BLACKROCK MUNIHOLDINGS CALIFORNIA QUALITY FUND, INC.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-08573

Name of Fund:  BlackRock MuniHoldings California Quality Fund, Inc. (MUC)

Fund Address:   100 Bellevue Parkway, Wilmington, DE 19809

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

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

Date of fiscal year end: 07/31/2019

Date of reporting period: 01/31/2019


Item 1 –

Report to Stockholders


JANUARY 31, 2019

 

SEMI-ANNUAL REPORT (UNAUDITED)

  LOGO

 

BlackRock MuniHoldings California Quality Fund, Inc. (MUC)

BlackRock MuniHoldings New Jersey Quality Fund, Inc. (MUJ)

BlackRock MuniYield Investment Quality Fund (MFT)

BlackRock MuniYield Michigan Quality Fund, Inc. (MIY)

BlackRock MuniYield Pennsylvania Quality Fund (MPA)

 

 

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

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

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

 

Not FDIC Insured • May Lose Value • No Bank Guarantee


The Markets in Review

Dear Shareholder,

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

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

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

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

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

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

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

Sincerely,

 

LOGO

Rob Kapito

President, BlackRock Advisors, LLC

LOGO

Rob Kapito

President, BlackRock Advisors, LLC

 

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

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

  (3.00)%   (2.31)%

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

  (9.62)   (3.52)

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

  (7.80)   (12.51)

Emerging market equities
(MSCI Emerging Markets Index)

  (2.60)   (14.24)

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

  1.10   1.95

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

  4.20   3.21

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

  2.71   2.25

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

  1.86   3.08

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

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

 

 

2    THIS PAGE IS NOT PART OF YOUR FUND REPORT


Table of Contents

 

      Page  

The Markets in Review

     2  

Semi-Annual Report:

  

Municipal Market Overview

     4  

The Benefits and Risks of Leveraging

     5  

Derivative Financial Instruments

     5  

Fund Summaries

     6  

Financial Statements:

  

Schedules of Investments

     16  

Statements of Assets and Liabilities

     42  

Statements of Operations

     43  

Statements of Changes in Net Assets

     44  

Statements of Cash Flows

     49  

Financial Highlights

     50  

Notes to Financial Statements

     55  

Director and Officer Information

     65  

Additional Information

     66  

Glossary of Terms Used in this Report

     67  

 

 

          3  


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

 

Municipal Market Conditions

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

 

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

A Closer Look at Yields

 

LOGO

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

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

Financial Conditions of Municipal Issuers

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

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

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

 

 

4    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


The Benefits and Risks of Leveraging

 

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

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

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

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

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

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

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

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

Derivative Financial Instruments

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

 

 

THE BENEFITS AND RISKS OF LEVERAGING / DERIVATIVE FINANCIAL INSTRUMENTS      5  


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

 

Fund Overview

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

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

Fund Information

 

Symbol on New York Stock Exchange (“NYSE”)

  MUC

Initial Offering Date

  February 27, 1998

Yield on Closing Market Price as of January 31, 2019 ($12.80)(a)

  4.45%

Tax Equivalent Yield(b)

  9.69%

Current Monthly Distribution per Common Share(c)

  $0.0475

Current Annualized Distribution per Common Share(c)

  $0.5700

Economic Leverage as of January 31, 2019(d)

  41%

 

  (a) 

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

 
  (b) 

Tax equivalent yield assumes the maximum marginal U.S. federal and state tax rate of 54.1%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields.

 
  (c) 

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

 
  (d) 

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

 

Performance

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

 

    Returns Based On  
     Market Price      NAV  

MUC(a)(b)

    0.23      0.71

Lipper California Municipal Debt Funds(c)

    2.77        0.80  

 

  (a) 

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

 
  (b) 

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

 
  (c) 

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

 

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

Past performance is not indicative of future results.

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

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

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

The Fund’s positions in the school district, local tax-backed and transportation sectors contributed to performance. An overweight in the higher-grade AA and A rated credit categories, which outperformed BBB rated debt, also contributed to performance. The Fund’s quality mandate restricts it from holding issues rated lower than BBB.

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

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

The Fund maintained exposure to bonds with longer maturities and shorter call dates that it purchased when yields were higher. While these bonds have above-average income, their lower interest-rate sensitivity hurt their performance in the past six months given the decline in prevailing yields. (Prices and yields move in opposite directions.)

An overweight to the long end of the yield curve detracted from performance, as bonds with maturities of 10 years and less generally outperformed longer-dated securities.

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

 

 

6    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


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

 

Market Price and Net Asset Value Per Share Summary

 

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

Market Price

  $ 12.80      $ 13.07        (2.07 )%     $ 13.26      $ 12.10  

Net Asset Value

    14.79        15.03        (1.60      15.03        14.45  

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

 

LOGO

Overview of the Fund’s Total Investments *

 

SECTOR ALLOCATION

 

Sector  

01/31/19

   

07/31/18

 

County/City/Special District/School District

    35     37

Health

    20       19  

Transportation

    16       13  

Utilities

    15       16  

Education

    7       8  

State

    5       6  

Tobacco

    2        

Corporate

          1  

 

   

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

 

CALL/MATURITY SCHEDULE (c)

 

Calendar Year Ended December 31,

       

2019

    13

2020

    4  

2021

    13  

2022

    6  

2023

    8  

 

  (c) 

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

 
  *

Excludes short-term securities.

 

CREDIT QUALITY ALLOCATION (a)

 

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

AAA/Aaa

    13     14

AA/Aa

    69       67  

A

    12       12  

BBB/Baa

    2       2  

N/R

    4       5 (b)  

 

  (a) 

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

 
  (b) 

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

 
 

 

 

FUND SUMMARY      7  


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

 

Fund Overview

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

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

Fund Information

 

Symbol on NYSE

  MUJ

Initial Offering Date

  March 11, 1998

Yield on Closing Market Price as of January 31, 2019 ($12.99)(a)

  4.85%

Tax Equivalent Yield(b)

  10.01%

Current Monthly Distribution per Common Share(c)

  $0.0525

Current Annualized Distribution per Common Share(c)

  $0.6300

Economic Leverage as of January 31, 2019(d)

  40%

 

  (a) 

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

 
  (b) 

Tax equivalent yield assumes the maximum marginal U.S. federal and state tax rate of 51.55%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields.

 
  (c) 

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

 
  (d) 

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

 

Performance

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

 

    Returns Based On  
     Market Price      NAV  

MUJ(a)(b)

    3.21      1.89

Lipper New Jersey Municipal Debt Funds(c)

    4.02        1.61  

 

  (a) 

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

 
  (b) 

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

 
  (c) 

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

 

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

Past performance is not indicative of future results.

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

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

The credit ratings and yield spreads on New Jersey’s debt continued to reflect the state’s high unfunded pension liabilities. In addition, slowing revenues created challenges in balancing the state’s budget for the 2020 fiscal year.

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

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

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

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

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

 

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

 

 

8    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


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

 

Market Price and Net Asset Value Per Share Summary

 

    

01/31/19

    

07/31/18

     Change      High      Low  

Market Price

  $ 12.99      $ 12.90        0.70    $ 13.07      $ 12.25  

Net Asset Value

    15.19        15.28        (0.59      15.28        14.75  

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

 

LOGO

Overview of the Fund’s Total Investments *

 

SECTOR ALLOCATION

 

Sector  

01/31/19

   

07/31/18

 

Transportation

    27     28

Education

    18       18  

State

    18       18  

County/City/Special District/School District

    14       14  

Health

    10       10  

Housing

    5       5  

Utilities

    3       3  

Corporate

    3       2  

Tobacco

    2       2  

 

   

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

 

CALL/MATURITY SCHEDULE (c)

 

Calendar Year Ended December 31,

       

2019

    5

2020

    8  

2021

    16  

2022

    9  

2023

    9  

 

  (c) 

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

 
  *

Excludes short-term securities.

 

CREDIT QUALITY ALLOCATION (a)

 

Credit Rating  

01/31/19

   

07/31/18

 

AAA/Aaa

    7     7

AA/Aa

    36       38  

A

    19       21  

BBB/Baa

    33       30  

N/R

    5 (b)       4  

 

  (a) 

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

 
  (b) 

The investment adviser evaluates the credit quality of unrated investments based upon certain factors including, but not limited to, credit ratings for similar investments and financial analysis of sectors and individual investments. Using this approach, the investment adviser has deemed certain of these unrated securities as investment grade quality. As of January 31, 2019, the market value of unrated securities deemed by the investment adviser to be investment grade represents 2% of the Fund’s total investments.

 
   
 

 

 

FUND SUMMARY      9  


Fund Summary  as of January 31, 2019    BlackRock MuniYield Investment Quality Fund

 

Fund Overview

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

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

Fund Information

 

Symbol on NYSE

  MFT

Initial Offering Date

  October 30, 1992

Yield on Closing Market Price as of January 31, 2019 ($13.10)(a)

  5.40%

Tax Equivalent Yield(b)

  9.12%

Current Monthly Distribution per Common Share(c)

  $0.0590

Current Annualized Distribution per Common Share(c)

  $0.7080

Economic Leverage as of January 31, 2019(d)

  43%

 

  (a) 

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

 
  (b) 

Tax equivalent yield assumes the maximum marginal U.S. federal tax rate of 40.8%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields.

 
  (c) 

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

 
  (d) 

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

 

Performance

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

 

    Returns Based On  
     Market Price      NAV  

MFT(a)(b)

    3.41      1.15

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

    2.46        0.94  

 

  (a) 

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

 
  (b) 

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

 
  (c) 

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

 

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

Past performance is not indicative of future results.

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

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

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

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

At the sector level, positions in transportation issues — particularly higher-quality debt — were contributors. Conversely, an allocation to the tobacco sector was a slight detractor. The sector experienced yield spread widening, which led to poor performance relative to other market segments.

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

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

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

 

 

10    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Fund Summary  as of January 31, 2019 (continued)    BlackRock MuniYield Investment Quality Fund

 

Market Price and Net Asset Value Per Share Summary

 

    

01/31/19

    

07/31/18

     Change      High      Low  

Market Price

  $ 13.10      $ 13.03        0.54    $ 13.15      $ 11.84  

Net Asset Value

    13.67        13.90        (1.65      13.90        13.41  

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

 

LOGO

Overview of the Fund’s Total Investments *

 

SECTOR ALLOCATION

 

Sector  

01/31/19

   

07/31/18

 

Transportation

    36     34

Utilities

    15       18  

Health

    14       12  

County/City/Special District/School District

    14       16  

State

    8       9  

Housing

    6       4  

Tobacco

    3       2  

Corporate

    3       1  

Education

    1       4  

 

   

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

 

CALL/MATURITY SCHEDULE (c)

 

Calendar Year Ended December 31,

       

2019

    15

2020

    4  

2021

    19  

2022

    2  

2023

    21  

 

  (c) 

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

 
  *

Excludes short-term securities.

 

CREDIT QUALITY ALLOCATION (a)

 

Credit Rating  

01/31/19

   

07/31/18

 

AAA/Aaa

    4     5

AA/Aa

    50       54  

A

    27       23  

BBB/Baa

    13       12  

N/R(b)

    6       6  

 

  (a) 

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

 
  (b) 

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

 
   
 

 

 

FUND SUMMARY      11  


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

 

Fund Overview

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

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

Fund Information

 

Symbol on NYSE

  MIY

Initial Offering Date

  October 30, 1992

Yield on Closing Market Price as of January 31, 2019 ($12.81)(a)

  4.87%

Tax Equivalent Yield(b)

  8.86%

Current Monthly Distribution per Common Share(c)

  $0.0520

Current Annualized Distribution per Common Share(c)

  $0.6240

Economic Leverage as of January 31, 2019(d)

  39%

 

  (a) 

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

 
  (b) 

Tax equivalent yield assumes the maximum marginal U.S. federal and state tax rate of 45.05%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields.

 
  (c) 

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

 
  (d) 

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

 

Performance

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

 

    Returns Based On  
     Market Price      NAV  

MIY(a)(b)

    1.85      1.95

Lipper Other States Municipal Debt Funds(c)

    1.42        1.34  

 

  (a) 

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

 
  (b) 

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

 
  (c) 

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

 

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

Past performance is not indicative of future results.

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

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

Michigan municipal bonds outperformed the national market due to the state’s improving economy and modest amount of new-issue supply. Michigan’s economy continued to improve, and its unemployment rate was only slightly above the national average. In addition, its budget for the 2019 fiscal year was structurally balanced and featured a conservative revenue forecast.

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

At the sector level, positions in transportation issues were key contributors to performance.

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

The Fund’s allocation to lower-rated securities also hurt results given that yield spreads generally widened in the period.

 

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

 

 

12    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


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

 

Market Price and Net Asset Value Per Share Summary

 

    

01/31/19

    

07/31/18

     Change      High      Low  

Market Price

  $ 12.81      $ 12.89        (0.62 )%     $ 12.91      $ 12.15  

Net Asset Value

    14.96        15.04        (0.53      15.04        14.54  

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

 

LOGO

Overview of the Fund’s Total Investments *

 

SECTOR ALLOCATION

 

Sector  

01/31/19

   

07/31/18

 

Health

    24     25

Education

    22       22  

County/City/Special District/School District

    18       18  

State

    17       13  

Utilities

    10       10  

Housing

   
4
 
    4  

Transportation

    3       6  

Corporate

    2       2  

 

   

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

 

CALL/MATURITY SCHEDULE (c)

 

Calendar Year Ended December 31,

       

2019

    6

2020

    3  

2021

    17  

2022

    8  

2023

    15  

 

  (c) 

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

 
  *

Excludes short-term securities.

 

CREDIT QUALITY ALLOCATION (a)

 

Credit Rating  

01/31/19

   

07/31/18

 

AAA/Aaa

    2     3

AA/Aa

    66       69  

A

    23       22  

BBB/Baa

    4       3  

N/R

    5       3 (b)  

 

  (a) 

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

 
  (b) 

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

 
 

 

 

FUND SUMMARY      13  


Fund Summary  as of January 31, 2019    BlackRock MuniYield Pennsylvania Quality Fund

 

Fund Overview

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

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

Fund Information

 

Symbol on NYSE

  MPA

Initial Offering Date

  October 30, 1992

Yield on Closing Market Price as of January 31, 2019 ($13.19)(a)

  4.82%

Tax Equivalent Yield(b)

  8.59%

Current Monthly Distribution per Common Share(c)

  $0.0530

Current Annualized Distribution per Common Share(c)

  $0.6360

Economic Leverage as of January 31, 2019(d)

  41%

 

  (a) 

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

 
  (b) 

Tax equivalent yield assumes the maximum marginal U.S. federal and state tax rate of 43.87%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields.

 
  (c) 

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

 
  (d) 

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

 

Performance

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

 

    Returns Based On  
     Market Price      NAV  

MPA(a)(b)

    2.03      1.97

Lipper Pennsylvania Municipal Debt Funds(c)

    2.64        1.68  

 

  (a) 

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

 
  (b) 

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

 
  (c) 

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

 

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

Past performance is not indicative of future results.

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

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

Pennsylvania bonds outperformed the national index as improving fundamentals and a decrease in new-issue supply led to tighter yield spreads. The budget season was less acrimonious than in years past, and the state made the first significant deposit into its rainy day fund since 2009.

The Fund’s positions in the health care, school district and education sectors contributed to Fund performance. The Fund’s allocation to higher-rated issues, which outpaced lower-quality bonds, also aided results.

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

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

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

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

 

 

14    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Fund Summary  as of January 31, 2019 (continued)    BlackRock MuniYield Pennsylvania Quality Fund

 

Market Price and Net Asset Value Per Share Summary

 

    

01/31/19

    

07/31/18

     Change      High      Low  

Market Price

  $ 13.19      $ 13.26        (0.53 )%     $ 13.34      $ 12.30  

Net Asset Value

    15.18        15.27        (0.59      15.27        14.70  

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

 

LOGO

Overview of the Fund’s Total Investments *

 

SECTOR ALLOCATION

 

Sector  

01/31/19

   

07/31/18

 

Education

    23     23

Health

    22       18  

County/City/Special District/School District

    18       17  

Transportation

    13       13  

State

    9       13  

Utilities

    8       8  

Housing

    5       6  

Corporate

    1       2  

Tobacco

    1        

 

   

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

 

CALL/MATURITY SCHEDULE (d)

 

Calendar Year Ended December 31,

       

2019

    9

2020

    6  

2021

    12  

2022

    8  

2023

    5  

 

  (d) 

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

 
  *

Excludes short-term securities.

 

CREDIT QUALITY ALLOCATION (a)

 

Credit Rating  

01/31/19

   

07/31/18

 

AAA/Aaa

    1     1

AA/Aa

    48       53  

A

    35       34  

BBB/Baa

    6       8  

BB/Ba

          (b)  

N/R(c)

    10       4  

 

  (a) 

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

 
  (b) 

Represents less than 1% of the Fund’s total investments.

 
  (c) 

The investment adviser evaluates the credit quality of unrated investments based upon certain factors including, but not limited to, credit ratings for similar investments and financial analysis of sectors and individual investments. Using this approach, the investment adviser has deemed certain of these unrated securities as investment grade quality. As of January 31, 2019 and July 31, 2018, the market value of unrated securities deemed by the investment adviser to be investment grade represents 2% and less than 1%, respectively, of the Fund’s total investments.

 
 

 

 

FUND SUMMARY      15  


Schedule of Investments  (unaudited)

January 31, 2019

  

BlackRock MuniHoldings California Quality Fund, Inc. (MUC)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  

Municipal Bonds — 111.8%

   

California — 111.8%

   
Corporate — 0.4%            

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

  $ 2,435     $ 2,459,934  
   

 

 

 
County/City/Special District/School District — 32.2%  

California Municipal Finance Authority, RB, Orange County Civic Center Infrastructure Improvement Program, 5.00%, 06/01/43

    2,000       2,270,920  

Centinela Valley Union High School District, GO, Election of 2010, Series A, 5.75%, 08/01/21(a)

    9,120       10,076,232  

Chabot-Las Positas Community College District, GO, Election of 2016, Series A, 4.00%, 08/01/47

    1,500       1,549,110  

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

   

0.00%, 08/01/32

    250       157,338  

0.00%, 08/01/33

    500       297,535  

0.00%, 08/01/34

    510       290,277  

0.00%, 08/01/35

    545       296,126  

0.00%, 08/01/36

    500       258,725  

0.00%, 08/01/37

    650       321,074  

0.00%, 08/01/38

    625       294,575  

0.00%, 08/01/39

    750       336,188  

0.00%, 08/01/40

    1,855       791,529  

0.00%, 08/01/41

    305       123,961  

0.00%, 02/01/42

    350       138,936  

City of Sacramento California Transient Occupancy Tax Revenue, RB, Convention Center Complex, Series A, 5.00%, 06/01/43

    1,230       1,405,103  

Coronado Community Development Agency Successor Agency, Refunding, Tax Allocation Bonds, Series A, 5.00%, 09/01/33

    2,100       2,419,200  

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

    3,500       3,500,000  

County of Los Angeles California Public Works Financing Authority, Refunding RB, Series D, 5.00%, 12/01/45

    1,430       1,595,923  

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

    2,500       2,500,000  

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

    2,665       2,903,917  

County of San Luis Obispo Community College District, GO, Refunding Series B, 4.00%, 08/01/43

    3,555       3,656,922  

County of Santa Clara California, GO, Election of 2008, Series B, 4.00%, 08/01/43

    10,225       10,438,907  

Fremont Union High School District, GO, Refunding, 4.00%, 08/01/40

    2,500       2,587,250  

Garden Grove Unified School District, GO, Election of 2010, Series C, 5.25%, 08/01/40

    5,500       6,201,140  

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

   

5.50%, 08/01/21

    2,170       2,384,309  

5.75%, 08/01/21

    8,400       9,280,740  

Glendale Community College District, GO, Election of 2016, Series A, 4.00%, 08/01/46

    8,000       8,268,960  

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

    2,000       2,221,420  

Kern Community College District, GO, Safety Repair & Improvements, Series C:

   

5.25%, 11/01/32

    5,715       6,576,193  

5.75%, 11/01/34

    12,085       14,113,105  
Security   Par
(000)
    Value  
County/City/Special District/School District (continued)  

Los Alamitos Unified School District, GO, Refunding, School Facilities Improvement:

   

5.25%, 08/01/23(a)

  $ 2,185     $ 2,528,285  

5.25%, 08/01/39

    1,515       1,717,146  

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

    11,000       11,562,430  

Mount San Jacinto Community College District, GO, Series A, 5.00%, 08/01/35

    3,565       4,128,377  

Oxnard Union High School District, GO, Refunding, Election of 2004, Series A (AGM), 5.00%, 08/01/20(a)

    10,000       10,511,300  

Rio Elementary School District, GO, Series A (AGM), 5.25%, 08/01/40

    5,865       6,784,104  

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

    2,545       2,578,390  

San Benito High School District, GO, Election of 2016, 4.00%, 08/01/48

    5,000       5,175,850  

San Diego California Unified School District, GO, CAB, Election of 2008, Series K-2(b):

   

0.00%, 07/01/38

    2,755       1,316,284  

0.00%, 07/01/39

    3,340       1,525,111  

0.00%, 07/01/40

    4,285       1,873,188  

San Diego Regional Building Authority, RB, County Operations Center & Annex, Series A,
5.50%, 02/01/19(a)

    905       905,000  

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

   

5.75%, 05/01/36

    2,560       2,567,526  

5.75%, 05/01/42

    4,500       4,859,730  

San Jose California Financing Authority, Refunding LRB, Civic Center Project, Series A, 5.00%, 06/01/39

    5,800       6,446,062  

San Marcos Redevelopment Agency Successor Agency, Refunding, Tax Allocation Bonds, Series A:

   

5.00%, 10/01/32

    1,700       1,989,833  

5.00%, 10/01/33

    1,125       1,312,256  

Santa Clarita Community College District, GO, Refunding, 4.00%, 08/01/46

    10,000       10,300,400  

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

    5,635       5,771,198  

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

    1,625       1,895,481  

West Contra Costa California Unified School District, GO:

   

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

    5,390       5,889,437  

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

    3,195       3,664,218  

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

    2,500       2,867,150  
   

 

 

 
      195,424,371  
Education — 5.5%            

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

    2,750       3,096,637  

California Statewide Communities Development Authority, Refunding RB:

   

CHF-Irvine LLC, 5.00%, 05/15/40

    750       817,688  

University of California, RB, Limited Project,
Series M, 5.00%, 05/15/47

    15,000       16,938,150  

University of California, Refunding RB:

   

Series AO, 5.00%, 05/15/40

    5,430       6,173,693  

Series AZ, 4.00%, 05/15/48

    6,000       6,149,520  
   

 

 

 
      33,175,688  
Health — 18.4%            

ABAG Finance Authority for Nonprofit Corps., Refunding RB, Sharp Healthcare, Series B, 6.25%, 08/01/19(a)

    6,305       6,449,574  
 

 

 

16    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniHoldings California Quality Fund, Inc. (MUC)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Health (continued)            

California Health Facilities Financing Authority, RB:

   

Sutter Health, Series A, 5.00%, 11/15/35

  $ 1,960     $ 2,254,020  

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

    8,000       8,721,360  

Lucile Slater Packard Children’s Hospital at Stanford, Series A, 4.00%, 11/15/47

    825       833,498  

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

    4,130       4,229,987  

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

    450       456,309  

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

    9,655       10,306,906  

California Health Facilities Financing Authority, Refunding RB:

   

Dignity Health, Series A, 6.00%, 07/01/19(a)

    3,700       3,766,822  

Providence Health and Services, Series A, 5.00%, 10/01/38

    10,970       12,315,909  

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

    10,000       11,010,800  

Sutter Health, Series B, 5.00%, 11/15/46

    8,295       9,213,174  

California Municipal Finance Authority, Refunding RB, Community Medical Centers, Series A:

   

5.00%, 02/01/37

    3,110       3,437,327  

5.00%, 02/01/42

    5,250       5,733,630  

California Statewide Communities Development Authority, RB:

   

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

    2,500       2,511,225  

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

    2,220       2,204,726  

California Statewide Communities Development Authority, Refunding RB:

   

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

    3,005       3,034,088  

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

    2,655       2,658,558  

Front Porch Communities and Services, 5.00%, 04/01/47

    2,995       3,309,056  

John Muir Health, Series A, 5.00%, 08/15/51

    1,635       1,804,075  

John Muir Health, Series A, 5.00%, 12/01/53

    1,000       1,108,990  

John Muir Health, Series A, 5.00%, 12/01/57

    1,750       1,922,637  

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

    3,250       3,205,637  

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

    6,235       6,696,265  

University of California Regents Medical Center Pooled Revenue, Refunding RB, Series L, 5.00%, 05/15/47

    4,000       4,447,640  
   

 

 

 
      111,632,213  
State — 8.4%  

State of California, GO:

   

Various Purposes, 6.00%, 04/01/19(a)

    9,820       9,891,097  

Various Purposes, 6.00%, 03/01/33

    5,000       5,232,950  

Various Purposes, 6.00%, 04/01/38

    17,945       18,061,822  

Refunding, 5.00%, 08/01/45

    5,690       6,363,867  

Refunding Veterans Bond, 4.00%, 12/01/40

    4,000       4,047,560  

State of California Public Works Board, LRB:

   

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

    3,670       3,699,397  

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

    2,015       2,290,390  

State of California Public Works Board, RB, California State Prisons, Series C, 5.75%, 10/01/31

    1,205       1,326,319  
   

 

 

 
      50,913,402  
Tobacco — 3.8%  

Golden State Tobacco Securitization Corp., Refunding RB:

   

Asset-Backed, Series A (AGM), 5.00%, 06/01/40

    9,765       11,062,476  

Series A-1, 3.50%, 06/01/36

    11,915       11,722,692  
   

 

 

 
      22,785,168  
Security   Par
(000)
    Value  
Transportation — 21.0%  

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

  $ 1,500     $ 1,668,180  

Bay Area Toll Authority, Refunding RB, San Francisco Bay Area Toll Bridge Subordinate, 4.00%, 04/01/42

    5,000       5,122,300  

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

    13,915       15,178,760  

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

   

6.00%, 05/01/19(a)

    745       753,106  

6.00%, 05/01/39

    8,905       9,001,886  

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

   

2nd, 5.00%, 05/01/29

    6,435       7,008,230  

San Francisco International Airport, 5.00%, 05/01/41

    5,000       5,502,700  

5.00%, 05/01/47

    5,000       5,525,150  

City of Los Angeles California Department of Airports, ARB:

   

Los Angeles International Airport, Senior, Series D, 5.25%, 05/15/29

    2,590       2,722,168  

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

    3,830       4,279,297  

Series D, AMT, 5.00%, 05/15/35

    2,000       2,255,400  

Series D, AMT, 5.00%, 05/15/36

    1,500       1,686,945  

Sub-Series A, AMT, 5.00%, 05/15/47

    6,725       7,475,039  

City of Los Angeles California Department of Airports, Refunding ARB, Los Angeles International Airport:

   

5.00%, 05/15/43

    7,000       8,129,380  

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

    3,000       3,114,690  

Series A, 5.25%, 05/15/39

    5,845       5,902,807  

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

   

Series A, 5.00%, 03/01/41

    3,075       3,410,636  

Series A, 5.00%, 03/01/47

    11,770       12,976,190  

Series A-1, 5.25%, 03/01/23

    3,785       4,047,338  

Series A-1, 6.25%, 03/01/34

    1,400       1,511,986  

County of Sacramento California Airport System Revenue, Refunding ARB:

   

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

    1,250       1,391,225  

Senior Series A, 5.00%, 07/01/41

    2,500       2,791,150  

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

    4,545       5,200,071  

County of San Diego Regional Airport Authority, Refunding ARB, Subordinate, Series A, 5.00%, 07/01/42

