------
G.6 FOR classified boards of closed-end investment companies
--------------------------------------------------------------------------------
15
H. Environmental and Social Issues
These are shareholder proposals to limit corporate conduct in some manner
that relates to the shareholder's environmental or social concerns. The
Committee generally believes that annual shareholder meetings are inappropriate
forums for the discussion of larger social issues, and opposes shareholder
resolutions "micromanaging" corporate conduct or requesting release of
information that would not help a shareholder evaluate an investment in the
corporation as an economic matter. While the Committee is generally supportive
of proposals to require corporate disclosure of matters that seem relevant and
material to the economic interests of shareholders, the Committee is generally
not supportive of proposals to require disclosure of corporate matters for other
purposes.
The Committee's general policy is to vote:
--------------------------------------------------------------------------------
H.1 AGAINST proposals seeking to have companies adopt international codes of
conduct
--------------------------------------------------------------------------------
H.2 AGAINST proposals seeking to have companies provide non-required reports
on:
o environmental liabilities;
o bank lending policies;
o corporate political contributions or activities;
o alcohol advertising and efforts to discourage drinking by minors;
o costs and risk of doing business in any individual country;
o involvement in nuclear defense systems
--------------------------------------------------------------------------------
H.3 AGAINST proposals requesting reports on Maquiladora operations or on CERES
principles
--------------------------------------------------------------------------------
H.4 AGAINST proposals seeking implementation of the CERES principles
--------------------------------------------------------------------------------
16
Notice to Clients
BlackRock will make records of any proxy vote it has made on behalf of a
client available to such client upon request.(11) BlackRock will use its best
efforts to treat proxy votes of clients as confidential, except as it may decide
to best serve its clients' interests or as may be necessary to effect such votes
or as may be required by law.
BlackRock encourage clients with an interest in particular proxy voting
issues to make their views known to BlackRock, provided that, in the absence of
specific written direction from a client on how to vote that client's proxies,
BlackRock reserves the right to vote any proxy in a manner it deems in the best
interests of its clients, as it determines in its sole discretion.
These policies are as of the date indicated on the cover hereof. The
Committee may subsequently amend these policies at any time, without notice.
----------
(11) Such request may be made to the client's portfolio or relationship manager
or addressed in writing to Secretary, BlackRock Equity Investment Policy
Oversight Committee, Legal and Compliance Department, BlackRock Inc., 40 East
52nd Street, New York, New York 10022.
17
Item 8 - Portfolio Managers of Closed-End Management Investment Companies -
as of October 31, 2007.
(a)(1) BlackRock MuniYield Quality Fund, Inc. is managed by a team
of investment professionals comprised of Michael A. Kalinoski,
Director at BlackRock, Theodore R. Jaeckel, Jr., CFA, Managing
Director at BlackRock, and Walter O'Connor, Managing Director at
BlackRock. Each is a member of BlackRock's municipal tax-exempt
management group. Mr. Jaeckel and Mr. O'Connor are responsible for
setting the Fund's overall investment strategy and overseeing the
management of the Fund. Mr. Kalinoski is the Fund's lead portfolio
manager and is responsible for the day-to-day management of the
Fund's portfolio and the selection of its investments. Messrs.
Jaeckel and O'Connor have been members of the Fund's management team
since 2006 and Mr. Kalinoski has been the Fund's portfolio manager
since 2000.
Mr. Jaeckel joined BlackRock in 2006. Prior to joining BlackRock, he
was a Managing Director (Municipal Tax-Exempt Fund Management) of
Merrill Lynch Investment Managers, L.P. ("MLIM") from 2005 to 2006
and a Director of MLIM from 1997 to 2005. He has been a portfolio
manager with BlackRock or MLIM since 1991.
Mr. O'Connor joined BlackRock in 2006. Prior to joining BlackRock,
he was a Managing Director (Municipal Tax-Exempt Fund Management) of
MLIM from 2003 to 2006 and was a Director of MLIM from 1997 to 2002.
He has been a portfolio manager with BlackRock or MLIM since 1991.
Mr. Kalinoski joined BlackRock in 2006. Prior to joining BlackRock,
he was Director (Municipal Tax-Exempt Fund Management) of MLIM since
2006 and a Vice President from 1999 to 2006. He has been a portfolio
manager of BlackRock or MLIM since 1999.
