N-Q 1 d627393dnq.htm BLACKROCK MUNIYIELD MICHIGAN QUALITY FUND, INC. BLACKROCK MUNIYIELD MICHIGAN QUALITY FUND, INC.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANY

 

Investment Company Act file number 811-07080

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

Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809

Name and address of agent for service: John M. Perlowski, Chief Executive Officer, BlackRock MuniYield

Michigan 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: 07/31/2014

Date of reporting period: 10/31/2013

Item 1 – Schedule of Investments

Schedule of Investments October 31, 2013 (Unaudited)   

BlackRock MuniYield Michigan Quality Fund, Inc. (MIY)

(Percentages shown are based on Net Assets)

 

Municipal Bonds   

Par  

(000)

     Value  

Michigan — 142.5%

                 

Corporate — 5.3%

     

County of Monroe EDC, Michigan, Refunding RB, Detroit Edison Co. Project, Series AA (NPFGC), 6.95%, 9/01/22

    $ 10,695      $ 13,562,437   

County/City/Special District/School District — 35.7%

  

Adrian City School District, GO, (AGM) (a):

     

5.00%, 5/01/14

      2,000        2,048,200   

5.00%, 5/01/14

      1,600        1,638,560   

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

     

4.13%, 5/01/25

      2,750        2,837,065   

4.25%, 5/01/26

      1,800        1,852,056   

4.38%, 5/01/27

      960        981,466   

4.50%, 5/01/29

      900        911,439   

Bay City School District Michigan, GO, School Building & Site (AGM) (Q-SBLF), 5.00%, 5/01/36

      2,800        2,853,284   

Birmingham City School District Michigan, GO, School Building & Site (AGM), 5.00%, 11/01/14 (a)

      1,000        1,047,720   

Brighton Area School District Michigan, GO, School Building & Site, Series I (Q-SBLF), 4.25%, 5/01/37

      3,070        2,858,170   

Charter Township of Canton Michigan, GO, Capital Improvement (AGM):

     

5.00%, 4/01/25

      1,840        2,019,234   

5.00%, 4/01/26

      2,000        2,195,200   

5.00%, 4/01/27

      500        535,475   

Chippewa Valley Schools, GO, Refunding (Q-SBLF), 5.00%, 5/01/32

      1,970        2,051,656   

City of Oak Park Michigan, GO, Street Improvement (NPFGC), 5.00%, 5/01/30

      500        521,770   

Comstock Park Public Schools, GO, School Building & Site, Series B (Q-SBLF):

     

5.50%, 5/01/36

      750        790,950   

5.50%, 5/01/41

      1,355        1,425,189   

County of Genesee Michigan, GO, Refunding, Series A (NPFGC), 5.00%, 5/01/19

      600        623,940   

Dearborn Brownfield Redevelopment Authority, GO, Limited Tax, Redevelopment, Series A (AGC), 5.50%, 5/01/39

      3,300        3,447,774   
Municipal Bonds   

Par  

(000)

     Value  

Michigan (continued)

  

County/City/Special District/School District (continued)

  

Eaton Rapids Public Schools, GO, School Building & Site (AGM) (a):

     

5.25%, 5/01/14

    $ 1,675      $ 1,717,545   

5.25%, 5/01/14

      1,325        1,358,655   

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

      3,070        3,034,388   

Fraser Public School District Michigan, GO, School Building & Site (AGM) (Q-SBLF), 5.00%, 5/01/25

      2,000        2,092,500   

Gibraltar School District Michigan, GO, School Building & Site Improvement (NPFGC) (Q-SBLF) (a):

     

5.00%, 5/01/14

      2,940        3,010,854   

5.00%, 5/01/14

      710        727,147   

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

     

5.50%, 5/01/32

      600        639,408   

5.50%, 5/01/36

      1,200        1,265,520   

5.50%, 5/01/41

      1,575        1,645,780   

Gull Lake Community School District, GO, School Building & Site (AGM), 5.00%, 5/01/14 (a)

      3,625        3,712,544   

Harper Creek Community School District Michigan, GO, Refunding, (AGM) (Q-SBLF), 5.00%, 5/01/22

      1,125        1,177,031   

Harper Woods School District Michigan, GO, Refunding, School Building & Site (NPFGC) (Q-SBLF), 5.00%, 5/01/14 (a)

      430        440,385   

Hudsonville Public Schools, GO, School Building & Site (Q-SBLF), 5.25%, 5/01/41

      4,100        4,240,302   

L’Anse Creuse Public Schools Michigan, GO, School Building & Site (AGM):