    4,275       4,828,142  

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

    5,530       5,632,582  

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

    500       555,095  
   

 

 

 
      127,670,453  
Utilities — 22.1%  

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

    2,200       2,383,282  

City & County of San Francisco Public Utilities Commission Wastewater Revenue, Refunding RB, Sewer System, Series B, 4.00%, 10/01/42

    3,000       3,061,320  

City of Los Angeles California Department of Water & Power, RB, Power System, Series A, 5.00%, 07/01/42

    8,825       10,019,287  

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

    16,000       17,002,720  

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

   

5.00%, 06/01/20(a)

    1,325       1,385,235  

5.00%, 06/01/28

    675       703,681  
 

 

 

SCHEDULES OF INVESTMENTS      17  


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniHoldings California Quality Fund, Inc. (MUC)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Utilities (continued)  

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

   

Series A, 5.00%, 11/01/39

  $ 5,245     $ 5,949,561  

Series B, 5.00%, 11/01/19(a)

    10,000       10,258,500  

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

    18,270       20,612,031  

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

    4,000       4,352,720  

East Bay California Municipal Utility District Water System Revenue, RB, Green Bond, Series A:

   

5.00%, 06/01/42

    5,000       5,747,550  

4.00%, 06/01/45

    4,585       4,745,796  

5.00%, 06/01/45

    5,500       6,296,070  

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

    10,000       11,379,600  

San Diego Public Facilities Financing Authority Sewer, Refunding RB, Series A:

   

Senior, 5.25%, 05/15/19(a)

    10,000       10,106,900  

Senior, 5.25%, 05/15/19(a)

    1,060       1,071,331  

5.00%, 08/01/43

    9,655       11,136,270  

San Juan Water District, Refunding RB, San Juan & Citrus Heights, 5.25%, 02/01/33

    7,325       8,021,901  
   

 

 

 
      134,233,755  
   

 

 

 

Total Municipal Bonds — 111.8%
(Cost — $655,829,646)

 

    678,294,984  
   

 

 

 

Municipal Bonds Transferred to Tender Option Bond Trusts(c) — 55.5%

 

California — 55.5%

 

County/City/Special District/School District — 26.1%  

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

    10,000       11,538,600  

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

    6,585       6,747,475  

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

    17,615       20,018,141  

Foothill-De Anza Community College District, GO, Series C, 5.00%, 08/01/21(a)

    40,000       43,436,550  

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

    9,596       9,807,106  

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

    15,140       17,196,088  

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

    9,990       11,259,296  

Southwestern Community College District, GO, Election of 2008, Series D, 5.00%, 08/01/44

    10,820       12,285,244  

Visalia Unified School District, COP, (AGM), 4.00%, 05/01/48

    8,493       8,542,149  

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

    17,000       17,689,265  
   

 

 

 
      158,519,914  
Education — 5.8%  

University of California, RB:

   

Series AM, 5.25%, 05/15/44

    10,210       11,498,451  

Series O, 5.75%, 05/15/19(a)

    11,193       11,323,672  
Security   Par
(000)
    Value  
Education (continued)  

University of California, Refunding RB:

   

Series A, 5.00%, 11/01/43

  $ 6,001     $ 6,757,287  

Series AF, 5.00%, 05/15/39

    5,000       5,518,125  
   

 

 

 
      35,097,535  
Health — 15.2%  

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

    17,720       18,069,704  

California Health Facilities Financing Authority, RB:

   

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

    6,000       6,565,760  

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

    14,520       15,581,194  

California Health Facilities Financing Authority, Refunding RB:

   

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

    4,500       4,921,594  

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

    4,997       5,052,994  

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

    19,425       21,372,040  

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

    19,070       20,417,868  
   

 

 

 
      91,981,154  
Transportation — 5.8%  

Bay Area Toll Authority, Refunding RB, San Francisco Bay Area Toll Bridge, 4.00%, 04/01/49(d)

    10,005       10,200,164  

City of Los Angeles California Department of Airports, ARB, Series D, AMT, 5.00%, 05/15/41

    13,331       14,881,346  

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

   

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

    3,641       4,030,934  

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

    5,500       6,144,050  
   

 

 

 
      35,256,494  
Utilities — 2.6%  

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

    13,790       15,605,729  
   

 

 

 

Total Municipal Bonds Transferred to Tender Option Bond Trusts — 55.5%
(Cost — $329,016,967)

 

    336,460,826  
   

 

 

 

Total Investments — 167.3%
(Cost — $984,846,613)

 

    1,014,755,810  
   

 

 

 
     Shares         
Short-Term Securities — 0.2%  

BlackRock Liquidity Funds California Money Fund, Institutional Class,
1.22%(e)(f)

    1,364,058       1,364,331  
   

 

 

 

Total Short-Term Securities — 0.2%
(Cost — $1,364,331)

 

    1,364,331  
   

 

 

 

Total Investments — 167.5%
(Cost — $986,210,944)

 

    1,016,120,141  

Other Assets Less Liabilities — 2.1%

 

    12,437,813  

Liability for TOB Trust Certificates, Including Interest Expense and Fees Payable — (27.7)%

VMTP Shares, at Liquidation Value, Net of Deferred — (41.9)%

 

 

    (167,982,744
    (254,000,000
   

 

 

 

Net Assets Applicable to Common Shares — 100.0%

 

  $ 606,575,210  
   

 

 

 
 

 

 

18    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniHoldings California Quality Fund, Inc. (MUC)

 

(a) 

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

(b) 

Zero-coupon bond.

(c) 

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

(d) 

All or a portion of security is subject to a recourse agreement. The aggregate maximum potential amount the Fund could ultimately be required to pay under the agreement, which expires on April 1, 2025, is $6,875,658. See Note 4 of the Notes to Financial Statements for details.

(e) 

Annualized 7-day yield as of period end.

(f) 

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

 

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

BlackRock Liquidity Funds California Money Fund, Institutional Class

            1,364,058        1,364,058      $ 1,364,331      $ 23,416      $      $  

BlackRock Liquidity Funds, MuniCash, Institutional Class*

                                 9,013        (1       
           

 

 

    

 

 

    

 

 

    

 

 

 
            $ 1,364,331      $ 32,429      $ (1    $  
           

 

 

    

 

 

    

 

 

    

 

 

 

 

  *

No longer held by the Fund as of period end.

 
  (a) 

Includes net capital gain distributions, if applicable.

 

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

Derivative Financial Instruments Outstanding as of Period End

Futures Contracts

 

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

Short Contracts:

                 

10-Year U.S. Treasury Note

     117          03/20/19        $ 14,329        $ (127,266

Long U.S. Treasury Bond

     275          03/20/19          40,339          (1,742,733

5-Year U.S. Treasury Note

     47          03/29/19          5,398          (58,065
                 

 

 

 
                  $ (1,928,064
                 

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

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

 

     

Commodity

Contract

    

Credit

Contracts

    

Equity

Contracts

    

Foreign

Currency

Exchange

Contracts

    

Interest

Rate

Contracts

    

Other

Contracts

     Total  

Liabilities — Derivative Financial Instruments

                    

Futures contracts

                    

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

   $      $      $      $      $ 1,928,064      $      $ 1,928,064  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

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

 

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

 

     

Commodity

Contract

    

Credit

Contracts

    

Equity

Contracts

    

Foreign

Currency

Exchange

Contracts

    

Interest

Rate

Contracts

    

Other

Contracts

     Total  

Net Realized Gain (Loss) from:

                    

Futures contracts

   $      $      $      $      $ 593,924      $      $ 593,924  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

                    

Futures contracts

   $      $      $      $      $ (2,308,745    $      $ (2,308,745
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

 

SCHEDULES OF INVESTMENTS      19  


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniHoldings California Quality Fund, Inc. (MUC)

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

 

Average notional value of contracts — short

   $ 45,623,090  

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

Fair Value Hierarchy as of Period End

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

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

 

      Level 1        Level 2        Level 3        Total  

Assets:

 

Investments:

 

Long-Term Investments(a)

   $        $ 1,014,755,810        $        $ 1,014,755,810  

Short-Term Securities

     1,364,331                            1,364,331  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 1,364,331        $ 1,014,755,810        $        $ 1,016,120,141  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative Financial Instruments(b)

 

Liabilities:

 

Interest rate contracts

   $ (1,928,064      $        $             —        $ (1,928,064
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

See above Schedule of Investments for values in each sector.

 
  (b) 

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

 

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

 

      Level 1        Level 2        Level 3        Total  

Liabilities:

                 

TOB Trust Certificates

   $        $ (167,017,593      $        $ (167,017,593

VMTP Shares at Liquidation Value

              (254,000,000                 (254,000,000
  

 

 

      

 

 

      

 

 

      

 

 

 
   $             —        $ (421,017,593      $             —        $ (421,017,593
  

 

 

      

 

 

      

 

 

      

 

 

 

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

See notes to financial statements.

 

 

20    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) 

January 31, 2019

  

BlackRock MuniHoldings New Jersey Quality Fund, Inc. (MUJ)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  

Municipal Bonds — 139.3%

 

New Jersey — 139.3%

 

Corporate — 4.1%  

New Jersey EDA, RB, Series B:

   

Provident Group-Kean Properties, Series A, 5.00%, 07/01/47

  $ 795     $ 836,849  

State House Project, Remark 10,
5.00%, 06/15/43

    1,235       1,297,750  

New Jersey EDA, Refunding RB:

   

Duke Farms Foundation Project,
4.00%, 07/01/46

    2,770       2,878,473  

New Jersey American Water Co., Inc. Project, Series A, AMT, 5.70%, 10/01/39

    7,500       7,655,925  

New Jersey American Water Co., Inc. Project, Series B, AMT, 5.60%, 11/01/34

    3,150       3,266,550  

Provident Group-Montclair Properties LLC (AGM), 5.00%, 06/01/42

    810       883,605  

New Jersey EDA, RB, Reunding,
5.00%, 11/01/19

    2,000       2,044,200  
   

 

 

 
      18,863,352  
County/City/Special District/School District — 16.6%  

Borough of Edgewater New Jersey Board of Education, GO, Refunding, (AGM)(a):

   

4.25%, 03/01/20

    3,135       3,221,119  

4.30%, 03/01/20

    1,670       1,716,760  

Casino Reinvestment Development Authority, Refunding RB:

   

5.25%, 11/01/39

    11,130       11,842,543  

5.25%, 11/01/44

    3,755       3,989,462  

City of Bayonne New Jersey, GO, Refunding, Qualified General Improvement (BAM),
5.00%, 07/01/39

    3,340       3,671,228  

City of Perth Amboy New Jersey, GO, CAB, Refunding (AGM):

   

5.00%, 07/01/32

    2,210       2,213,558  

5.00%, 07/01/33

    670       671,072  

5.00%, 07/01/35

    595       595,958  

5.00%, 07/01/37

    705       706,086  

County of Essex New Jersey, GO, Vocational School, Series B, 3.00%, 09/01/46

    2,700       2,333,529  

County of Essex New Jersey Improvement Authority, Refunding RB, Project Consolidation (NPFGC):

   

5.50%, 10/01/27

    250       311,805  

5.50%, 10/01/28

    4,840       6,097,868  

County of Hudson New Jersey Improvement Authority, RB, CAB, Series A-1 (NPFGC), 0.00%, 12/15/32(b)

    1,000       638,700  

County of Middlesex New Jersey Improvement Authority, RB, Senior Citizens Housing Project, AMT (AMBAC), 5.50%, 09/01/30

    500       501,500  

County of Monmouth New Jersey Improvement Authority, Refunding RB, Governmental Loan (AMBAC), 5.00%, 12/01/19

    5       5,013  

County of Union New Jersey, GO, Refunding(a):

   

4.00%, 03/01/21

    225       235,221  

4.00%, 03/01/21

    11,200       11,732,224  

County of Union New Jersey Utilities Authority, Refunding RB, Resources Recovery Facility, Covanta Union, Inc., AMT, Series A,
5.25%, 12/01/31

    650       705,107  

Ewing Township Board of Education, GO:

   

4.00%, 07/15/38

    1,470       1,522,670  

4.00%, 07/15/39

    1,330       1,371,190  

New Jersey EDA, RB:

   

Motor Vehicle Surcharge, Series A,
5.25%, 07/01/26(c)

    1,415       1,726,894  

Motor Vehicle Surcharge, Series A (NPFGC), 5.25%, 07/01/25(c)

    535       641,577  

Series EEE, 5.00%, 06/15/43

    5,395       5,669,120  
Security   Par
(000)
    Value  
County/City/Special District/School District (continued)  

New Jersey Sports & Exposition Authority, Refunding RB, (NPFGC)(c):

   

5.50%, 03/01/21

  $ 7,430     $ 7,993,640  

5.50%, 03/01/22

    4,200       4,665,444  

Township of Irvington New Jersey, GO, Refunding Series A (AGM), 5.00%, 07/15/33

    1,175       1,316,717  
   

 

 

 
      76,096,005  
Education — 25.4%  

County of Gloucester New Jersey Improvement Authority, RB, Rowan University General Capital Improvement Projects:

   

5.00%, 07/01/44

    1,985       2,192,770  

Series A, 5.00%, 07/01/31

    1,950       2,205,976  

Series A, 5.00%, 07/01/32

    1,775       2,003,567  

Series A, 5.00%, 07/01/33

    2,250       2,532,690  

Series A, 5.00%, 07/01/34

    1,200       1,347,780  

New Jersey EDA, LRB, Rutgers — The State University of New Jersey, College Avenue Redevelopment Project, 5.00%, 06/15/33

    3,065       3,409,537  

New Jersey EDA, RB, Series A:

   

Foundation Academy Charter School Project, 5.00%, 07/01/38

    190       199,606  

Foundation Academy Charter School Project, 5.00%, 07/01/50

    495       515,191  

Provident Group — Rowan Properties LLC, 5.00%, 01/01/35

    2,000       2,115,020  

Provident Group — Rowan Properties LLC, 5.00%, 01/01/48

    2,000       2,077,580  

New Jersey EDA, Refunding RB, Provident Group-Monteclair Properites LLC (AGM),
5.00%, 06/01/37

    3,990       4,406,676  

New Jersey Educational Facilities Authority, RB:

   

Higher Educational Capital Improvement Fund, Series A, 4.00%, 09/01/28

    9,705       10,058,165  

Higher Educational Capital Improvement Fund, Series A, 5.00%, 09/01/33

    5,370       5,715,828  

Rider University Issue, Series F, 4.00%, 07/01/42

    2,365       2,224,259  

Rider University Issue, Series F, 5.00%, 07/01/47

    2,185       2,314,024  

New Jersey Educational Facilities Authority, Refunding RB:

   

Montclair State University, Series A,
5.00%, 07/01/39

    15,555       17,195,275  

Montclair State University, Series A,
5.00%, 07/01/44

    3,540       3,892,832  

New Jersey Institute of Technology, Series H, 5.00%, 07/01/31

    4,000       4,152,800  

Princeton University, Series I, 5.00%, 07/01/34

    3,295       3,905,135  

Seton Hall University, Series D, 5.00%, 07/01/38

    500       551,415  

Seton Hall University, Series D, 5.00%, 07/01/43

    600       658,542  

Stevens Institute of Technology, Series A, 4.00%, 07/01/47

    1,145       1,162,965  

Stockton University, Series A, 5.00%, 07/01/41

    1,770       1,909,529  

William Paterson University (AGC),
5.00%, 07/01/28

    20       20,046  

William Paterson University (AGC),
4.75%, 07/01/34

    380       380,688  

New Jersey Higher Education Student Assistance Authority, RB, AMT, Student Loan:

   

Senior Series 1A, 4.00%, 12/01/28

    855       885,652  

Senior Series 1A, 4.50%, 12/01/28

    1,975       2,073,928  

Senior Series 1A, 4.00%, 12/01/29

    4,520       4,674,177  

Senior Series 1A, 4.00%, 12/01/29

    565       582,571  

Senior Series 1A, 4.50%, 12/01/29

    2,475       2,587,142  

Senior Series 1A, 4.63%, 12/01/30

    2,425       2,537,690  

Senior Series 1A, 4.00%, 12/01/31

    925       942,048  

Senior Series 1A, 4.25%, 12/01/32

    1,625       1,674,969  

Senior Series 1A, 4.13%, 12/01/35

    565       573,469  

Senior Series 1A, 4.50%, 12/01/36

    1,430       1,480,708  

Sub-Series C, 4.00%, 12/01/48

    1,760       1,717,936  
 

 

 

SCHEDULES OF INVESTMENTS      21  


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniHoldings New Jersey Quality Fund, Inc. (MUJ)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Education (continued)  

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

   

5.38%, 12/01/24

  $ 675     $ 716,762  

5.50%, 12/01/26

    810       858,325  

New Jersey Institute of Technology, RB, Series A:

   

5.00%, 07/01/22(a)

    2,120       2,352,182  

5.00%, 07/01/42

    4,825       5,202,363  

5.00%, 07/01/45

    7,500       8,451,675  

Rutgers — The State University of New Jersey, Refunding RB, Series L, 5.00%, 05/01/30

    1,565       1,738,527  
   

 

 

 
      116,198,020  
Health — 15.8%  

County of Camden New Jersey Improvement Authority, Refunding RB, Cooper Healthcare System, Series A, 5.00%, 02/15/33

    2,000       2,153,500  

New Jersey EDA, RB, Reunding Cranes Mill Project:

   

5.00%, 01/01/34

    675       736,364  

5.00%, 01/01/39

    675       722,898  

5.00%, 01/01/49

    1,355       1,431,937  

New Jersey Health Care Facilities Financing Authority, RB:

   

Inspira Health Obligated Group,
5.00%, 07/01/42

    2,270       2,519,587  

Robert Wood Johnson University Hospital, Series A, 5.50%, 07/01/43

    7,105       7,882,713  

Virtua Health, Series A (AGC), 5.50%, 07/01/38

    4,035       4,094,194  

New Jersey Health Care Facilities Financing Authority, Refunding RB:

   

AHS Hospital Corp., 5.50%, 07/01/21(a)

    4,055       4,415,003  

AHS Hospital Corp., 6.00%, 07/01/21(a)

    4,180       4,600,216  

AHS Hospital Corp., 4.00%, 07/01/41

    1,600       1,622,736  

Catholic Health East Issue, 5.00%, 11/15/33

    1,925       2,028,584  

Hackensack University Medical Center (AGM), 4.63%, 01/01/20(a)

    7,795       8,000,242  

Meridian Health System Obligated Group, 5.00%, 07/01/25

    1,000       1,100,780  

Meridian Health System Obligated Group, 5.00%, 07/01/26

    3,720       4,088,429  

Princeton Healthcare System,
5.00%, 07/01/34

    1,330       1,503,605  

Princeton Healthcare System,
5.00%, 07/01/39

    1,825       2,027,374  

RWJ Barnabas Health Obligated Group, Series A, 4.00%, 07/01/43

    1,865       1,903,344  

RWJ Barnabas Health Obligated Group, Series A, 5.00%, 07/01/43

    3,080       3,447,321  

St. Barnabas Health Care System, Series A, 5.00%, 07/01/21(a)

    3,640       3,915,948  

St. Barnabas Health Care System, Series A, 5.63%, 07/01/21(a)

    9,310       10,152,369  

Virtua Health, 5.00%, 07/01/28

    3,000       3,376,830  

Virtua Health, 5.00%, 07/01/29

    715       801,987  
   

 

 

 
      72,525,961  
Housing — 7.6%  

County of Atlantic New Jersey Improvement Authority, RB, Stockton University Atlantic City, Series A (AGM), 4.00%, 07/01/46

    1,300       1,326,949  

New Jersey Housing & Mortgage Finance Agency, RB:

   

Capital Fund Program, Series A (AGM),
5.00%, 05/01/27

    4,300       4,310,449  

M/F Housing, Series A, 4.55%, 11/01/43

    4,710       4,805,848  

S/F Housing, Series B, 4.50%, 10/01/30

    8,560       8,885,451  

New Jersey Housing & Mortgage Finance Agency, Refunding RB:

   

M/F Housing, Series 2, AMT, 4.60%, 11/01/38

    3,120       3,211,603  

M/F Housing, Series 2, AMT, 4.75%, 11/01/46

    3,795       3,895,454  

M/F Housing, Series A, 4.00%, 11/01/48

    370       370,796  
Security   Par
(000)
    Value  
Housing (continued)  

M/F Housing, Series A, 4.10%, 11/01/53

  $ 220     $ 221,276  

S/F Housing, Series A, 3.75%, 10/01/35

    6,295       6,336,484  

Series D, AMT, 4.25%, 11/01/37

    490       501,015  

Series D, AMT, 4.35%, 11/01/42

    1,000       1,010,470  
   

 

 

 
      34,875,795  
State — 24.0%  

Garden State Preservation Trust, RB, CAB, Series B (AGM)(b):

   

0.00%, 11/01/23

    15,725       14,089,285  

0.00%, 11/01/25

    10,000       8,435,300  

Garden State Preservation Trust, Refunding RB, Series C (AGM):

   

5.25%, 11/01/20

    5,000       5,278,400  

5.25%, 11/01/21

    7,705       8,354,532  

New Jersey EDA, RB:

   

CAB, Motor Vehicle Surcharge, Series A (NPFGC), 0.00%, 07/01/21(b)

    2,325       2,185,802  

Motor Vehicle Surcharge, Series A (NPFGC), 5.25%, 07/01/25

    4,465       5,144,975  

Motor Vehicle Surcharge, Series A (NPFGC), 5.25%, 07/01/24

    1,785       2,025,065  

Motor Vehicle Surcharge, Series A (NPFGC), 5.25%, 07/01/26

    6,085       7,080,445  

School Facilities Construction, Series KK, 5.00%, 03/01/38

    325       336,482  

Series WW, 5.25%, 06/15/33

    380       412,885  

Series WW, 5.00%, 06/15/34

    5,500       5,872,955  

Series WW, 5.00%, 06/15/36

    3,115       3,304,517  

Series WW, 5.25%, 06/15/40

    8,375       8,875,574  

New Jersey EDA, Refunding RB:

   

Cigarette Tax, 5.00%, 06/15/24

    5,000       5,380,650  

Cigarette Tax, 5.00%, 06/15/26

    1,250       1,337,663  

Cigarette Tax, 5.00%, 06/15/28

    2,430       2,583,527  

Cigarette Tax, 5.00%, 06/15/29

    3,195       3,388,425  

School Facilities Construction, Series N-1 (NPFGC), 5.50%, 09/01/27

    1,000       1,194,440  

School Facilities Construction, Series NN, 5.00%, 03/01/29

    5,000       5,337,250  

Sub Series A, 5.00%, 07/01/33

    3,875       4,175,080  

Sub Series A, 4.00%, 07/01/34

    8,800       8,650,576  

Sub-Series A, 4.00%, 07/01/32

    5,000       4,989,550  

State of New Jersey, COP, Equipment Lease Purchase, Series A, 5.25%, 06/15/19(a)

    1,580       1,600,682  
   

 

 

 
      110,034,060  
Tobacco — 3.5%  

Tobacco Settlement Financing Corp., Refunding RB:

   

Series A, 5.25%, 06/01/46

    1,960       2,072,347  

Sub-Series B, 5.00%, 06/01/46

    13,815       13,756,977  
   

 

 

 
      15,829,324  
Transportation — 36.7%  

Delaware River Port Authority, RB:

   

5.00%, 01/01/29

    2,000       2,242,340  

5.00%, 01/01/37

    8,830       9,727,658  

Series D, 5.05%, 01/01/20(a)

    1,430       1,473,758  

Series D (AGM), 5.00%, 01/01/20(a)

    5,200       5,356,832  

New Brunswick Parking Authority, Refunding RB, City Guaranteed, Series B (AGM),
3.00%, 09/01/39

    2,500       2,260,825  

New Jersey EDA, RB, Goethals Bridge Replacement Project, AMT, Private Activity Bond:

   

5.38%, 01/01/43

    7,730       8,302,406  

5.13%, 01/01/34

    2,290       2,463,903  

New Jersey State Turnpike Authority, RB:

   

Series A, 5.00%, 01/01/35

    1,440       1,643,558  

Series E, 5.00%, 01/01/45

    8,000       8,787,440  
 

 

 

22    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniHoldings New Jersey Quality Fund, Inc. (MUJ)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Transportation (continued)  

New Jersey State Turnpike Authority, Refunding RB:

   

Series A (AGM), 5.25%, 01/01/29

  $ 4,000     $ 5,003,880  

Series A (AGM), 5.25%, 01/01/30

    4,000       5,024,480  

Series A (BHAC), 5.25%, 01/01/29

    500       628,000  

Series B, 5.00%, 01/01/34

    2,300       2,670,852  

Series G, 5.00%, 01/01/36

    5,000       5,755,400  

Series G, 4.00%, 01/01/43

    3,320       3,389,853  

New Jersey Transportation Trust Fund Authority, RB:

   

CAB, Transportation System, Series A,
0.00%, 12/15/35(b)

    6,000       2,832,900  

CAB, Transportation System, Series C (AGM), 0.00%, 12/15/32(b)

    8,800       5,207,752  

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

    4,160       2,003,414  

CAB, Transportation System, Series C (AMBAC), 0.00%, 12/15/36(b)

    7,210       3,290,356  

Federal Highway Reimbursement Revenue Notes, Series A, 5.00%, 06/15/30

    2,250       2,502,833  

Transportation Program, Series AA,
5.00%, 06/15/33

    3,000       3,121,200  

Transportation Program, Series AA,
5.25%, 06/15/33

    5,690       6,051,599  

Transportation Program, Series AA,
5.25%, 06/15/34

    1,305       1,411,775  

Transportation Program, Series AA,
5.00%, 06/15/38

    2,340       2,452,999  

Transportation System, Series A,
6.00%, 06/15/35

    6,365       6,804,885  

Transportation System, Series A,
5.00%, 06/15/42

    5,000       5,144,550  

Transportation System, Series A (NPFGC),
5.75%, 06/15/24

    1,205       1,398,439  

Transportation System, Series B,
5.25%, 06/15/36

    2,500       2,605,825  

Transportation System, Series D,
5.00%, 06/15/32

    3,300       3,531,330  

New Jersey Transportation Trust Fund Authority, Refunding RB, Series A:

   

Federal Highway Reimbursement,
5.00%, 06/15/31

    6,730       7,439,813  

Transportation System, 5.00%, 12/15/32

    4,285       4,671,378  

Transportation System, 5.00%, 12/15/35

    2,435       2,627,633  

New Jersey Turnpike Authority, Refunding RB:

   

Series B, 5.00%, 01/01/40

    9,740       11,016,719  

Series E, 5.00%, 01/01/32

    3,715       4,358,549  

Port Authority of New York & New Jersey, ARB:

   

Consolidated, 93rd Series, 6.13%, 06/01/94

    1,000       1,185,120  

Special Project, JFK International Air Terminal LLC Project, Series 6, AMT (NPFGC),
5.75%, 12/01/25

    3,000       3,121,410  

Special Project, JFK International Air Terminal LLC Project, Series 8, 6.00%, 12/01/42

    4,000       4,234,080  

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

   

178th Series, 5.00%, 12/01/33

    4,005       4,439,983  

Consolidated, 206th Series, 5.00%, 11/15/42

    3,110       3,467,339  

Consolidated, 206th Series, 5.00%, 11/15/47

    3,475       3,860,378  

South Jersey Port Corp., Refunding ARB, Marine Terminal, Series B:

   

5.00%, 01/01/42

    3,000       3,185,880  

5.00%, 01/01/48

    1,500       1,586,070  
   

 

 

 
      168,285,394  
Utilities — 5.6%  

County of Essex New Jersey Utilities Authority, Refunding RB, (AGC), 4.13%, 04/01/22

    2,000       2,007,100  

North Hudson New Jersey Sewerage Authority, Refunding RB, Series A (NPFGC),
5.13%, 08/01/20(c)

    6,045       6,342,233  

Rahway Valley Sewerage Authority, RB, CAB, Series A (NPFGC)(b):

   

0.00%, 09/01/26

    4,100       3,394,103  

0.00%, 09/01/28

    6,600       5,095,662  

0.00%, 09/01/29

    9,650       7,176,608  

0.00%, 09/01/33

    2,350       1,477,375  
   

 

 

 
      25,493,081  

Total Municipal Bonds — 139.3%
(Cost — $608,368,629)

 

    638,200,992  
 

 

 

 
Security   Par
(000)
    Value  

Municipal Bonds Transferred to Tender Option Bond Trusts(d) — 25.1%

 

New Jersey — 25.1%

 

County/City/Special District/School District — 5.9%  

County of Union New Jersey Utilities Authority, Refunding RB, Series A, AMT:

   

County Deficiency Agreement,
5.00%, 06/15/41

  $ 7,573     $ 8,070,210  

Resource Recovery Facility, Covanta Union, Inc., 5.25%, 12/01/31

    17,300       18,750,000  
   

 

 

 
      26,820,210  
Education — 3.5%  

Rutgers — The State University of New Jersey, Refunding RB:

   

Series F, 5.00%, 05/01/19(a)

    4,998       5,038,238  

Series L, 5.00%, 05/01/43

    10,000       11,059,500  
   

 

 

 
      16,097,738  
Health — 1.4%  

New Jersey Health Care Facilities Financing Authority, RB, Inspira Health Obligated Group, 4.00%, 07/01/47

    6,133       6,228,960  
   

 

 

 
State — 4.8%  

Garden State Preservation Trust, RB, Election of 2005, Series A (AGM), 5.75%, 11/01/28

    12,460       15,024,392  

New Jersey EDA, Refunding RB, School Facilities Construction, Series NN,
5.00%, 03/01/29(e)

    6,698       7,149,933  
   

 

 

 
      22,174,325  
Transportation — 9.5%  

County of Hudson New Jersey Improvement Authority, RB, Hudson County Vocational-Technical Schools Project, 5.25%, 05/01/51

    3,120       3,506,755  

New Jersey State Turnpike Authority, RB, Series A, 5.00%, 07/01/22(a)(e)

    9,300       10,282,685  

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

    2,661       2,772,992  

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

 

163rd Series, 5.00%, 07/15/39

    15,545       16,181,843  

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

    10,000       10,642,350  
   

 

 

 
      43,386,625  
   

 

 

 

Total Municipal Bonds Transferred to Tender Option Bond Trusts — 25.1%
(Cost — $108,249,196)

 

    114,707,858  
   

 

 

 

Total Long-Term Investments — 164.4%
(Cost — $716,617,825)

 

    752,908,850  
   

 

 

 
     Shares         
Short-Term Securities — 0.2%  

BlackRock Liquidity Funds, MuniCash, Institutional Class, 1.24%(f)(g)

    825,609       825,774  
   

 

 

 

Total Short-Term Securities — 0.2%
(Cost — $825,691)

 

    825,774  
   

 

 

 

Total Investments — 164.6%
(Cost — $717,443,516)

 

    753,734,624  

Other Assets Less Liabilities — 0.8%

 

    3,879,896  

Liability for TOB Trust Certificates, Including Interest Expense and Fees Payable — (13.7)%

 

    (62,941,273

VRDP Shares at Liquidation Value, Net of Deferred Offering
Costs — (51.7)%

 

    (236,637,459
   

 

 

 

Net Assets Applicable to Common Shares — 100.0%

 

  $ 458,035,788  
   

 

 

 
 

 

 

SCHEDULES OF INVESTMENTS      23  


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniHoldings New Jersey Quality Fund, Inc. (MUJ)

 

 

(a) 

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

(b) 

Zero-coupon bond.

