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 811-08215
Name of Fund: BlackRock MuniHoldings Fund II, Inc.
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Robert C. Doll, Jr., Chief Executive
Officer, BlackRock MuniHoldings Fund II, Inc., 800 Scudders Mill Road,
Plainsboro, NJ, 08536. Mailing address: P.O. Box 9011, Princeton, NJ,
08543-9011
Registrant's telephone number, including area code: (800) 882-0052
Date of fiscal year end: 07/31/07
Date of reporting period: 08/01/06 - 07/31/07
Item 1 - Report to Stockholders
EQUITIES FIXED INCOME REAL ESTATE LIQUIDITY ALTERNATIVES
BLACKROCK SOLUTIONS
Annual Reports
JULY 31, 2007
BlackRock MuniHoldings Fund II, Inc. (MUH)
BlackRock MuniHoldings New Jersey Insured Fund, Inc. (MUJ)
(BLACKROCK logo)
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
These reports, including the financial information herein, are transmitted
to shareholders of BlackRock MuniHoldings Fund II, Inc. and BlackRock
MuniHoldings New Jersey Insured Fund, Inc. for their information. This is not
a prospectus. Past performance results shown in these reports should not be
considered a representation of future performance. The Funds have leveraged
their Common Stock and intend to remain leveraged by issuing Preferred Stock
to provide the Common Stock shareholders with a potentially higher rate of
return. Leverage creates risks for Common Stock shareholders, including the
likelihood of greater volatility of net asset value and market price of shares
of the Common Stock, and the risk that fluctuations in the short-term dividend
rates of the Preferred Stock may affect the yield to Common Stock shareholders.
Statements and other information herein are as dated and are subject to change.
A description of the policies and procedures that the Funds use to determine
how to vote proxies relating to portfolio securities is available (1)
without charge, upon request, by calling toll-free 1-800-441-7762; (2) at
www.blackrock.com; and (3) on the Securities and Exchange Commission's Web
site at http://www.sec.gov. Information about how the Funds voted proxies
relating to securities held in the Funds' portfolios during the most recent
12-month period ended June 30 is available (1) at www.blackrock.com; and (2)
on the Securities and Exchange Commission's Web site at http://www.sec.gov.
BlackRock MuniHolidngs Fund II, Inc.
BlackRock MuniHoldings New Jersey Insured Fund, Inc.
P.O. Box 9011
Princeton, NJ 08543-9011
(GO PAPERLESS... logo)
It's Fast, Convenient, & Timely!
BlackRock MuniHoldings Fund II, Inc.
BlackRock MuniHoldings New Jersey Insured Fund, Inc.
Dividend Policy
The Funds' dividend policy is to distribute all or a portion of their net
investment income to their shareholders on a monthly basis. In order to
provide shareholders with a more stable level of dividend distributions, the
Funds may at times pay out less than the entire amount of net investment
income earned in any particular month and may at times in any particular month
pay out such accumulated but undistributed income in addition to net investment
income earned in that month. As a result, the dividends paid by the Funds for
any particular month may be more or less than the amount of net investment
income earned by the Funds during such month. The Funds' current accumulated
but undistributed net investment income, if any, is disclosed in the Statement
of Net Assets, which comprises part of the financial information included in
these reports.
Availability of Quarterly Schedule of Investments
The Funds file their complete schedules of portfolio holdings with the
Securities and Exchange Commission ("SEC") for the first and third quarters
of each fiscal year on Form N-Q. The Funds' Forms N-Q are available on the
SEC's Web site at http://www.sec.gov. The Funds' Forms N-Q may also be
reviewed and copied at the SEC's Public Reference Room in Washington, DC.
Information on the operation of the Public Reference Room may be obtained by
calling 1-800-SEC-0330.
Electronic Delivery
Electronic copies of most financial reports and prospectuses are available on
the Funds' Web site. Shareholders can sign up for e-mail notifications of
quarterly statements, annual and semi-annual reports and prospectuses by
enrolling in the Funds' electronic delivery program.
Shareholders Who Hold Accounts with Investment Advisers, Banks or Brokerages:
Please contact your financial advisor to enroll. Please note that not all
investment advisers, banks or brokerages may offer this service.
ANNUAL REPORTS JULY 31, 2007
A Letter to Shareholders
Dear Shareholder
As the July reporting period closed, financial markets were rattled by ongoing
problems in the credit markets, particularly those associated with the
subprime mortgage industry. While this has been an issue for much of 2007,
recent headlines and some high-profile credit collapses reignited concerns
that credit problems could spill over into the broader economy and derail
global financial markets. Although volatility has reared its head throughout
the year, the fundamental market and economic backdrop has been little
changed. U.S. economic activity has decelerated, led by a slowdown in the
housing market, but economies outside the United States remain robust, which
has been a boon for U.S. exports. Through July, the Federal Reserve Board had
kept the target short-term interest rate on hold at 5.25%.
For the most part, equities continued to find support in robust merger-and-
acquisition activity, a healthy global economy, tame inflation, relatively low
interest rates, still-positive earnings growth and attractive valuations.
These tailwinds generally prevailed over such headwinds as the weakening U.S.
economy, slowing housing market, escalating geopolitical concerns and high
energy prices, leading the Standard & Poor's (S&P) 500 Index and the Dow Jones
Industrial Average to post new record highs in mid-July before succumbing to
the latest market correction.
Meanwhile, mixed economic signals and the credit market debacle have made for
a volatile backdrop for fixed income, with investors fleeing from bonds
associated with the housing and credit markets in favor of higher-quality
Treasury bonds. As a result, the 10-year Treasury yield, which touched 5.30%
in June (its highest level in five years), fell to nearly 4.75% by period-end.
Prices correspondingly rose, reflecting the investor flight to quality.
Against this backdrop, financial markets posted mixed results for the six-
month period ended July 31, 2007, but continued to exhibit relative strength
when measured over the past year:
Total Returns as of July 31, 2007 6-month 12-month
U.S. equities (S&P 500 Index) +2.10% +16.13%
Small cap U.S. equities (Russell 2000 Index) -2.47 +12.12
International equities (MSCI Europe, Australasia, Far East Index) +8.38 +23.91
Fixed income (Lehman Brothers U.S. Aggregate Bond Index) +1.86 + 5.58
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) +1.17 + 4.27
High yield bonds (Lehman Brothers U.S. Corporate High Yield 2% Issuer Cap Index) -1.75 + 6.44
Past performance is no guarantee of future results. Index performance shown
for illustrative purposes only. You cannot invest directly in an index.
We expect market volatility to linger through the remainder of 2007. As you
navigate the uncertainties, we encourage you to review your investment goals
with your financial professional and to make portfolio changes, as needed. For
more market insight, we invite you to visit www.blackrock.com/funds. We thank
you for entrusting BlackRock with your investment assets, and we look forward
to continuing to serve you in the months and years ahead.
Sincerely,
(Robert C. Doll, Jr.)
Robert C. Doll, Jr.
Fund President and Director
THIS PAGE NOT PART OF YOUR FUND REPORT
ANNUAL REPORTS JULY 31, 2007
Fund Summary as of July 31, 2007 BlackRock MuniHoldings Fund II, Inc.
