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: 07/31/2013

Date of reporting period: 04/30/2013

Item 1    –    Schedule of Investments

Schedule of Investments April 30, 2013 (Unaudited)    BlackRock MuniYield Michigan Quality Fund, Inc. (MIY)
   (Percentages shown are based on Net Assets)

 

Municipal Bonds

    Par
(000)		      Value  

Michigan – 126.5%

      

Corporate – 6.2%

      

Dickinson County EDC, Michigan, Refunding RB, International Paper Co. Project, Series A,

      

5.75%, 6/01/16

    $ 3,900       $ 3,914,898   

Monroe County EDC, Refunding RB, Detroit Edison Co. Project, Series AA (NPFGC),

      

6.95%, 9/01/22

      10,695         14,509,265   
     

 

 

  
        18,424,163   
     

 

 

  

County/City/Special District/School District – 36.8%

      

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

      

5.00%, 5/01/14

      2,000         2,093,920   

5.00%, 5/01/14

      1,600         1,675,136   

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

      

4.13%, 5/01/25

      3,000         3,321,030   

4.25%, 5/01/26

      1,800         1,984,626   

4.38%, 5/01/27

      960         1,056,643   

4.00%, 5/01/28

      240         256,082   

4.38%, 5/01/28

      600         655,632   

4.00%, 5/01/29

      620         657,925   

4.50%, 5/01/29

      900         992,052   

Bay City School District Michigan, GO, School Building & Site (AGM),

      

5.00%, 5/01/36

      2,800         3,051,608   

Birmingham City School District Michigan, GO, School Building & Site (AGM),

      

5.00%, 11/01/14(a)

      1,000         1,069,890   

Brighton Area School District Michigan, GO, School Building & Site, Series I (Q-SBLF),

      

4.25%, 5/01/37

      3,570         3,708,016   

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

      

5.00%, 4/01/25

      1,840         2,093,699   

5.00%, 4/01/26

      2,000         2,248,040   

5.00%, 4/01/27

      500         562,710   

Chippewa Valley Schools, GO, Refunding (Q-SBLF):

      

5.00%, 5/01/31

      1,860         2,167,179   

5.00%, 5/01/32

      1,970         2,284,294   

City of Oak Park Michigan, GO, Street Improvement (NPFGC),

      

5.00%, 5/01/30

      500         543,555   

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

      

5.50%, 5/01/36

      750         865,793   

5.50%, 5/01/41

      1,355         1,562,139   

County of Genesee Michigan, GO, Refunding, Series A (NPFGC),

      

5.00%, 5/01/19

      600         643,914   

County of Genesee Michigan, GO, Water Supply System (NPFGC),

      

5.13%, 11/01/33

      1,000         1,019,870   

Dearborn Brownfield Redevelopment Authority, GO, Limited Tax, Redevelopment, Series A (AGC),

      

5.50%, 5/01/39

      3,300         3,711,543   

Detroit City School District Michigan, GO, School Building & Site Improvement (NPFGC)(a):

      

Series A, 5.38%, 5/01/13

      1,300         1,300,169   

Series B, 5.00%, 5/01/13

      2,850         2,850,342   

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

      

5.25%, 5/01/14

      1,325         1,390,945   

5.25%, 5/01/14

      1,675         1,758,365   

Flint EDC, RB, Michigan Department of Human Services Office Building Project,

      

5.25%, 10/01/41

      3,070         3,314,587   

Fraser Public School District, GO, School Building & Site (AGM),

      

5.00%, 5/01/25

      2,000         2,170,480   

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

      

5.00%, 5/01/14

      2,940         3,078,062   

5.00%, 5/01/14

      710         743,562   

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

      

5.50%, 5/01/32

      600         702,756   

5.50%, 5/01/36

      1,200         1,394,424   

5.50%, 5/01/41

      1,575         1,812,179   

Gull Lake Community School District, GO, School Building & Site (AGM),

      