(c) 

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

(d) 

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

(e) 

All or a portion of security is subject to a recourse agreement. The aggregate maximum potential amount the Fund could ultimately be required to pay under the agreements, which expire between June 15, 2019 to September 1, 2020, is $13,916,017. See Note 4 of the Notes to Financial Statements for details.

(f) 

Annualized 7-day yield as of period end.

(g) 

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

 

Affiliate    Shares
Held at
07/31/18
     Net
Activity
     Shares
Held at
01/31/19
     Value at
01/31/19
     Income     

Net

Realized
Gain (Loss) (a)

     Change in
Unrealized
Appreciation
(Depreciation)
 

BlackRock Liquidity Funds, MuniCash, Institutional Class

     1,217,685        (392,076      825,609      $ 825,774      $ 24,551      $ 237      $ 83  
           

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Includes net capital gain distributions, if applicable.

 

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

Derivative Financial Instruments Outstanding as of Period End

Futures Contracts

 

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

Short Contracts:

                 

10-Year U.S. Treasury Note

     152          03/20/19        $ 18,615        $ (424,738

Long U.S. Treasury Bond

     186          03/20/19          27,284          (1,178,433

5-Year U.S. Treasury Note

     69          03/29/19          7,925          (138,767
                 

 

 

 
                  $ (1,741,938
                 

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

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

 

     

Commodity

Contract

    

Credit

Contracts

    

Equity

Contracts

    

Foreign

Currency

Exchange

Contracts

    

Interest

Rate

Contracts

    

Other

Contracts

     Total  

Liabilities — Derivative Financial Instruments

 

Futures contracts
Net unrealized depreciation(a)

   $      $      $      $      $ 1,741,938      $      $ 1,741,938  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

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

 

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

 

      Commodity
Contract
    

Credit

Contracts

    

Equity

Contracts

    

Foreign

Currency

Exchange

Contracts

    

Interest

Rate

Contracts

    

Other

Contracts

     Total  

Net Realized Gain (Loss) from:

                    

Futures contracts

   $      $      $      $      $ 473,575      $      $ 473,575  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

                    

Futures contracts

   $      $      $      $      $ (1,896,764    $      $ (1,896,764
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

 

24    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniHoldings New Jersey Quality Fund, Inc. (MUJ)

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

        

Average notional value of contracts — short

   $ 38,326,000  

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

Fair Value Hierarchy as of Period End

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

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

 

      Level 1        Level 2        Level 3        Total  

Assets:

                 

Investments:

                 

Long-Term Investments(a)

   $        $ 752,908,850        $             —        $ 752,908,850  

Short-Term Securities

     825,774                            825,774  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 825,774        $ 752,908,850        $        $ 753,734,624  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative Financial Instruments(b)

                 

Liabilities:

                 

Interest rate contracts

   $ (1,741,938      $        $        $ (1,741,938
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

See above Schedule of Investments for values in each sector.

 
  (b) 

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

 

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

 

      Level 1        Level 2        Level 3        Total  

Liabilities:

                 

TOB Trust Certificates

   $        $ (62,747,370      $             —        $ (62,747,370

VRDP Shares at Liquidation Value

              (237,100,000                 (237,100,000
  

 

 

      

 

 

      

 

 

      

 

 

 
   $        $ (299,847,370      $        $ (299,847,370
  

 

 

      

 

 

      

 

 

      

 

 

 

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

See notes to financial statements.

 

 

SCHEDULES OF INVESTMENTS      25  


Schedule of Investments  (unaudited) 

January 31, 2019

  

BlackRock MuniYield Investment Quality Fund (MFT)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  

Municipal Bonds — 127.4%

 

Alabama — 4.2%

 

City of Birmingham Alabama Special Care Facilities Financing Authority, RB, Children’s Hospital (AGC)(a):

   

6.00%, 06/01/19

  $ 2,985     $ 3,026,103  

6.13%, 06/01/19

    1,500       1,521,270  

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

    350       376,177  
   

 

 

 
      4,923,550  
Arizona — 0.2%  

County of Maricopa IDA, Refunding RB, Honorhealth, Series A, 4.13%, 09/01/38

    270       273,729  
   

 

 

 
California — 18.2%  

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

    1,150       1,227,648  

California Municipal Finance Authority, ARB, Senior Lien-Linxs APM Project, AMT, 4.00%, 12/31/47

    780       766,834  

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

   

2nd, 5.50%, 05/01/28

    720       817,884  

2nd, 5.25%, 05/01/33

    560       625,419  

5.00%, 05/01/44

    745       815,224  

City of San Jose California, Refunding ARB, Norman Y Mineta San Jose International Airport SJC, Series A-1, AMT:

   

5.50%, 03/01/30

    1,600       1,705,488  

6.25%, 03/01/34

    1,250       1,349,987  

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

    2,000       2,323,040  

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

    970       1,124,725  

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

    1,000       1,098,760  

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

   

5.25%, 05/15/23(a)

    1,740       2,001,696  

5.25%, 05/15/38

    495       552,900  

San Diego Public Facilities Financing Authority Water, Refunding RB, Series B (AGC),
5.38%, 08/01/19(a)

    1,020       1,039,288  

State of California, GO, Various Purposes (AGC), 5.50%, 11/01/39

    3,450       3,538,078  

State of California Public Works Board, LRB, Various Capital Projects, Series I,
5.50%, 11/01/31

    1,000       1,140,040  

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

    490       549,481  

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

    370       429,304  
   

 

 

 
      21,105,796  
Colorado — 2.4%  

City & County of Denver Colorado, RB, Capital Appreciation Bonds Series, Series A-2,
0.00%, 08/01/38(b)

    835       382,071  

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

   

5.50%, 11/15/28

    500       566,690  

5.50%, 11/15/30

    225       253,606  

5.50%, 11/15/31

    270       303,680  

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

    1,300       1,315,860  
   

 

 

 
      2,821,907  
Connecticut — 0.3%  

Connecticut Housing Finance Authority, Refunding RB, S/F Housing, Sub-Series B-1,
4.00%, 05/15/45

    380       381,683  
   

 

 

 
Security   Par
(000)
    Value  
Florida — 13.5%  

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

  $ 575     $ 627,590  

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

    1,170       1,323,949  

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

    1,000       1,068,290  

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

    55       55,390  

County of Manatee Florida HFA, RB, S/F Housing, Series A, AMT (Ginnie Mae, Fannie Mae & Freddie Mac), 5.90%, 09/01/40

    35       35,066  

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

   

Series A, 6.00%, 10/01/38

    1,840       2,104,905  

Series A, 5.50%, 10/01/42

    2,125       2,366,974  

Series B, AMT, 6.00%, 10/01/26

    590       680,252  

Series B, AMT, 6.00%, 10/01/27

    775       892,079  

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

    310       356,097  

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

    410       467,101  

County of Miami-Dade Florida, Refunding RB:

   

Seaport Department, Series D, AMT,
6.00%, 10/01/26

    735       846,735  

Water & Sewer System, Series B, 5.25%, 10/01/29

    500       566,445  

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

    2,165       2,338,849  

County of Orange Florida Health Facilities Authority, Refunding RB, Presbyterian Retirement Communities Project, 5.00%, 08/01/41

    1,000       1,067,520  

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

    710       800,418  
   

 

 

 
      15,597,660  
Hawaii — 2.0%  

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

    1,000       1,099,260  

State of Hawaii Airports System, COP, AMT:

   

5.25%, 08/01/25

    250       279,375  

5.25%, 08/01/26

    810       900,801  
   

 

 

 
      2,279,436  
Idaho — 0.7%  

Idaho Health Facilities Authority, RB, Trinity Health Credit Group, 4.00%, 12/01/43(c)

    605       609,368  

Idaho Health Facilities Authority, Refunding RB, St. Luke’s Health System Project, Series A,
4.00%, 03/01/43

    40       39,330  

Idaho State Building Authority, RB, Department of Health And Welfare Project, 4.00%, 09/01/48

    215       218,103  
   

 

 

 
      866,801  
Illinois — 17.7%  

City of Chicago Illinois Midway International Airport, Refunding GARB, 2nd Lien, Series A, AMT, 5.00%, 01/01/41

    1,010       1,087,659  

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

   

Series A, 5.75%, 01/01/21(a)

    645       694,214  

Series A, 5.75%, 01/01/39

    125       132,545  

Series C, 6.50%, 01/01/21(a)

    3,680       4,011,678  

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

    1,000       1,056,570  

City of Chicago Illinois Transit Authority, Refunding RB, Federal Transit Administration, Section 5309 (AGM), 5.00%, 06/01/28

    3,000       3,097,440  

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

    1,375       1,438,497  
 

 

 

26    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniYield Investment Quality Fund (MFT)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Illinois (continued)  

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

   

5.50%, 12/01/38

  $ 1,000     $ 1,042,430  

5.25%, 12/01/43

    1,190       1,225,641  

Illinois Finance Authority, RB, Series A:

   

Carle Foundation, 6.00%, 08/15/41

    1,555       1,690,440  

Chicago LLC, University of Illinois at Chicago Project, 5.00%, 02/15/37

    480       519,082  

Railsplitter Tobacco Settlement Authority, RB(a):

   

5.50%, 06/01/21

    940       1,019,270  

6.00%, 06/01/21

    270       295,831  

State of Illinois, GO:

   

5.25%, 02/01/32

    1,000       1,044,550  

5.50%, 07/01/33

    1,500       1,582,605  

5.50%, 07/01/38

    280       292,208  

State of Illinois, GO, Refunding, Series B, 5.00%, 10/01/27

    235       254,907  
   

 

 

 
      20,485,567  
Indiana — 0.3%  

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

    375       396,221  
   

 

 

 
Louisiana — 1.7%  

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

    1,000       1,124,950  

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

    805       811,794  
   

 

 

 
      1,936,744  
Maryland — 0.6%  

Maryland Community Development Administration, Refunding RB, S/F Housing, Series A, 4.10%, 09/01/38

    645       656,668  
   

 

 

 
Massachusetts — 1.6%  

Massachusetts Development Finance Agency, RB, Emerson College Issue, Series A, 5.00%, 01/01/47

    645       691,046  

Massachusetts Development Finance Agency, Refunding RB, Emerson College, 5.00%, 01/01/41

    525       555,765  

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

    620       624,018  
   

 

 

 
      1,870,829  
Michigan — 2.1%  

City of Detroit Michigan Water Supply System Revenue, RB, 2nd Lien, Series B (AGM):

   

6.25%, 07/01/19(a)

    1,795       1,828,118  

6.25%, 07/01/36

    5       5,085  

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

    515       558,965  
   

 

 

 
      2,392,168  
Minnesota — 3.2%  

City of Minneapolis Minnesota, Refunding RB, Fairview Health Services, Series A, 4.00%, 11/15/48

    360       359,359  

Duluth EDA, Refunding RB, Essentia Health Obligated Group, Series A:

   

4.25%, 02/15/48

    2,790       2,802,444  

5.25%, 02/15/58

    475       523,032  
   

 

 

 
      3,684,835  
Mississippi — 1.5%  

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

    1,190       1,409,151  

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

    260       299,023  
   

 

 

 
      1,708,174  
Security   Par
(000)
    Value  
Nevada — 3.4%  

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

  $ 2,375     $ 2,436,489  

County of Clark Nevada Water Reclamation District, GO, Series A, 5.25%, 07/01/19(a)

    1,500       1,522,230  
   

 

 

 
      3,958,719  
New Jersey — 8.2%  

New Jersey EDA, RB, Goethals Bridge Replacement Project, AMT, Private Activity Bond:

   

5.38%, 01/01/43

    1,000       1,074,050  

(AGM), 5.00%, 01/01/31

    530       575,257  

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

    1,400       1,420,538  

New Jersey Transportation Trust Fund Authority, RB:

   

Transportation Program Bonds, Series S, 5.00%, 06/15/46

    1,885       1,979,231  

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

    1,600       1,696,464  

New Jersey Turnpike Authority, RB, Series A,
4.00%, 01/01/48(c)

    550       559,444  

Tobacco Settlement Financing Corp., Refunding RB:

   

Series A, 5.00%, 06/01/35

    525       578,387  

Series A, 5.00%, 06/01/46

    1,255       1,297,444  

Sub-Series B, 5.00%, 06/01/46

    315       313,677  
   

 

 

 
      9,494,492  
New York — 8.1%  

City of New York Transitional Finance Authority Future Tax Secured, RB, Future Tax Secured, Series A, Sub-Series E-1, 5.00%, 02/01/36

    1,500       1,717,500  

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

    1,545       1,565,703  

New York State Dormitory Authority, Refunding RB, Series A, 5.00%, 03/15/45

    1,530       1,744,078  

New York State Urban Development Corp., RB, Personal Income Tax Revenue, 4.00%, 03/15/47

    1,000       1,030,590  

New York Transportation Development Corp., ARB, LaGuardia Airport Terminal B Redevelopment Project, Series A, AMT, 5.25%, 01/01/50

    600       637,926  

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

    2,500       2,650,925  
   

 

 

 
      9,346,722  
Ohio — 1.7%  

Ohio Housing Finance Agency, RB, S/F Housing, Series A (Ginnie Mae, Fannie Mae & Freddie Mac), 4.00%, 09/01/48

    255       256,099  

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

    1,500       1,670,010  
   

 

 

 
      1,926,109  
Oklahoma — 1.1%  

Norman Regional Hospital Authority, Refunding RB, 5.00%, 09/01/37

    400       442,416  

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

    915       852,798  
   

 

 

 
      1,295,214  
Oregon — 0.2%  

County of Clackamas Oregon School District No. 12 North Clackamas, GO, CAB, Series A, 0.00%, 06/15/38(b)

    475       219,298  
   

 

 

 
Pennsylvania — 0.8%  

Pennsylvania Housing Finance Agency, RB, S/F Housing Mortgage, Series 123-B, 4.00%, 10/01/42

    935       936,795  
   

 

 

 
 

 

 

SCHEDULES OF INVESTMENTS      27  


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniYield Investment Quality Fund (MFT)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Rhode Island — 1.3%  

Rhode Island Student Loan Authority, Refunding RB, Senior-Series A, AMT, 3.50%, 12/01/34

  $ 475     $ 479,299  

Tobacco Settlement Financing Corp., Refunding RB, Series A, 5.00%, 06/01/40

    950       982,708  
   

 

 

 
      1,462,007  
South Carolina — 12.0%  

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

    1,470       1,661,188  

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

   

5.50%, 07/01/26

    1,810       2,060,413  

6.00%, 07/01/38

    1,155       1,314,436  

5.50%, 07/01/41

    1,000       1,110,340  

South Carolina Jobs EDA, Refunding RB:

   

Anmed Health Projects, 5.00%, 02/01/38

    2,710       2,914,903  

Prisma Health Obligated Group, Series A,
5.00%, 05/01/43

    800       872,224  

Prisma Health Obligated Group, Series A,
5.00%, 05/01/48

    715       776,075  

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

    750       814,868  

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

    40       42,661  

State of South Carolina Public Service Authority, Refunding RB:

   

Series C, 5.00%, 12/01/46

    1,795       1,890,207  

Series E, 5.25%, 12/01/55

    425       454,338  
   

 

 

 
      13,911,653  
Texas — 16.9%  

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

    930       1,033,435  

City of Frisco Texas ISD, GO, School Building (AGM), 5.50%, 08/15/41

    1,210       1,231,586  

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

   

6.00%, 05/15/19

    2,560       2,591,078  

6.00%, 05/15/19

    140       141,721  

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

   

5.38%, 05/15/19

    950       959,889  

5.38%, 05/15/19

    50       50,528  

6.00%, 05/15/19

    1,945       1,968,612  

6.00%, 05/15/19

    110       111,352  

Dallas-Fort Worth International Airport, Refunding ARB, Joint Revenue, Series E, AMT,
5.50%, 11/01/27

    2,500       2,852,500  

Dallas-Fort Worth Texas International Airport, ARB, Joint Improvement, Series H, AMT,
5.00%, 11/01/37

    980       1,034,880  

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

    730       825,002  

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

    2,120       2,317,605  

North Texas Tollway Authority, Refunding RB:

   

4.25%, 01/01/49

    2,335       2,403,019  

1st Tier (AGM), 6.00%, 01/01/21(a)

    1,000       1,079,010  

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

    420       467,149  

Texas Private Activity Bond Surface Transportation Corp., RB, Senior Lien, Blueridge Transportation Group, AMT, 5.00%, 12/31/55

    525       554,773  
   

 

 

 
    19,622,139  
Virginia — 0.3%  

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

    380       410,031  
   

 

 

 
Security   Par
(000)
    Value  
Washington — 2.5%  

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

  $ 1,000     $ 1,069,840  

State of Washington, GO, Various Purposes,
Series B, 5.25%, 02/01/21(a)

    725       775,634  

Washington State Housing Finance Commission, Refunding RB, Horizon House Project, 5.00%, 01/01/43(d)

    1,000       1,040,050  
   

 

 

 
    2,885,524  
West Virginia — 0.1%  

West Virginia Hospital Finance Authority, RB, Improvement, West Virginia University Health System Obligated Group, Series A,
4.00%, 06/01/51

    85       82,590  
   

 

 

 
Wisconsin — 0.6%  

Wisconsin Housing & Economic Development Authority, RB, M/F Housning, WHPC Madison Pool Project, Series A, 4.70%, 07/01/47

    660       682,678  
   

 

 

 

Total Municipal Bonds — 127.4%
(Cost — $140,745,266)

 

    147,615,739  
   

 

 

 

Municipal Bonds Transferred to Tender Option Bond Trusts(e) — 47.0%

 

California — 5.8%  

City of Los Angeles California Department of Airports, ARB, Los Angeles International Airport, Series B, AMT, 5.00%, 05/15/46

    2,050       2,257,901  

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

    1,520       1,581,081  

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

    2,565       2,890,900  
   

 

 

 
    6,729,882  
Connecticut — 1.2%  

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

    1,216       1,334,834  
   

 

 

 
District of Columbia — 0.7%  

District of Columbia Housing Finance Agency, RB, M/F Housing, Series B-2, 4.10%, 09/01/39

    790       800,231  
   

 

 

 
Georgia — 0.9%  

County of Dalton Whitfield Joint Development Authority, RB, Hamilton Health Care System Obligation, 4.00%, 08/15/48

    1,025       1,046,042  
   

 

 

 
Idaho — 1.4%  

Idaho State Building Authority, RB, State Office Campus Project, Series A, 4.00%, 09/01/48

    1,570       1,598,519  
   

 

 

 
Illinois — 1.0%  

State of Illinois Toll Highway Authority, RB,
Series C, 5.00%, 01/01/38

    1,004       1,118,423  
   

 

 

 
Nevada — 5.6%  

County of Clark Nevada Water Reclamation District, GO, Series B, 5.50%, 07/01/19(a)

    1,994       2,025,944  

Las Vegas Valley Water District, GO, Refunding, Series C, 5.00%, 06/01/28

    4,200       4,489,632  
   

 

 

 
    6,515,576  
New Jersey — 2.0%  

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

    1,290       1,294,891  

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

    1,000       1,042,478  
   

 

 

 
    2,337,369  
 

 

 

28    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniYield Investment Quality Fund (MFT)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
New York — 15.9%  

City of New York, GO, Series D, 5.00%, 12/01/43(f)

  $ 2,380     $ 2,723,125  

City of New York Housing Development Corp., Refunding RB, Sustainable Neighborhood Bonds, Series A, 4.15%, 11/01/38(c)

    1,740       1,796,689  

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

    1,095       1,109,673  

City of New York New York Municipal Water Finance Authority, Refunding RB, Water & Sewer System, 2nd General Resolution, Series BB, 5.25%, 06/15/44

    2,999       3,259,490  

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

   

5.75%, 02/15/21(a)

    619       666,962  

5.75%, 02/15/47

    381       410,295  

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

    3,000       3,256,696  

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

    1,770       1,936,724  

State of New York Dormitory Authority, ERB, Personal Income Tax, Series B,
5.25%, 03/15/19(a)

    3,250       3,263,748  
   

 

 

 
      18,423,402  
North Carolina — 0.8%  

North Carolina Housing Finance Agency, RB, S/F Housing, Series 39-B (Ginnie Mae, Fannie Mae & Freddie Mac), 4.00%, 01/01/48

    902       903,374  
   

 

 

 
Pennsylvania — 1.6%  

Pennsylvania Turnpike Commission, RB, Sub-Series A, 5.50%, 12/01/42

    1,664       1,903,525  
   

 

 

 
Rhode Island — 1.6%  

Rhode Island Health & Educational Building Corp., RB, Series A, 4.00%, 09/15/47

    1,832       1,846,399  
   

 

 

 
Texas — 2.3%  

City of San Antonio Texas Public Service Board, Refunding RB, Series A, 5.25%, 02/01/31(a)(f)

    2,609       2,609,398  
   

 

 

 
Utah — 0.9%  

City of Riverton Utah, RB, IHC Health Services, Inc., 5.00%, 08/15/19(a)

    1,005       1,022,556  
   

 

 

 
Security   Par
(000)
    Value  
Virginia — 1.7%  

Hampton Roads Transportation Accountability Commission, RB, Transportation Fund, Senior Lien, Series A,
5.50%, 07/01/57(f)

  $ 1,668     $ 1,978,200  
   

 

 

 
West Virginia — 1.2%  

Morgantown Utility Board, Inc., RB, Series B,
4.00%, 12/01/48(f)

    1,391       1,410,100  
   

 

 

 
Wisconsin — 2.4%  

Wisconsin Housing & Economic Development Authority, RB, M/F Housing, Series A:

   

4.10%, 11/01/43

    1,222       1,235,612  

4.45%, 05/01/57

    1,528       1,544,542  
   

 

 

 
      2,780,154  
   

 

 

 

Total Municipal Bonds Transferred to Tender Option Bond Trusts — 47.0%
(Cost — $53,280,812)

 

    54,357,984  
   

 

 

 

Total Long-Term Investments — 174.4%
(Cost — $194,026,078)

 

    201,973,723  
   

 

 

 
     Shares         
Short-Term Securities — 0.4%  

BlackRock Liquidity Funds, MuniCash, Institutional Class,
1.24%(g)(h)

    478,001       478,097  
   

 

 

 

Total Short-Term Securities — 0.4%
(Cost — $478,097)

 

    478,097  
   

 

 

 

Total Investments — 174.8%
(Cost — $194,504,175)

 

    202,451,820  

Liabilities in Excess of Other Assets — (0.0)%

 

    (1,857

Liability for TOB Trust Certificates, Including Interest Expense and Fees Payable — (26.0)%

 

    (30,097,734

VMTP Shares at Liquidation Value — (48.8)%

 

    (56,500,000
   

 

 

 

Net Assets Applicable to Common Shares — 100.0%

 

  $ 115,852,229  
   

 

 

 
 
(a) 

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

(b) 

Zero-coupon bond.

(c) 

When-issued security.

(d) 

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

(e) 

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

(f) 

All or a portion of security is subject to a recourse agreement. The aggregate maximum potential amount the Fund could ultimately be required to pay under the agreements, which expire between February 1, 2019, to December 1, 2026, is $7,188,603. See Note 4 of the Notes to Financial Statements for details.

(g) 

Annualized 7-day yield as of period end.

(h) 

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

 

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

BlackRock Liquidity Funds, MuniCash, Institutional Class

     477,450        551        478,001      $ 478,097      $ 7,532      $ 283      $  
           

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Includes net capital gain distributions, if applicable.