(a)(2) As of October 31, 2007:
-----------------------------------------------------------------------------------------------------------------------
(iii) Number of Other Accounts and
(ii) Number of Other Accounts Managed Assets for Which Advisory Fee is
and Assets by Account Type Performance-Based
-----------------------------------------------------------------------------------------------------------------------
Other Other Other Other
(i) Name of Registered Pooled Registered Pooled
Portfolio Investment Investment Other Investment Investment Other
Manager Companies Vehicles Accounts Companies Vehicles Accounts
-----------------------------------------------------------------------------------------------------------------------
Michael A.
Kalinoski 6 0 0 0 0 0
-----------------------------------------------------------------------------------------------------------------------
$ 2,622,453,188 $0 $0 $0 $0 $0
-----------------------------------------------------------------------------------------------------------------------
Walter O'Connor 80 0 0 0 0 0
-----------------------------------------------------------------------------------------------------------------------
$28,227,307,033 $0 $0 $0 $0 $0
-----------------------------------------------------------------------------------------------------------------------
Theodore R.
Jaeckel, Jr. 80 1 0 0 1 0
-----------------------------------------------------------------------------------------------------------------------
$28,227,307,033 $26,763,472 $0 $0 $26,763,472 $0
-----------------------------------------------------------------------------------------------------------------------
(iv) Potential Material Conflicts of Interest
BlackRock, Inc. and its affiliates (collectively, herein
"BlackRock") has built a professional working environment, firm-wide
compliance culture and compliance procedures and systems designed to
protect against potential incentives that may favor one account over
another. BlackRock has adopted policies and procedures that address
the allocation of investment opportunities, execution of portfolio
transactions, personal trading by employees and other potential
conflicts of interest that are designed to ensure that all client
accounts are treated equitably over time. Nevertheless, BlackRock
furnishes investment management and advisory services to numerous
clients in addition to the Fund, and BlackRock may, consistent with
applicable law, make investment recommendations to other clients or
accounts (including accounts which are hedge funds or have
performance or higher fees paid to BlackRock, or in which portfolio
managers have a personal interest in the receipt of such fees),
which may be the same as or different from those made to the Fund.
In addition, BlackRock, its affiliates and any officer, director,
stockholder or employee may or may not have an interest in the
securities whose purchase and sale BlackRock recommends to the Fund.
BlackRock, or any of its affiliates, or any officer, director,
stockholder, employee or any member of their families may take
different actions than those recommended to the Fund by BlackRock
with respect to the same securities. Moreover, BlackRock may refrain
from rendering any advice or services concerning securities of
companies of which any of BlackRock's (or its affiliates') officers,
directors or employees are directors or officers, or companies as to
which BlackRock or any of its affiliates or the officers, directors
and employees of any of them has any substantial economic interest
or possesses material non-public information. Each portfolio manager
also may manage accounts whose investment strategies may at times be
opposed to the strategy utilized for the Fund. In this connection,
it should be noted that certain portfolio managers currently manage
certain accounts that are subject to performance fees. In addition,
certain portfolio managers assist in managing certain hedge funds
and may be entitled to receive a portion of any incentive fees
earned on such funds and a portion of such incentive fees may be
voluntarily or involuntarily deferred. Additional portfolio managers
may in the future manage other such accounts or funds and may be
entitled to receive incentive fees.
As a fiduciary, BlackRock owes a duty of loyalty to its clients and
must treat each client fairly. When BlackRock purchases or sells
securities for more than one account, the trades must be allocated
in a manner consistent with its fiduciary duties. BlackRock attempts
to allocate investments in a fair and equitable manner among client
accounts, with no account receiving preferential treatment. To this
end, BlackRock has adopted a policy that is intended to ensure that
investment opportunities are allocated fairly and equitably among
client accounts over time. This policy also seeks to achieve
reasonable efficiency in client transactions and provide BlackRock
with sufficient flexibility to allocate investments in a manner that
is consistent with the particular investment discipline and client
base.
(a)(3) As of October 31, 2007:
Portfolio Manager Compensation
The portfolio manager compensation program of BlackRock is
critical to BlackRock's ability to attract and retain the most
talented asset management professionals. This program ensures that
compensation is aligned with maximizing investment returns and it
provides a competitive pay opportunity for competitive performance.
Compensation Program
The elements of total compensation for BlackRock portfolio
managers are: fixed base salary, annual performance-based cash and
stock compensation (cash and stock bonus) and other benefits.
BlackRock has balanced these components of pay to provide portfolio
managers with a powerful incentive to achieve consistently superior
investment performance. By design, portfolio manager compensation
levels fluctuate -- both up and down -- with the relative investment
performance of the portfolios that they manage.
Base Salary
Under the BlackRock approach, like that of many asset
management firms, fixed base salaries represent a relatively small
portion of a portfolio manager's total compensation. This approach
serves to enhance the motivational value of the performance-based
(and therefore variable) compensation elements of the compensation
program.