5.00%, 5/01/14(a)

      3,625         3,797,079   

Harper Creek Community School District Michigan, GO, Refunding (AGM),

      

5.00%, 5/01/22

      1,125         1,220,895   

Harper Woods School District Michigan, GO, Refunding, School Building & Site (NPFGC),

      

5.00%, 5/01/14(a)

      430         445,188   

Howell Public Schools, GO, Refunding (Q-SBLF),

      

4.50%, 5/01/29

      1,090         1,231,929   

Hudsonville Public Schools, GO, School Building & Site (Q-SBLF),

      

5.25%, 5/01/41

      4,100         4,645,956   

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

      

5.00%, 5/01/24

      1,000         1,085,240   

5.00%, 5/01/25

      1,525         1,654,991   

5.00%, 5/01/26

      1,600         1,726,384   

5.00%, 5/01/35

      3,000         3,194,370   

 

    BLACKROCK MUNIYIELD MICHIGAN QUALITY FUND, INC.    APRIL 30, 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)

      

Lansing Building Authority Michigan, GO, Series A (NPFGC),

      

5.38%, 6/01/13(a)

    $ 1,510       $ 1,516,750   

Lincoln Consolidated School District Michigan, GO, Refunding (NPFGC),

      

4.63%, 5/01/28

      5,000         5,355,850   

Livonia Public Schools School District Michigan, GO, Refunding, Series A (NPFGC),

      

5.00%, 5/01/24

      1,000         1,042,520   

Montrose Community Schools, GO (NPFGC),

      

6.20%, 5/01/17

      830         908,360   

Orchard View Schools Michigan, GO, School Building & Site (NPFGC),

      

5.00%, 11/01/13(a)

      5,320         5,448,159   

Parchment School District, GO, School Building & Site,

      

5.00%, 5/01/25

      1,000         1,149,990   

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

      

5.00%, 5/01/14

      765         800,527   

5.00%, 5/01/14

      605         633,096   

Reed City Public Schools Michigan, GO, School Building & Site (AGM),

      

5.00%, 5/01/14(a)

      1,425         1,492,645   

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

      

4.13%, 5/01/25

      1,150         1,260,457   

4.25%, 5/01/26

      1,200         1,314,372   

4.25%, 5/01/27

      1,200         1,305,432   

4.50%, 5/01/29

      1,025         1,122,211   

Southfield Public Schools Michigan, GO, School Building & Site, Series B (AGM),

      

5.00%, 5/01/14(a)

      2,000         2,094,540   

Thornapple Kellogg School District Michigan, GO, Refunding, School Building & Site (NPFGC),

      

5.00%, 5/01/32

      2,500         2,774,625   

Van Dyke Public Schools Michigan, GO, School Building & Site (AGM),

      

5.00%, 5/01/28

      1,250         1,423,412   

Zeeland Public Schools Michigan, GO, School Building & Site (NPFGC),

      

5.00%, 5/01/14(a)

      1,600         1,675,632   
     

 

 

  
        109,061,777   
     

 

 

  

Education – 6.0%

      

Grand Valley State University Michigan, RB (NPFGC),

      

5.50%, 2/01/18

      1,760         1,925,510   

Lake Superior State University, Refunding RB (AGM):

      

4.00%, 11/15/26

      770         815,268   

4.00%, 11/15/27

      465         489,850   

4.00%, 11/15/28

      310         325,091   

4.00%, 11/15/29

      400         416,752   

4.00%, 11/15/30

      310         321,588   

Michigan Higher Education Facilities Authority, RB, Limited Obligation, Hillsdale College Project,

      

5.00%, 3/01/35

      1,720         1,738,008   

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

      

5.00%, 2/15/40

      4,700         5,200,456   

Michigan Technological University, Refunding RB, General, Series A,

      

5.00%, 10/01/34

      1,650         1,861,151   

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

      