Fund Information
Symbol on New York Stock Exchange MUH
Initial Offering Date February 27, 1998
Yield on Closing Market Price as of 7/31/07 ($13.99)* 5.40%
Current Monthly Distribution per share of Common Stock** $.063
Current Annualized Distribution per share of Common Stock** $.756
Leverage as of 7/31/07*** 34.50%
* 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.
** The distribution is not constant and is subject to change.
*** As a percentage of managed assets, which is the total assets of the
Fund (including any assets attributable to any borrowing that may be
outstanding) minus the sum of accrued liabilities (other than debt
representing financial leverage).
The table below summarizes the changes in the Fund's market price and net
asset value per share:
7/31/07 7/31/06 Change High Low
Market Price $13.99 $14.12 (.92%) $15.23 $13.81
Net Asset Value $14.78 $14.82 (.27%) $15.33 $14.63
The following charts show the Fund's portfolio composition and credit quality
allocations of the Fund's long-term investments:
Portfolio Composition
Sector 7/31/07 7/31/06
Hospital 21% 15%
City/County/State 16 16
Transportation 11 11
Sales Tax 10 11
IDB/PCR 9 10
Power 6 7
Waste/Pollution 6 6
Schools 6 8
Tobacco 5 5
Lease Revenue 5 5
Housing 3 4
Resource Recovery 2 2
Credit Quality Allocations*
Credit Rating 7/31/07 7/31/06
AAA/Aaa 43% 45%
AA/Aa 11 8
A/A 14 12
BBB/Baa 12 15
BB/Ba 1 1
B/B 1 1
CCC/Caa 2 2
NR (Not Rated) 16 16
* Using the highest of S&P's, Moody's or Fitch's ratings.
ANNUAL REPORTS JULY 31, 2007
Fund Summary as of July 31, 2007
BlackRock MuniHoldings New Jersey Insured Fund, Inc.
Fund Information
Symbol on New York Stock Exchange MUJ
Initial Offering Date March 11, 1998
Yield on Closing Market Price as of 7/31/07 ($14.40)* 4.92%
Current Monthly Distribution per share of Common Stock** $.059
Current Annualized Distribution per share of Common Stock** $.708
Leverage as of 7/31/07*** 39.13%
* 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.
** The distribution is not constant and is subject to change.
*** As a percentage of managed assets, which is the total assets of the
Fund (including any assets attributable to any borrowing that may be
outstanding) minus the sum of accrued liabilities (other than debt
representing financial leverage).
The table below summarizes the changes in the Fund's market price and net
asset value per share:
7/31/07 7/31/06 Change High Low
Market Price $14.40 $14.98 (3.87%) $15.76 $13.83
Net Asset Value $14.86 $14.91 (.34%) $15.55 $14.55
The following charts show the Fund's portfolio composition and credit quality
allocations of the Fund's long-term investments:
Portfolio Composition
Sector 7/31/07 7/31/06
Transportation 32% 30%
School 16 13
City/County/State 15 19
Lease Revenue 9 10
Hospital 8 8
Sales Tax 8 7
Housing 4 4
IDR/PCR 3 4
Power 2 2
Water/Sewer 2 2
Tobacco 1 1
Credit Quality Allocations*
Credit Rating 7/31/07 7/31/06
AAA/Aaa 89% 89%
AA/Aa 3 3
A/A 4 4
BBB/Baa 4 4
BB/Ba --** --
* Using the highest of S&P's, Moody's or Fitch's ratings.
** Amount is less than one percent.
ANNUAL REPORTS JULY 31, 2007
The Benefits and Risks of Leveraging
The Funds utilize leveraging to seek to enhance the yield and net asset value
of their Common Stock. However, these objectives cannot be achieved in all
interest rate environments. To leverage, each Fund issues Preferred Stock,
which pays dividends at prevailing short-term interest rates, and invests the
proceeds in long-term municipal bonds. The interest earned on these
investments, net of dividends to Preferred Stock, is paid to Common Stock
shareholders in the form of dividends, and the value of these portfolio
holdings is reflected in the per share net asset value of each Fund's Common
Stock. However, in order to benefit Common Stock shareholders, the yield curve
must be positively sloped; that is, short-term interest rates must be lower
than long-term interest rates. At the same time, a period of generally
declining interest rates will benefit Common Stock shareholders. If either of
these conditions change, then the risks of leveraging will begin to outweigh
the benefits.
To illustrate these concepts, assume a fund's Common Stock capitalization of
$100 million and the issuance of Preferred Stock for an additional $50 million,
creating a total value of $150 million available for investment in long-term
municipal bonds. If prevailing short-term interest rates are approximately 3%
and long-term interest rates are approximately 6%, the yield curve has a
strongly positive slope. The fund pays dividends on the $50 million of
Preferred Stock based on the lower short-term interest rates. At the same time,
the fund's total portfolio of $150 million earns the income based on long-term
interest rates. Of course, increases in short-term interest rates would reduce
(and even eliminate) the dividends on the Common Stock.
In this case, the dividends paid to Preferred Stock shareholders are
significantly lower than the income earned on the fund's long-term
investments, and therefore the Common Stock shareholders are the beneficiaries
of the incremental yield. However, if short-term interest rates rise,
narrowing the differential between short-term and long-term interest rates,
the incremental yield pickup on the Common Stock will be reduced or eliminated
completely. At the same time, the market value of the fund's Common Stock
(that is, its price as listed on the New York Stock Exchange) may, as a
result, decline. Furthermore, if long-term interest rates rise, the Common
Stock's net asset value will reflect the full decline in the price of the
portfolio's investments, since the value of the fund's Preferred Stock does
not fluctuate. In addition to the decline in net asset value, the market value
of the fund's Common Stock may also decline.
As of July 31, 2007, BlackRock MuniHoldings Fund II, Inc. and BlackRock
MuniHoldings New Jersey Insured Fund, Inc. had leverage amounts, due to
Auction Market Preferred Stock, of 34.50% and 39.13% of total net assets,
respectively, before the deduction of Preferred Stock.
As a part of its investment strategy, the Funds may invest in certain
securities whose potential income return is inversely related to changes in a
floating interest rate ("inverse floaters"). In general, income on inverse
floaters will de-crease when short-term interest rates increase and increase
when short-term interest rates decrease. Investments in inverse floaters may
be characterized as derivative securities and may subject the Funds to the
risks of reduced or eliminated interest payments and losses of invested
principal. In addition, inverse floaters have the effect of providing
investment leverage and, as a result, the market value of such securities will
generally be more volatile than that of fixed rate, tax-exempt securities. To
the extent the Funds invest in inverse floaters, the market value of each
Fund's portfolio and the net asset value of each Fund's shares may also be
more volatile than if the Funds did not invest in these securities. (See Note
1(c) to Financial Statements for details of municipal bonds held in trust.)
Swap Agreements
The Funds may invest in swap agreements, which are over-the-counter contracts
in which one party agrees to make periodic payments based on the change in
market value of a specified bond, basket of bonds, or index in return for
periodic payments based on a fixed or variable interest rate or the change in
market value of a different bond, basket of bonds or index. Swap agreements
may be used to obtain exposure to a bond or market without owning or taking
physical custody of securities. Swap agreements involve the risk that the
party with whom each Fund has entered into the swap will default on its
obligation to pay the Fund and the risk that the Fund will not be able to meet
its obligations to pay the other party to the agreement.