 

 

 

SCHEDULES OF INVESTMENTS      29  


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniYield Investment Quality Fund (MFT)

 

Derivative Financial Instruments Outstanding as of Period End

Futures Contracts

 

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

Short Contracts:

                 

10-Year U.S. Treasury Note

     13          03/20/19        $ 1,592        $ (28,345

Long U.S. Treasury Bond

     40          03/20/19          5,868          (226,803

5-Year U.S. Treasury Note

     13          03/29/19          1,493          (23,576
                 

 

 

 
                  $ (278,724
                 

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

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

 

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

Liabilities — Derivative Financial Instruments

                    

Futures contracts

                    

Net unrealized depreciation(a)

   $      $      $      $      $ 278,724      $      $ 278,724  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

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

 

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

 

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

Net Realized Gain (Loss) from:

                    

Futures contracts

   $      $      $      $      $ 36,883      $      $ 36,883  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

                    

Futures contracts

   $      $      $      $      $ (297,792    $      $ (297,792
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

 

Average notional value of contracts — short

   $ 6,805,309  

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

Fair Value Hierarchy as of Period End

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

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

 

      Level 1        Level 2        Level 3        Total  

Assets:

 

Investments:

 

Long-Term Investments(a)

   $        $ 201,973,723        $        $ 201,973,723  

Short-Term Securities

     478,097                            478,097  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 478,097        $ 201,973,723        $          $ 202,451,820  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative Financial Instruments(b)

 

Liabilities:

 

Interest rate contracts

   $ (278,724      $        $        $ (278,724
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

See above Schedule of Investments for values in each state.

 
  (b) 

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

 

 

 

30    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniYield Investment Quality Fund (MFT)

 

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

 

      Level 1        Level 2        Level 3        Total  

Liabilities:

                 

TOB Trust Certificates

   $        $ (29,988,610      $        $ (29,988,610

VMTP Shares at Liquidation Value

              (56,500,000                 (56,500,000
  

 

 

      

 

 

      

 

 

      

 

 

 
   $             —        $ (86,488,610      $             —        $ (86,488,610
  

 

 

      

 

 

      

 

 

      

 

 

 

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

See notes to financial statements.

 

 

SCHEDULES OF INVESTMENTS      31  


Schedule of Investments  (unaudited)

January 31, 2019

  

BlackRock MuniYield Michigan Quality Fund, Inc. (MIY)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  

Municipal Bonds — 139.6%

 

Michigan — 139.6%

 

Corporate — 3.8%  

County of Monroe Michigan EDC, Refunding RB, Detroit Edison Co. Project, Series AA (NPFGC), 6.95%, 09/01/22

  $ 14,500     $ 16,914,975  
   

 

 

 
County/City/Special District/School District — 28.4%  

Anchor Bay School District, GO, Refunding, (Q-SBLF):

   

4.38%, 05/01/27

    1,600       1,680,336  

4.50%, 05/01/29

    1,505       1,579,257  

Battle Creek School District Michigan, GO, Refunding, (Q-SBLF):

   

5.00%, 05/01/35

    1,100       1,242,956  

5.00%, 05/01/36

    1,500       1,689,735  

5.00%, 05/01/37

    1,170       1,313,150  

Berkley School District, GO, School Building & Site (Q-SBLF), 5.00%, 05/01/35

    2,965       3,339,657  

Byron Center Public Schools, GO, School Building & Site, Series I (Q-SBLF):

   

5.00%, 05/01/43

    4,475       5,023,277  

5.00%, 05/01/47

    740       823,317  

Columbia Michigan School District, GO, Unlimited Tax, School Building & Site (Q-SBLF), 5.00%, 05/01/38

    5,185       5,746,328  

Comstock Park Michigan Public Schools, GO, School Building & Site, Series B (Q-SBLF), 5.50%, 05/01/21(a)

    3,385       3,664,296  

Country of Saginaw Michigan, GO, 4.00%, 11/01/42

    2,000       2,059,460  

County of Genesee Michigan, GO, Refunding, Series A (NPFGC), 5.00%, 05/01/19

    1,000       1,007,820  

Dearborn Brownfield Redevelopment Authority, GO, Limited Tax, Redevelopment, Series A (AGC), 5.50%, 05/01/39

    5,300       5,343,460  

Dearborn School District, GO, School Building & Site, Series A (Q-SBLF):

   

5.00%, 05/01/32

    1,500       1,685,925  

5.00%, 05/01/33

    1,600       1,792,192  

5.00%, 05/01/34

    1,200       1,340,712  

Dowagiac Union School District, GO, (Q-SBLF), 5.00%, 05/01/41

    1,140       1,252,313  

East Lansing School District, GO, School Building & Site, Series I (Q-SBLF):

   

5.00%, 05/01/36

    550       630,201  

5.00%, 05/01/37

    550       625,466  

5.00%, 05/01/39

    740       833,506  

5.00%, 05/01/42

    1,000       1,114,870  

Farmington Public School District, GO, Refunding, School Building & Site (AGM):

   

5.00%, 05/01/33

    1,500       1,702,425  

5.00%, 05/01/34

    1,500       1,698,735  

5.00%, 05/01/35

    1,000       1,131,870  

Flint EDC, RB, Michigan Department of Human Services Office Building Project, 5.25%, 10/01/41

    4,950       5,348,277  

Fraser Public School District, Refunding, GO,School Building & Site (Q-SBLF):

   

5.00%, 05/01/38

    750       843,615  

5.00%, 05/01/43

    2,000       2,222,140  

5.00%, 05/01/47

    3,225       3,575,880  

Gibraltar School District, GO, (Q-SBLF):

   

5.00%, 05/01/35

    1,000       1,151,620  

5.00%, 05/01/36

    750       861,765  

Goodrich Area School District, GO, School Building & Site (Q-SBLF):

   

5.50%, 05/01/21(a)

    1,540       1,665,294  

5.50%, 05/01/36

    460       495,001  
Security   Par
(000)
    Value  
County/City/Special District/School District (continued)  

Goodrich Area School District Michigan, GO, School Building & Site (Q-SBLF):

   

5.50%, 05/01/21(a)

  $ 2,575     $ 2,787,463  

5.50%, 05/01/32

    1,000       1,080,210  

Grand Rapids Public Schools, GO, Refunding Unlimited Tax (AGM), 5.00%, 05/01/29

    1,000       1,177,790  

Grandville Public Schools, GO, School Building & Site, Series II (AGM), 5.00%, 05/01/40

    3,250       3,599,765  

Gull Lake Community School District, GO, School Building & Site, Series I (Q-SBLF), 5.00%, 05/01/45

    4,000       4,486,840  

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

    6,750       7,277,782  

Hudsonville Public Schools, GO, Refunding Unlimited Tax (Q-SBLF):

   

5.00%, 05/01/38

    1,835       2,066,871  

5.00%, 05/01/40

    2,450       2,742,653  

Jackson Michigan Public Schools, GO, School Building & Site (Q-SBLF), 5.00%, 05/01/42

    4,000       4,486,840  

Kentwood Public Schools, GO, School Building & Site:

   

5.00%, 05/01/41

    1,120       1,236,390  

5.00%, 05/01/44

    1,815       1,997,480  

Livonia Public Schools School District Michigan, GO, Series I (AGM), 5.00%, 05/01/43

    5,000       5,521,150  

Mattawan Consolidated School District, GO, Series I (Q-SBLF), 5.00%, 05/01/39

    3,375       3,758,501  

Portage Public Schools, GO, Refunding School Building & Site, 5.00%, 11/01/37

    1,250       1,408,988  

Romeo Community School District, GO, Refunding School Building & Site, Series 1 (Q-SBLF), 5.00%, 05/01/41

    2,000       2,213,240  

Troy School District, GO, School Building & Site (Q-SBLF), 5.00%, 05/01/28

    2,000       2,268,140  

Walled Lake Consolidated School District, GO, School Building & Site (Q-SBLF):

   

5.00%, 05/01/37

    2,850       3,174,729  

5.00%, 05/01/40

    2,630       2,925,901  

5.00%, 05/01/43

    1,530       1,698,530  

West Bloomfield School District, GO, School Building & Site (AGM), 5.00%, 05/01/35

    1,800       2,053,998  

Zeeland Public Schools, GO, School Building & Site, Series A (AGM):

   

5.00%, 05/01/33

    1,000       1,133,100  

5.00%, 05/01/34

    1,000       1,130,650  

5.00%, 05/01/35

    1,000       1,128,810  
   

 

 

 
      125,840,677  
Education — 22.9%  

City of Grand Rapids Michigan, EDC, RB, Ferris State University Project, Series A, 5.50%, 10/01/35

    760       803,366  

Eastern Michigan University, Refunding RB, Series A (BAM), 5.00%, 03/01/36

    500       565,105  

Ferris State University, Refunding RB:

   

5.00%, 10/01/41

    2,250       2,487,645  

General (AGM), 4.50%, 10/01/24

    1,595       1,598,732  

General (AGM), 4.50%, 10/01/25

    1,405       1,408,288  

Grand Valley State University, RB, 5.00%, 12/01/43

    1,600       1,798,000  

Lake Superior State University, RB, General (AGM), 5.00%, 01/15/48

    3,750       4,121,362  

Michigan Finance Authority, Refunding RB:

   

College for Creative Studies, 4.00%, 12/01/33

    1,720       1,712,312  

College for Creative Studies, 5.00%, 12/01/36

    1,550       1,628,430  

College for Creative Studies, 5.00%, 12/01/40

    2,900       3,018,204  

College for Creative Studies, 5.00%, 12/01/45

    4,400       4,559,808  

Series 25 A, AMT, Student Loan Revenue, 4.00%, 11/01/29

    5,900       6,081,779  
 

 

 

32    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniYield Michigan Quality Fund, Inc. (MIY)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Education (continued)  

Series 25 A, AMT, Student Loan Revenue, 4.00%, 11/01/30

  $ 2,850     $ 2,929,686  

Series 25 A, AMT, Student Loan Revenue, 4.00%, 11/01/31

    3,150       3,223,552  

Michigan State University, Refunding RB, General, Series C:

   

5.00%, 02/15/40

    8,470       8,714,614  

5.00%, 02/15/44

    1,000       1,028,360  

Michigan Technological University, RB, General, Series A, 5.00%, 10/01/45

    1,800       2,037,798  

Northern Michigan University, Refunding RB, General, Series A, 5.00%, 12/01/35

    1,245       1,431,974  

Oakland University, RB:

   

5.00%, 03/01/41

    3,635       3,990,721  

General, 5.00%, 03/01/32

    400       429,396  

General, Series A, 5.00%, 03/01/38

    5,490       5,950,227  

General, Series A, 5.00%, 03/01/43

    16,845       18,216,688  

University of Michigan, RB, Series A, 5.00%, 04/01/39

    3,425       3,905,733  

Wayne State University, RB, General, Series A, 5.00%, 11/15/40

    3,000       3,351,030  

Western Michigan University, Refunding RB, General, University and College Improvements:

   

5.25%, 11/15/40

    3,500       3,822,980  

5.25%, 11/15/43

    8,475       9,592,174  

(AGM), 5.25%, 11/15/33

    1,000       1,134,250  

(AGM), 5.00%, 11/15/39

    1,750       1,956,798  
   

 

 

 
      101,499,012  
Health — 31.8%  

Grand Traverse County Hospital Finance Authority, RB:

   

Munson Healthcare Obligated Group, Series A, 5.00%, 07/01/49

    2,610       2,840,646  

Munson Healthcare Obligated Group, Series B, 4.00%, 07/01/49

    2,000       2,009,300  

Series A, 5.00%, 07/01/44

    4,230       4,548,688  

Series A, 5.00%, 07/01/47

    2,200       2,364,626  

Kalamazoo Hospital Finance Authority, RB, Bronson Methodist Hospital (AGM):

   

5.25%, 05/15/20(a)

    4,140       4,318,807  

5.25%, 05/15/36

    3,360       3,473,434  

Kent Hospital Finance Authority Michigan, Refunding RB, Spectrum Health, Series A, 5.00%, 11/15/29

    7,500       8,063,175  

Michigan Finance Authority, RB:

   

Beaumont Health Credit Group, 4.00%, 11/01/46

    1,025       1,018,143  

Sparrow Obligated Group, 5.00%, 11/15/36

    2,500       2,681,950  

Sparrow Obligated Group, 5.00%, 11/15/45

    3,750       4,057,912  

Michigan Finance Authority, Refunding RB:

   

Henry Ford Health System, 5.00%, 11/15/37

    3,000       3,278,400  

Henry Ford Health System, 5.00%, 11/15/41

    1,000       1,078,020  

Henry Ford Health System, 3.25%, 11/15/42

    1,145       1,002,585  

Henry Ford Health System, 4.00%, 11/15/46

    8,500       8,359,410  

Hospital, McLaren Health Care, 5.00%, 05/15/32

    1,000       1,125,240  

Hospital, McLaren Health Care, 5.00%, 05/15/33

    2,000       2,240,700  

Hospital, McLaren Health Care, 5.00%, 05/15/34

    6,500       7,246,720  

Hospital, McLaren Health Care, 5.00%, 05/15/35

    4,945       5,492,115  

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

    4,980       5,299,118  

MidMichigan Health, 5.00%, 06/01/39

    1,500       1,639,620  

Trinity Health Credit Group, 5.00%, 12/01/21(a)

    20       21,766  

Trinity Health Credit Group, 5.00%, 12/01/31

    5,000       5,377,000  

Trinity Health Credit Group, 5.00%, 12/01/35

    6,500       6,953,180  

Michigan State Hospital Finance Authority, RB, Ascension Health Senior Credit Group, 5.00%, 11/15/25

    6,000       6,134,280  

Michigan State Hospital Finance Authority, Refunding RB:

   

Ascension Senior Credit Group, 5.00%, 11/15/47

    2,750       3,040,537  

Henry Ford Health System, 5.75%, 11/15/19(a)

    3,165       3,263,115  
Security   Par
(000)
    Value  
Health (continued)  

Hospital, Oakwood Obligated Group, 5.00%, 11/01/32

  $ 4,000     $ 4,374,400  

McLaren Health Care, Series A, 5.00%, 06/01/35

    2,250       2,429,078  

Trinity Health, 6.50%, 12/01/33

    80       80,109  

Trinity Health Credit Group, Series C, 4.00%, 12/01/32

    5,300       5,462,975  

Royal Oak Hospital Finance Authority Michigan, Refunding RB:

   

Beaumont Health Credit Group, Series D, 5.00%, 09/01/39

    27,365       29,548,453  

William Beaumont Hospital, Series W,
6.00%, 08/01/19(a)

    1,500       1,531,065  
   

 

 

 
      140,354,567  
Housing — 7.1%  

Michigan State HDA, RB:

   

M/F Housing, Rental Housing Revenue, Series A, 4.45%, 10/01/34

    1,000       1,034,470  

M/F Housing, Rental Housing Revenue, Series A, 4.63%, 10/01/39

    3,490       3,594,211  

M/F Housing, Rental Housing Revenue, Series A, 4.75%, 10/01/44

    5,000       5,138,250  

Williams Pavilion, AMT (Ginnie Mae), 4.75%, 04/20/37

    3,190       3,192,105  

Michigan State Housing Development Authority, RB, Series A, M/F:

   

Housing, 4.30%, 10/01/40

    3,320       3,395,165  

4.00%, 10/01/43

    7,420       7,362,124  

State of Michigan Housing Development Authority, RB, S/F Housing, Series C, 4.13%, 12/01/38

    7,500       7,698,000  
   

 

 

 
      31,414,325  
State — 23.3%  

Michigan Finance Authority, RB, Charter County of Wayne Criminal Justice Center Project:

   

5.00%, 11/01/34

    215       251,279  

5.00%, 11/01/38

    2,500       2,851,475  

5.00%, 11/01/43

    4,000       4,502,000  

Michigan Finance Authority, Refunding RB, Detroit Regional Convention Facility Authority Local Project Bonds, 5.00%, 10/01/39

    5,400       6,026,454  

Michigan State Finance Authority, RB, Local Government Loan Program, Series F, 5.00%, 04/01/31

    1,000       1,068,670  

Michigan Strategic Fund, RB:

   

1-75 Improvement Project, AMT, 5.00%, 12/31/43

    15,000       16,357,650  

1-75 Improvement Project, AMT (AGM), 4.25%, 12/31/38

    14,000       14,191,940  

Michigan Senate Offices Project, Series A, 5.25%, 10/15/40

    3,000       3,404,700  

Michigan Strategic Fund, Refunding RB, Cadillac Place Office Building Project, 5.25%, 10/15/31

    7,000       7,615,440  

State of Michigan, COP, (AMBAC), 0.00%, 06/01/22(b)(c)

    3,000       2,814,390  

State of Michigan Building Authority, RB, Local Government Loan Program, Series F, 5.25%, 10/01/41

    8,595       9,221,919  

State of Michigan Building Authority, Refunding RB:

   

Facilities Program, Series I (AGC), 5.25%, 10/15/24

    6,000       6,139,680  

Facilities Program, Series I (AGC), 5.25%, 10/15/25

    3,500       3,580,710  

Facilities Program, Series I (AGC), 5.25%, 10/15/26

    1,000       1,022,640  

Facilities Program, Series I-A, 5.50%, 10/15/45

    2,000       2,165,280  

Facilities Program, Series II (AGM), 5.00%, 10/15/26

    7,500       7,658,475  

Series I, 5.00%, 04/15/41

    4,750       5,287,178  

State of Michigan Trunk Line Fund, RB:

   

5.00%, 11/15/33

    3,000       3,237,060  

5.00%, 11/15/36

    5,345       5,750,846  
   

 

 

 
      103,147,786  
 

 

 

SCHEDULES OF INVESTMENTS      33  


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniYield Michigan Quality Fund, Inc. (MIY)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Transportation — 5.4%  

Wayne County Airport Authority, ARB, Series A, 5.00%, 12/01/42

  $ 1,000     $ 1,113,800  

Wayne County Airport Authority, RB:

   

Detroit Metropolitan Wayne County Airport, AMT (NPFGC), 5.00%, 12/01/39

    1,475       1,610,921  

Series B, AMT, 5.00%, 12/01/42

    1,000       1,097,070  

Series B, AMT, 5.00%, 12/01/47

    1,250       1,368,375  

Series D, 5.00%, 12/01/35

    3,850       4,349,769  

Series D, 5.00%, 12/01/45

    5,000       5,547,650  

Wayne County Airport Authority, Refunding RB, Series F, AMT, 5.00%, 12/01/34

    8,000       8,907,360  
   

 

 

 
      23,994,945  
Utilities — 16.9%  

City of Detroit Michigan Sewage Disposal System, Refunding RB, Senior Lien, Series A, 5.25%, 07/01/39

    2,655       2,860,497  

City of Detroit Michigan Water Supply System Revenue, RB, Series A:

   

Senior Lien, 5.25%, 07/01/41

    4,325       4,605,390  

(NPFGC), 5.00%, 07/01/34

    10       10,025  

City of Grand Rapids Michigan Sanitary Sewer System, Refunding RB, Series A (NPFGC), 5.50%, 01/01/22

    810       863,079  

City of Holland Michigan Electric Utility System, RB, Series A, 5.00%, 07/01/39

    10,000       10,655,500  

City of Lansing Michigan, RB, Board of Water & Light Utilities System, Series A:

   

5.00%, 07/01/27

    3,180       3,403,936  

5.00%, 07/01/31

    6,830       7,297,650  

5.00%, 07/01/37

    3,335       3,550,374  

5.50%, 07/01/41

    5,000       5,402,000  

City of Port Huron Michigan, RB, Water Supply System:

   

5.25%, 10/01/31

    500       538,210  

5.63%, 10/01/40

    1,500       1,636,785  

Downriver Utility Wastewater Authority, Refunding RB, (AGM), 5.00%, 04/01/43

    1,000       1,105,070  

Great Lakes Water Authority Water Supply System Revenue, RB, Second Lien, Series B, 5.00%, 07/01/46

    10,000       10,945,600  

Karegnondi Water Authority, Refunding RB:

   

5.00%, 11/01/41

    2,750       3,023,405  

5.00%, 11/01/45

    3,000       3,284,160  

Michigan Finance Authority, Refunding RB:

   

Government Loan Program, 5.00%, 07/01/34

    2,000       2,212,200  

Government Loan Program, 5.00%, 07/01/35

    750       827,640  

Senior Lien, Detroit Water and Sewer, Series C-3 (AGM), 5.00%, 07/01/31

    1,000       1,111,280  

Senior Lien, Detroit Water and Sewer, Series C-3 (AGM), 5.00%, 07/01/32

    5,250       5,812,852  

Senior Lien, Detroit Water and Sewer, Series C-3 (AGM), 5.00%, 07/01/33

    3,000       3,311,610  

Michigan Municipal Bond Authority, RB, State Clean Water Revolving Fund, Pooled Project, 5.00%, 10/01/20(a)

    2,000       2,106,760  
   

 

 

 
      74,564,023  
   

 

 

 

Total Municipal Bonds — 139.6%
(Cost — $592,256,066)

 

    617,730,310  
   

 

 

 

Municipal Bonds Transferred to Tender Option Bond Trusts(d) — 22.7%

 

Michigan — 22.7%

 

Education — 12.0%  

Eastern Michigan University, RB, General ,Series A (AGM), 4.00%, 03/01/44

    10,000       10,213,000  
Security   Par
(000)
    Value  
Education (continued)  

Michigan State University, Refunding RB, General, Series A, 5.00%, 08/15/38(e)

  $ 10,000     $ 10,974,650  

University of Michigan, Refunding RB, 5.00%, 04/01/46

    10,000       11,238,286  

Wayne State University, RB, General, Series A(e):

   

5.00%, 11/15/43

    8,530       9,559,035  

5.00%, 11/15/40

    10,000       11,161,750  
   

 

 

 
      53,146,721  
Health — 7.4%  

Michigan Finance Authority, RB, Beaumont Health Credit Group, Series A, 5.00%, 11/01/44

    10,002       10,839,360  

Michigan Finance Authority, Refunding RB:

   

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

    190       202,072  

Trinity Health Corp., Series 2016, 5.00%, 12/01/45

    19,735       21,608,106  
   

 

 

 
      32,649,538  
State — 3.3%  

Michigan State Finance Authority, Refunding RB, Student Loan, AMT, Series A, 4.00%, 11/01/28

    8,750       9,044,881  

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

    5,150       5,827,019  
   

 

 

 
      14,871,900  
   

 

 

 

Total Municipal Bonds Transferred to Tender Option Bond Trusts — 22.7%
(Cost — $99,496,462)

 

    100,668,159  
   

 

 

 

Total Long-Term Investments — 162.3%
(Cost — $691,752,528)

 

    718,398,469  
   

 

 

 
     Shares         
Short-Term Securities — 0.8%  

BlackRock Liquidity Funds, MuniCash, Institutional Class,
1.24%(f)(g)

    3,343,952       3,344,621  
   

 

 

 

Total Short-Term Securities — 0.8%
(Cost — $3,344,368)

 

    3,344,621  
   

 

 

 

Total Investments — 163.1%
(Cost — $695,096,896)

 

    721,743,090  

Other Assets Less Liabilities — 1.5%

 

    6,513,990  

Liability for TOB Trust Certificates, Including Interest Expense and Fees Payable — (12.3)%

 

    (54,246,049

VRDP Shares at Liquidation Value, Net of Deferred Offering Costs — (52.3)%

 

    (231,480,550
   

 

 

 

Net Assets Applicable to Common Shares — 100.0%

 

  $ 442,530,481  
   

 

 

 

 

(a) 

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

(b) 

Zero-coupon bond.

(c) 

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

(d) 

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

(e) 

All or a portion of security is subject to a recourse agreement. The aggregate maximum potential amount the Fund could ultimately be required to pay under the agreements, which expire between June 1, 2021 to November 15, 2026, is $16,418,062. See Note 4 of the Notes to Financial Statements for details.

(f) 

Annualized 7-day yield as of period end.

 

 

 

34    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniYield Michigan Quality Fund, Inc. (MIY)

 

(g) 

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

 

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

BlackRock Liquidity Funds, MuniCash, Institutional Class

     3,335,566        8,386        3,343,952      $ 3,344,621      $ 26,450      $ 698      $ (172
           

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Includes net capital gain distributions, if applicable.

 

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

Derivative Financial Instruments Outstanding as of Period End

Futures Contracts

 

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

Short Contracts:

                 

10-Year U.S. Treasury Note

     70          03/20/19        $ 8,573        $ (213,419

Long U.S. Treasury Bond

     145          03/20/19          21,270          (995,457

5-Year U.S. Treasury Note

     56          03/29/19          6,432          (118,912
                 

 

 

 
                  $ (1,327,788
                 

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

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

 

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

Liabilities — Derivative Financial Instruments

                    

Futures contracts

                    

Net unrealized depreciation(a)

   $      $      $      $      $ 1,327,788      $      $ 1,327,788  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

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

 

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

 

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

Net Realized Gain (Loss) from:

                    

Futures contracts

   $      $      $      $      $ 250,628      $      $ 250,628  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

                    

Futures contracts

   $      $      $      $      $ (1,287,862    $      $ (1,287,862
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

 

Average notional value of contracts — short

   $ 29,438,406  

 

 

SCHEDULES OF INVESTMENTS      35  


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniYield Michigan Quality Fund, Inc. (MIY)

 

Fair Value Hierarchy as of Period End

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

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

 

      Level 1        Level 2        Level 3        Total  

Assets:

 

Investments:

 

Long-Term Investments(a)

   $        $ 718,398,469        $        $ 718,398,469  

Short-Term Securities

     3,344,621                            3,344,621  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 3,344,621        $ 718,398,469        $        $ 721,743,090  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative Financial Instruments(b)

 

Liabilities:

 

Interest rate contracts

   $ (1,327,788      $        $             —        $ (1,327,788
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

See above Schedule of Investments for values in each sector.