5.00%, 7/01/24

      2,100         2,209,284   

Western Michigan University, Refunding RB, General,

      

5.25%, 11/15/40

      2,100         2,397,570   
     

 

 

  
        17,700,528   
     

 

 

  

Health – 22.0%

      

Flint Hospital Building Authority Michigan, Refunding RB, Hurley Medical Center (ACA),

      

6.00%, 7/01/20

      1,045         1,048,793   

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

      

5.25%, 5/15/36

      4,750         5,318,195   

Kent Hospital Finance Authority Michigan, Refunding RB, Spectrum Health, Series A,

      

5.00%, 11/15/29

      4,500         5,093,955   

Michigan State Finance Authority, RB, Sparrow Obligated Group,

      

5.00%, 11/15/36

      1,550         1,718,625   

Michigan State Finance Authority, Refunding RB:

      

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

      1,745         1,951,870   

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

      3,100         3,551,019   

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

      3,100         3,483,749   

Michigan State Hospital Finance Authority, RB:

      

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

      3,700         4,343,245   

Hospital, MidMichigan Obligated Group, Series A (AMBAC), 5.50%, 4/15/18

      2,530         2,538,223   

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

      1,000         1,069,010   

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

      620         654,100   

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

      3,550         3,684,190   

 

2   BLACKROCK MUNIYIELD MICHIGAN QUALITY FUND, INC.    APRIL 30, 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 (concluded)

      

Michigan State Hospital Finance Authority, Refunding RB:

      

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

    $ 2,500       $ 2,637,500   

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

      4,000         4,450,720   

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

      600         676,356   

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

      3,260         3,523,767   

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

      630         661,613   

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

      3,100         3,301,686   

Mclaren Health Care, 5.75%, 5/15/38

      4,500         5,198,625   

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

      1,390         1,544,179   

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

      930         1,120,659   

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

      1,000         1,208,950   

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

      4,460         4,621,630   

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

      

8.25%, 9/01/39

      1,000         1,281,170   

Sturgis Building Authority, RB, Sturgis Hospital Project (NPFGC),

      

4.75%, 10/01/34

      475         482,942   
     

 

 

  
        65,164,771   
     

 

 

  

Housing – 8.8%

      

Michigan State HDA, RB:

      

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

      1,000         1,038,780   

Series A, 4.75%, 12/01/25

      4,235         4,679,209   

Series A, AMT (NPFGC), 5.30%, 10/01/37

      130         130,139   

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

      3,700         3,826,651   

Michigan State HDA, Refunding RB:

      

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

      9,715         9,863,639   

Series A, 6.05%, 10/01/41

      6,010         6,516,944   
     

 

 

  
        26,055,362   
     

 

 

  

State – 16.3%

      

Michigan Municipal Bond Authority, Refunding RB, Local Government, Charter County Wayne, Series B (AGC),

      

5.38%, 11/01/24

      125         145,778   

Michigan State Building Authority, Refunding RB, Facilities Program:

      

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

      4,500         5,130,810   

Series I, 6.25%, 10/15/38

      3,900         4,728,555   

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

      4,000         4,780,400   

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

      2,000         2,390,200   

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

      600         713,862   

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

      1,250         1,447,500   

Series II (NPFGC), 5.00%, 10/15/29

      3,500         3,564,820   

Michigan State Finance Authority, RB, Series F:

      

5.00%, 4/01/31

      1,000         1,087,250   

5.25%, 10/01/41

      6,085         6,664,961   

Michigan Strategic Fund, Refunding RB, Cadillac Place Office Building Project,

      

5.25%, 10/15/31

      1,500         1,716,705   

State of Michigan, RB, GAB (AGM),

      

5.25%, 9/15/27

      5,250         6,095,932   

State of Michigan Trunk Line Revenue, RB:

      

5.00%, 11/15/29

      1,000         1,181,920   

5.00%, 11/15/33

      1,850         2,154,214   

5.00%, 11/15/36

      3,500         4,049,675   

State of Michigan, COP (AMBAC),

      