     

5.00%, 5/01/24

      1,000        1,046,250   

5.00%, 5/01/26

      1,600        1,674,000   

(Q-SBLF), 5.00%, 5/01/25

      1,525        1,595,531   

(Q-SBLF), 5.00%, 5/01/35

      3,000        3,063,690   

Lincoln Consolidated School District Michigan, GO, Refunding, (NPFGC) (Q-SBLF), 4.63%, 5/01/28

      5,000        5,054,650   

 

                
   BLACKROCK MUNIYIELD MICHIGAN QUALITY FUND, INC.    OCTOBER 31, 2013    1

Schedule of Investments (continued)   

BlackRock MuniYield Michigan Quality Fund, Inc. (MIY)

(Percentages shown are based on Net Assets)

 

Municipal Bonds   

Par  

(000)

     Value  

Michigan (continued)

  

County/City/Special District/School District (concluded)

  

Livonia Public Schools School District Michigan, GO, Refunding, Series A (NPFGC), 5.00%, 5/01/24

    $ 1,000      $ 1,018,570   

Livonia Public Schools School District Michigan, GO, Series I (AGM), 5.00%, 5/01/43

      3,090        3,094,635   

Montrose Community Schools, GO, (NPFGC), 6.20%, 5/01/17

      830        904,625   

Parchment School District, County of Kalamazoo, State of Michigan, GO, School Building and Site (NPFGC) (Q-SBLF), 5.00%, 5/01/25

      1,000        1,084,990   

Pennfield School District, GO, School Building & Site (NPFGC) (a):

     

5.00%, 5/01/14

      605        619,484   

5.00%, 5/01/14

      765        783,314   

Plymouth-Canton Community School District, GO, School Building & Site, Series A:

     

4.00%, 5/01/32

      1,700        1,590,945   

4.00%, 5/01/33

      1,240        1,148,934   

Reed City Public Schools Michigan, GO, School Building & Site (AGM) (Q-SBLF), 5.00%, 5/01/14 (a)

      1,425        1,459,414   

Romulus Community Schools, GO, Unlimited Tax, Refunding (AGM) (Q-SBLF):

     

4.13%, 5/01/25

      1,150        1,185,719   

4.25%, 5/01/26

      1,200        1,234,200   

4.25%, 5/01/27

      1,200        1,214,664   

4.50%, 5/01/29

      1,025        1,038,028   

Southfield Public Schools Michigan, GO, School Building & Site, Series B (AGM) (Q-SBLF), 5.00%, 5/01/14 (a)

      2,000        2,047,880   

Thornapple Kellogg School District Michigan, GO, Refunding, School Building & Site (NPFGC) (Q-SBLF), 5.00%, 5/01/32

      2,500        2,579,500   

Van Dyke Public Schools Michigan, GO, School Building & Site (AGM) (Q-SBLF), 5.00%, 5/01/28

      1,250        1,325,638   

Zeeland Public Schools Michigan, GO, School Building & Site (NPFGC), 5.00%, 5/01/14 (a)

      1,600        1,638,640   
    

 

 

  
        92,104,508   
Municipal Bonds   

Par  

(000)

     Value  

Michigan (continued)

  

Education — 19.7%

  

Grand Valley State University, RB, (NPFGC), 5.50%, 2/01/18

    $ 1,760      $ 1,891,050   

Lake Superior State University, Refunding RB, (AGM):

     

4.00%, 11/15/26

      750        741,180   

4.00%, 11/15/28

      310        299,441   

4.00%, 11/15/29

      400        379,952   

4.00%, 11/15/30

      310        288,192   

Michigan Higher Education Facilities Authority, RB, Limited Obligation, Hillsdale College Project, 5.00%, 3/01/35

      1,720        1,720,103   

Michigan State University, Refunding RB, General:

     

Series A, 5.00%, 8/15/41

      4,980        5,171,083   

Series C, 5.00%, 2/15/40

      4,700        4,806,502   

Michigan Technological University, Refunding RB, Series A, 5.00%, 10/01/34

      1,650        1,702,156   

Oakland University, RB, General, Series A:

     

5.00%, 3/01/38

      8,485        8,636,457   

5.00%, 3/01/43

      13,865        14,018,763   

Saginaw Valley State University Michigan, Refunding RB, General (NPFGC):

     

5.00%, 7/01/14 (a)