ANNUAL REPORTS JULY 31, 2007
Schedule of Investments as of July 31, 2007
BlackRock MuniHoldings Fund II, Inc. (in Thousands)
Face
Amount Municipal Bonds Value
Alabama--3.4%
Birmingham, Alabama, Special Care Facilities
Financing Authority, Revenue Refunding Bonds
(Ascension Health Credit), Series C-2:
$ 1,145 5% due 11/15/2036 $ 1,150
835 5% due 11/15/2039 837
3,450 Jefferson County, Alabama, Limited Obligation School
Warrants, Series A, 5% due 1/01/2024 3,559
Arizona--4.6%
1,000 Arizona Health Facilities Authority Revenue Bonds
(Catholic Healthcare West), Series A, 6.625%
due 7/01/2010 (h) 1,084
1,365 Maricopa County, Arizona, IDA, Education Revenue
Bonds (Arizona Charter Schools Project 1), Series A,
6.50% due 7/01/2012 1,360
2,060 Phoenix, Arizona, IDA, Airport Facility, Revenue
Refunding Bonds (America West Airlines Inc. Project),
AMT, 6.30% due 4/01/2023 2,081
980 Pima County, Arizona, IDA, Education Revenue Bonds
(Arizona Charter Schools Project), Series C, 6.75%
due 7/01/2031 1,030
1,000 Pinal County, Arizona, COP, 5% due 12/01/2029 1,009
980 Show Low, Arizona, Improvement District Number 5,
Special Assessment Bonds, 6.375% due 1/01/2015 995
Arkansas--0.6%
1,000 University of Arkansas, University Construction
Revenue Bonds (UAMS Campus), Series B, 5%
due 11/01/2022 (d) 1,048
California--20.8%
2,000 Benicia, California, Unified School District, GO,
Refunding, Series A, 5.615% due 8/01/2020 (b)(p) 1,113
4,100 California Health Facilities Financing Authority
Revenue Bonds (Sutter Health), Series A, 5.25%
due 11/15/2046 4,214
2,900 California State, GO, Refunding, 5% due 6/01/2032 2,986
5,200 California State Public Works Board, Lease Revenue
Bonds (Department of Corrections), Series C, 5.25%
due 6/01/2028 5,410
1,000 East Side Union High School District, California,
Santa Clara County, GO (Election of 2002), Series D,
5% due 8/01/2020 (i) 1,057
870 Golden State Tobacco Securitization Corporation of
California, Tobacco Settlement Revenue Bonds,
Series A-3, 7.875% due 6/01/2013 (h) 1,046
670 Golden State Tobacco Securitization Corporation of
California, Tobacco Settlement Revenue Refunding
Bonds, Senior Series A-1, 5.125% due 6/01/2047 624
1,750 Poway, California, Unified School District, Special
Tax (Community Facilities District Number 6 Area),
Series A, 6.125% due 9/01/2033 1,813
Face
Amount Municipal Bonds Value
California (concluded)
San Marino, California, Unified School District, GO,
Series A (d)(p):
$ 1,820 5.50% due 7/01/2017 $ 1,185
1,945 5.55% due 7/01/2018 1,204
2,070 5.60% due 7/01/2019 1,217
5,525 Sequoia, California, Unified High School District, GO,
Refunding, Series B, 5.50% due 7/01/2035 (c) 6,033
4,925 Tracy, California, Area Public Facilities Financing
Agency, Special Tax Refunding Bonds (Community
Facilities District Number 87-1), Series H, 5.875%
due 10/01/2019 (d) 5,221
1,250 Tustin, California, Unified School District, Senior
Lien Special Tax Bonds (Community Facilities
District Number 97-1), Series A, 5% due
9/01/2032 (c) 1,279
Colorado--1.6%
1,675 Elk Valley, Colorado, Public Improvement Revenue
Bonds (Public Improvement Fee), Series A, 7.10%
due 9/01/2014 1,770
860 Plaza Metropolitan District Number 1, Colorado,
Tax Allocation Revenue Bonds (Public Improvement
Fees), 8.125% due 12/01/2025 863
Florida--7.7%
1,625 Ballantrae, Florida, Community Development District,
Capital Improvement Revenue Bonds, 6% due 5/01/2035 1,691
2,100 Highlands County, Florida, Health Facilities
Authority, Hospital Revenue Refunding Bonds
(Adventist Health System), Series G, 5.125% due
11/15/2032 2,113
1,765 Miami-Dade County, Florida, Subordinate Special
Obligation Revenue Bonds, Series A, 5.24%
due 10/01/2037 (d)(p) 377
2,450 Midtown Miami, Florida, Community Development
District, Special Assessment Revenue Bonds,
Series A, 6.25% due 5/01/2037 2,494
2,400 Orange County, Florida, Health Facilities Authority,
Hospital Revenue Bonds (Orlando Regional
Healthcare), 6% due 12/01/2012 (h) 2,637
1,515 Orlando, Florida, Greater Orlando Aviation Authority,
Airport Facilities Revenue Bonds (JetBlue Airways
Corp.), AMT, 6.50% due 11/15/2036 1,579
525 Palm Coast Park Community Development District,
Florida, Special Assessment Revenue Bonds, 5.70%
due 5/01/2037 529
1,255 Preserve at Wilderness Lake, Florida, Community
Development District, Capital Improvement Bonds,
Series A, 5.90% due 5/01/2034 1,275
Georgia--3.6%
1,250 Atlanta, Georgia, Tax Allocation Bonds (Atlantic
Station Project), 7.90% due 12/01/2024 1,365
1,535 Brunswick and Glynn County, Georgia, Development
Authority, First Mortgage Revenue Bonds (Coastal
Community Retirement Corporation Project),
Series A, 7.25% due 1/01/2035 (p) 1,211
Portfolio Abbreviations
To simplify the listings of portfolio holdings in the Schedules of Investments,
we have abbreviated the names of many of the securities according to the list
at right.
AMT Alternative Minimum Tax (subject to)
CABS Capital Appreciation Bonds
COP Certificates of Participation
EDA Economic Development Authority
EDR Economic Development Revenue Bonds
GO General Obligation Bonds
HDA Housing Development Authority
HFA Housing Finance Agency
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
PCR Pollution Control Revenue Bonds
S/F Single Family
VRDN Variable Rate Demand Notes
ANNUAL REPORTS JULY 31, 2007
Schedule of Investments (continued) BlackRock MuniHoldings Fund II, Inc.