2.12%, 6/01/22(b)(c)

      3,000         2,476,920   
     

 

 

  
        48,329,502   
     

 

 

  

Transportation – 12.1%

      

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

      

5.25%, 12/01/25

      7,525         8,227,308   

5.25%, 12/01/26

      6,300         6,887,979   

5.00%, 12/01/34

      4,435         4,777,560   

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

      

5.75%, 12/01/25

      4,000         4,744,800   

5.75%, 12/01/26

      1,000         1,186,200   

5.38%, 12/01/32

      8,700         9,903,036   
     

 

 

  
        35,726,883   
     

 

 

  

Utilities – 18.3%

      

City of Detroit Michigan Water Supply System, RB:

      

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

      3,000         3,614,850   

Second Lien, Series B (NPFGC), 5.00%, 7/01/13(a)

      1,550         1,562,570   

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

      6,000         6,000,060   

Series B (NPFGC), 5.25%, 7/01/13(a)

      11,790         11,890,569   

 

    BLACKROCK MUNIYIELD MICHIGAN QUALITY FUND, INC.    APRIL 30, 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 (concluded)

      

Utilities (concluded)

      

City of Detroit Michigan Water Supply System, Refunding RB, Second Lien, Series C (AGM),

      

5.00%, 7/01/29

    $ 10,470       $ 10,765,673   

City of Grand Rapids Michigan Sanitary Sewer System, RB:

      

5.00%, 1/01/37

      930         1,074,094   

4.00%, 1/01/42

      1,700         1,759,262   

City of Port Huron Michigan, RB, Water Supply:

      

5.25%, 10/01/31

      310         344,717   

5.63%, 10/01/40

      1,000         1,123,520   

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

      

5.00%, 7/01/27

      1,970         2,300,133   

5.00%, 7/01/31

      4,230         4,888,484   

5.00%, 7/01/37

      2,065         2,357,363   

5.50%, 7/01/41

      3,000         3,549,240   

Michigan Municipal Bond Authority, RB:

      

Clean Water Revolving-Pooled, 5.00%, 10/01/27

      1,240         1,497,759   

State Clean Water, 5.00%, 10/01/27

      1,250         1,411,912   
     

 

 

  
        54,140,206   
     

 

 

  

Total Municipal Bonds in Michigan

         374,603,192   
     

 

 

  

Guam – 2.5%

      

State – 1.9%

      

Government of Guam Business Privilege Tax Revenue, RB, Series A,

      

5.13%, 1/01/42

      2,300         2,566,363   

Territory of Guam, Limited Obligation Bonds, RB, Section 30, Series A,

      

5.63%, 12/01/29

      1,400         1,558,788   

Territory of Guam, RB, Series B-1,

      

5.00%, 1/01/37

      1,165         1,290,971   
     

 

 

  
        5,416,122   
     

 

 

  

Utilities – 0.6%

      

Guam Power Authority, Refunding RB, Series A:

      

5.00%, 10/01/34

      605         669,590   

(AGM), 5.00%, 10/01/26

      970         1,145,376   
        1,814,966   
     

 

 

  

Total Municipal Bonds in Guam

         7,231,088   
     

 

 

  

Puerto Rico – 6.5%

      

State – 5.5%

      

Puerto Rico Sales Tax Financing Corp., RB, First Sub-Series A,

      

5.50%, 8/01/42

      500         526,125   

Puerto Rico Sales Tax Financing Corp., Refunding RB:

      

CAB, Series A (NPFGC), 5.64%, 8/01/41(b)

      8,500         1,766,895   

CAB, Series A (NPFGC), 5.65%, 8/01/42(b)

      6,680         1,307,476   

CAB, Series A (NPFGC), 5.67%, 8/01/43(b)

      12,500         2,304,250   

CAB, Series A (NPFGC), 5.73%, 8/01/46(b)