      1,935        1,996,707   

5.00%, 7/01/24

      165        169,457   

Wayne State University, RB, Series A, 4.00%, 11/15/44

      620        511,934   

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

     

5.25%, 11/15/40

      2,100        2,183,664   

5.25%, 11/15/43

      4,505        4,553,924   

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

      620        647,026   

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

      1,085        1,096,067   
    

 

 

  
        50,813,658   

Health — 24.3%

     

Flint Hospital Building Authority Michigan, Refunding RB, Hurley Medical Center (ACA), 6.00%, 7/01/20

      140        140,106   

Kalamazoo Hospital Finance Authority, RB, Bronson Methodist Hospital (AGM), 5.25%, 5/15/36

      4,750        4,828,660   

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

      4,500        4,635,000   

 

                
2    BLACKROCK MUNIYIELD MICHIGAN QUALITY FUND, INC.    OCTOBER 31, 2013   

Schedule of Investments (continued)

   

BlackRock MuniYield Michigan Quality Fund, Inc. (MIY)

(Percentages shown are based on Net Assets)

 

 

Municipal Bonds   

Par  

(000)

     Value  

Michigan (continued)

  

Health (continued)

  

Michigan Finance Authority, RB, Sparrow Obligated Group, 5.00%, 11/15/36

    $ 1,550      $ 1,520,860   

Michigan Finance Authority, Refunding RB:

     

Hospital, Oakwood Obligated Group, 5.00%, 8/15/31

      1,745        1,744,860   

Trinity Health Credit Group, 5.00%, 12/01/31

      3,100        3,176,477   

Trinity Health Credit Group, 5.00%, 12/01/35

      4,100        4,132,349   

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

      3,350        3,335,327   

Michigan State Hospital Finance Authority, RB:

     

Ascension Health Senior Credit Group, 5.00%, 11/15/25

      3,700        4,019,865   

McLaren Health Care, Series C, 5.00%, 8/01/35

      1,000        1,003,240   

MidMichigan Obligated Group, Series A, 5.00%, 4/15/26

      620        629,877   

MidMichigan Obligated Group, Series A, 5.00%, 4/15/36

      3,550        3,456,493   

Michigan State Hospital Finance Authority, Refunding RB:

     

Henry Ford Health System, 5.75%, 11/15/39

      1,965        2,009,114   

Henry Ford Health System, Series A, 5.25%, 11/15/46

      2,500        2,419,200   

Hospital, Oakwood Obligated Group, 5.00%, 11/01/32

      4,000        3,975,760   

Hospital, Oakwood Obligated Group, Series A, 5.00%, 7/15/21

      600        653,358   

Hospital, Oakwood Obligated Group, Series A, 5.00%, 7/15/25

      3,260        3,349,487   

Hospital, Oakwood Obligated Group, Series A, 5.00%, 7/15/37

      630        597,284   

Hospital, Sparrow Obligated Group, 5.00%, 11/15/31

      3,100        3,085,337   

McLaren Health Care, Series A, 5.00%, 6/01/35

      1,390        1,377,268   

McLaren Health Care, Series A, 5.75%, 5/15/38

      4,500        4,913,415   

Trinity Health Credit Group, Series C, 4.00%, 12/01/32

      4,460        3,951,070   

Trinity Health Credit, Series A, 6.25%, 12/01/28

      930        1,061,130   

Trinity Health Credit, Series A, 6.50%, 12/01/33

      1,000        1,141,260   
Municipal Bonds   

Par  

(000)

     Value  

Michigan (continued)

  

Health (concluded)

  

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

    $ 1,000      $ 1,202,880   

Sturgis Building Authority, RB, Sturgis Hospital Project (NPFGC), 4.75%, 10/01/34

      475        463,296   
    

 

 

  
        62,822,973   

Housing — 8.6%

     

Michigan State HDA, RB:

     

Deaconess Tower, AMT (Ginnie Mae), 5.25%, 2/20/48

      1,000        1,006,200   

Series A, 4.75%, 12/01/25

      4,235        4,421,467   

Williams Pavilion, AMT (Ginnie Mae), 4.75%, 4/20/37

      3,660        3,549,102   

Michigan State HDA, Refunding RB:

     

Rental Housing, Series D, 4.50%, 10/01/48

      9,715        8,436,797   

Series A, 6.05%, 10/01/41

      4,825        4,881,694   
    

 

 

  
        22,295,260   

State — 13.8%

     

Michigan State Building Authority, Refunding RB, Facilities Program:

     

Series I, 6.25%, 10/15/38

      3,900        4,418,232   

Series I (AGC), 5.25%, 10/15/24

      4,000        4,478,640   

Series I (AGC), 5.25%, 10/15/25

      2,000        2,189,960   

Series I (AGC), 5.25%, 10/15/26

      600        647,736   

Series I-A, 5.50%, 10/15/45

      1,250        1,287,275   

Series II (AGM), 5.00%, 10/15/26

      4,500        4,763,475   

Michigan State Finance Authority, RB, Local Government Loan Program, Series F:

     

5.00%, 4/01/31

      1,000        1,003,850   

5.25%, 10/01/41

      6,085        6,135,688   

Michigan Strategic Fund, Refunding RB, Cadillac Place Office Building Project, 5.25%, 10/15/31

      1,500        1,538,175   

State of Michigan, COP, (AMBAC), 2.71%, 6/01/22 (b)(c)

      3,000        2,381,160   

State of Michigan Trunk Line Fund, RB:

     

5.00%, 11/15/29

      1,000        1,076,700   

5.00%, 11/15/33

      1,850        1,943,610   

 

                
   BLACKROCK MUNIYIELD MICHIGAN QUALITY FUND, INC.    OCTOBER 31, 2013    3

Schedule of Investments (continued)

   

BlackRock MuniYield Michigan Quality Fund, Inc. (MIY)

(Percentages shown are based on Net Assets)

 

Municipal Bonds   

Par  

(000)

     Value  

Michigan (continued)

  

State (concluded)

  

State of Michigan Trunk Line Fund, RB (concluded):

     

5.00%, 11/15/36

    $ 3,500      $ 3,657,710   
    

 

 

  
        35,522,211   

Transportation — 15.3%

     

State of Michigan, RB, GAB (AGM), 5.25%, 9/15/27

      5,250        5,713,523   

Wayne County Airport Authority, RB, Detroit Metropolitan Wayne County Airport, AMT (NPFGC):

     

5.25%, 12/01/25

      7,525        7,958,515   

5.25%, 12/01/26

      6,300        6,662,943   

5.00%, 12/01/34

      4,435        4,288,955   

Wayne County Airport Authority, Refunding RB, AMT (AGC):

     

5.75%, 12/01/25

      4,000        4,503,400   

5.75%, 12/01/26

      1,000        1,120,620   

5.38%, 12/01/32

      8,700        9,219,303   
    

 

 

  
        39,467,259   

Utilities — 19.8%

     

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

      1,645        1,512,512   

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

     

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

      3,000        3,145,050   

Series A (NPFGC), 5.00%, 7/01/34

      6,000        5,412,480   

City of Detroit Michigan Water Supply System, Refunding RB, Second Lien, Series C (AGM), 5.00%, 7/01/29

      10,470        9,903,154   

City of Grand Rapids Michigan Sanitary Sewer System, RB:

     

5.00%, 1/01/37

      930        972,380   

4.00%, 1/01/42

      1,700        1,510,280   

(NPFGC), 5.00%, 7/01/14 (a)

      11,385        11,751,255   

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

      3,000        3,216,630   

City of Port Huron Michigan, RB, Water Supply System:

     

5.25%, 10/01/31

      310        318,674   

5.63%, 10/01/40

      1,000        1,035,110   

County of Genesee Michigan, GO, Water Supply System (NPFGC), 5.13%, 11/01/33

      1,000        1,000,200   

 

Municipal Bonds   

Par  

(000)

     Value  

Michigan (concluded)

  

Utilities (concluded)

  

Lansing Board of Water & Light Utilities System, RB, Series A:

     

5.00%, 7/01/27

    $ 1,970      $ 2,108,274   

5.00%, 7/01/31

      4,230        4,415,782   

5.00%, 7/01/37

      2,065        2,146,134   

Michigan Municipal Bond Authority, RB, State Clean Water Revolving Fund:

     

5.00%, 10/01/27

      1,250        1,345,937   

Pooled Project, 5.00%, 10/01/27

      1,240        1,368,514   
    

 

 

  
               51,162,366   

Total Municipal Bonds in Michigan

              367,750,672   

Guam — 1.9%

                 

State — 1.9%

     

Territory of Guam, RB:

     

Business Privilege Tax Bonds, Series A, 5.13%, 1/01/42

      2,300        2,294,733   

Business Privilege Tax Bonds, Series B-1, 5.00%, 1/01/37

      1,165        1,160,165   

Section 30, Series A, 5.63%, 12/01/29

      1,400        1,465,506   
    

 