(in Thousands)
Face
Amount Municipal Bonds Value
Georgia (concluded)
$ 1,945 Fulton County, Georgia, Development Authority, PCR
(General Motors Corporation), Refunding, VRDN,
7.50% due 4/01/2010 (j)(m) $ 1,945
1,250 Milledgeville-Baldwin County, Georgia, Development
Authority Revenue Bonds (Georgia College and
State University Foundation), 5.50% due
9/01/2014 (h) 1,379
Idaho--1.3%
2,000 Power County, Idaho, Industrial Development
Corporation, Solid Waste Disposal Revenue Bonds (FMC
Corporation Project), AMT, 6.45% due 8/01/2032 2,100
Illinois--2.2%
1,000 Chicago, Illinois, Special Assessment Bonds (Lake
Shore East), 6.75% due 12/01/2032 1,070
2,000 Illinois HDA, Homeowner Mortgage Revenue Bonds,
AMT, Sub-Series C-2, 5.25% due 8/01/2022 2,027
500 Illinois State Finance Authority Revenue Bonds
(Landing At Plymouth Place Project), Series A,
6% due 5/15/2025 523
Louisiana--2.3%
2,500 Louisiana Public Facilities Authority, Hospital
Revenue Bonds (Franciscan Missionaries of Our Lady
Health System, Inc.), Series A, 5.25% due 8/15/2036 2,533
1,275 New Orleans, Louisiana, Financing Authority Revenue
Bonds (Xavier University of Louisiana Project), 5.30%
due 6/01/2026 (d) 1,323
Maine--2.1%
3,425 Maine State Housing Authority, Mortgage Purchase
Revenue Refunding Bonds, Series B, 5.30%
due 11/15/2023 3,512
Maryland--1.1%
800 Baltimore, Maryland, Wastewater Project Revenue
Bonds, Series D, 5% due 7/01/2037 (a) 834
1,050 Maryland State Energy Financing Administration, Limited
Obligation Revenue Bonds (Cogeneration-AES Warrior
Run), AMT, 7.40% due 9/01/2019 1,053
Massachusetts--4.6%
Massachusetts State Development Finance Agency
Revenue Bonds (Neville Communities Home),
Series A (f):
600 5.75% due 6/20/2022 662
1,500 6% due 6/20/2044 1,652
2,100 Massachusetts State, HFA, Housing Revenue Bonds, AMT,
Series A, 5.25% due 12/01/2048 2,109
3,000 Massachusetts State School Building Authority, Dedicated
Sales Tax Revenue Bonds, Series A, 5% due 8/15/2030 (c) 3,121
Michigan--0.7%
1,100 Flint, Michigan, Hospital Building Authority, Revenue
Refunding Bonds (Hurley Medical Center), Series A,
6% due 7/01/2020 (k) 1,177
Minnesota--7.1%
1,680 Minneapolis, Minnesota, Community Development
Agency, Supported Development Revenue Refunding
Bonds (Common Bond), Series G-3, 5.35%
due 12/01/2011 (h) 1,779
4,220 Minnesota State Municipal Power Agency, Electric
Revenue Bonds, 5.25% due 10/01/2021 4,452
Rockford, Minnesota, Independent School District
Number 883, GO (c):
2,870 5.60% due 2/01/2019 2,987
2,390 5.60% due 2/01/2020 2,487
Face
Amount Municipal Bonds Value
Mississippi--1.5%
Mississippi Business Finance Corporation, Mississippi,
PCR, Refunding (System Energy Resources Inc.
Project):
$ 2,000 5.875% due 4/01/2022 $ 2,020
500 5.90% due 5/01/2022 505
Missouri--1.9%
950 Fenton, Missouri, Tax Increment Revenue Refunding
and Improvement Bonds (Gravois Bluffs), 7%
due 10/01/2011 (h) 1,071
1,000 Kansas City, Missouri, IDA, First Mortgage Health
Facilities Revenue Bonds (Bishop Spencer Place),
Series A, 6.50% due 1/01/2035 1,047
1,000 Missouri State Development Finance Board, Infrastructure
Facilities Revenue Refunding Bonds (Branson), Series A,
5.50% due 12/01/2032 1,033
New Jersey--11.5%
New Jersey EDA, Cigarette Tax Revenue Bonds:
4,050 5.75% due 6/15/2029 4,312
1,890 5.50% due 6/15/2031 1,976
New Jersey EDA, Retirement Community Revenue
Bonds (h):
1,000 (Cedar Crest Village Inc. Facility), Series A, 7.25%
due 11/15/2011 1,135
2,000 (Seabrook Village Inc.), Series A, 8.125%
due 11/15/2010 2,278
2,000 New Jersey EDA, Special Facility Revenue Bonds
(Continental Airlines Inc. Project), AMT, 6.625%
due 9/15/2012 2,104
2,375 New Jersey Health Care Facilities Financing Authority
Revenue Bonds (South Jersey Hospital), 6%
due 7/01/2012 (h) 2,586
2,500 New Jersey State Turnpike Authority, Turnpike Revenue
Bonds, Series C, 5% due 1/01/2030 (c) 2,594
1,725 Tobacco Settlement Financing Corporation of New Jersey,
Asset-Backed Revenue Bonds, 7% due 6/01/2013 (h) 1,998
New Mexico--4.0%
3,675 Farmington, New Mexico, PCR, Refunding (Public Service
Company of New Mexico--San Juan Project), Series A,
5.80% due 4/01/2022 3,697
2,675 New Mexico Finance Authority, Senior Lien State
Transportation Revenue Bonds, Series A, 5.125%
due 6/15/2018 (d) 2,833
New York--11.5%
900 Dutchess County, New York, IDA, Civic Facility Revenue
Refunding Bonds (Saint Francis Hospital), Series A,
7.50% due 3/01/2029 986
415 New York City, New York, City IDA, Civic Facility Revenue
Bonds, Series C, 6.80% due 6/01/2028 450
New York City, New York, City IDA, Special Facility
Revenue Bonds (Continental Airlines Inc.
Project), AMT:
525 8% due 11/01/2012 568
525 8.375% due 11/01/2016 575
3,855 New York City, New York, Sales Tax Asset Receivable
Corporation Revenue Bonds, Series A, 5%
due 10/15/2020 (d) 4,047
2,725 New York State Dormitory Authority Revenue Bonds
(School Districts Financing Program), Series D, 5.25%
due 10/01/2023 (d) 2,876
ANNUAL REPORTS JULY 31, 2007
Schedule of Investments (continued) BlackRock MuniHoldings Fund II, Inc.
