Commercial emulsion-made impact modifiers with a shell of poly(methyl methacrylate) (PMMA) chains grafted onto a rubber core, either acrylate or butadiene based, cannot be adequately dispersed in a matrix of poly(butylene terephthalate) (PBT) to achieve useful toughening. However, it is known that tough materials can be achieved when these blends also contain polycarbonate (PC). It is demonstrated here that 10 wt% or less of PC greatly facilitates the dispersal of such core-shell impact modifiers in a PBT matrix and leads to tough blends even at low temperatures. It is known that PC wets PBT and PMMA better than PBT and PMMA wet each other, which allows the PC to act as a dispersing agent for these impact modifier particles in the PBT matrix. The morphology and mechanical properties of ternary blends where PC is a major matrix component rather than simply a dispersing agent are also examined.