      20,000         3,054,200   

CAB, Series C, 5.50%, 8/01/38(b)

      2,775         705,044   

First Sub-Series C (AGM), 5.13%, 8/01/42

      5,100         5,398,554   

Series A-1, 5.25%, 8/01/43

      1,070         1,117,230   
     

 

 

  
        16,179,774   
     

 

 

  

Transportation – 1.0%

      

Puerto Rico Highway & Transportation Authority, Refunding RB, Series CC (AGC),

      

5.50%, 7/01/31

      2,750         3,041,583   
     

 

 

  

Total Municipal Bonds in Puerto Rico

         19,221,357   
     

 

 

  

Total Municipal Bonds – 135.5%

         401,055,637   
     

 

 

  

Municipal Bonds Transferred to Tender Option Bond (TOB) Trusts(d)

              

Michigan – 17.6%

      

County/City/Special District/School District – 4.3%

      

Lakewood Public Schools Michigan, GO, School Building & Site (AGM),

      

5.00%, 5/01/37

      6,470         7,486,534   

Portage Public Schools Michigan, GO, School Building & Site (AGM),

      

5.00%, 5/01/31

      4,650         5,198,096   
     

 

 

  
        12,684,630   
     

 

 

  

Education – 7.4%

      

Saginaw Valley State University, Refunding RB, General (AGM),

      

5.00%, 7/01/31

      7,500         8,446,425   

Wayne State University, Refunding RB, General (AGM),

      

5.00%, 11/15/35

      12,207         13,544,998   
     

 

 

  
        21,991,423   
     

 

 

  

Health – 1.2%

      

Michigan Finance Authority, Refunding RB, Trinity Health,

      

5.00%, 12/01/39

      3,350         3,725,032   
     

 

 

  

Utilities – 4.7%

      

City of Grand Rapids Michigan, RB (NPFGC),

      

5.00%, 7/01/14(a)

      11,387         12,001,432   

 

4   BLACKROCK MUNIYIELD MICHIGAN QUALITY FUND, INC.    APRIL 30, 2013    

Schedule of Investments (continued)    BlackRock MuniYield Michigan Quality Fund, Inc. (MIY)
   (Percentages shown are based on Net Assets)

 

      Par
(000)		      Value  

Municipal Bonds Transferred to Tender Option Bond (TOB) Trusts(d)

              

Michigan (concluded)

      

Utilities (concluded)

      

Detroit Water and Sewerage Department, Refunding RB, Senior Lien, Series A,

      

5.25%, 7/01/39

    $ 1,649       $ 1,799,535   
     

 

 

  
        13,800,967   
     

 

 

  

Total Municipal Bonds in Michigan

         52,202,052   
     

 

 

  

Puerto Rico – 1.1%

      

State – 1.1%

      

Puerto Rico Sales Tax Financing Corp., Refunding RB, Series C,

      

5.25%, 8/01/40

      3,060         3,315,256   
     

 

 

  

Total Municipal Bonds Transferred to Tender Option Bond (TOB) Trusts – 18.7%

         55,517,308   
     

 

 

  

Total Long-Term Investments
(Cost – $419,837,284) – 154.2%

         456,572,945   
     

 

 

  

Short-Term Securities

    Shares         

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

      5,322,547       $ 5,322,547   
     

 

 

  

Total Short-Term Securities
(Cost – $5,322,547) – 1.8%

         5,322,547   
     

 

 

  

Total Investments (Cost – $425,159,831*) – 156.0%

         461,895,492   

Other Assets Less Liabilities – 2.0%

         5,864,032   

Liability for TOB Trust Certificates, Including Interest Expense and Fees Payable – (9.2)%

         (27,095,555 ) 

VRDP Shares, at Liquidation Value – (48.8)%

         (144,600,000 ) 
     

 

 

  

Net Assets Applicable to Common Shares – 100.0%

       $ 296,063,969   
     

 

 

  

 

* As of April 30, 2013, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:

 

Tax cost

    $ 398,895,446   
  

 

 

  

Gross unrealized appreciation

    $ 37,990,563   

Gross unrealized depreciation

      (2,063,708 ) 
  

 

 

  

Net unrealized appreciation

    $ 35,926,855   
  

 

 

  

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

 

(c) Security is collateralized by Municipal or US Treasury obligations.