(in Thousands)
Face
Amount Municipal Bonds Value
New York (concluded)
Tobacco Settlement Financing Corporation of New York
Revenue Bonds:
$ 1,100 Series A-1, 5.50% due 6/01/2015 $ 1,143
2,400 Series A-1, 5.50% due 6/01/2018 2,544
2,750 Series C-1, 5.50% due 6/01/2020 (b) 2,942
1,100 Series C-1, 5.50% due 6/01/2022 1,169
1,575 Westchester County, New York, IDA, Continuing Care
Retirement, Mortgage Revenue Bonds (Kendal on
Hudson Project), Series A, 6.50% due 1/01/2034 1,652
North Carolina--1.3%
2,000 North Carolina Eastern Municipal Power Agency,
Power System Revenue Bonds, Series D, 6.75%
due 1/01/2026 2,123
Oklahoma--0.9%
1,315 Oklahoma State Development Finance Authority,
Revenue Refunding Bonds (Saint John Health
System), 5% due 2/15/2042 1,315
110 Oklahoma State Housing Finance Agency, S/F Mortgage
Revenue Bonds (Homeownership Loan Program),
Series D-2, AMT, 6.25% due 9/01/2029 (f)(g) 112
Pennsylvania--4.0%
2,750 Pennsylvania Economic Development Financing Authority,
Exempt Facilities Revenue Bonds (National Gypsum
Company), AMT, Series A, 6.25% due 11/01/2027 2,857
540 Philadelphia, Pennsylvania, Authority for IDR,
Commercial Development, 7.75% due 12/01/2017 541
2,630 Sayre, Pennsylvania, Health Care Facilities Authority,
Revenue Bonds (Guthrie Healthcare System), Series B,
7.125% due 12/01/2011 (h) 3,130
Rhode Island--1.5%
2,190 Rhode Island State Health and Educational Building
Corporation, Hospital Financing Revenue Bonds
(Lifespan Obligation Group), 6.50%
due 8/15/2012 (h) 2,447
South Carolina--2.8%
2,080 Medical University Hospital Authority, South Carolina,
Hospital Facilities Revenue Refunding Bonds, Series A,
6.375% due 8/15/2012 (h) 2,319
2,000 South Carolina Jobs, EDA, EDR (Westminster Presbyterian
Center), 7.75% due 11/15/2010 (h) 2,272
South Dakota--0.8%
1,350 South Dakota State Health and Educational Facilities
Authority Revenue Bonds (Sanford Health), 5%
due 11/01/2040 1,352
Tennessee--5.6%
600 Blount County, Tennessee, Public Building Authority,
Local Government Public Improvement Revenue
Bonds, VRDN, Series A-2F, 3.72%
due 6/01/2021 (a)(j) 600
2,200 Hardeman County, Tennessee, Correctional Facilities
Corporation Revenue Bonds, Series B, 7.375%
due 8/01/2017 2,245
Shelby County, Tennessee, Health, Educational and
Housing Facility Board, Hospital Revenue Refunding
Bonds:
3,450 (Methodist Healthcare), 6.50% due 9/01/2012 (h) 3,870
2,500 (Saint Jude Children's Research Hospital), 5%
due 7/01/2031 2,518
Face
Amount Municipal Bonds Value
Texas--8.7%
$ 2,665 Austin, Texas, Convention Center Revenue Bonds
(Convention Enterprises Inc.), First Tier, Series A,
6.70% due 1/01/2011 (h) $ 2,904
2,500 Brazos River, Texas, Harbor Navigation District,
Brazoria County Environmental Revenue Refunding
Bonds (Dow Chemical Company Project), AMT,
Series A-7, 6.625% due 5/15/2033 2,665
800 Harris County, Texas, Health Facilities Development
Corporation, Hospital Revenue Bonds (Texas
Children's Hospital), VRDN, Series B-1, 3.70%
due 10/01/2029 (d)(j) 800
1,300 Houston, Texas, Health Facilities Development
Corporation, Retirement Facility Revenue Bonds
(Buckingham Senior Living Community), Series A,
7.125% due 2/15/2034 1,537
2,965 Matagorda County, Texas, Navigation District
Number 1, Revenue Refunding Bonds (Reliant
Energy Inc.), Series C, 8% due 5/01/2029 3,083
1,100 Port Corpus Christi, Texas, Individual Development
Corporation, Environmental Facilities Revenue Bonds
(Citgo Petroleum Corporation Project), AMT, 8.25%
due 11/01/2031 1,124
SA Energy Acquisition Public Facilities Corporation,
Texas, Gas Supply Revenue Bonds:
1,130 5.50% due 8/01/2023 1,205
1,035 5.50% due 8/01/2024 1,105
Vermont--0.6%
1,000 Vermont Educational and Health Buildings Financing
Agency, Revenue Bonds (Developmental and Mental
Health), Series A, 6.50% due 6/15/2032 1,045
Virginia--11.1%
425 Chesterfield County, Virginia, IDA, PCR (Virginia
Electric and Power Company), Series A, 5.875%
due 6/01/2017 451
575 Chesterfield County, Virginia, IDA, PCR, Refunding
(Virginia Electric and Power Company), Series B,
5.875% due 6/01/2017 612
5,000 Fairfax County, Virginia, EDA, Resource Recovery
Revenue Refunding Bonds, AMT, Series A, 6.10%
due 2/01/2011 (a) 5,345
18,400 Pocahontas Parkway Association, Virginia, Toll Road
Revenue Bonds, Senior-Series B, 7.35%
due 8/15/2008 (h)(p) 5,020
2,185 Tobacco Settlement Financing Corporation of
Virginia, Asset-Backed Revenue Bonds, 5.625%
due 6/01/2015 (h) 2,413
1,095 Virginia State, HDA, Rental Housing Revenue Bonds,
AMT, Series B, 5.625% due 8/01/2011 1,131
3,200 Virginia State, HDA, Revenue Bonds, AMT, Series D, 6%
due 4/01/2024 3,287
Washington--0.6%
1,015 Seattle, Washington, Housing Authority Revenue
Bonds (Replacement Housing Project), 6.125%
due 12/01/2032 1,036
Wisconsin--1.5%
Wisconsin State Health and Educational Facilities Authority
Revenue Bonds:
1,100 (ProHealth Care, Inc.), VRDN, Series B, 3.64%
due 8/15/2030 (a)(j) 1,100
1,360 (SynergyHealth Inc.), 6% due 11/15/2032 1,438
ANNUAL REPORTS JULY 31, 2007
Schedule of Investments (concluded) BlackRock MuniHoldings Fund II, Inc.
(in Thousands)
Face
Amount Municipal Bonds Value
Puerto Rico--3.4%
$ 1,945 Puerto Rico Commonwealth Highway and Transportation
Authority, Transportation Revenue Refunding Bonds,
Series N, 5.25% due 7/01/2036 (o) $ 2,146
1,550 Puerto Rico Industrial, Medical and Environmental
Pollution Control Facilities Financing Authority, Special
Facilities Revenue Bonds (American Airlines Inc.),
Series A, 6.45% due 12/01/2025 1,574
13,940 Puerto Rico Sales Tax Financing Corporation, Sales
Tax Revenue Refunding Bonds, Series A, 5.06%
due 8/01/2047 (a)(p) 1,930
U.S. Virgin Islands--1.7%
2,680 Virgin Islands Government Refinery Facilities, Revenue
Refunding Bonds (Hovensa Coker Project), AMT, 6.50%
due 7/01/2021 2,875
Total Municipal Bonds
(Cost--$217,254)--138.6% 228,852
Municipal Bonds Held in Trust (e)
California--3.3%
5,130 California Pollution Control Financing Authority,
PCR, Refunding (Pacific Gas and Electric), AMT,
Series A, 5.35% due 12/01/2016 (d) 5,409
Maryland--4.9%
7,765 Baltimore, Maryland, Convention Center Hotel Revenue
Bonds, Senior Series A, 5.25%, due 9/01/2039 (i) 8,177
Face
Amount Municipal Bonds Held in Trust (e) Value
Michigan--3.2%
$ 5,000 Michigan State Strategic Fund, Limited Obligation
Revenue Refunding Bonds (Detroit Edison Company
Pollution Control Project), AMT, Series C, 5.65%
due 9/01/2029 (i) $ 5,237
New York--2.0%
3,205 New York City, New York, Sales Tax Asset Receivable
Corporation Revenue Bonds, Series A, 5.25%,
due 10/15/2027 (a) 3,413
South Carolina--5.2%
8,400 South Carolina State Ports Authority, Ports Revenue
Bonds, AMT, 5.30% due 7/01/2026 (c) 8,544
Texas--5.5%
8,730 Harris County, Texas, Toll Road Revenue Refunding
Bonds, Senior Lien, Series A, 5.25% due 8/15/2035 (c) 9,086
Total Municipal Bonds Held in Trust
(Cost--40,262)--24.1% 39,866
Shares
Held Short-Term Securities
12 Merrill Lynch Institutional Tax-Exempt Fund, 3.47% (l)(n) 12
Total Short-Term Securities
(Cost--$12)--0.0% 12
Total Investments (Cost--$257,528*)--162.7% 268,730
Other Assets Less Liabilities--1.7% 2,826
Liabilities for Trust Certificates, Including Interest
Expense Payable--(11.7%) (19,332)
Preferred Stock, at Redemption Value--(52.7%) (87,039)
----------
Net Assets--100.0% $ 165,185
==========
* The cost and unrealized appreciation (depreciation) of investments
as of July 31, 2007, as computed for federal income tax purposes,
were as follows:
Aggregate cost $ 237,876
=============
Gross unrealized appreciation $ 12,946
Gross unrealized depreciation (1,204)
-------------
Net unrealized appreciation $ 11,742
=============
(a) AMBAC Insured.