 

  
               4,920,404   

Total Municipal Bonds in Guam

              4,920,404   

Total Municipal Bonds — 144.4%

              372,671,076   
    
                  

Municipal Bonds Transferred to

Tender Option Bond (TOB) Trusts (d)

  

Michigan — 17.4%

                 

County/City/Special District/School District — 4.5%

     

Lakewood Public Schools Michigan, GO, School Building & Site (AGM) (Q-SBLF), 5.00%, 5/01/37

      6,470        6,854,997   

Portage Public Schools Michigan, GO, School Building & Site (AGM), 5.00%, 5/01/31

      4,650        4,803,915   
    

 

 

  
               11,658,912   

Education — 12.8%

     

Michigan State University, Refunding RB, General, Series A, 5.00%, 8/15/38

      6,220        6,493,680   

Saginaw Valley State University, Refunding RB, General (AGM), 5.00%, 7/01/31

      7,500        7,822,650   

 

                
4    BLACKROCK MUNIYIELD MICHIGAN QUALITY FUND, INC.    OCTOBER 31, 2013   

Schedule of Investments (continued)

   

BlackRock MuniYield Michigan Quality Fund, Inc. (MIY)

(Percentages shown are based on Net Assets)

 

 

Municipal Bonds Transferred to

Tender Option Bond (TOB) Trusts (d)

   

Par  

(000)

     Value  

Michigan (concluded)

  

Education (concluded)

  

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

    $ 6,190      $ 6,312,314   

Wayne State University, Refunding RB, General (AGM), 5.00%, 11/15/35

      12,207        12,570,148   
    

 

 

  
               33,198,792   

Health — 0.1%

     

Michigan Finance Authority, RB, Hospital, Trinity Health Credit Group, 5.00%, 12/01/39

      190        189,168   
Total Municipal Bonds Transferred to
Tender Option Bond (TOB) Trusts — 17.4%		         45,046,872   

Total Long-Term Investments

(Cost — $412,317,189) — 161.8%

  

  

     417,717,948   
    
                  
    
Short-Term Securities    Shares     Value  

BIF Michigan Municipal Money Fund, 0.00% (e)(f)

      2,832,572      $ 2,832,572   

Total Short-Term Securities

(Cost — $2,832,572) — 1.1%

  

  

     2,832,572   
Total Investments (Cost — $415,149,761*) — 162.9%        420,550,520   
Other Assets Less Liabilities — 2.2%        5,667,078   

Liability for TOB Trust Certificates, Including Interest
Expense and Fees Payable — (9.1%)

   

     (23,496,885 ) 

VRDP Shares, at Liquidation

Value — (56.0%)

        (144,600,000 ) 
    

 

 

  
Net Assets Applicable to Common Shares — 100.0%      $ 258,120,713   
    

 

 

  

 

*   As of October 31, 2013, gross unrealized appreciation and depreciation based on cost for federal income tax purposes were as follows:

 

Tax cost

   $ 392,117,626   
 

 

 

  

Gross unrealized appreciation

   $ 14,921,468   

Gross unrealized depreciation

     (9,975,574 ) 
 

 

 

  

Net unrealized appreciation

   $ 4,945,894   
 

 

 

  

 

Notes to Schedule of Investments

 

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

 

(b)   Security is collateralized by municipal or US Treasury obligations.

 

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

 

(d)   Represent bonds transferred to a TOB. In exchange the Fund acquired residual interest certificates. These bonds serve as collateral in a financing transaction.

 

(e)   Represents the current yield as of report date.

 

(f)   Investments in issuers considered to be an affiliate of the Fund during the period ended October 31, 2013, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliate   Shares Held
at July 31,
2013		    

Net

Activity

     Shares Held
at October 31,
2013		     Income  

BIF Michigan Municipal Money Fund

     479,667        2,352,905        2,832,572        —   

 

Portfolio Abbreviations

 

To simplify the listings of portfolio holdings in the Schedule of Investments, the names and descriptions of many of the securities have been abbreviated according to the following list:      ACA    American Capital Access Holding Ltd.      
     AGC    Assured Guarantee Corp.      
     AGM    Assured Guaranty Municipal Corp.      
             