 

(d) Securities represent bonds transferred to a TOB in exchange for which the Fund acquired residual interest certificates. These securities serve as collateral in a financing transaction.

 

(e) Investments in issuers considered to be an affiliate of the Fund during the period ended April 30, 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,
2012		      Net Activity     Shares Held at
April 30,
2013		      Income  

BIF Michigan Municipal Money Fund

      9,419,517         (4,096,970 )      5,322,547         –   

 

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

 

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 Corp.   
  AGC    Assured Guaranty Corp.   
  AGM    Assured Guaranty Municipal Corp.   
  AMBAC    American Municipal Bond Assurance Corp.   
  AMT    Alternative Minimum Tax (subject to)   
  CAB    Capital Appreciation Bonds   
  COP    Certificates of Participation   

 

    BLACKROCK MUNIYIELD MICHIGAN QUALITY FUND, INC.    APRIL 30, 2013   5

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

 

Portfolio Abbreviations

 

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    

 

• Financial futures contracts as of April 30, 2013 were as follows:

 

Contracts

Sold

   

Issue

   

Exchange

    Expiration    Notional Value      Unrealized
Depreciation		  
(90)    10-Year US Treasury Note    Chicago Board of Trade    June 2013    $ 12,002,344       $ (178,712 ) 

 

•  

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 ratings 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.

 

•  

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:

 

  •  

Level 1 – unadjusted price quotations in active markets/exchanges for identical assets and liabilities that the 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 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 level in the fair value hierarchy within which the fair value measurement falls in its entirety 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 and other significant accounting policies, please refer to the Fund’s most recent financial statements as contained in its semi-annual report.

The following tables summarize the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy as of April 30, 2013:

 

     Level 1      Level 2      Level 3      Total  

Assets:

            

Investments:

            

Long-Term Investments1

      –       $ 456,572,945         –       $ 456,572,945   

Short-Term Securities

    $ 5,322,547         –         –         5,322,547   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 5,322,547       $ 456,572,945         –       $ 461,895,492   
  

 

 

     

 

 

     

 

 

     

 

 

  

 

1 

See above Schedule of Investments for values in each sector.

 

6   BLACKROCK MUNIYIELD MICHIGAN QUALITY FUND, INC.    APRIL 30, 2013    

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

 

      Level 1     Level 2      Level 3      Total  

Derivative Financial Instruments2

           

Liabilities:

           

Equity contracts

    $ (178,712 )      –         –       $ (178,712 ) 

 

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 liabilities are held at carrying amount, which approximates fair value for financial reporting purposes. As of April 30, 2013, such assets and liabilities are categorized within the disclosure hierarchy as follows:

 

      Level 1      Level 2     Level 3      Total  

Assets

  

Cash pledged for financial futures contracts

    $ 118,000         –        –       $ 118,000   

Liabilities:

           

TOB trust certificates

      –       $ (27,073,191 )      –         (27,073,191 ) 

VRDP Shares

      –         (144,600,000 )      –         (144,600,000 ) 
  

 

 

     

 

 

    

 

 

     

 

 

  

Total

    $ 118,000       $ (171,673,191 )      –       $ (171,555,191 ) 
  

 

 

     

 

 

    

 

 

     

 

 

  

There were no transfers between levels during the period ended April 30, 2013.

 

    BLACKROCK MUNIYIELD MICHIGAN QUALITY FUND, INC.    APRIL 30, 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: June 24, 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: June 24, 2013
By:  

/s/ Neal J. Andrews

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

Date: June 24, 2013