 
  (b) 

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

 

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

 

      Level 1        Level 2        Level 3        Total  

Liabilities:

                 

TOB Trust Certificates

   $        $ (54,022,057      $        $ (54,022,057

VRDP Shares at Liquidation Value

              (231,900,000                 (231,900,000
  

 

 

      

 

 

      

 

 

      

 

 

 
   $             —        $ (285,922,057      $             —        $ (285,922,057
  

 

 

      

 

 

      

 

 

      

 

 

 

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

See notes to financial statements

 

 

36    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited)

January 31, 2019

  

BlackRock MuniYield Pennsylvania Quality Fund (MPA)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  

Municipal Bonds — 122.1%

 

Pennsylvania — 122.1%

 

Corporate — 2.2%  

Pennsylvania Economic Development Financing Authority, RB:

   

American Water Co. Project, 6.20%, 04/01/39

  $ 1,510     $ 1,519,755  

Aqua Pennsylvania, Inc. Project, Series B, 4.50%, 12/01/42

    2,630       2,700,878  

Pennsylvania Economic Development Financing Authority, Refunding RB, AMT:

   

Aqua Pennsylvania, Inc. Project, Series A, 5.00%, 12/01/34

    180       188,039  

National Gypsum Co., 5.50%, 11/01/44

    135       139,683  
   

 

 

 
      4,548,355  
County/City/Special District/School District — 30.3%  

Allentown Neighborhood Improvement Zone Development Authority, Refunding RB, Series A:

   

5.00%, 05/01/35

    190       196,211  

5.00%, 05/01/42

    450       460,233  

Altoona Area School District, GO:

   

5.00%, 12/01/36

    125       140,485  

5.00%, 12/01/45

    600       662,622  

Altoona Area School District, GOL, Series A (AGM), 5.00%, 12/01/36

    1,180       1,326,178  

Bethlehem Area School District, GO, (BAM), Series A:

   

5.00%, 08/01/34

    1,610       1,834,289  

5.00%, 08/01/35

    1,210       1,377,791  

Borough of West Chester Pennsylvania, GO, Refunding, 3.50%, 11/15/35

    1,095       1,106,202  

Boyertown Area School District, GO:

   

5.00%, 10/01/36

    610       676,801  

5.00%, 10/01/38

    920       1,017,952  

City of Philadelphia Pennsylvania, GO, Refunding Series A (AGC):

   

5.00%, 08/01/19(a)

    255       259,228  

5.00%, 08/01/24

    2,115       2,147,254  

City of Pittsburgh Pennsylvania, GO, Series B, 5.00%, 09/01/26

    1,095       1,204,193  

County of Bucks Pennsylvania Water & Sewer Authority, RB, Series A (AGM):

   

5.00%, 12/01/37

    780       884,614  

5.00%, 12/01/40

    1,000       1,130,650  

County of Delaware Springfield School District, GO:

   

5.00%, 03/01/40

    1,025       1,158,947  

5.00%, 03/01/43

    775       871,751  

County of Lycoming Pennsylvania Water & Sewer Authority, RB, (AGM), 5.00%, 11/15/19(a)

    500       512,805  

County of Northampton Pennsylvania IDA, Route 33 Project, Tax Allocation Bonds, 7.00%, 07/01/32

    170       189,763  

County of York Pennsylvania, GO, Refunding,
5.00%, 09/01/20(a)

    500       525,370  

Dallastown Area School District, GO, Refunding, 5.00%, 04/15/34

    1,235       1,407,394  

Fox Chapel Area School District, GO:

   

5.00%, 02/01/39

    1,345       1,528,740  

5.00%, 02/01/42

    1,250       1,411,313  

Marple Newtown School District, GO, (AGM),
5.00%, 06/01/19(a)

    4,100       4,145,305  

Shaler Area School District Pennsylvania, GO, CAB (Syncora), 0.00%, 09/01/30(b)

    6,145       4,299,165  

Springfield School District/Delaware County, GO:

   

5.00%, 03/01/36

    870       1,002,092  

5.00%, 03/01/37

    890       1,016,798  
Security   Par
(000)
    Value  
County/City/Special District/School District (continued)  

State Public School Building Authority, RB (AGM):

   

Community College, Allegheny County Project, 5.00%, 07/15/34

  $ 2,190     $ 2,334,847  

Corry Area School District, CAB, 0.00%,
12/15/22(b)

    1,640       1,493,876  

Corry Area School District, CAB, 0.00%,
12/15/23(b)

    1,980       1,753,785  

Corry Area School District, CAB, 0.00%,
12/15/24(b)

    1,980       1,702,661  

Corry Area School District, CAB, 0.00%,
12/15/25(b)

    1,770       1,474,392  

State Public School Building Authority, Refunding RB, Harrisburg School District Project, Series A (AGC)(a):

   

5.00%, 05/15/19

    215       217,055  

5.00%, 05/15/19

    215       217,055  

5.00%, 05/15/19

    855       863,174  

Township of Bristol Pennsylvania School District, GO:

   

5.00%, 06/01/40

    775       838,380  

5.25%, 06/01/43

    6,925       7,620,201  

(BAM), 5.00%, 06/01/42

    1,685       1,859,684  

Township of Falls Pennsylvania, Refunding RB, Water & Sewer Authority, 5.00%, 12/01/37

    1,270       1,370,101  

Township of Lower Paxton Pennsylvania, GO:

   

5.00%, 04/01/42

    435       486,417  

5.00%, 04/01/46

    1,435       1,601,675  

Tredyffrin Easttown School District, GOL, 5.00%, 02/15/39(c)

    695       791,181  

West Shore School District Pennsylvania, GOL:

   

5.00%, 11/15/43

    2,095       2,317,510  

5.00%, 11/15/48

    1,200       1,324,728  

Williamsport Sanitary Authority, Refunding RB, (BAM), 4.00%, 01/01/40

    580       587,807  
   

 

 

 
      61,348,675  
Education — 22.3%  

County of Adams Pennsylvania IDA, Refunding RB, Gettysburg College, 5.00%, 08/15/26

    100       104,391  

County of Cumberland Pennsylvania Municipal Authority, RB, AICUP Financing Program, Dickinson College Project, 5.00%, 11/01/19(a)

    200       204,794  

County of Cumberland Pennsylvania Municipal Authority, Refunding RB, Diakon Lutheran Social Ministries Project:

   

4.00%, 01/01/36

    395       387,369  

4.13%, 01/01/38

    160       156,802  

5.00%, 01/01/39

    760       820,998  

County of Delaware Pennsylvania Authority, RB, Villanova University:

   

5.00%, 08/01/40

    1,205       1,364,602  

5.00%, 08/01/45

    3,610       4,076,701  

County of Delaware Pennsylvania Authority, Refunding RB:

   

Cabrini University, 5.00%, 07/01/47

    2,480       2,576,472  

Villanova University, 5.25%, 12/01/19(a)

    100       102,860  

County of Montgomery Higher Education & Health Authority, Refunding RB, Thomas Jeferson University, Series A:

   

5.00%, 09/01/37

    840       943,202  

5.00%, 09/01/48

    1,500       1,650,900  

County of Northampton Pennsylvania General Purpose Authority, Refunding RB:

   

Lafayette College, 4.00%, 11/01/38

    1,160       1,196,830  

Moravian College, 5.00%, 10/01/36

    610       661,167  

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

    2,000       2,257,320  

Pennsylvania Higher Educational Facilities Authority, RB, Thomas Jefferson University, 5.00%,
03/01/20(a)

    1,000       1,033,800  

Pennsylvania Higher Educational Facilities Authority, RB, Series AT-1, 4.00%, 06/15/34

    2,000       2,090,800  
 

 

 

SCHEDULES OF INVESTMENTS      37  


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniYield Pennsylvania Quality Fund (MPA)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Education (continued)  

Pennsylvania Higher Educational Facilities Authority, Refunding RB:

   

Drexel University, Series A, 5.25%, 05/01/21(a)

  $ 3,700     $ 3,985,048  

Drexel University, Series A, 5.25%, 05/01/41

    230       244,138  

La Salle University, 5.00%, 05/01/37

    1,325       1,354,362  

La Salle University, 5.00%, 05/01/42

    1,855       1,883,938  

State System of Higher Education, Series AL, 5.00%, 06/15/35

    280       290,786  

Thomas Jefferson University, 5.00%, 09/01/45

    2,000       2,219,940  

University of Science in Philadelphia, 5.00%, 11/01/36

    2,100       2,313,192  

Widener University, Series A, 5.25%, 07/15/33

    1,580       1,688,894  

Widener University, Series A, 5.50%, 07/15/38

    385       410,244  

Philadelphia Authority for Industrial Development, RB, University of Sciences, 5.00%, 11/01/42

    2,710       2,994,631  

Philadelphia Authority for Industrial Development, Refunding RB:

   

1st Series, 5.00%, 04/01/45

    2,170       2,399,195  

La Salle University, 4.00%, 05/01/42

    2,985       2,730,767  

Swarthmore Borough Authority, Refunding RB, Swarthmore College Project, 5.00%, 09/15/38

    830       934,215  

Township of East Hempfield Pennsylvania IDA, RB, Student Services, Inc., Student Housing Project at Millersville University of Pennsylvania:

   

5.00%, 07/01/35

    485       504,604  

5.00%, 07/01/35

    435       459,612  

5.00%, 07/01/45

    300       307,854  

5.00%, 07/01/47

    820       849,036  
   

 

 

 
      45,199,464  
Health — 21.9%  

City of Pottsville Pennsylvania Hospital Authority, Refunding RB, Lehigh Valley Health, Series B, 5.00%, 07/01/41

    3,000       3,291,060  

County of Allegheny Hospital Development Authority, Refunding RB:

   

Allegheny Health Network Obligation, Class A (AGM), 4.00%, 04/01/44

    3,940       3,969,944  

Allegheny Health Network Obligated Group Issue, Series A, 4.00%, 04/01/37

    1,700       1,723,392  

Allegheny Health Network Obligated Group Issue, Series A, 5.00%, 04/01/47

    700       759,913  

County of Allegheny Pennsylvania Hospital Development Authority, RB, University of Pittsburgh Medical Center Health, Series B (NPFGC), 6.00%, 07/01/26

    2,000       2,489,020  

County of Berks Pennsylvania Municipal Authority, Refunding RB, Reading Hospital & Medical Center Project:

   

Series A, 5.00%, 11/01/40

    765       810,189  

Series A3, 5.50%, 11/01/19(a)

    250       256,815  

Series A3, 5.50%, 11/01/31

    250       256,533  

County of Bucks Pennsylvania IDA, Refunding RB, Pennswood Village Project, 5.00%, 10/01/37

    940       1,011,017  

County of Centre Pennsylvania Hospital Authority, RB, Mount Nittany Medical Center Project, 7.00%, 11/15/21(a)

    2,410       2,746,195  

County of Chester Health & Education Facilities Authority, Refunding RB, Main Line Health System, Series A, 5.00%, 10/01/52

    2,290       2,531,961  

County of Cumberland Pennsylvania Municipal Authority, Refunding RB, Diakon Lutheran Social Ministries, 5.00%, 01/01/38

    2,600       2,739,724  

County of Dauphin General Authority, Refunding RB, Pinnacle Health System Project:

   

6.00%, 06/01/19(a)

    240       243,386  

6.00%, 06/01/29

    260       263,263  

County of Franklin Pennsylvania IDA, Refunding RB, Chambersburg Hospital Project, 5.38%, 07/01/42

    415       432,633  
Security   Par
(000)
    Value  
Health (continued)  

County of Lancaster Pennsylvania Hospital Authority, Refunding RB, Masonic Villages of The Grand Lodge of Pennsylvania Project, 5.00%, 11/01/35

  $ 575     $ 622,622  

County of Montgomery Pennsylvania Higher Education & Health Authority, Refunding RB, Abington Memorial Hospital Obligated Group, Series A, 5.13%, 06/01/19(a)

    490       495,449  

County of Montgomery Pennsylvania IDA, RB, Acts Retirement-Life Communities, Series A-1, 6.25%, 11/15/19(a)

    235       243,192  

County of Montgomery Pennsylvania IDA, Refunding RB:

   

Acts Retirement-Life Communities, 5.00%, 11/15/27

    865       921,978  

Acts Retirement-Life Communities, 5.00%, 11/15/28

    555       589,588  

Whitemarsh Continuing Care Retirement Community, 5.25%, 01/01/40

    220       216,425  

County of Northampton Pennsylvania General Purpose Authority, Refunding RB:

   

St. Luke’s University Health Network Project, 5.00%, 08/15/46

    1,000       1,091,620  

St. Lukes University Health Network, 5.00%, 08/15/48

    1,125       1,244,407  

County of Union Pennsylvania Hospital Authority, Refunding RB, Evangelical Community Hospital Project, 7.00%, 08/01/21(a)

    460       517,666  

County of Wayne Hospital & Health Facilites Authority, RB, Wayne Memorial Hospital Project, Series A, 4.00%, 07/01/46

    1,595       1,610,854  

DuBois Hospital Authority, Refunding RB, Penn Highlands Healthcare, 4.00%, 07/15/48

    2,060       2,035,342  

Geisinger Authority Pennsylvania, RB, Series A(a):

   

Health System, 5.25%, 06/01/19

    125       126,420  

5.13%, 06/01/19

    500       505,475  

Geisinger Authority Pennsylvania, Refunding RB, Health System, Series A-2, 5.00%, 02/15/39

    4,050       4,538,268  

Lancaster IDA, Refunding RB, Garden Spot Village Project:

   

5.38%, 05/01/28

    520       558,516  

5.75%, 05/01/35

    865       934,321  

Pennsylvania Higher Educational Facilities Authority, Refunding RB, University of Pittsburgh Medical Center, Series E, 5.00%, 05/15/31

    1,000       1,037,450  

Philadelphia Hospitals & Higher Education Facilities Authority, RB, The Children’s Hospital of Philadelphia Project, Series C, 5.00%, 07/01/41

    940       996,381  

Philadelphia Hospitals & Higher Education Facilities Authority, Refunding RB, Presbyterian Medical Center,
6.65%, 12/01/19(d)

    465       483,763  

South Fork Municipal Authority, Refunding RB, Conemaugh Valley Memorial Hospital, Series B (AGC),
5.38%, 07/01/20(a)

    2,055       2,154,626  
   

 

 

 
      44,449,408  
Housing — 6.4%  

City of Philadelphia Pennsylvania, GO, Refunding, Series A, 5.00%, 08/01/37

    1,360       1,498,244  

Pennsylvania HFA, RB:

   

S/F Housing, Series 128B, 4.00%, 10/01/47(c)

    3,780       3,782,608  

Brinton Manor Apartments & Brinton Towers, M/F Housing, Series A, 4.25%, 10/01/35

    400       353,480  

Brinton Manor Apartments & Brinton Towers, M/F Housing, Series A, 4.50%, 10/01/40

    400       349,244  

S/F Housing Mortgage, Series 118-B, 4.05%, 10/01/40

    1,000       1,007,010  

S/F Housing Mortgage, Series 2015-117-B, 4.05%, 10/01/40

    1,600       1,610,400  

Philadelphia IDA, RB, Series A:

   

3.50%, 12/01/36

    790       765,463  

4.00%, 12/01/46

    2,970       2,911,164  

4.00%, 12/01/51

    790       753,834  
   

 

 

 
      13,031,447  
 

 

 

38    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniYield Pennsylvania Quality Fund (MPA)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
State — 5.7%  

Commonwealth Financing Authority, RB, Tobacco Master Settlement Payment, 5.00%, 06/01/35

  $ 1,295     $ 1,451,630  

Commonwealth of Pennsylvania, GO, 1st Series, 5.00%, 06/01/22(a)

    2,460       2,721,301  

Pennsylvania Economic Development Financing Authority, RB, AMT, 5.00%, 06/30/42

    7,000       7,476,980  
   

 

 

 
      11,649,911  
Tobacco — 2.0%  

Commonwealth Financing Authority, RB, Tobacco Master Settlement Payment, 5.00%, 06/01/33

    3,575       4,043,933  
   

 

 

 
Transportation — 19.7%  

City of Philadelphia Pennsylvania, ARB, Series A, 5.00%, 06/15/40

    3,825       3,959,104  

City of Philadelphia Pennsylvania Airport Revenue, Refunding ARB, AMT, Series B:

   

5.00%, 07/01/37

    1,100       1,222,639  

5.00%, 07/01/47

    2,105       2,301,123  

Delaware River Joint Toll Bridge Commission, RB, Bridge System, 5.00%, 07/01/42

    1,500       1,691,730  

Delaware River Port Authority, RB:

   

5.00%, 01/01/29

    475       532,556  

5.00%, 01/01/37

    2,285       2,517,293  

Series D, 5.00%, 01/01/20(a)

    750       772,620  

Series D (AGM), 5.00%, 01/01/20(a)

    1,560       1,607,050  

Pennsylvania Economic Development Financing Authority, Refunding RB, Amtrak Project, Series A, AMT, 5.00%, 11/01/41

    6,025       6,430,603  

Pennsylvania Turnpike Commission, RB:

   

CAB, Sub-Series A-3, 0.00%, 12/01/42(b)

    4,760       1,735,496  

CAB, Sub-Series A-3 (AGM), 0.00%, 12/01/40(b)

    1,275       520,213  

Sub-Series B, 5.25%, 12/01/48

    1,930       2,190,280  

Sub-Series B-1, 5.00%, 06/01/42

    2,345       2,544,090  

Pennsylvania Turnpike Commission, Refunding RB:

   

Sub-Series A-1, 5.25%, 12/01/45

    3,270       3,618,778  

Sub-Series B (AGM), 5.25%, 06/01/19(a)

    1,695       1,714,526  

Sub-Series B (AGM), 5.25%, 06/01/19(a)

    1,805       1,826,389  

Southeastern Pennsylvania Transportation Authority, RB, Capital Grant Receipts(a):

   

5.00%, 06/01/21

    1,860       1,997,975  

5.00%, 06/01/21

    2,465       2,647,854  
   

 

 

 
      39,830,319  
Utilities — 11.6%  

City of Lancaster Pennsylvania, GO, (BAM), 4.00%, 11/01/42

    1,705       1,738,043  

City of Philadelphia Pennsylvania Gas Works, RB, 9th Series:

   

5.25%, 08/01/20(a)

    660       693,667  

5.25%, 08/01/40

    1,040       1,085,354  

City of Philadelphia Pennsylvania Gas Works, Refunding RB:

   

5.00%, 08/01/30

    800       909,400  

5.00%, 08/01/31

    600       679,758  

5.00%, 08/01/32

    800       903,304  

5.00%, 08/01/33

    400       450,388  

5.00%, 08/01/34

    700       785,533  

City of Philadelphia Pennsylvania Water & Wastewater, RB:

   

Series A, 5.25%, 10/01/52

    810       920,241  

Series C (AGM), 5.00%, 08/01/40

    3,350       3,484,904  

City of Philadelphia Pennsylvania Water & Wastewater Revenue, RB, Series A, 5.00%, 10/01/43

    3,040       3,424,104  

Commonwealth Financing Authority, RB, Tobacco Master Settlement Payment, 5.00%, 06/01/34

    4,175       4,701,259  

County of Allegheny Pennsylvania Sanitary Authority, RB, Sewer Improvement (BAM), 5.25%, 12/01/41

    1,410       1,585,855  
Security   Par
(000)
    Value  
Utilities (continued)  

County of Delaware Pennsylvania Regional Water Quality Control Authority, RB, Sewer Improvements, 5.00%, 05/01/23(a)

  $ 420     $ 474,638  

Pennsylvania Economic Development Financing Authority, RB, Philadelphia Biosolids Facility, 6.25%, 01/01/32

    1,605       1,647,549  
   

 

 

 
      23,483,997  
   

 

 

 

Total Municipal Bonds — 122.1%
(Cost — $238,894,733)

 

    247,585,509  
   

 

 

 

Municipal Bonds Transferred to Tender Option Bond Trusts(e) — 47.4%

 

Pennsylvania — 47.4%

 

Education — 17.3%  

County of Northampton General Purpose Authority, Refunding RB, Lafayette College, 5.00%, 11/01/47

    3,900       4,358,884  

Pennsylvania Higher Educational Facilities Authority, RB:

   

State System of Higher Education, Series AR, 4.00%, 06/15/38

    11,335       11,653,572  

University of Pennsylvania Health System, Series A, 5.75%, 08/15/21(a)

    5,120       5,621,658  

University of Pennsylvania Health System, Series A, 4.00%, 08/15/39(f)

    7,815       7,948,847  

Philadelphia Authority for Industrial Development, RB, Philadelphia College of osteopathic Medicine, 0.01%, 12/01/48(f)

    3,300       3,323,381  

University of Pittsburgh Pennsylvania, RB, The Commonwealth System of Higher Education, Capital Project, Series B, 5.00%, 03/15/19(a)

    2,202       2,210,354  
   

 

 

 
      35,116,696  
Health — 15.1%  

Geisinger Authority Pennsylvania, RB, Health System:

   

Series A, 5.13%, 06/01/19(a)

    2,500       2,527,388  

Series A, 5.25%, 06/01/19(a)

    3,000       3,034,080  

Series A-1, 5.13%, 06/01/41

    7,430       7,900,132  

Pennsylvania Economic Development Financing Authority, RB, University of Pittsburgh Medical Center, Series B, 4.00%, 03/15/40

    8,000       8,081,440  

Philadelphia Hospitals & Higher Education Facilities Authority, RB, The Children’s Hospital of Philadelphia Project, Series C, 5.00%, 07/01/41

    4,680       4,957,477  

Saint Mary Pennsylvania Hospital Authority, Refunding RB, Trinity Health Credit Group, 5.00%, 12/01/48

    3,754       4,213,560  
   

 

 

 
      30,714,077  
Housing — 1.3%  

Pennsylvania HFA, Refunding RB, S/F Mortgage, Series 114A, AMT, 3.70%, 10/01/42(f)

    2,637       2,607,982  
   

 

 

 
State — 9.8%  

Commonwealth of Pennsylvania, GO, 1st Series:

   

4.00%, 03/01/38(f)

    6,000       6,205,920  

5.00%, 03/15/19(a)

    6,028       6,051,925  

General Authority of Southcentral Pennsylvania, Refunding RB, Wellspan Health Obligated Group, Series A, 5.00%, 06/01/44

    7,000       7,528,920  
   

 

 

 
      19,786,765  
Transportation — 2.0%  

Pennsylvania Turnpike Commission, RB, Sub-Series A, 5.50%, 12/01/42

    1,680       1,921,819  

Pennsylvania Turnpike Commission, Refunding RB, Sub Series B-2 (AGM), 5.00%, 06/01/35

    1,850       2,088,465  
   

 

 

 
      4,010,284  
 

 

 

SCHEDULES OF INVESTMENTS      39  


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniYield Pennsylvania Quality Fund (MPA)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Utilities — 1.9%  

County of Westmoreland Pennsylvania Municipal Authority, Refunding RB, (BAM), 5.00%, 08/15/42

  $ 3,493     $ 3,827,568  
   

 

 

 

Total Municipal Bonds Transferred to Tender Option Bond Trusts — 47.4%
(Cost — $93,929,391)

 

    96,063,372  
   

 

 

 

Total Investments — 169.5%
(Cost — $332,824,124)

 

    343,648,881  

Liabilities in Excess of Other Assets — (1.1)%

 

    (2,310,541

Liability for TOB Trust Certificates, Including Interest Expense and Fees Payable — (27.8)%

 

    (56,300,342

VRDP Shares, at Liquidation Value, Net of Deferred Offering Costs — (40.6)%

 

    (82,347,492
   

 

 

 

Net Assets Applicable to Common Shares — 100.0%

 

  $ 202,690,506  
   

 

 

 

    

    

(a) 

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

(b) 

Zero-coupon bond.

(c) 

When-issued security.

(d) 

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

(e) 

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

(f) 

All or a portion of security is subject to a recourse agreement. The aggregate maximum potential amount the Fund could ultimately be required to pay under the agreements, which expire April 1 2020 to June 1, 2039, is $12,824,280. See Note 4 of the Notes to Financial Statements for details.

 
(g) 

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

 

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

BlackRock Liquidity Funds, MuniCash, Institutional Class*

     562,228        (562,228           $      $ 15,557      $ 426      $ (54
           

 

 

    

 

 

    

 

 

    

 

 

 

 

  *

No longer held by the Fund as of period end.

 
  (a) 

Includes net capital gain distributions, if applicable.

 

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

Derivative Financial Instruments Outstanding as of Period End

Futures Contracts

 

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

Short Contracts:

                 

10-Year U.S. Treasury Note

     53          03/20/19        $ 6,491        $ (146,906

Long U.S. Treasury Bond

     123          03/20/19          18,043          (783,065

5-Year U.S. Treasury Note

     16          03/29/19          1,838          (32,846
                 

 

 

 
                  $ (962,817
                 

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

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

 

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

Liabilities — Derivative Financial Instruments

                    

Futures contracts

                    

Net unrealized depreciation(a)

   $      $      $      $      $ 962,817      $      $ 962,817  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

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

 

 

 

40    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

January 31, 2019

  

BlackRock MuniYield Pennsylvania Quality Fund (MPA)

 

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

 

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

Net Realized Gain (Loss) from:

                    

Futures contracts

   $      $      $      $      $ 388,160      $      $ 388,160  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

                    

Futures contracts

   $      $      $      $      $ (1,036,013    $      $ (1,036,013
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

 

Average notional value of contracts – sold

   $ 18,678,664  

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

Fair Value Hierarchy as of Period End

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

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

 

      Level 1        Level 2        Level 3        Total  

Assets:

                 

Investments:

                 

Long-Term Investments(a)

   $        $ 343,648,881        $        $ 343,648,881  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative Financial Instruments(b)

                 

Liabilities:

                 

Interest rate contracts

   $ (962,817      $        $        $ (962,817
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

See above Schedule of Investments for values in each sector.

 
  (b) 

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

 

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

 

      Level 1        Level 2        Level 3        Total  

Liabilities:

                 

TOB Trust Certificates

   $        $ (56,058,453      $        $ (56,058,453

VRDP Shares at Liquidation Value

              (82,600,000                 (82,600,000
  

 

 

      

 

 

      

 

 

      

 

 

 
   $        $ (138,658,453      $        $ (138,658,453
  

 

 

      

 

 

      

 

 

      

 

 

 

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

See notes to financial statements

 

 

SCHEDULES OF INVESTMENTS      41  


 

Statements of Assets and Liabilities

January 31, 2019 (unaudited)

 

     MUC      MUJ      MFT      MIY      MPA  

ASSETS

             

Investments at value — unaffiliated(a)

  $ 1,014,755,810      $ 752,908,850      $ 201,973,723      $ 718,398,469      $ 343,648,881  

Investments at value — affiliated(b)

    1,364,331        825,774        478,097        3,344,621         

Cash pledged for futures contracts

    879,502        708,000        113,551        496,950        388,800  

Receivables:

             

Interest — unaffiliated

    14,776,647        5,508,667        2,210,552        8,197,571        3,577,451  

Dividends — affiliated

    1,278        3,647        1,265        4,282        1,249  

Investments sold

                  5,123               1,466,776  

TOB Trust

                  1,260,000               2,500,000  

Prepaid expenses

    6,664        6,143        4,154        6,070        4,670  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total assets

    1,031,784,232        759,961,081        206,046,465        730,447,963        351,587,827  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

ACCRUED LIABILITIES

             

Bank overdraft

                                377,176  

Payables:

             

Investments purchased

                  2,892,344               8,761,065  

Income dividend distributions — Common Shares

    1,947,618        1,583,078        500,145        1,538,070        707,675  

Interest expense and fees

    965,151        193,903        109,124        223,992        241,889  

Investment advisory fees

    435,581        320,993        85,353        301,789        140,879  

Variation margin on futures contracts

    342,688        276,117        46,515        193,125        152,219  

Directors’ and Officer’s fees

    320,541        5,751        1,228        5,523        10,312  

Other accrued expenses

    179,850        160,622        70,917        152,376        100,161  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total accrued liabilities

    4,191,429        2,540,464        3,705,626        2,414,875        10,491,376  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

OTHER LIABILITIES

             

TOB Trust Certificates

    167,017,593        62,747,370        29,988,610        54,022,057        56,058,453  

VRDP Shares, at liquidation value of $100,000 per share, net of deferred offering costs(c)(d)

           236,637,459               231,480,550        82,347,492  

VMTP Shares, at liquidation value of $100,000 per share(c)(d)

    254,000,000               56,500,000                
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total other liabilities

    421,017,593        299,384,829        86,488,610        285,502,607        138,405,945  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total liabilities

    425,209,022        301,925,293        90,194,236        287,917,482        148,897,321  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS

  $ 606,575,210      $ 458,035,788      $ 115,852,229      $ 442,530,481      $ 202,690,506  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS CONSIST OF

             

Paid-in capital(e)(f)

  $ 581,297,061      $ 424,089,469      $ 113,433,638      $ 419,036,337      $ 194,703,136  

Accumulated earnings

    25,278,149        33,946,319        2,418,591        23,494,144        7,987,370  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS

  $ 606,575,210      $ 458,035,788      $ 115,852,229      $ 442,530,481      $ 202,690,506  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net asset value per Common Share

  $ 14.79      $ 15.19      $ 13.67      $ 14.96      $ 15.18  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

(a) Investments at cost — unaffiliated

  $ 984,846,613      $ 716,617,825      $ 194,026,078      $ 691,752,528      $ 332,824,124  

(b) Investments at cost — affiliated

  $ 1,364,331      $ 825,691      $ 478,097      $ 3,344,368      $  

(c) Preferred Shares outstanding:

             

Par value $0.05 per share

                  565               826  

Par value $0.10 per share

    2,540        2,371               2,319         

(d) Preferred Shares authorized

    18,140        9,847        1,000,000        8,046        1,000,000  

(e) Common Shares outstanding, par value $0.10 per share

    41,002,483        30,153,865        8,477,033        29,578,269        13,352,365  

(f)  Common Shares authorized

    199,981,860        199,990,153        unlimited        199,991,954        unlimited  

See notes to financial statements.