(b) FGIC Insured.
(c) FSA Insured.
(d) MBIA Insured.
(e) Securities represent underlying bonds transferred to a separate
securitization trust established in a tender option bond transaction in
which the Fund may have acquired the residual interest certificates. These
securities serve as collateral in a financing transaction. See Note 1(c)
to Financial Statements for details of municipal bonds held in trust.
(f) GNMA Collateralized.
(g) FNMA Collateralized.
(h) Prerefunded.
(i) XL Capital Insured.
(j) Security may have a maturity of more than one year at time of issuance, but
has variable rate and demand features that qualify it as a short-term
security. The rate disclosed is that currently in effect. This rate changes
periodically based upon prevailing market rates.
(k) ACA Insured.
(l) Investments in companies considered to be an affiliate of the Fund, for
purposes of Section 2(a)(3) of the Investment Company Act of 1940, were
as follows:
Net Dividend
Affiliate Activity Income
Merrill Lynch Institutional Tax-Exempt Fund -- --*
* Amount is less than $1,000.
(m) Represents a pay-in-kind security which may pay interest/dividends in
additional face/shares.
(n) Represents the current yield as of July 31, 2007.
(o) Assured Guaranty Insured.
(p) Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase.
o Forward Interest Rate Swaps entered into as of July 31, 2007 were as
follows:
Notional Unrealized
Amount (Depreciation)
Receive a fixed rate of 5.39% and pay a
floating rate based on 3-month LIBOR
Broker, Deutsche Bank AG London
Expires August 2017 $12,455,000 $ (66,099)
----------
Total $ (66,099)
==========
See Notes to Financial Statements.
ANNUAL REPORTS JULY 31, 2007
Schedule of Investments as of July 31, 2007
BlackRock MuniHoldings New Jersey Insured Fund, Inc. (in Thousands)
Face
Amount Municipal Bonds Value
New Jersey--145.7%
$ 1,875 Atlantic Highlands, New Jersey, Highland Regional
Sewer Authority, Sewer Revenue Refunding Bonds,
5.50% due 1/01/2020 (b) $ 1,981
Camden County, New Jersey, Improvement Authority,
Lease Revenue Bonds (c )(h):
2,635 5.375% due 9/01/2010 2,756
1,540 5.5% due 9/01/2010 1,617
430 Carteret, New Jersey, Board of Education, COP, 6%
due 1/15/2010 (d)(h) 456
2,500 Delaware River and Bay Authority Revenue Bonds,
New Jersey, 5% due 1/01/2033 (d) 2,573
4,630 Delaware River Joint Toll Bridge Commission of New
Jersey and Pennsylvania, Bridge Revenue Refunding
Bonds, 5% due 7/01/2028 4,746
Delaware River Port Authority of Pennsylvania and New
Jersey Revenue Bonds (c):
5,000 5.50% due 1/01/2012 5,185
6,000 5.625% due 1/01/2013 6,243
500 5.75% due 1/01/2015 521
4,865 6% due 1/01/2018 5,095
5,525 6% due 1/01/2019 5,786
2,425 Delaware River Port Authority of Pennsylvania and New
Jersey Revenue Bonds (Port District Project), Series B,
5.625% due 1/01/2026 (c) 2,513
7,895 East Orange, New Jersey, Board of Education, COP,
5.50% due 8/01/2012 (c) 8,294
4,000 Essex County, New Jersey, Improvement Authority, Lease
Revenue Bonds (Correctional Facility Project), 6%
due 10/01/2010 (b)(h) 4,262
4,400 Essex County, New Jersey, Improvement Authority Revenue
Bonds, Series A, 5% due 10/01/2013 (b)(h) 4,670
Garden State Preservation Trust of New Jersey,
Capital Appreciation Revenue Bonds (c)(k):
9,000 Series B, 5.12% due 11/01/2023 4,298
10,000 Series B, 5.20% due 11/01/2025 4,314
Garden State Preservation Trust of New Jersey, Open
Space and Farmland Preservation Revenue Bonds,
Series A (c):
1,960 5.80% due 11/01/2021 2,194
2,730 5.80% due 11/01/2023 3,056
9,160 5.75% due 11/01/2028 10,827
Garden State Preservation Trust of New Jersey, Open
Space and Farmland Preservation, Revenue Refunding
Bonds Series C (c):
5,000 5.25% due 11/01/2020 5,518
7,705 5.25% due 11/01/2021 8,522
4,790 Hopatcong, New Jersey, GO, Sewer Refunding Bonds,
4.50% due 8/01/2033 (a) 4,801
2,230 Jersey City, New Jersey, GO, Series B, 5.25%
due 9/01/2011 (c)(h) 2,390
5,250 Lafayette Yard, New Jersey, Community Development
Revenue Bonds (Hotel/Conference Center Project-
Trenton), 6% due 4/01/2010 (d)(h) 5,593
Face
Amount Municipal Bonds Value
New Jersey (continued)
$ 1,550 Middlesex County, New Jersey, COP, 5.25%
due 6/15/2023 (d) $ 1,596
1,375 Middlesex County, New Jersey, COP, Refunding,
5.50% due 8/01/2016 (d) 1,456
5,270 Middlesex County, New Jersey, Improvement Authority,
Lease Revenue Bonds (Educational Services
Commission Projects), 6% due 7/15/2010 (h) 5,643
500 Middlesex County, New Jersey, Improvement Authority
Revenue Bonds (Senior Citizens Housing Project),
AMT, 5.50% due 9/01/2030 (a) 516
Monmouth County, New Jersey, Improvement Authority,
Governmental Loan Revenue Refunding Bonds (a):
695 5.35% due 12/01/2010 729
535 5.375% due 12/01/2010 561
845 5.35% due 12/01/2017 883
935 5.375% due 12/01/2018 976
Morristown, New Jersey, Parking Authority Revenue
Bonds (d):
1,830 5% due 8/01/2030 1,918
3,000 5% due 8/01/2033 3,144
New Jersey EDA, Cigarette Tax Revenue Bonds:
2,700 5.625% due 6/15/2019 2,793
2,000 5.75% due 6/15/2029 2,130
585 5.50% due 6/15/2031 612
1,180 5.75% due 6/15/2034 1,251
5,000 New Jersey EDA, Lease Revenue Bonds (University of
Medicine and Dentistry--International Center for
Public Health Project), 6% due 6/01/2032 (a) 5,266
New Jersey EDA, Motor Vehicle Surcharge Revenue
Bonds, Series A (d):
7,500 5.25% due 7/01/2026 8,323
11,105 5.25% due 7/01/2033 11,737
2,000 5% due 7/01/2034 2,068
1,000 New Jersey EDA, Parking Facility Revenue Bonds
(Elizabeth Development Company Project), 5.60%
due 10/15/2007 (b)(h) 1,024
New Jersey EDA, School Facilities Construction