 

                
   BLACKROCK MUNIYIELD MICHIGAN QUALITY FUND, INC    OCTOBER 31, 2013    5

Schedule of Investments (continued)    BlackRock MuniYield Michigan Quality Fund, Inc.  (MIY)

 

 

     AMBAC    American Municipal Bond Assurance Corp.      
     AMT    Alternative Minimum Tax (subject to)      
     COP    Certificate of Participation      
     EDC    Economic Development Corp.      
     GAB    Grant Anticipation Bonds      
     Ginnie Mae    Government National Mortgage Association      
     GO    General Obligation Bonds      
     HDA    Housing Development Authority      
     NPFGC    National Public Finance Guarantee Corp.      
     Q-SBLF    Qualified School Bond Loan Fund      
     RB    Revenue Bonds      

 

Ÿ  

Financial futures contracts as of October 31, 2013 were as follows:

 

Contracts

Sold

     Issue   Exchange   Expiration  

Notional

Value

     Unrealized
Appreciation		  
  (45 )    10-Year US Treasury Note   Chicago Board of Trade   December 2013   $ 5,731,172      $ 3,467   

 

Ÿ  

For Fund compliance purposes, the Fund’s sector classifications refer to any 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 Fund management. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.

 

Ÿ  

Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial reporting purposes as follows:

 

Ÿ  

Level 1 — unadjusted price quotations in active markets/exchanges for identical assets or liabilities that the Fund has the ability to access

 

Ÿ  

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)

 

Ÿ  

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

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value disclosure 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 investment and derivative financial instrument and is not necessarily an indication of the risks associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and derivative financial instruments, please refer to the Fund’s most recent financial statements as contained in its annual report.

 

                
6    BLACKROCK MUNIYIELD MICHIGAN QUALITY FUND, INC.    OCTOBER 31, 2013   

Schedule of Investments (concluded)    BlackRock MuniYield Michigan Quality Fund, Inc.  (MIY)

 

The following tables summarize the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy as of October 31, 2013:

 

     Level 1        Level 2        Level 3        Total  

Assets:

                 
Investments:                 

Long-Term Investments 1

     —         $ 417,717,948           —         $ 417,717,948   

Short-Term Securities

   $ 2,832,572           —           —           2,832,572   
 

 

 

       

 

 

       

 

 

       

 

 

  

Total

   $ 2,832,572         $ 417,717,948           —         $ 420,550,520   
 

 

 

       

 

 

       

 

 

       

 

 

  

 

1   See above Schedule of Investments for values in each sector.

 

      

     Level 1        Level 2        Level 3        Total  
Derivative Financial Instruments 2             

Assets:

                 

Interest rate contracts

   $ 3,467           —           —         $ 3,467   

 

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

      

 

Certain of the Fund’s assets and/or liabilities are held at carrying amount, which approximates fair value for financial reporting purposes. As of October 31, 2013, such assets and/or liabilities are categorized within the disclosure hierarchy as follows:

 

   

     Level 1        Level 2        Level 3        Total  

Assets:

                 

Cash pledged for financial futures contracts

   $ 80,000           —           —         $ 80,000   

Liabilities:

                 

TOB trust certificates

     —         $ (23,487,000 )         —           (23,487,000 ) 

VRDP Shares

     —           (144,600,000 )         —           (144,600,000 ) 
 

 

 

       

 

 

       

 

 

       

 

 

  

Total

   $ 80,000         $ (168,087,000 )         —         $ (168,007,000 ) 
 

 

 

       

 

 

       

 

 

       

 

 

  

There were no transfers between levels during the period ended October 31, 2013.

 

                
   BLACKROCK MUNIYIELD MICHIGAN QUALITY FUND, INC.    OCTOBER 31, 2013    7

Item 2 – Controls and Procedures

 

2(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.

 

2(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 registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 3 – Exhibits

Certifications – Attached hereto

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

BlackRock MuniYield Michigan Quality Fund, Inc.

 

By:  

/s/ John M. Perlowski

   
  John M. Perlowski   
  Chief Executive Officer (principal executive officer) of
  BlackRock MuniYield Michigan Quality Fund, Inc.
Date: December 23, 2013   

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By:  

/s/ John M. Perlowski

   
  John M. Perlowski   
  Chief Executive Officer (principal executive officer) of
  BlackRock MuniYield Michigan Quality Fund, Inc.
Date: December 23, 2013   

 

By:  

/s/ Neal J. Andrews

   
  Neal J. Andrews   
  Chief Financial Officer (principal financial officer) of
  BlackRock MuniYield Michigan Quality Fund, Inc.
Date: December 23, 2013