 

 

42    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Statements of Operations

Six Months Ended January 31, 2019 (unaudited)

 

     MUC     MUJ     MFT     MIY     MPA  

INVESTMENT INCOME

         

Interest — unaffiliated

  $ 19,570,441     $ 15,675,558     $ 4,500,208     $ 14,637,160     $ 6,918,420  

Dividends — affiliated

    32,429       24,551       7,532       26,450       15,557  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total investment income

    19,602,870       15,700,109       4,507,740      
14,663,610
 
    6,933,977  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EXPENSES

         

Investment advisory

    2,846,646       1,898,915       504,749       1,793,205       841,275  

Accounting services

    60,734       52,217       20,240       51,369       27,707  

Professional

    58,581       51,134       28,068       49,388       36,980  

Rating agency

    21,789       21,783       21,728       21,782       21,735  

Transfer agent

    19,570       18,370       10,612       18,194       14,683  

Directors and Officer

    14,368       22,238       5,665       21,393       9,490  

Registration

    8,031       5,906       4,782       5,793       4,778  

Custodian

    5,120       1,222       2,438       3,992       3,179  

Printing

    5,084       4,489       3,205       4,424       3,542  

Liquidity fees

          12,173             19,857        

Remarketing fees on Preferred Shares

          11,953             1,839        

Miscellaneous

    19,225       17,590       9,905             12,739  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

    3,059,148       2,117,990       611,392       1,991,236       976,108  

Interest expense, fees and amortization of offering cost(a)

    4,876,038       3,611,955       1,046,758       3,405,763       1,643,038  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

    7,935,186       5,729,945       1,658,150       5,396,999       2,619,146  

Less fees waived and/or reimbursed by the Manager

    (268,482     (1,456     (492     (1,720     (952
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses after fees waived and/or reimbursed

    7,666,704       5,728,489       1,657,658       5,395,279       2,618,194  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    11,936,166       9,971,620       2,850,082       9,268,331       4,315,783  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

         

Net realized gain (loss) from:

         

Investments — unaffiliated

    (3,669,097     (709,300     149,372       36,595       (338,397

Investments — affiliated

    (1     231       195       540       83  

Futures contracts

    593,924       473,575       36,883       250,628       388,160  

Capital gain distributions from investment companies — affiliated

          6       88       158       343  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    (3,075,174     (235,488     186,538       287,921       50,189  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation) on:

         

Investments — unaffiliated

    (4,304,390     (1,032,146     (1,681,105     (1,455,958     (216,210

Investments — affiliated

          83             (172     (54

Futures contracts

    (2,308,745     (1,896,764     (297,792     (1,287,862     (1,036,013
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    (6,613,135     (2,928,827     (1,978,897     (2,743,992     (1,252,277
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net realized and unrealized loss

    (9,688,309     (3,164,315     (1,792,359     (2,456,071     (1,202,088
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS RESULTING FROM OPERATIONS

  $ 2,247,857     $ 6,807,305     $ 1,057,723     $ 6,812,260     $ 3,113,695  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(a) Related to TOB Trusts, VMTP Shares and/or VRDP Shares.

         

See notes to financial statements.

 

 

FINANCIAL STATEMENTS      43  


 

Statements of Changes in Net Assets

 

    MUC  
     Six Months Ended
01/31/19
(unaudited)
    Year Ended
07/31/18
 

INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS

 

OPERATIONS

 

Net investment income

  $ 11,936,166     $ 26,345,394  

Net realized gain (loss)

    (3,075,174     2,208,575  

Net change in unrealized appreciation (depreciation)

    (6,613,135     (21,642,313
 

 

 

   

 

 

 

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

    2,247,857       6,911,656  
 

 

 

   

 

 

 

DISTRIBUTIONS TO COMMON SHAREHOLDERS(a)(b)

 

Decrease in net assets resulting from distributions to shareholders

    (12,059,938     (27,389,659
 

 

 

   

 

 

 

NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS(b)

 

Total decrease in net assets applicable to Common Shareholders

    (9,812,081     (20,478,003

Beginning of period

    616,387,291       636,865,294  
 

 

 

   

 

 

 

End of period

  $ 606,575,210     $ 616,387,291  
 

 

 

   

 

 

 

 

(a) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(b) 

Prior year distribution character information and undistributed net investment income has been modified or removed to conform with current year Regulation S-X presentation changes. Refer to Note 11 for this prior year information.

See notes to financial statements.

 

 

44    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Statements of Changes in Net Assets  (continued)

 

    MUJ  
     Six Months Ended
01/31/19
(unaudited)
    Year Ended
07/31/18
 

INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS

 

OPERATIONS

 

Net investment income

  $ 9,971,620     $ 21,389,643  

Net realized gain (loss)

    (235,488     3,015,448  

Net change in unrealized appreciation (depreciation)

    (2,928,827     (10,791,325
 

 

 

   

 

 

 

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

    6,807,305       13,613,766  
 

 

 

   

 

 

 

DISTRIBUTIONS TO COMMON SHAREHOLDERS(a)(b)

 

Decrease in net assets resulting from distributions to shareholders

    (9,498,467     (22,304,151
 

 

 

   

 

 

 

NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS(b)

 

Total decrease in net assets applicable to Common Shareholders

    (2,691,162     (8,690,385

Beginning of period

    460,726,950       469,417,335  
 

 

 

   

 

 

 

End of period

  $ 458,035,788     $ 460,726,950  
 

 

 

   

 

 

 

 

(a) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(b) 

Prior year distribution character information and undistributed net investment income has been modified or removed to conform with current year Regulation S-X presentation changes. Refer to Note 11 for this prior year information.

See notes to financial statements.

 

 

FINANCIAL STATEMENTS      45  


 

Statements of Changes in Net Assets  (continued)

 

    MFT  
     Six Months Ended
01/31/19
(unaudited)
    Year Ended
07/31/18
 

INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS

   

OPERATIONS

   

Net investment income

  $ 2,850,082     $ 6,310,000  

Net realized gain

    186,538       749,117  

Net change in unrealized (depreciation)

    (1,978,897     (6,248,096
 

 

 

   

 

 

 

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

    1,057,723       811,021  
 

 

 

   

 

 

 

DISTRIBUTIONS TO COMMON SHAREHOLDERS(a)(b)

   

Decrease in net assets resulting from distributions to shareholders

    (3,000,870     (6,747,670
 

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

   

Reinvestment of common distributions to shareholders

          27,009  
 

 

 

   

 

 

 

NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS(b)

   

Total decrease in net assets applicable to Common Shareholders

    (1,943,147     (5,909,640

Beginning of period

    117,795,376       123,705,016  
 

 

 

   

 

 

 

End of period

  $ 115,852,229     $ 117,795,376  
 

 

 

   

 

 

 

 

(a) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(b) 

Prior year distribution character information and undistributed net investment income has been modified or removed to conform with current year Regulation S-X presentation changes. Refer to Note 11 for this prior year information.

See notes to financial statements.

 

 

46    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Statements of Changes in Net Assets  (continued)

 

    MIY  
     Six Months Ended
01/31/19
(unaudited)
    Year Ended
07/31/18
 

INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS

 

OPERATIONS

 

Net investment income

  $ 9,268,331     $ 20,261,471  

Net realized gain

    287,921       2,353,308  

Net change in unrealized appreciation (depreciation)

    (2,743,992     (14,527,958
 

 

 

   

 

 

 

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

    6,812,260       8,086,821  
 

 

 

   

 

 

 

DISTRIBUTIONS TO COMMON SHAREHOLDERS(a)(b)

 

Decrease in net assets resulting from distributions to shareholders

    (9,228,420     (21,027,723
 

 

 

   

 

 

 

NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS(b)

 

Total decrease in net assets applicable to Common Shareholders

    (2,416,160     (12,940,902

Beginning of period

    444,946,641       457,887,543  
 

 

 

   

 

 

 

End of period

  $ 442,530,481     $ 444,946,641  
 

 

 

   

 

 

 

 

(a)

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(b)

Prior year distribution character information and undistributed net investment income has been modified or removed to conform with current year Regulation S-X presentation changes. Refer to Note 11 for this prior year information.

See notes to financial statements.

 

 

FINANCIAL STATEMENTS      47  


 

Statements of Changes in Net Assets  (continued)

 

    MPA  
    

Six Months Ended
01/31/19

(unaudited)

    Year Ended
07/31/19
 

INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS

   

OPERATIONS

   

Net investment income

  $ 4,315,783     $ 9,437,503  

Net realized gain

    50,189       1,004,627  

Net change in unrealized appreciation (depreciation)

    (1,252,277     (7,113,551
 

 

 

   

 

 

 

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

    3,113,695       3,328,579  
 

 

 

   

 

 

 

DISTRIBUTIONS TO COMMON SHAREHOLDERS(a)(b)

   

Decrease in net assets resulting from distributions to shareholders

    (4,379,576     (9,542,548
 

 

 

   

 

 

 

NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS(b)

   

Total decrease in net assets applicable to Common Shareholders

    (1,265,881     (6,213,969
 

 

 

   

 

 

 

Beginning of period

  $ 203,956,387     $ 210,170,356  
 

 

 

   

 

 

 

End of period

  $ 202,690,506     $ 203,956,387  
 

 

 

   

 

 

 

 

(a) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(b) 

Prior year distribution character information and undistributed net investment income has been modified or removed to conform with current year Regulation S-X presentation changes. Refer to Note 11 for this prior year information.

See notes to financial statements.

 

 

48    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Statements of Cash Flows  (unaudited)

Six Months Ended January 31, 2019

 

     MUC     MUJ     MFT     MIY     MPA  

CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES

 

Net increase in net assets resulting from operations

  $ 2,247,857     $ 6,807,305     $ 1,057,723     $ 6,812,260     $ 3,113,695  

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

         

Proceeds from sales of long-term investments

    202,688,610       47,440,257       37,157,633       78,995,249       31,058,970  

Purchases of long-term investments

    (175,689,179     (44,492,644     (37,004,360     (73,764,179     (26,722,311

Net (purchases) sales of short-term securities

    (1,364,332     (1,653,651     (355     (8,019     562,370  

Amortization of premium and accretion of discount on investments and other fees

    3,767,381       390,701       432,555       1,943,894       508,683  

Net realized (gain) loss on investments

    3,669,098       709,069       (149,567     (37,135     338,314  

Net unrealized depreciation on investments

    4,304,390       1,032,063       1,681,105       1,456,130       216,264  

(Increase) Decrease in Assets:

 

Receivables:

 

Interest — unaffiliated

    780,821       (129,046     9,779       176,431       (174,393

Dividends — affiliated

    10,009       (2,125     (1,005     (410     (504

Prepaid expenses

    17,646       14,675       12,046       14,499       12,443  

Increase (Decrease) in Liabilities:

 

Payables:

 

Investment advisory fees

    (7,872     (1,971     (959     (5,275     (2,851

Interest expense and fees

    81,546       35,202       12,954       29,739       38,247  

Directors’ and Officer’s

    (24,615     1,628       137       1,478       162  

Variation margin on futures contracts

    270,779       255,205       42,044       158,323       139,106  

Other accrued expenses

    (83,026     (72,745     (29,902     (72,599     (50,370
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

    40,669,113       10,333,923       3,219,828       15,700,386       9,037,825  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES

 

Proceeds from TOB Trust Certificates

    10,958,931             2,570,851       5,684,998       1,655,350  

Repayments of TOB Trust Certificates

    (29,846,529           (2,628,429     (11,664,998     (6,273,213

Proceeds from Loan for TOB Trust Certificates

    10,958,283                          

Repayments of Loan for TOB Trust Certificates

    (10,958,283                        

Cash dividends paid to Common Shareholders

    (12,059,938     (9,498,467     (3,000,870     (9,228,420     (4,412,957

Increase (decrease) in bank overdraft

    (9,451,577     (358,053     (95,379     (335,798     258,383  

Amortization of deferred offering costs

          9,597             4,832       5,612  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used for financing activities

    (40,399,113     (9,846,923     (3,153,827     (15,539,386     (8,766,825
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

CASH

 

Net increase in restricted and unrestricted cash and foreign currency

    270,000       487,000       66,001       161,000       271,000  

Restricted and unrestricted cash and foreign currency at beginning of period

    609,502       221,000       47,550       335,950       117,800  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Restricted and unrestricted cash and foreign currency at end of period

  $ 879,502     $ 708,000     $ 113,551     $ 496,950     $ 388,800  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

 

Cash paid during the period for interest expense

  $ 4,794,492     $ 3,567,156     $ 1,033,804     $ 3,371,192     $ 1,599,179  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

RECONCILIATION OF RESTRICTED AND UNRESTRICTED CASH AT THE END OF PERIOD TO THE STATEMENTS OF ASSETS AND LIABILITIES

         

Cash pledged:

 

Futures contracts

  $ 879,502     $ 708,000     $ 113,551     $ 496,950     $ 388,800  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

RECONCILIATION OF RESTRICTED AND UNRESTRICTED CASH AT THE BEGINNING OF PERIOD TO THE STATEMENTS OF ASSETS AND LIABILITIES

         

Cash pledged:

 

Futures contracts

  $ 609,502     $ 221,000     $ 47,550     $ 335,950     $ 117,800  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

See notes to financial statements.

 

 

FINANCIAL STATEMENTS      49  


Financial Highlights

(For a share outstanding throughout each period)

 

    MUC  
    Six Months Ended
01/31/19
(unaudited)
          Year Ended July 31,  
          2018      2017      2016      2015      2014  
               

Net asset value, beginning of period

  $ 15.03       $ 15.53      $ 16.51      $ 15.78      $ 15.82      $ 14.52  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income(a)

    0.29         0.64        0.69        0.77        0.78        0.82  

Net realized and unrealized gain (loss)

    (0.23       (0.47      (0.93      0.76        (0.00 )(b)       1.34  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) from investment operations

    0.06         0.17        (0.24      1.53        0.78        2.16  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Distributions to Common Shareholders(c)

                 

From net investment income

    (0.29       (0.67      (0.74      (0.80      (0.82      (0.86

From net realized gain

    (0.01                                    
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total distributions

    (0.30       (0.67      (0.74      (0.80      (0.82      (0.86
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net asset value, end of period

  $ 14.79       $ 15.03      $ 15.53      $ 16.51      $ 15.78      $ 15.82  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Market price, end of period

  $ 12.80       $ 13.07      $ 14.75      $ 16.28      $ 14.28      $ 14.04  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Return Applicable to Common Shareholders(d)

 

               

Based on net asset value

    0.71 %(e)        1.54      (1.08 )%       10.20      5.52      15.94
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Based on market price

    0.23 %(e)        (7.03 )%       (4.73 )%       20.08      7.60      12.25
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Ratios to Average Net Assets Applicable to Common Shareholders

 

Total expenses

    2.60 %(f)        2.38      2.04      1.60      1.47      1.57
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses after fees waived and/or reimbursed and paid indirectly

    2.52 %(f)        2.29      1.96      1.55      1.45      1.51
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses after fees waived and/or reimbursed and paid indirectly and excluding interest expense, fees and amortization of offering costs(g)

    0.92 %(f)        0.93      0.93      0.93      0.93      0.93
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income to Common Shareholders

    3.92 %(f)        4.20      4.44      4.79      4.88      5.44
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Supplemental Data

 

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

  $ 606,575       $ 616,387      $ 636,865      $ 677,128      $ 646,897      $ 648,837  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

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

  $ 254,000       $ 254,000      $ 254,000      $ 254,000      $ 254,000      $ 254,000  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Asset coverage per VMTP Shares at $100,000 liquidation value, end of period

  $ 338,809       $ 342,672      $ 350,734      $ 366,586      $ 354,684      $ 355,448  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Borrowings outstanding, end of period (000)

  $ 167,018       $ 185,905      $ 181,685      $ 169,699      $ 161,571      $ 88,271  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Portfolio turnover rate

    15       24      19      21      25      25
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(a) 

Based on average Common Shares outstanding.

(b)

Amount is greater than $(0.005) per share.

(c) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(d) 

Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions at actual reinvestment prices.

(e) 

Aggregate total return.

(f) 

Annualized.

(g) 

Interest expense, fees and amortization of offering costs related to TOB Trusts and/or VMTP Shares. See Note 4 and Note 10 of the Notes to Financial Statements for details.

See notes to financial statements.

 

 

50    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    MUJ  
   

Six Months Ended

01/31/19
(unaudited)

          Year Ended July 31,  
          2018      2017      2016      2015     2014  
               

Net asset value, beginning of period

  $ 15.28       $ 15.57      $ 16.55      $ 15.62      $ 15.74     $ 14.51  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Net investment income(a)

    0.33         0.71        0.77        0.84        0.84       0.86  

Net realized and unrealized gain (loss)

    (0.10       (0.26      (0.94      0.96        (0.07     1.27  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Net increase (decrease) from investment operations

    0.23         0.45        (0.17      1.80        0.77       2.13  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Distributions to Common Shareholders(b)

                

From net investment income

    (0.32       (0.74      (0.81      (0.87      (0.89     (0.89

From net realized gain

                                       (0.01
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total distributions

    (0.32       (0.74      (0.81      (0.87      (0.89     (0.90
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Net asset value, end of period

  $ 15.19       $ 15.28      $ 15.57      $ 16.55      $ 15.62     $ 15.74  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Market price, end of period

  $ 12.99       $ 12.90      $ 14.88      $ 16.12      $ 13.55     $ 14.11  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total Return Applicable to Common Shareholders(c)

                

Based on net asset value

    1.89 %(d)        3.52      (0.57 )%       12.39      5.59     15.79
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Based on market price

    3.21 %(d)        (8.55 )%       (2.44 )%       26.20      2.18     13.24
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Ratios to Average Net Assets Applicable to Common Shareholders

                

Total expenses

    2.51 %(e)        2.23      1.89      1.52      1.62 %(f)      1.64
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total expenses after fees waived and/or reimbursed and paid indirectly

    2.51 %(e)        2.23      1.89      1.52      1.57 %(f)      1.57
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total expenses after fees waived and/or reimbursed and paid indirectly and excluding interest expense fees and amortization of offering costs(g)(h)

    0.93 %(e)        0.93      0.91      0.90      1.02 %(f)      1.25
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Net investment income to Common Shareholders

    4.36 %(e)        4.60      4.95      5.27      5.27     5.78
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Supplemental Data

                

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

  $ 458,036       $ 460,727      $ 469,417      $ 499,058      $ 470,946     $ 335,425  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

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

  $ 237,100       $ 237,100      $ 237,100      $ 237,100      $ 237,100     $ 172,700  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

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

  $ 293,183       $ 294,318      $ 297,983      $ 310,484      $ 298,628     $ 294,224  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Borrowings outstanding, end of period (000)

  $ 62,747       $ 62,747      $ 63,877      $ 55,089      $ 52,744     $ 34,699  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Portfolio turnover rate

    6       14      8      9      10     16
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

(a)

Based on average Common Shares outstanding.

(b) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(c) 

Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions at actual reinvestment prices.

(d) 

Aggregate total return.

(e) 

Annualized.

(f) 

Includes reorganization costs associated with the Fund’s reorganization. Without these costs, total expenses, total expenses after fees waived and/or reimbursed and/or paid indirectly and total expenses after fees waived and/or reimbursed and/or paid indirectly and excluding interest expense, fees and amortization of offering costs would have been 1.52%, 1.50% and 0.95%, respectively.

(g) 

Interest expense, fees and amortization of offering costs related to TOB Trusts and/or VRDP Shares. See Note 4 and Note 10 of the Notes to Financial Statements for details.

(h) 

The total expense ratio after fees waived and/or reimbursed and paid indirectly and excluding interest expense, fees, amortization of offering costs, liquidity and remarketing fees were as follows:

 

   

Six Months Ended
01/31/19

(unaudited)

          Year Ended July 31,  
          2018           2017           2016           2015           2014        

Expense ratios

            0.93             0.93             0.91             0.89             1.01             0.95        
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

See notes to financial statements.

 

 

FINANCIAL HIGHLIGHTS      51  


Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    MFT  
   

Six Months Ended

01/31/19
(unaudited)

     

 

    Year Ended July 31,  
    2018      2017      2016      2015      2014  
               

Net asset value, beginning of period

  $ 13.90       $ 14.60      $ 15.55      $ 14.95      $ 14.83      $ 13.61  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income(a)

    0.34         0.74        0.79        0.83        0.84        0.85  

Net realized and unrealized gain (loss)

    (0.22       (0.64      (0.91      0.62        0.13        1.22  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) from investment operations

    0.12         0.10        (0.12      1.45        0.97        2.07  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Distributions to Common Shareholders from net investment income(b)

    (0.35       (0.80      (0.83      (0.85      (0.85      (0.85
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net asset value, end of period

  $ 13.67       $ 13.90      $ 14.60      $ 15.55      $ 14.95      $ 14.83  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Market price, end of period

  $ 13.10       $ 13.03      $ 14.67      $ 16.09      $ 13.37      $ 13.26  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Return Applicable to Common Shareholders(c)

                 

Based on net asset value

    1.15 %(d)        0.92      (0.51 )%       10.31      7.25      16.40
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Based on market price

    3.41 %(d)        (5.85 )%       (3.39 )%       27.63      7.27      16.10
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Ratios to Average Net Assets Applicable to Common Shareholders

                 

Total expenses

    2.85 %(e)        2.47      2.07      1.61      1.56      1.67
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses after fees waived and/or reimbursed and paid indirectly

    2.85 %(e)        2.47      2.07      1.61      1.56      1.67
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses after fees waived and/or reimbursed and paid indirectly and excluding interest expense, fees and amortization of offering costs(f)

    1.05 %(e)        1.03      1.00      0.96      0.98      1.00
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income to Common Shareholders

    4.89 %(e)        5.23      5.35      5.45      5.52      6.04
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Supplemental Data

                 

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

  $ 115,852       $ 117,795      $ 123,705      $ 131,739      $ 126,696      $ 125,647  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

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

  $ 56,500       $ 56,500      $ 56,500      $ 56,500      $ 56,500      $ 56,500  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Asset coverage per VMTP Shares at $100,000 liquidation value, end of period

  $ 305,048       $ 308,487      $ 318,947      $ 333,167      $ 324,240      $ 322,384  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Borrowings outstanding, end of period (000)

  $ 29,989       $ 28,786      $ 27,229      $ 21,953      $ 19,488      $ 20,284  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Portfolio turnover rate

    18       30      34      21      13      32
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(a) 

Based on average Common Shares outstanding.

(b) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(c) 

Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions at actual reinvestment prices.

(d) 

Aggregate total return.

(e) 

Annualized.

(f) 

Interest expense, fees and amortization of offering costs related to TOB Trusts and/or VMTP Shares. See Note 4 and Note 10 of the Notes to Financial Statements for details.

See notes to financial statements.

 

 

52    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    MIY  
   

Six Months Ended

01/31/19
(unaudited)

          Year Ended July 31,  
          2018      2017      2016     2015     2014  
               

Net asset value, beginning of period

  $ 15.04       $ 15.48      $ 16.36      $ 15.48     $ 15.24     $ 14.16  
 

 

 

     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Net investment income(a)

    0.31         0.69        0.75        0.79       0.83       0.86  

Net realized and unrealized gain (loss)

    (0.08       (0.42      (0.86      0.92       0.27       1.12  
 

 

 

     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Net increase (decrease) from investment operations

    0.23         0.27        (0.11      1.71       1.10       1.98  
 

 

 

     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Distributions to Common Shareholders from net investment income(b)

    (0.31       (0.71      (0.77      (0.83     (0.86     (0.90
 

 

 

     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Net asset value, end of period

  $ 14.96       $ 15.04      $ 15.48      $ 16.36     $ 15.48     $ 15.24  
 

 

 

     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Market price, end of period

  $ 12.81       $ 12.89      $ 14.19      $ 15.38     $ 13.22     $ 13.47  
 

 

 

     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total Return Applicable to Common Shareholders(c)

               

Based on net asset value

    1.95 %(d)        2.37      (0.07 )%       11.99     8.08     15.24
 

 

 

     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Based on market price

    1.85 %(d)        (4.29 )%       (2.56 )%       23.28     4.43     14.74
 

 

 

     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets Applicable to Common Shareholders

               

Total expenses

    2.44 %(e)        2.16      1.88      1.54 %(f)      1.52 %(g)      1.54
 

 

 

     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total expenses after fees waived and/or reimbursed and paid indirectly

    2.44 %(e)        2.16      1.88      1.54 %(f)      1.48 %(g)      1.54
 

 

 

     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total expenses after fees waived and/or reimbursed and paid indirectly and excluding interest expense, fees and amortization of offering costs(h)

    0.90 %(e)        0.89      0.89      0.93 %(f)      0.93 %(g)      0.93
 

 

 

     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Net investment income to Common Shareholders

    4.20 %(e)        4.49      4.81      5.02     5.30     5.94
 

 

 

     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Supplemental Data

 

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

  $ 442,530       $ 444,947      $ 457,888      $ 483,968     $ 282,534     $ 278,143  
 

 

 

     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

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

  $ 231,900       $ 231,900      $ 231,900      $ 231,900     $ 144,600     $ 144,600  
 

 

 

     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

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

  $ 290,828       $ 291,870      $ 297,450      $ 308,697     $ 295,390     $ 292,354  
 

 

 

     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Borrowings outstanding, end of period (000)

  $ 54,022       $ 60,002      $ 52,002      $ 51,227     $ 23,487     $ 23,487  
 

 

 

     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Portfolio turnover rate

    9       8      13      19     19     16
 

 

 

     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

 

(a) 

Based on average Common Shares outstanding.

(b) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(c) 

Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions at actual reinvestment prices.

(d) 

Aggregate total return.

(e) 

Annualized.

(f) 

Includes reorganization costs associated with the Fund’s reorganization. Without these costs total expenses, total expenses after fees waived and/or reimbursed and/or paid indirectly and total expenses after fees waived and/or reimbursed and/or paid indirectly and excluding interest expense, fees and amortization of offering costs would have been 1.49%, 1.49% and 0.88%, respectively.

(g) 

Includes reorganization costs associated with the Fund’s reorganization. Without these costs total expenses, total expenses after fees waived and/or reimbursed and/or paid indirectly and total expenses after fees waived and/or reimbursed and/or paid indirectly and excluding interest expense, fees and amortization of offering costs would have been 1.48%, 1.48% and 0.92%, respectively

(h) 

Interest expense, fees and amortization of offering costs related to TOB Trusts and/or VRDP Shares. See Note 4 and Note 10 of the Notes to Financial Statements for details.

See notes to financial statements.

 

 

FINANCIAL HIGHLIGHTS      53  


Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    MPA  
    Six Months Ended
01/31/19
(unaudited)
          Year Ended July 31,  
          2018      2017      2016      2015     2014  
               

Net asset value, beginning of period

  $ 15.27       $ 15.74      $ 16.76      $ 15.77      $ 15.77     $ 14.59  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Net investment income(a)

    0.32         0.71        0.76        0.80        0.81       0.87  

Net realized and unrealized gain (loss)

    (0.08       (0.47      (1.03      1.02        0.07       1.20  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Net increase (decrease) from investment operations

    0.24         0.24        (0.27      1.82        0.88       2.07  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Distributions to Common Shareholders from net investment income(b)

    (0.33       (0.71      (0.75      (0.83      (0.88     (0.89
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Net asset value, end of period

  $ 15.18       $ 15.27      $ 15.74      $ 16.76      $ 15.77     $ 15.77  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Market price, end of period

  $ 13.19       $ 13.26      $ 14.69      $ 16.07      $ 13.50     $ 13.89  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total Return Applicable to Common Shareholders(c)

                

Based on net asset value

    1.97 %(d)        2.09      (1.20 )%       12.38      6.33     15.39
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Based on market price

    2.03 %(d)        (5.01 )%       (3.83 )%       25.87      3.34     13.45
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Ratios to Average Net Assets Applicable to Common Shareholders

                

Total expenses

    2.59 %(e)        2.26      1.91      1.46      1.54 %(f)      1.48
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total expenses after fees waived and/or reimbursed and paid indirectly

    2.59 %(e)        2.26      1.91      1.46      1.45 %(f)      1.48
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total expenses after fees waived and/or reimbursed and paid indirectly and excluding interest expense, fees and amortization of offering costs(g)

    0.96 %(e)        0.95      0.94      0.89      0.96 %(f)      0.95
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Net investment income to Common Shareholders

    4.27 %(e)        4.56      4.83      4.98      5.05     5.79
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Supplemental Data

 

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

  $ 202,691       $ 203,956      $ 210,170      $ 223,738      $ 210,549     $ 181,459  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

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

  $ 82,600       $ 82,600      $ 82,600      $ 82,600      $ 82,600     $ 66,300  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

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

  $ 345,388       $ 346,921      $ 354,444      $ 370,869      $ 354,901     $ 373,693  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Borrowings outstanding, end of period (000)

  $ 56,058       $ 58,176      $ 55,826      $ 48,710      $ 28,468     $ 37,066  
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Portfolio turnover rate

    10       21      15      17      21     16
 

 

 

     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

(a) 

Based on average Common Shares outstanding.