Revenue Bonds:
9,000 Series L, 5% due 3/01/2030 (c) 9,321
8,420 Series O, 5.25% due 3/01/2023 8,949
1,000 New Jersey EDA, School Facilities Construction,
Revenue Refunding Bonds, Series N-1, 5.50%
due 9/01/2027 (b) 1,146
2,500 New Jersey EDA, Solid Waste Disposal Facilities
Revenue Bonds (Waste Management Inc.), AMT,
Series A, 5.30% due 6/01/2015 2,542
New Jersey EDA, State Lease Revenue Bonds:
2,670 (Liberty State Park Project), Series C, 5%
due 3/01/2022 (c) 2,797
3,000 (State Office Buildings Projects), 6%
due 6/15/2010 (a)(h) 3,181
4,620 (State Office Buildings Projects), 6.25%
due 6/15/2010 (a)(h) 4,929
ANNUAL REPORTS JULY 31, 2007
Schedule of Investments (continued)
BlackRock MuniHoldings New Jersey Insured Fund, Inc. (in Thousands)
Face
Amount Municipal Bonds Value
New Jersey (continued)
$ 10,775 New Jersey Health Care Facilities Financing Authority,
Department of Human Services Revenue Bonds
(Greystone Park Psychiatric Hospital Project), 5%
due 9/15/2023 (a) $ 11,219
New Jersey Health Care Facilities Financing Authority
Revenue Bonds:
3,015 (RWJ Healthcare Corporation), Series B, 5%
due 7/01/2035 (i) 3,017
2,820 (Society of the Valley Hospital), 5.375%
due 7/01/2025 (a) 2,918
2,135 (Somerset Medical Center), 5.50% due 7/01/2033 2,176
5,440 (South Jersey Hospital), 6% due 7/01/2012 (h) 5,924
New Jersey Health Care Facilities Financing Authority,
Revenue Refunding Bonds:
4,000 (AHS Hospital Corporation), Series A, 6%
due 7/01/2013 (a)(g) 4,440
1,525 (Atlantic City Medical Center), 5.75%
due 7/01/2012 (h) 1,650
530 (Atlantic City Medical Center), 6.25%
due 7/01/2012 (h) 585
925 (Atlantic City Medical Center), 6.25%
due 7/01/2017 1,001
1,975 (Atlantic City Medical Center), 5.75%
due 7/01/2025 2,067
1,000 (Meridian Health System Obligation Group),
5.375% due 7/01/2024 (c) 1,032
New Jersey Sports and Exposition Authority, Luxury Tax
Revenue Refunding Bonds (Convention Center) (d):
5,890 5.50% due 3/01/2021 6,618
3,000 5.50% due 3/01/2022 3,377
2,400 New Jersey Sports and Exposition Authority, State
Contract Revenue Bonds, Series A, 6%
due 3/01/2013 (d) 2,524
7,500 New Jersey State Educational Facilities Authority,
Higher Education, Capital Improvement Revenue
Bonds, Series A, 5.125% due 9/01/2012 (a)(h) 7,945
New Jersey State Educational Facilities Authority
Revenue Bonds:
9,420 (Capital Improvement Fund), Series A, 5.75%
due 9/01/2010 (c)(h) 9,956
2,000 (Kean University), Series D, 5% due 7/01/2032 (b) 2,096
300 (Kean University), Series D, 5% due 7/01/2039 (b) 314
1,200 (Montclair State University), Series A, 5%
due 7/01/2021 (a) 1,268
2,880 (Montclair State University), Series A, 5%
due 7/01/2022 (a) 3,037
1,400 (Richard Stockton College), Series F, 5%
due 7/01/2031 (d) 1,462
3,260 (Rowan University), Series C, 5%
due 7/01/2014 (d)(h) 3,475
3,615 (Rowan University), Series C, 5.125%
due 7/01/2014 (d)(h) 3,881
700 (Rowan University), Series G, 4.50%
due 7/01/2031 (d) 694
Face
Amount Municipal Bonds Value
New Jersey (continued)
New Jersey State Educational Facilities Authority,
Revenue Refunding Bonds:
$ 3,900 (Montclair State University), Series J, 4.25%
due 7/01/2030 (d) $ 3,715
7,510 (Montclair State University), Series L, 5%
due 7/01/2014 (d)(h) 8,006
1,250 (Ramapo College), Series I, 4.25%
due 7/01/2031 (a) 1,197
1,000 (Ramapo College), Series I, 4.25%
due 7/01/2036 (a) 953
1,800 (Rowan University), Series B, 4.25%
due 7/01/2034 (b) 1,705
465 (Rowan University), Series C, 5%
due 7/01/2011 (b)(h) 489
790 (Rowan University), Series C, 5.25%
due 7/01/2011 (b)(h) 839
2,135 (Rowan University), Series C, 5.25%
due 7/01/2017 (b) 2,257
2,535 (Rowan University), Series C, 5.25%
due 7/01/2018 (b) 2,662
2,370 (Rowan University), Series C, 5.25%
due 7/01/2019 (b) 2,489
945 (Rowan University), Series C, 5%
due 7/01/2031 (b) 974
2,800 (Stevens Institute of Technology), Series A,
5% due 7/01/2027 2,822
900 (Stevens Institute of Technology), Series A,
5% due 7/01/2034 901
11,225 New Jersey State Housing and Mortgage Finance
Agency, Capital Fund Program Revenue Bonds,
Series A, 4.70% due 11/01/2025 (c) 11,268
New Jersey State Housing and Mortgage Finance
Agency, Home Buyer Revenue Bonds, AMT,
Series U (d):
745 5.60% due 10/01/2012 757
2,140 5.65% due 10/01/2013 2,175
2,395 5.75% due 4/01/2018 2,434
640 5.85% due 4/01/2029 650
800 New Jersey State Housing and Mortgage Finance
Agency, S/F Housing Revenue Refunding Bonds,
AMT, Series T, 4.70% due 10/01/2037 752
5,000 New Jersey State Transit Corporation, COP (Federal
Transit Administration Grants), Series A, 6.125%
due 9/15/2009 (a)(h) 5,237
New Jersey State Transportation Trust Fund Authority,
Transportation System Revenue Bonds:
7,500 Series A, 6% due 6/15/2010 (h) 7,951
4,050 Series C, 4.70% due 12/15/2032 (c)(k) 1,216
1,400 Series C, 5.05% due 12/15/2035 (a)(k) 362
5,500 Series C, 5.05% due 12/15/2036 (a)(k) 1,354
7,800 Series D, 5% due 6/15/2019 (c) 8,212
New Jersey State Transportation Trust Fund Authority,
Transportation System Revenue Refunding Bonds:
10,750 Series A, 5.25% due 12/15/2020 (c) 11,861
9,165 Series B, 5.50% due 12/15/2021 (d) 10,366
ANNUAL REPORTS JULY 31, 2007
Schedule of Investments (continued)
BlackRock MuniHoldings New Jersey Insured Fund, Inc. (in Thousands)
Face
Amount Municipal Bonds Value
New Jersey (continued)
$ 7,615 New Jersey State Turnpike Authority, Turnpike Revenue
Bonds, Series B, 5.15% due 1/01/2035 (a)(k) $ 5,426
New Jersey State Turnpike Authority, Turnpike Revenue
Refunding Bonds:
4,610 Series C, 6.50% due 1/01/2016 (d)(g) 5,254