Performance-Based Compensation
BlackRock believes that the best interests of investors are
served by recruiting and retaining exceptional asset management
talent and managing their compensation within a consistent and
disciplined framework that emphasizes pay for performance in the
context of an intensely competitive market for talent. To that end,
the portfolio manager incentive compensation is based on a formulaic
compensation program.
BlackRock's formulaic portfolio manager compensation program
includes: pre-tax investment performance relative to the appropriate
competitors or benchmarks over 1-, 3- and 5-year performance periods
and a measure of operational efficiency. If a portfolio manager's
tenure is less than 5 years, performance periods will reflect time
in position. Portfolio managers are compensated based on products
they manage. For these purposes, the performance of the Fund is
compared to the Lipper Closed-end Leveraged Insured Municipal Debt
Funds classification. A smaller discretionary element of portfolio
manager compensation may include consideration of: financial
results, expense control, profit margins, strategic planning and
implementation, quality of client service, market share, corporate
reputation, capital allocation, compliance and risk control,
leadership, workforce diversity, supervision, technology and
innovation. All factors are considered collectively by BlackRock
management.
Cash Bonus
Performance-based compensation is distributed to portfolio
managers in a combination of cash and stock. Typically, the cash
bonus, when combined with base salary, represents more than 60% of
total compensation for the portfolio managers.
Stock Bonus
A portion of the dollar value of the total annual
performance-based bonus is paid in restricted shares of stock of
BlackRock, Inc. (the "Company"). Paying a portion of annual bonuses
in stock puts compensation earned by a portfolio manager for a given
year "at risk" based on the Company's ability to sustain and improve
its performance over future periods. The ultimate value of stock
bonuses is dependent on future Company stock price performance. As
such, the stock bonus aligns each portfolio manager's financial
interests with those of the Company's shareholders and encourages a
balance between short-term goals and long-term strategic objectives.
Management strongly believes that providing a significant portion of
competitive performance-based compensation in stock is in the best
interests of investors and shareholders. This approach ensures that
portfolio managers participate as shareholders in both the "downside
risk" and "upside opportunity" of the Company's performance.
Portfolio managers, therefore, have a direct incentive to protect
the Company's reputation for integrity.
Other Benefits
Portfolio managers are also eligible to participate in
broad-based plans offered generally to BlackRock employees,
including broad-based retirement, 401(k), health, and other employee
benefit plans. For example, BlackRock, Inc. has created a variety of
incentive savings plans in which BlackRock employees are eligible to
participate, including a 401(k) plan, the BlackRock Retirement
Savings Plan (RSP) and the BlackRock Employee Stock Purchase Plan
(ESPP). The employer contribution components of the RSP include a
company match equal to 50% of the first 6% of eligible pay
contributed to the plan capped at $4,000 per year, and a company
retirement contribution equal to 3% of eligible compensation, plus
an additional contribution of 2% for any year in which BlackRock has
positive net operating income. The RSP offers a range of investment
options, including registered investment companies managed by the
firm. Company contributions follow the investment direction set by
participants for their own contributions or absent, employee
investment direction, are invested into a stable value fund. The
ESPP allows for investment in BlackRock common stock at a 5%
discount on the fair market value of the stock on the purchase date.
Annual participation in the ESPP is limited to the purchase of 1,000
shares or a dollar value of $25,000. Each portfolio manager is
eligible to participate in these plans.
(a)(4) Beneficial Ownership of Securities. As of October 31,
2007, none of Messrs. Kalinoski, Jaeckel or O'Connor
beneficially owned any stock issued by the Fund.
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable due to no such
purchases during the period covered by this report.
Item 10 - Submission of Matters to a Vote of Security Holders - The
registrant's Nominating and Governance Committee will consider
nominees to the Board recommended by shareholders when a vacancy
becomes available. Shareholders who wish to recommend a nominee
should send nominations which 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
13a-15(b) under the Securities and 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 - See Item 2
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/ Donald C. Burke
-------------------
Donald C. Burke,
Chief Executive Officer (principal executive officer) of
BlackRock MuniYield Quality Fund, Inc.
Date: December 19, 2007
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/ Donald C. Burke
-------------------
Donald C. Burke,
Chief Executive Officer (principal executive officer) of
BlackRock MuniYield Quality Fund, Inc.
Date: December 19, 2007
By: /s/ Neal J. Andrews
-------------------
Neal J. Andrews,
Chief Financial Officer (principal financial officer) of
BlackRock MuniYield Quality Fund, Inc.
Date: December 19, 2007