(b) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

(c) 

Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions at actual reinvestment prices.

(d) 

Aggregate total return.

(e) 

Annualized.

(f) 

Includes reorganization costs associated with the Fund’s reorganization. Without these costs, total expenses, total expenses after fees waived and/or reimbursed and/or paid indirectly and total expenses after fees waived and/or reimbursed and/or paid indirectly and excluding interest expense, fees and amortization of offering costs would have been 1.40%, 1.40% and 0.91% respectively.

(g) 

Interest expense, fees and amortization of offering costs related to TOBs and/or VRDP Shares. See Note 4 and Note 10 of the Notes to Financial Statements for details.

See notes to financial statements.

 

 

54    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Notes to Financial Statements  (unaudited)

 

1.

ORGANIZATION

The following are registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as closed-end management investment companies and are referred to herein collectively as the “Funds”, or individually as a “Fund”:

 

Fund Name   Herein Referred To As    Organized    Diversification
Classification

BlackRock MuniHoldings California Quality Fund, Inc.

  MUC    Maryland    Diversified

BlackRock MuniHoldings New Jersey Quality Fund, Inc.

  MUJ    Maryland    Non-diversified

BlackRock MuniYield Investment Quality Fund

  MFT    Massachusetts    Diversified

BlackRock MuniYield Michigan Quality Fund, Inc.

  MIY    Maryland    Non-diversified

BlackRock MuniYield Pennsylvania Quality Fund

  MPA    Massachusetts    Non-diversified

The Boards of Directors and Boards of Trustees of the Funds are collectively referred to throughout this report as the “Board of Directors” or the “Board,” and the directors thereof are collectively referred to throughout this report as “Directors”. The Funds determine and make available for publication the net asset values (“NAVs”) of their Common Shares on a daily basis.

The Funds, together with certain other registered investment companies advised by BlackRock Advisors, LLC (the “Manager”) or its affiliates, are included in a complex of non-index fixed-income mutual funds and all BlackRock-advised closed-end funds referred to as the Fixed-Income Complex.

 

2.

SIGNIFICANT ACCOUNTING POLICIES

The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. Each Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. Below is a summary of significant accounting policies:

Investment Transactions and Income Recognition: For financial reporting purposes, investment transactions are recorded on the dates the transactions are entered into (the “trade dates”). Realized gains and losses on investment transactions are determined on the identified cost basis. Dividend income is recorded on the ex-dividend date. Interest income, including amortization and accretion of premiums and discounts on debt securities, is recognized on an accrual basis.

Segregation and Collateralization: In cases where a Fund enters into certain investments (e.g., futures contracts) or certain borrowings (e.g., TOB Trust transactions) that would be treated as “senior securities” for 1940 Act purposes, a Fund may segregate or designate on its books and records cash or liquid assets having a market value at least equal to the amount of its future obligations under such investments or borrowings. Doing so allows the investment or borrowing to be excluded from treatment as a “senior security.” Furthermore, if required by an exchange or counterparty agreement, the Funds may be required to deliver/deposit cash and/or securities to/with an exchange, or broker-dealer or custodian as collateral for certain investments or obligations.

Distributions: Distributions from net investment income are declared and paid monthly. Distributions of capital gains are recorded on the ex-dividend date and made at least annually. The character and timing of distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP.

Distributions to Preferred Shareholders are accrued and determined as described in Note 10.

Deferred Compensation Plan: Under the Deferred Compensation Plan (the “Plan”) approved by each Fund’s Board, the independent Directors (“Independent Directors”) may defer a portion of their annual complex-wide compensation. Deferred amounts earn an approximate return as though equivalent dollar amounts had been invested in common shares of certain funds in the BlackRock Fixed-Income Complex selected by the Independent Directors. This has the same economic effect for the Independent Directors as if the Independent Directors had invested the deferred amounts directly in certain funds in the BlackRock Fixed-Income Complex.

The Plan is not funded and obligations thereunder represent general unsecured claims against the general assets of each Fund, as applicable. Deferred compensation liabilities are included in the Directors’ and Officer’s fees payable in the Statements of Assets and Liabilities and will remain as a liability of the Funds until such amounts are distributed in accordance with the Plan.

Recent Accounting Standards: In March 2017, the Financial Accounting Standards Board issued Accounting Standards Update “Premium Amortization of Purchased Callable Debt Securities” which amends the amortization period for certain purchased callable debt securities. Under the new guidance, the premium amortization of purchased callable debt securities that have explicit, non-contingent call features and are callable at fixed prices will be amortized to the earliest call date. The guidance will be applied on a modified retrospective basis and is effective for fiscal years, and their interim periods, beginning after December 15, 2018. Management is currently evaluating the impact of this guidance to the Funds.

In August 2018, the Financial Accounting Standards Board issued Accounting Standards Update 2018-13 “Changes to the Disclosure Requirements for Fair Value Measurement” which modifies disclosure requirements for fair value measurements. The guidance is effective for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years. Management is currently evaluating the impact of this guidance to the Funds.

Indemnifications: In the normal course of business, a Fund enters into contracts that contain a variety of representations that provide general indemnification. A Fund’s maximum exposure under these arrangements is unknown because it involves future potential claims against a Fund, which cannot be predicted with any certainty.

 

 

NOTES TO FINANCIAL STATEMENTS      55  


Notes to Financial Statements  (unaudited) (continued)

 

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

 

3.

INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS

Investment Valuation Policies: The Funds’ investments are valued at fair value (also referred to as “market value” within the financial statements) as of the close of trading on the New York Stock Exchange (“NYSE”) (generally 4:00 p.m., Eastern time). U.S. GAAP defines fair value as the price the Funds would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Funds determine the fair values of their financial instruments using various independent dealers or pricing services under policies approved by the Board. The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to oversee the pricing function for all financial instruments.

Fair Value Inputs and Methodologies: The following methods and inputs are used to establish the fair value of each Fund’s assets and liabilities:

 

   

Municipal investments (including commitments to purchase such investments on a “when-issued” basis) are valued on the basis of prices provided by dealers or pricing services. In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from dealers, pricing matrixes, market transactions in comparable investments and information with respect to various relationships between investments.

 

   

Investments in open-end U.S. mutual funds are valued at NAV each business day.

 

   

Futures contracts traded on exchanges are valued at their last sale price.

If events (e.g., a company announcement, market volatility or a natural disaster) occur that are expected to materially affect the value of such investments, or in the event that the application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued by the Global Valuation Committee, or its delegate, in accordance with a policy approved by the Board as reflecting fair value (“Fair Valued Investments”). The fair valuation approaches that may be used by the Global Valuation Committee will include market approach, income approach and cost approach. Valuation techniques such as discounted cash flow, use of market comparables and matrix pricing are types of valuation approaches and are typically used in determining fair value. When determining the price for Fair Valued Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that each Fund might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant and consistent with the principles of fair value measurement. The pricing of all Fair Valued Investments is subsequently reported to the Board or a committee thereof on a quarterly basis.

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

 

   

Level 1 — Unadjusted price quotations in active markets/exchanges for identical assets or liabilities that each Fund has the ability to access

 

   

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

 

   

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

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Investments classified within Level 3 have significant unobservable inputs used by the Global Valuation Committee in determining the price for Fair Valued Investments. Level 3 investments include equity or debt issued by privately held companies or funds. There may not be a secondary market, and/or there are a limited number of investors. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the Global Valuation Committee in the absence of market information.

Changes in valuation techniques may result in transfers into or out of an assigned level within the hierarchy. In accordance with each Fund’s policy, transfers between different levels of the fair value hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investments and derivative financial instruments and is not necessarily an indication of the risks associated with investing in those securities.

 

4.

SECURITIES AND OTHER INVESTMENTS

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

Forward Commitments and When-Issued Delayed Delivery Securities: Certain Funds may purchase securities on a when-issued basis and may purchase or sell securities on a forward commitment basis. Settlement of such transactions normally occurs within a month or more after the purchase or sale commitment is made. A Fund may purchase securities under such conditions with the intention of actually acquiring them, but may enter into a separate agreement to sell the securities before the

 

 

56    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Notes to Financial Statements  (unaudited) (continued)

 

settlement date. Since the value of securities purchased may fluctuate prior to settlement, a Fund may be required to pay more at settlement than the security is worth. In addition, a Fund is not entitled to any of the interest earned prior to settlement. When purchasing a security on a delayed delivery basis, a Fund assumes the rights and risks of ownership of the security, including the risk of price and yield fluctuations. In the event of default by the counterparty, a Fund’s maximum amount of loss is the unrealized appreciation of unsettled when-issued transactions.

Municipal Bonds Transferred to TOB Trusts: Certain Funds leverage their assets through the use of “TOB Trust” transactions. The Funds transfer municipal bonds into a special purpose trust (a “TOB Trust”). A TOB Trust issues two classes of beneficial interests: short-term floating rate interests (“TOB Trust Certificates”), which are sold to third party investors, and residual inverse floating rate interests (“TOB Residuals”), which are issued to the participating funds that contributed the municipal bonds to the TOB Trust. The TOB Trust Certificates have interest rates that reset weekly and their holders have the option to tender such certificates to the TOB Trust for redemption at par and any accrued interest at each reset date. The TOB Residuals held by a Fund provides the Fund with the right to cause the holders of a proportional share of the TOB Trust Certificates to tender their certificates to the TOB Trust at par plus accrued interest. The Funds may withdraw a corresponding share of the municipal bonds from the TOB Trust. Other funds managed by the investment adviser may also contribute municipal bonds to a TOB Trust into which a Fund has contributed bonds. If multiple BlackRock-advised funds participate in the same TOB Trust, the economic rights and obligations under the TOB Residuals will be shared among the funds ratably in proportion to their participation in the TOB Trust.

TOB Trusts are supported by a liquidity facility provided by a third party bank or other financial institution (the “Liquidity Provider”) that allows the holders of the TOB Trust Certificates to tender their certificates in exchange for payment of par plus accrued interest on any business day. The tendered TOB Trust Certificates are remarketed by a Remarketing Agent. In the event of a failed remarketing, the TOB Trust may draw upon a loan from the Liquidity Provider to purchase the tendered TOB Trust Certificates. Any loans made by the Liquidity Provider will be secured by the purchased TOB Trust Certificates held by the TOB Trust and will be subject to an increased interest rate based on number of days the loan is outstanding.

The TOB Trust may be collapsed without the consent of a Fund, upon the occurrence of a termination event, as defined in the TOB Trust agreement. Upon the occurrence of a termination event, a TOB Trust would be liquidated with the proceeds applied first to any accrued fees owed to the trustee of the TOB Trust, the Remarketing Agent and the Liquidity Provider. Upon certain termination events, TOB Trust Certificates holders will be paid before the TOB Residuals holders (i.e., the Funds) whereas in other termination events, TOB Trust Certificates holders and TOB Residuals holders will be paid pro rata.

While a Fund’s investment policies and restrictions expressly permit investments in inverse floating rate securities, such as TOB Residuals, they restrict the ability of a Fund to borrow money for purposes of making investments. The management of each of MFT, MIY and MPA believes that each Fund’s restriction on borrowings do not apply to the Fund’s TOB Trust transactions. Each Fund’s transfer of the municipal bonds to a TOB Trust is considered a secured borrowing for financial reporting purposes. The cash received by the TOB Trust from the sale of the TOB Trust Certificates, less certain transaction expenses, is paid to a Fund. A Fund typically invests the cash received in additional municipal bonds.

Accounting for TOB Trusts: The municipal bonds deposited into a TOB Trust are presented in a Fund’s Schedule of Investments and the TOB Trust Certificates are shown in Other Liabilities in the Statements of Assets and Liabilities. Any loans drawn by the TOB Trust pursuant to the liquidity facility to purchase tendered TOB Trust Certificates are shown as Loan for TOB Trust Certificates. The carrying amount of a Fund’s payable to the holder of the TOB Trust Certificates, as reported in the Statements of Assets and Liabilities as TOB Trust Certificates, approximates its fair value.

Interest income, including amortization and accretion of premiums and discounts, from the underlying municipal bonds is recorded by a Fund on an accrual basis. Interest expense incurred on the TOB Trust transaction and other expenses related to remarketing, administration, trustee, liquidity and other services to a TOB Trust are shown as interest expense, fees and amortization of offering costs in the Statements of Operations. Fees paid upon creation of the TOB Trust are recorded as debt issuance costs and are amortized to interest expense, fees and amortization of offering costs in the Statements of Operations to the expected maturity of the TOB Trust. In connection with the restructurings of the TOB Trusts to non-bank sponsored TOB Trusts, a Fund incurred non-recurring, legal and restructuring fees, which are recorded as interest expense, fees and amortization of deferred offering costs in the Statements of Operations.

Amounts recorded within interest expense, fees and amortization of offering costs in the Statements of Operations are:

 

     Interest
Expense
     Liquidity
Fees
     Other
Expenses
     Total  

MUC

  $ 1,326,087      $ 385,997      $ 115,815      $ 1,827,899  

MUJ

    508,229        124,271        75,159        707,659  

MFT

    224,719        61,190        24,508        310,417  

MIY

    453,267        124,389        36,314        613,970  

MPA

    457,724        140,418        33,567        631,709  

For the six months ended January 31, 2019, the following table is a summary of each Fund’s TOB Trusts:

 

     Underlying
Municipal Bonds
Transferred to
TOB Trusts 
(a)
     Liability for
TOB Trust
Certificates 
(b)
     Range of
Interest Rates
on TOB Trust
Certificates at
Period End
     Average
TOB Trust
Certificates
Outstanding
     Daily Weighted
Average Rate
of Interest and
Other Expenses
on TOB Trusts
 

MUC

  $ 336,460,826      $ 167,017,593        1.25% — 1.41    $ 167,807,275        2.16

MUJ

    114,707,858        62,747,370        1.29 — 1.49        62,747,370        2.24  

MFT

    54,357,984        29,988,610        1.29 — 1.49        28,115,938        2.19  

MIY

    100,668,159        54,022,057        1.32 — 1.49        55,922,220        2.18  

MPA

    96,063,372        56,058,453        1.31 — 1.49        57,484,660        2.18  

 

 

NOTES TO FINANCIAL STATEMENTS      57  


Notes to Financial Statements  (unaudited) (continued)

 

 

  (a) 

The municipal bonds transferred to a TOB Trust are generally high grade municipal bonds. In certain cases, when municipal bonds transferred are lower grade municipal bonds, the TOB Trust transaction may include a credit enhancement feature that provides for the timely payment of principal and interest on the bonds to the TOB Trust by a credit enhancement provider in the event of default of the municipal bond. The TOB Trust would be responsible for the payment of the credit enhancement fee and the funds, as TOB Residuals holders, would be responsible for reimbursement of any payments of principal and interest made by the credit enhancement provider. The maximum potential amounts owed by the funds, for such reimbursements, as applicable, are included in the maximum potential amounts disclosed for recourse TOB Trusts.

 
  (b) 

TOB Trusts may be structured on a non-recourse or recourse basis. When a fund invests in TOB Trusts on a non-recourse basis, the Liquidity Provider may be required to make a payment under the liquidity facility to allow the TOB Trust to repurchase TOB Trust Certificates. The Liquidity Provider will be reimbursed from the liquidation of bonds held in the TOB Trust. If a fund invests in a TOB Trust on a recourse basis, a fund enters into a reimbursement agreement with the Liquidity Provider where a fund is required to reimburse the Liquidity Provider for any shortfall between the amount paid by the Liquidity Provider and proceeds received from liquidation of municipal bonds held in the TOB Trust (the “Liquidation Shortfall”). As a result, if a fund invests in a recourse TOB Trust, a fund will bear the risk of loss with respect to any Liquidation Shortfall. If multiple funds participate in any such TOB Trust, these losses will be shared ratably, including the maximum potential amounts owed by a fund at January 31, 2019, in proportion to their participation in the TOB Trust. The recourse TOB Trusts are identified in the Schedules of Investments including the maximum potential amounts owed by a fund at January 31, 2019.

 

For the six months ended January 31, 2019, the following table is a summary of each Fund’s Loan for TOB Trust Certificates:

 

     Loan
Outstanding
at Period End
     Interest Rate
on Loan at
Period End
     Average
Loans
Outstanding
     Daily Weighted
Average Rate
of Interest and
Other Expenses
on Loans
 

MUC

  $           $ 547,045        0.82

 

5.

DERIVATIVE FINANCIAL INSTRUMENTS

The Funds engage in various portfolio investment strategies using derivative contracts both to increase the returns of the Funds and/or to manage their exposure to certain risks such as credit risk, equity risk, interest rate risk, foreign currency exchange rate risk, commodity price risk or other risks (e.g., inflation risk). Derivative financial instruments categorized by risk exposure are included in the Schedules of Investments. These contracts may be transacted on an exchange or over-the-counter (“OTC”).

Futures Contracts: Futures contracts are purchased or sold to gain exposure to, or manage exposure to, changes in interest rates (interest rate risk), and changes in the value of equity securities (equity risk) or foreign currencies (foreign currency exchange rate risk).

Futures contracts are agreements between the Funds and a counterparty to buy or sell a specific quantity of an underlying instrument at a specified price and on a specified date. Depending on the terms of a contract, it is settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash amount on the settlement date. Upon entering into a futures contract, the Funds are required to deposit initial margin with the broker in the form of cash or securities in an amount that varies depending on a contract’s size and risk profile. The initial margin deposit must then be maintained at an established level over the life of the contract. Amounts pledged, which are considered restricted, are included in cash pledged for futures contracts in the Statements of Assets and Liabilities.

Securities deposited as initial margin are designated in the Schedules of Investments and cash deposited, if any, is shown as cash pledged for futures contracts in the Statements of Assets and Liabilities. Pursuant to the contract, the Funds agree to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”). Variation margin is recorded as unrealized appreciation (depreciation) and, if any, shown as variation margin receivable (or payable) on futures contracts in the Statements of Assets and Liabilities. When the contract is closed, a realized gain or loss is recorded in the Statements of Operations equal to the difference between the notional amount of the contract at the time it was opened and the notional amount at the time it was closed. The use of futures contracts involves the risk of an imperfect correlation in the movements in the price of futures contracts and interest, foreign currency exchange rates or underlying assets.

 

6.

INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES

INVESTMENT ADVISORY: Each Fund entered into an Investment Advisory Agreement with the Manager, the Funds’ investment adviser and an indirect, wholly-owned subsidiary of BlackRock, to provide investment advisory and administrative services. The Manager is responsible for the management of each Fund’s portfolio and provides the personnel, facilities, equipment and certain other services necessary to the operations of each Fund.

For such services, each Fund pays the Manager a monthly fee at an annual rate equal to the following percentages of the average daily value of each Fund’s net assets.

 

     MUC      MUJ      MFT      MIY      MPA  

Investment advisory fees

    0.55      0.50      0.50      0.49      0.49

For purposes of calculating these fees, “net assets” mean the total assets of each Fund minus the sum of its accrued liabilities (which does not include liabilities represented by TOB Trusts and the liquidation preference of any outstanding preferred shares). It is understood that the liquidation preference of any outstanding preferred stock (other than accumulated dividends) and TOB Trusts is not considered a liability in determining a Fund’s NAV.

Waivers: The Manager, for MUC, voluntarily agreed to waive its investment advisory fee on the proceeds of the Preferred Shares and TOB Trusts that exceed 35% of total assets minus the sum of its accrued liabilities (which does not include liabilities represented by TOB Trusts and the liquidation preference of any outstanding preferred shares). The voluntary waiver may be reduced or discontinued at any time without notice. This amount is included in fees waived and/or reimbursed by the Manager in the Statements of Operations. For the six months ended January 31, 2019 the waiver was $267,712.

 

 

58    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Notes to Financial Statements  (unaudited) (continued)

 

With respect to each Fund, the Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees each Fund pays to the Manager indirectly through its investment in affiliated money market funds (the “affiliated money market fund waiver”). These amounts are included in fees waived and/or reimbursed by the Manager in the Statements of Operations. For the six months ended January 31, 2019, the amounts waived were as follows:

 

     MUC      MUJ      MFT      MIY      MPA  

Amounts waived

  $ 770      $ 1,456      $ 492      $ 1,720      $ 952  

The Manager contractually agreed to waive its investment advisory fee with respect to any portion of each assets invested in affiliated equity and fixed-income mutual funds and affiliated exchange-traded funds that have a contractual management fee through June 30, 2019. The agreement can be renewed for annual periods thereafter, and may be terminated on 90 days’ notice, each subject to approval by a majority of the Fund’s Independent Directors. For the six months ended January 31, 2019, there were no fees waived by the Manager.

Directors and Officers: Certain directors and/or officers of the Funds are directors and/or officers of BlackRock or its affiliates. The Funds reimburse the Manager for a portion of the compensation paid to the Funds’ Chief Compliance Officer, which is included in Directors and Officer in the Statements of Operations.

Other Transactions: The Fund may purchase securities from, or sell securities to, an affiliated fund provided the affiliation is due solely to having a common investment adviser, common officers, or common trustees. For the six months ended January 31, 2019, the purchase and sale transactions and any net realized gains (losses) with an affiliated funds in compliance with Rule 17a-7 under the 1940 Act were as follows:

 

    

Purchases

    

Sales

    

Net Realized

Gain (Loss)

 

BlackRock MuniYield Investment Quality Fund

  $      $ 99,351      $ (7,368

 

7.

PURCHASES AND SALES

For the six months ended January 31, 2019, purchases and sales of investments, excluding short-term securities, were as follows:

 

     MUC      MUJ      MFT      MIY      MPA  

Purchases

  $ 153,957,028      $ 44,492,644      $ 38,548,128      $ 73,764,179      $ 35,483,376  

Sales

    201,224,068        47,440,257        35,847,020        78,995,249        32,525,746  

 

8.

INCOME TAX INFORMATION

It is each Fund’s policy to comply with the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies, and to distribute substantially all of its taxable income to its shareholders. Therefore, no U.S. federal income tax provision is required.

Each Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on each Fund’s U.S. federal tax returns generally remains open for each of the four years ended July 31, 2018. The statutes of limitations on each Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

Management has analyzed tax laws and regulations and their application to the Funds as of January 31, 2019, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Funds’ financial statements.

As of July 31, 2018, the Funds had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates as follows:

 

Expires July 31,   MUJ      MFT      MIY      MPA  

No expiration date(a)

  $ 715,913      $ 5,782,781      $ 1,788,344      $ 1,302,025  

2019

                         50,303  
 

 

 

    

 

 

    

 

 

    

 

 

 
  $ 715,913      $ 5,782,781      $ 1,788,344      $ 1,352,328  
 

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Must be utilized prior to losses subject to expiration.

 

As of January 31, 2019, gross unrealized appreciation and depreciation for investments and derivatives based on cost for U.S. federal income tax purposes were as follows:

 

     MUC     MUJ     MFT     MIY     MPA  

Tax cost

  $ 819,663,718     $ 655,700,745     $ 164,625,021     $ 641,439,410     $ 277,022,618  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross unrealized appreciation

    31,191,918       38,392,796       8,258,408       27,531,435       11,862,786  

Gross unrealized depreciation

    (3,681,152     (4,848,225     (698,943     (2,577,600     (2,257,793
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net unrealized appreciation

  $ 27,510,766     $ 33,544,571     $ 7,559,465     $ 24,953,835     $ 9,604,993  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

NOTES TO FINANCIAL STATEMENTS      59  


Notes to Financial Statements  (unaudited) (continued)

 

 

9.

PRINCIPAL RISKS

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

Inventories of municipal bonds held by brokers and dealers may decrease, which would lessen their ability to make a market in these securities. Such a reduction in market making capacity could potentially decrease a Fund’s ability to buy or sell bonds. As a result, a Fund may sell a security at a lower price, sell other securities to raise cash, or give up an investment opportunity, any of which could have a negative impact on performance. If a Fund needed to sell large blocks of bonds, those sales could further reduce the bonds’ prices and impact performance.

In the normal course of business, certain Funds invest in securities or other instruments and may enter into certain transactions, and such activities subject each Fund to various risks, including among others, fluctuations in the market (market risk) or failure of an issuer to meet all of its obligations. The value of securities or other instruments may also be affected by various factors, including, without limitation: (i) the general economy; (ii) the overall market as well as local, regional or global political and/or social instability; (iii) regulation, taxation or international tax treaties between various countries; or (iv) currency, interest rate and price fluctuations.

Each Fund may be exposed to prepayment risk, which is the risk that borrowers may exercise their option to prepay principal earlier than scheduled during periods of declining interest rates, which would force each Fund to reinvest in lower yielding securities. Each Fund may also be exposed to reinvestment risk, which is the risk that income from each Fund’s portfolio will decline if each Fund invests the proceeds from matured, traded or called fixed-income securities at market interest rates that are below each Fund portfolio’s current earnings rate.

The Funds may hold a significant amount of bonds subject to calls by the issuers at defined dates and prices. When bonds are called by issuers and the Funds reinvest the proceeds received, such investments may be in securities with lower yields than the bonds originally held, and correspondingly, could adversely impact the yield and total return performance of a Fund.

A Fund structures and “sponsors” the TOB Trusts in which it holds TOB Residuals and has certain duties and responsibilities, which may give rise to certain additional risks including, but not limited to, compliance, securities law and operational risks.

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

The SEC and various federal banking and housing agencies have adopted credit risk retention rules for securitizations (the “Risk Retention Rules”). The Risk Retention Rules would require the sponsor of a TOB Trust to retain at least 5% of the credit risk of the underlying assets supporting the TOB Trust’s municipal bonds. The Risk Retention Rules may adversely affect the Funds’ ability to engage in TOB Trust transactions or increase the costs of such transactions in certain circumstances.

TOB Trusts constitute an important component of the municipal bond market. Any modifications or changes to rules governing TOB Trusts may adversely impact the municipal market and the Funds, including through reduced demand for and liquidity of municipal bonds and increased financing costs for municipal issuers. The ultimate impact of any potential modifications on the TOB Trust market and the overall municipal market is not yet certain.

Counterparty Credit Risk: The Funds may be exposed to counterparty credit risk, or the risk that an entity may fail to or be unable to perform on its commitments related to unsettled or open transactions. The Funds manage counterparty credit risk by entering into transactions only with counterparties that the Manager believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Funds’ exposure to market, issuer and counterparty credit risks with respect to these financial assets is approximately their value recorded in the Statements of Assets and Liabilities, less any collateral held by the Funds.

A derivative contract may suffer a mark-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.

With exchange-traded futures, there is less counterparty credit risk to the Funds since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, a Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency). Additionally, credit risk exists in exchange-traded futures with respect to initial and variation margin that is held in a clearing broker’s customer accounts. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be allocated on a pro rata basis across all the clearing broker’s customers, potentially resulting in losses to the Funds.

Concentration Risk: Each of MUC, MUJ, MIY and MPA invests a substantial amount of its assets in issuers located in a single state or limited number of states. This may subject each Fund to the risk that economic, political or social issues impacting a particular state or group of states could have an adverse and disproportionate impact on the income from, or the value or liquidity of, the Funds’ respective portfolios. Investment percentages in specific states or U.S. territories are presented in the Schedules of Investments.

As of period end, MUC invested a significant portion of their assets in securities in the county, city, special district and school district sector. MUJ and MFT invested a significant portion of its assets in securities in the transportation sector. Changes in economic conditions affecting such sectors would have a greater impact on the Funds and could affect the value, income and/or liquidity of positions in such securities.

 

 

60    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Notes to Financial Statements  (unaudited) (continued)

 

Certain Funds invest a significant portion of their assets in fixed-income securities and/or use derivatives tied to the fixed-income markets. Changes in market interest rates or economic conditions may affect the value and/or liquidity of such investments. Interest rate risk is the risk that prices of bonds and other fixed-income securities will increase as interest rates fall and decrease as interest rates rise. The Funds may be subject to a greater risk of rising interest rates due to the current period of historically low rates. The Federal Reserve has begun to raise the Federal Funds rate, and each increase results in more pronounced interest rate risk in the current market environment.

 

10.

CAPITAL SHARE TRANSACTIONS

Common Shares

MFT and MPA are authorized to issue an unlimited number of Common Shares and 1 million Preferred Shares, all of which were initially classified as Common Shares. MUC, MUJ and MIY each is authorized to issue 200 million shares, all of which were initially classified as Common Shares. The par value for each Fund’s Common Shares is $0.10. The par value for each Fund’s Preferred Shares outstanding is $0.10, except for MFT and MPA, which is $0.05. The Board is authorized, however, to reclassify any unissued Common Shares to Preferred Shares without the approval of Common Shareholders.

For the six months ended January 31, 2019, shares issued and outstanding remained constant for MFT. For the year ended July 31, 2018, shares issued and outstanding increased by 1,844, for MFT as a result of dividend reinvestment.

For the six months ended January 31, 2019 and the year ended July 31, 2018, shares issued and outstanding remained constant for MUC, MUJ, MIY and MPA.

On November 15, 2018, the Board authorized each Fund to participate in an open market share repurchase program. Under the program, each Fund may repurchase up to 5% of its outstanding common shares through November 30, 2019, based on common shares outstanding as of the close of business on November 30, 2018, subject to certain conditions. There is no assurance that the Funds will purchase shares in any particular amounts. For the six months ended January 31, 2019, the Funds did not repurchase any shares.

Preferred Shares

A Fund’s Preferred Shares rank prior to its Common Shares as to the payment of dividends by the Fund and distribution of assets upon dissolution or liquidation of the Fund. The 1940 Act prohibits the declaration of any dividend on Common Shares or the repurchase of Common Shares if the Fund fails to maintain asset coverage of at least 200% of the liquidation preference of the its outstanding Preferred Shares. In addition, pursuant to the Preferred Shares’ governing instruments, a Fund is restricted from declaring and paying dividends on classes of shares ranking junior to or on parity with its Preferred Shares or repurchasing such shares if the Fund fails to declare and pay dividends on the Preferred Shares, redeem any Preferred Shares required to be redeemed under the Preferred Shares’ governing instruments or comply with the basic maintenance amount requirement of the ratings agencies rating the Preferred Shares.

Holders of Preferred Shares have voting rights equal to the voting rights of holders of Common Shares (one vote per share) and vote together with holders of Common Shares (one vote per share) as a single class on certain matters. Holders of Preferred Shares, voting as a separate class, are also entitled to (i) elect two members of the Board, (ii) elect the full Board if dividends on the Preferred Shares are not paid for a period of two years and (iii) a separate class vote to amend the Preferred Share governing documents. In addition, the 1940 Act requires the approval of the holders of a majority of any outstanding Preferred Shares, voting as a separate class, to (a) adopt any plan of reorganization that would adversely affect the Preferred Shares, (b) change a Fund’s sub-classification as a closed-end investment company or change its fundamental investment restrictions or (c) change its business so as to cease to be an investment company.

VRDP Shares

MUJ, MIY and MPA (for purposes of this section, a “VRDP Fund”), have issued Series W-7 VRDP Shares, $100,000 liquidation preference per share, in one or more privately negotiated offerings to qualified institutional buyers as defined pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The VRDP Shares include a liquidity feature and may be subject to a special rate period.

As of period end, the VRDP Shares outstanding of each Fund were as follows:

 

     Issue
Date
     Shares
Issued
     Aggregate
Principal
     Maturity
Date
 

MUJ

    06/30/11        1,727      $ 172,700,000        07/01/41  
    04/13/15        644        64,400,000        07/01/41  

MIY

    04/21/11        1,446        144,600,000        05/01/41  
    09/14/15        873        87,300,000        05/01/41  

MPA

    05/19/11        663        66,300,000        06/01/41  
      04/13/15        163        16,300,000        06/01/41  

Redemption Terms: A VRDP Fund is required to redeem its VRDP Shares on the maturity date, unless earlier redeemed or repurchased. Six months prior to the maturity date, a VRDP Fund is required to begin to segregate liquid assets with the Fund’s custodian to fund the redemption. In addition, a VRDP Fund is required to redeem certain of its outstanding VRDP Shares if it fails to comply with certain asset coverage, basic maintenance amount or leverage requirements.

Subject to certain conditions, the VRDP Shares may also be redeemed, in whole or in part, at any time at the option of a VRDP Fund. The redemption price per VRDP Share is equal to the liquidation preference per share plus any outstanding unpaid dividends.

 

 

NOTES TO FINANCIAL STATEMENTS      61  


Notes to Financial Statements  (unaudited) (continued)

 

Liquidity Feature: VRDP Shares are subject to a fee agreement between the VRDP Fund and the liquidity provider that requires a per annum liquidity fee and, in some cases, an upfront or initial commitment fee, payable to the liquidity provider. These fees, if applicable, are shown as liquidity fees in the Statements of Operations. The fee agreement is set to expire, unless renewed or terminated in advance, as follows:

 

     MUJ      MIY      MPA  

Expiration Date

    04/15/20        07/04/19        07/04/19  

In the event a fee agreement is not renewed or is terminated in advance, and the VRDP Fund does not enter into a fee agreement with an alternate liquidity provider, the VRDP Shares will be subject to mandatory purchase by the liquidity provider prior to the termination of the fee agreement. In the event of such mandatory purchase, a VRDP Fund is required to redeem the VRDP Shares six months after the purchase date. Immediately after such mandatory purchase, the VRDP Fund is required to begin to segregate liquid assets with its custodian to fund the redemption. There is no assurance that a VRDP Fund will replace such redeemed VRDP Shares with any other preferred shares or other form of leverage.

Remarketing: A VRDP Fund may incur remarketing fees on the aggregate principal amount of all its VRDP Shares, which, if any, are included in remarketing fees on Preferred Shares in the Statements of Operations. During any special rate period (as described below), a VRDP Fund may incur nominal or no remarketing fees.

Ratings: As of period end, the VRDP Shares were assigned the following long-term ratings:

 

     Moody’s    Fitch

MUJ

  Aa2    AAA

MIY

  Aa2    AAA

MPA

  Aa2    AAA

Any short-term ratings on the VRDP Shares are directly related to the short-term ratings of the liquidity provider for such VRDP Shares. Changes in the credit quality of the liquidity provider could cause a change in the short-term credit ratings of the VRDP Shares as rated by Moody’s and Fitch. A change in the short-term credit rating of the liquidity provider or the VRDP Shares may adversely affect the dividend rate paid on such shares, although the dividend rate paid on the VRDP Shares is not directly based upon either short-term rating. The liquidity provider may be terminated prior to the scheduled termination date if the liquidity provider fails to maintain short-term debt ratings in one of the two highest rating categories. As of period end, the short-term ratings of the VRDP Shares were within the two highest rating categories as follows:

 

     Moody’s    Fitch

MIY

 

P-1

  

F1

Special Rate Period: A VRDP Fund may commence a “special rate period” with respect to its VRDP Shares, during which the VRDP Shares will not be subject to any remarketing and the dividend rate will be based on a predetermined methodology. During a special rate period, short-term ratings on VRDP Shares are withdrawn. The following VRDP Funds have commenced or are set to commence a special rate period:

 

        Commencement Date   

Expiration Date as of Period Ended

January 31, 2019

MUJ

     04/17/2014*    04/15/2020

MPA

     06/21/2012*    06/19/2019

 

  *

Issuance date of VRDP Shares.

 

The following VRDP Fund was in a special rate period that terminated during the reporting period:

 

        Commencement Date    Termination Date

MIY

     06/21/12*    01/24/19

 

  *

Issuance date of VRDP Shares.

 

Prior to the expiration date, the VRDP Fund and the VRDP Shares holder may mutually agree to extend the special rate period. If a special rate period is not extended, the VRDP Shares will revert to remarketable securities upon the termination of the special rate period and will be remarketed and available for purchase by qualified institutional investors.

During the special rate period: (i) the liquidity and fee agreements remain in effect, (ii) VRDP Shares remain subject to mandatory redemption by the VRDP Fund on the maturity date, (iii) VRDP Shares will not be remarketed or subject to optional or mandatory tender events, (iv) the VRDP Fund is required to comply with the same asset coverage, basic maintenance amount and leverage requirements for the VRDP Shares as is required when the VRDP Shares are not in a special rate period, (v) the VRDP Fund will pay dividends monthly based on the sum of the Securities Industry and Financial Markets Association (“SIFMA”) Municipal Swap Index rate and a percentage per annum based on the long-term ratings assigned to the VRDP Shares and (vi) the VRDP Fund will pay nominal or no fees to the liquidity provider and remarketing agent.

If a VRDP Fund redeems its VRDP Shares prior to end of the special rate period and the VRDP Shares have long-term ratings above A1/A+ and its equivalent by all ratings agencies then rating the VRDP Shares, then such redemption may be subject to a redemption premium payable to the holder of the VRDP Shares based on the time remaining in the special rate period, subject to certain exceptions for redemptions that are required to comply with minimum asset coverage requirements.

Dividends: Except during the Special Rate Period, dividends on the VRDP Shares are payable monthly at a variable rate set weekly by the remarketing agent. Such dividend rates are generally based upon a spread over a base rate and cannot exceed a maximum rate. A change in the short-term credit rating of the liquidity provider or the VRDP Shares may adversely affect the dividend rate paid on such shares, although the dividend rate paid on the VRDP Shares is not directly based upon either

 

 

62    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Notes to Financial Statements  (unaudited) (continued)

 

short-term rating. In the event of a failed remarketing, the dividend rate of the VRDP Shares will be reset to a maximum rate. The maximum rate is determined based on, among other things, the long-term preferred share rating assigned to the VRDP Shares and the length of time that the VRDP Shares fail to be remarketed.

For the six months ended January 31, 2019, the annualized dividend rates for the VRDP Shares were as follows:

 

     MUJ      MIY      MPA  

Rate

    1.22      1.20      1.22

VMTP Shares

MUC and MFT (for purposes of this section, a “VMTP Fund”) have issued Series W-7 VMTP Shares, $100,000 liquidation preference per share, in one or more privately negotiated offerings to qualified institutional buyers as defined pursuant to Rule 144A under the Securities Act. The VMTP Shares are subject to certain restrictions on transfer, and a VMTP Fund may also be required to register its VMTP Shares for sale under the Securities Act under certain circumstances. In addition, amendments to the VMTP governing documents generally require the consent of the holders of VMTP Shares. As of period end, the VMTP Shares outstanding were as follows:

 

     Issue
Date
     Shares
Issued
     Aggregate
Principal
     Maturity
Date
 

MUC

    03/22/12        2,540      $ 254,000,000        03/30/20  

MFT

    12/16/11        565        56,500,000        07/02/20  

Redemption Terms: A VMTP Fund is required to redeem its VMTP Shares on the term redemption date, unless earlier redeemed or repurchased or unless extended. There is no assurance that a term will be extended further or that any VMTP Shares will be replaced with any other preferred shares or other form of leverage upon the redemption or repurchase of the VMTP Shares. Six months prior to the term redemption date, a VMTP Fund is required to begin to segregate liquid assets with its custodian to fund the redemption. In addition, a VMTP Fund is required to redeem certain of its outstanding VMTP Shares if it fails to comply with certain asset coverage, basic maintenance amount or leverage requirements.

Subject to certain conditions, VMTP Shares may be redeemed, in whole or in part, at any time at the option of the VMTP Fund. The redemption price per VMTP Share is equal to the liquidation preference per share plus any outstanding unpaid dividends and applicable redemption premium. If a VMTP Fund redeems its VMTP Shares prior to the term redemption date and the VMTP Shares have long-term ratings above A1/A+ or its equivalent by the ratings agencies then rating the VMTP Shares, then such redemption may be subject to a prescribed redemption premium (up to 3% of the liquidation preference) payable to the holder of the VMTP Shares based on the time remaining until the term redemption date, subject to certain exceptions for redemptions that are required to comply with minimum asset coverage requirements.

Dividends: Dividends on the VMTP Shares are declared daily and payable monthly at a variable rate set weekly at a fixed rate spread to the SIFMA Municipal Swap Index or to a percentage of the one-month LIBOR rate, as set forth in the VMTP Shares governing instrument. The fixed spread is determined based on the long-term preferred share rating assigned to the VMTP Shares by the ratings agencies then rating the VMTP Shares. As of period end, the VMTP Shares were assigned the following long-term ratings:

 

     Moody’s    Fitch

MUC

  Aa2    AAA

MFT

  Aa1    AAA

The dividend rate on VMTP Shares is subject to a step-up spread if the VMTP Fund fails to comply with certain provisions, including, among other things, the timely payment of dividends, redemptions or gross-up payments, and complying with certain asset coverage and leverage requirements.

For the six months ended January 31, 2019, the average annualized dividend rates for the VMTP Shares were as follows:

 

     MUC      MFT  

Rate

    1.20      1.30

For the six months ended January 31, 2019, VMTP Shares issued and outstanding of each Fund remained constant.

Offering Costs: The Funds incurred costs in connection with the issuance of VRDP and VMTP Shares, which were recorded as a direct deduction from the carrying value of the related debt liability and will be amortized over the life of the VRDP Shares with the exception of upfront fees paid to the liquidity provider which were amortized over the life of the liquidity agreement. Amortization of these costs is included in interest expense, fees and amortization of offering costs in the Statements of Operations.

Financial Reporting: The VRDP and VMTP Shares are considered debt of the issuer; therefore, the liquidation preference, which approximates fair value of the VRDP and VMTP Shares, is recorded as a liability in the Statements of Assets and Liabilities net of deferred offering costs. Unpaid dividends are included in interest expense and fees payable in the Statements of Assets and Liabilities, and the dividends accrued and paid on the VRDP and VMTP Shares are included as a component of interest expense, fees and amortization of offering costs in the Statements of Operations. The VRDP and VMTP Shares are treated as equity for tax purposes. Dividends paid to holders of the VRDP and VMTP Shares are generally classified as tax-exempt income for tax-reporting purposes. Dividends and amortization of deferred offering costs on VRDP and VMTP Shares are included in interest expense, fees and amortization of offering costs in the Statements of Operations:

 

     Dividends
Accrued
     Deferred
Offering Costs
Amortization
 

MUC

  $ 3,048,139      $  

MUJ

    2,894,699        9,597  

MFT

    736,341         

MIY

    2,786,961        4,832  

MPA

    1,005,717        5,612  

 

 

NOTES TO FINANCIAL STATEMENTS      63  


Notes to Financial Statements  (unaudited) (continued)

 

 

11.

REGULATION S-X AMENDMENTS

On August 17, 2018, the SEC adopted amendments to certain disclosure requirements in Securities Act Release No. 33-10532, Disclosure Update and Simplification. The Funds have adopted the amendments pertinent to Regulation S-X in this shareholder report. The amendments impacted certain disclosure presentation on the Statements of Assets and Liabilities, Statements of Changes in Net Assets and Notes to Financial Statements.

Prior year distribution information and undistributed net investment income in the Statements of Changes in Net Assets has been modified to conform to the current year presentation in accordance with the Regulation S-X changes.

Distributions for the year ended July 31, 2018, were classified as follows:

 

     Net Investment Income  

MUC

  $ 27,389,659  

MUJ

    22,304,151  

MFT

    6,747,670  

MIY

    21,027,723  

MPA

    9,542,548  

Undistributed net investment income as of July 31, 2018, is as follows:

 

     Undistributed
Net Investment Income
 

MUC

  $ 2,019,353  

MUJ

    2,514,002  

MFT

    828,755  

MIY

    673,979  

MPA

    646,458  

 

12.

SUBSEQUENT EVENTS

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

 

     Common Dividend
Per Share
            Preferred Shares (c)  
     Paid (a)      Declared (b)             Shares      Series      Declared  

MUC

  $ 0.0475      $ 0.0475          VMTP        W-7      $ 460,540  

MUJ

    0.0525        0.0525          VRDP        W-7        453,543  

MFT

    0.0590        0.0590          VMTP        W-7        115,417  

MIY

    0.0520        0.0520          VRDP        W-7        313,732  

MPA

    0.0530        0.0530                VRDP        W-7        157,370  

 

  (a) 

Net investment income dividend paid on March 1, 2019 to Common Shareholders of record on February 15, 2019.

 
  (b) 

Net investment income dividend declared on March 1, 2019, payable to Common Shareholders of record on March 15, 2019.

 
  (c) 

Dividends declared for period February 1, 2019 to February 28, 2019.

 

 

 

64    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Director and Officer Information

 

Richard E. Cavanagh, Co-Chair of the Board and Director

Karen P. Robards, Co-Chair of the Board and Director

Michael J. Castellano, Director

Cynthia L. Egan, Director

Frank J. Fabozzi, Director

Henry Gabbay, Director

R. Glenn Hubbard, Director

W. Carl Kester, Director

Catherine A. Lynch, Director

Robert Fairbairn, Director

John M. Perlowski, Director, President and Chief Executive Officer

Jonathan Diorio, Vice President

Neal J. Andrews, Chief Financial Officer

Jay M. Fife, Treasurer

Charles Park, Chief Compliance Officer

Janey Ahn, Secretary

 

Effective January 1, 2019, Richard E. Cavanagh and Karen P. Robards were appointed as a Co-Chair of the Board. Prior to January 1, 2019, Mr. Cavanagh served as Chair of the Board and Ms. Robards served as Vice Chair of the Board. In addition, effective January 1, 2019, Henry Gabbay was appointed as a Director of each Fund.

 

Investment Adviser

BlackRock Advisors, LLC

Wilmington, DE 19809

Accounting Agent and Custodian

State Street Bank and Trust Company

Boston, MA 02111

Transfer Agent

Computershare Trust Company, N.A.

Canton, MA 02021

VRDP Tender and Paying Agent and VMTP Redemption and Paying Agent

The Bank of New York Mellon

New York, NY 10286

VRDP Liquidity Providers

Citibank, N.A.(a)

New York, NY 10179

Bank of America, N.A.(b)

New York, NY 10036

VRDP Remarketing Agents

Citigroup Global Markets Inc.(a)

New York, NY 10179

Merrill Lynch, Pierce, Fenner & Smith Incorporated(b)

New York, NY 10036

Independent Registered Public Accounting Firm

Deloitte & Touche LLP

Boston, MA 02116

Legal Counsel

Willkie Farr & Gallagher LLP

New York, NY 10019

Address of the Funds

100 Bellevue Parkway

Wilmington, DE 19809

 

 

(a) 

For MIY and MPA.

(b) 

For MUJ.

 

 

DIRECTOR AND OFFICER INFORMATION      65  


Additional Information

 

Section 19(a) Notices

The amounts and sources of distributions reported in this notice are estimates that are subject to change based on the Fund’s investment experience during the remainder of the calendar year, are for financial reporting purposes and are not being provided for tax reporting purposes. The actual amounts and character of the distributions for tax reporting purposes will be reported to shareholders on Form 1099-DIV which is sent to shareholders shortly after calendar year end.

 

            Total Fiscal Year to Date Cumulative
Distributions by Character
    Percentage of Fiscal Year to Date Cumulative
Distributions by Character
 
     Ticker    

Net

Investment

Income

   

Net Realized

Capital Gains

Short-Term

   

Net Realized

Capital Gains

Long-Term

   

Return of

Capital

   

Total Per

Common

Share

   

Net

Investment

Income

   

Net Realized

Capital Gains

Short-Term

   

Net Realized

Capital Gains

Long-Term

   

Return of

Capital

   

Total Per

Common

Share

 

BlackRock MuniYield Pennsylvania Quality Fund

    MPA     $ 0.328000     $     $     $     $ 0.328000       100                 100

Section 19(a) notices for the Trusts, as applicable, are available on the BlackRock website at http://www.blackrock.com.

Fund Certification

The Funds are listed for trading on the NYSE and have filed with the NYSE their annual chief executive officer certification regarding compliance with the NYSE’s listing standards. The Funds filed with the SEC the certification of its chief executive officer and chief financial officer required by section 302 of the Sarbanes-Oxley Act.

Dividend Policy

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

General Information

The Funds do not make available copies of their Statements of Additional Information because the Funds’ shares are not continuously offered, which means that the Statement of Additional Information of each Fund has not been updated after completion of the respective Fund’s offerings and the information contained in each Fund’s Statement of Additional Information may have become outdated.

During the period, there were no material changes in the Funds’ investment objectives or policies or to the Funds’ charters or by-laws that would delay or prevent a change of control of the Funds that were not approved by the shareholders or in the principal risk factors associated with investment in the Funds. Except as disclosed on page xx, there have been no changes in the persons who are primarily responsible for the day-to-day management of the Funds’ portfolios.

In accordance with Section 23(c) of the Investment Company Act of 1940, each Fund may from time to time purchase shares of its common stock in the open market or in private transactions.

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

Electronic Delivery

Shareholders can sign up for e-mail notifications of quarterly statements, annual and semi-annual shareholder reports by enrolling in the electronic delivery program. Electronic copies of shareholder reports are available on BlackRock’s website.

To enroll in electronic delivery:

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

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

Householding

The Funds will mail only one copy of shareholder documents, annual and semi-annual reports and proxy statements, to shareholders with multiple accounts at the same address. This practice is commonly called “householding” and is intended to reduce expenses and eliminate duplicate mailings of shareholder documents. Mailings of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please call the Funds at (800) 882-0052.

Availability of Quarterly Schedule of Investments

The Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the SEC’s website at http://www.sec.gov. The Funds’ Forms N-Q may also be obtained upon request and without charge by calling (800) 882-0052.

 

 

66    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Additional Information  (continued)

 

Availability of Proxy Voting Policies and Procedures

A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available upon request and without charge (1) by calling (800) 882-0052; (2) at http://www.blackrock.com; and (3) on the SEC’s website at http://www.sec.gov.

Availability of Proxy Voting Record

Information about how the Funds voted proxies relating to securities held in the Funds’ portfolios during the most recent 12-month period ended June 30 is available upon request and without charge (1) at http://www.blackrock.com; or by calling (800) 882-0052; and (2) on the SEC’s website at http://www.sec.gov.

Availability of Fund Updates

BlackRock will update performance and certain other data for the Funds on a monthly basis on its website in the “Closed-end Funds” section of http://www.blackrock.com as well as certain other material information as necessary from time to time. Investors and others are advised to check the website for updated performance information and the release of other material information about the Funds. This reference to BlackRock’s website is intended to allow investors public access to information regarding the Funds and does not, and is not intended to, incorporate BlackRock’s website in this report.

BlackRock Privacy Principles

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

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

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

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

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

Glossary of Terms Used in this Report

 

Portfolio Abbreviations
AGC    Assured Guarantee Corp.
AGM    Assured Guaranty Municipal Corp.
AMBAC    American Municipal Bond Assurance Corp.
AMT    Alternative Minimum Tax (subject to)
ARB    Airport Revenue Bonds
BAM    Build America Mutual Assurance Co.
BARB    Building Aid Revenue Bonds
CAB    Capital Appreciation Bonds
COP    Certificates of Participation
EDA    Economic Development Authority
EDC    Economic Development Corp.
ERB    Education Revenue Bonds
GARB    General Airport Revenue Bonds
 
GO    General Obligation Bonds
HDA    Housing Development Authority
HFA    Housing Finance Agency
IDA    Industrial Development Authority
IDB    Industrial Development Board
ISD    Independent School District
LRB    Lease Revenue Bonds
M/F    Multi-Family
NPFGC    National Public Finance Guarantee Corp.
RB    Revenue Bonds
S/F    Single-Family
Syncora    Syncora Guarantee
VRDN    Variable Rate Demand Notes
 

 

 

ADDITIONAL INFORMATION / GLOSSARY OF TERMS USED IN THIS REPORT      67  


This report is intended for current holders. It is not a prospectus. Past performance results shown in this report should not be considered a representation of future performance. The Funds have leveraged their Common Shares, which creates risks for Common Shareholders, including the likelihood of greater volatility of net asset value and market price of the Common Shares, and the risk that fluctuations in short-term interest rates may reduce the Common Shares’ yield. Statements and other information herein are as dated and are subject to change.

 

LOGO

 

 

MQUAL5-1/19-SAR    LOGO


Item 2 –

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

 

Item 3 –

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

 

Item 4 –

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

 

Item 5 –

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

 

Item 6 –

Investments

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

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

 

Item 7 –

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

 

Item 8 –

Portfolio Managers of Closed-End Management Investment Companies

 

  (a)

Not Applicable to this semi-annual report.

 

  (b)

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

 

Item 9 –

Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers

 

Period   (a) Total   (b) Average Price Paid per   Share   (c) Total Number of Shares Purchased as Part   of Publicly Announced Plans or Programs   (d) Maximum Number of Shares that May Yet Be Purchased Under the Plans   or Programs1
    Number of   Shares Purchased
August 1 – 31, 2018   N/A   N/A   N/A   N/A
September 1 – 30, 2018   N/A   N/A   N/A   N/A
October 1- 31, 2018   N/A   N/A   N/A   N/A
November 1 – 30, 2018   N/A   N/A   N/A   N/A
December 1 – 31, 2018   0   $0   0   2,050,124
January 1 – 31, 2019   0   $0   0   2,050,124
Total:   0   $0   0   2,050,124

1The Fund announced an open market share repurchase program on November 15, 2018 pursuant to which the Fund was authorized to repurchase, through November 30, 2019, up to 5% of its common shares based on common shares outstanding on November 30, 2018, in open market transactions, subject to certain conditions.

 

Item 10 –

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

 

2


Item 11 –

Controls and Procedures

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

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

 

Item 12 –

Disclosure of Securities Lending Activities for Closed-End Management Investment

Companies – Not Applicable

 

Item 13 –

Exhibits attached hereto

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

(a)(2) – Certifications – Attached hereto

(a)(3) – Not Applicable

(a)(4) – Not Applicable

(b) –   Certifications – Attached hereto

 

3


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 MuniHoldings California Quality Fund, Inc.

 

By:       /s/ John M. Perlowski                  
  John M. Perlowski  
  Chief Executive Officer (principal executive officer) of
  BlackRock MuniHoldings California Quality Fund, Inc.

Date: April 5, 2019

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

 

By:       /s/ John M. Perlowski                  
  John M. Perlowski  
  Chief Executive Officer (principal executive officer) of
  BlackRock MuniHoldings California Quality Fund, Inc.

Date: April 5, 2019

 

By:       /s/ Neal J. Andrews                      
  Neal J. Andrews  
  Chief Financial Officer (principal financial officer) of
  BlackRock MuniHoldings California Quality Fund, Inc.

Date: April 5, 2019

 

4