910 Series C, 6.50% due 1/01/2016 (d) 1,034
1,915 Series C-1, 4.50% due 1/01/2031 (a) 1,899
1,870 Newark, New Jersey, Housing Authority, Port Authority--
Port Newark Marine Terminal, Additional Rent-
Backed Revenue Refunding Bonds (City of Newark
Redevelopment Projects), 4.375% due 1/01/2037 (d) 1,798
North Bergen Township, New Jersey, Board of
Education, COP (c)(h):
1,000 6% due 12/15/2010 1,078
3,260 6.25% due 12/15/2010 3,541
4,335 North Hudson Sewage Authority, New Jersey, Sewer
Revenue Refunding Bonds, 5.125% due 8/01/2020 (d) 4,738
1,035 Orange Township, New Jersey, Municipal Utility
and Lease, GO, Refunding, Series C, 5.10%
due 12/01/2017 (d) 1,062
Paterson, New Jersey, Public School District, COP (d):
1,980 6.125% due 11/01/2015 2,095
2,000 6.25% due 11/01/2019 2,121
Perth Amboy, New Jersey, GO (Convertible CABS),
Refunding (c)(k)(m):
1,470 4.55% due 7/01/2012 1,186
4,605 4.50% due 7/01/2032 3,727
1,395 4.50% due 7/01/2033 1,128
Port Authority of New York and New Jersey, Special
Obligation Revenue Bonds (JFK International Air
Terminal LLC), AMT, Series 6 (d):
13,500 6.25% due 12/01/2011 14,692
1,500 6.25% due 12/01/2015 1,713
3,000 5.75% due 12/01/2025 3,016
6,600 Rahway Valley Sewerage Authority, New Jersey, Sewer
Revenue Bonds (Capital Appreciation), Series A, 4.79%
due 9/01/2028 (d)(k) 2,433
700 Rutgers State University, New Jersey, Revenue Bonds,
Series E, 5% due 5/01/2034 (b) 725
500 Salem County, New Jersey, Improvement Authority
Revenue Bonds (Finlaw State Office Building Project),
5.375% due 8/15/2028 (c) 546
South Jersey Port Corporation of New Jersey, Revenue
Refunding Bonds:
3,750 4.50% due 1/01/2015 3,822
1,920 4.50% due 1/01/2016 1,950
1,500 5% due 1/01/2026 1,535
2,000 5.10% due 1/01/2033 2,051
4,755 Tobacco Settlement Financing Corporation of
New Jersey, Asset-Backed Revenue Bonds, 7%
due 6/01/2013 (h) 5,507
2,000 University of Medicine and Dentistry of New Jersey,
COP, 5% due 6/15/2029 (d) 2,069
Face
Amount Municipal Bonds Value
New Jersey (concluded)
$ 4,740 University of Medicine and Dentistry of New
Jersey, Revenue Bonds, Series A, 5.50%
due 12/01/2027 (a) $ 5,041
8,580 West Deptford Township, New Jersey, GO,
5.625% due 9/01/2010 (b)(h) 9,037
Puerto Rico--14.5%
Puerto Rico Commonwealth Highway and Transportation
Authority, Transportation Revenue Refunding Bonds:
4,500 Series J, 5% due 7/01/2029 (d) 4,673
3,480 Series K, 5% due 7/01/2015 (h) 3,736
17,450 Series N, 5.25% due 7/01/2039 (b) 19,464
4,000 Puerto Rico Commonwealth Infrastructure Financing
Authority, Special Tax and Capital Appreciation Revenue
Bonds, Series A, 4.34% due 7/01/2037 (a)(k) 940
Puerto Rico Electric Power Authority, Power Revenue
Bonds:
6,830 Series HH, 5.25% due 7/01/2010 (c)(h) 7,174
5,100 Series RR, 5% due 7/01/2028 (f) 5,309
Puerto Rico Industrial, Tourist, Educational, Medical and
Environmental Control Facilities Revenue Bonds:
1,780 (Hospital Auxilio Mutuo Obligation Group), Series A,
6.25% due 7/01/2024 (d) 1,792
1,750 (Hospital de la Concepcion), Series A, 6.50%
due 11/15/2020 1,889
700 Puerto Rico Sales Tax Financing Corporation, Sales
Tax Revenue Refunding Bonds, Series A, 5.25%
due 8/01/2057 733
Total Municipal Bonds
(Cost--$488,965)--160.2% 505,916
Municipal Bonds Held in Trust (e)
New Jersey--2.9%
8,650 Trenton, New Jersey, Parking Authority, Parking Revenue
Bonds, 6.10% due 4/01/2010 (b)(h) 9,159
Total Municipal Bonds Held in Trust
(Cost--$9,670)--2.9% 9,159
Shares
Held Short-Term Securities
8,378 CMA New Jersey Municipal Money Fund, 2.99% (j)(l) 8,378
Total Short-Term Securities
(Cost--$8,378)--2.7% 8,378
Total Investments (Cost--$507,013*)--165.8% 523,453
Liabilities in Excess of Other Assets--(0.1%) (226)
Liabilities for Trust Certificates, Including Interest
Expense Payable--(1.4%) (4,378)
Preferred Stock, at Redemption Value--(64.3%) (203,080)
----------
Net Assets Applicable to Common Stock--100.0% $ 315,769
==========
ANNUAL REPORTS JULY 31, 2007
Schedule of Investments (concluded)
BlackRock MuniHoldings New Jersey Insured Fund, Inc. (in Thousands)
* The cost and unrealized appreciation (depreciation) of investments
as of July 31, 2007, as computed for federal income tax purposes,
were as follows:
Aggregate cost $ 502,510
============
Gross unrealized appreciation $ 17,397
Gross unrealized depreciation (779)
------------
Net unrealized appreciation $ 16,618
============
(a) AMBAC Insured.
(b) FGIC Insured.
(c) FSA Insured.
(d) MBIA Insured.
(e) Securities represent underlying bonds transferred to a separate
securitization trust established in a tender option bond transaction in
which the Fund may have acquired the residual interest certificates.
These securities serve as collateral in a financing transaction. See
Note 1(c) to Financial Statements for details of municipal bonds held in
trust.
(f) CIFG Insured.
(g) Escrowed to maturity.
(h) Prerefunded.
(i) Radian Insured.
(j) Investments in companies considered to be an affiliate of the Fund,
for purposes of Section 2(a)(3) of the Investment Company Act of 1940,
were as follows:
Net Dividend
Affiliate Activity Income
CMA New Jersey Municipal Money Fund 7,328 $130
(k) Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase.
(l) Represents the current yield as of July 31, 2007.
(m) Represents a step-bond; the interest rate shown reflects the effective
yield at the time of purchase.
See Notes to Financial Statements.
ANNUAL REPORTS JULY 31, 2007
Statements of Net Assets
BlackRock
MuniHoldings
BlackRock New Jersey
MuniHoldings Insured
As of July 31, 2007 Fund II, Inc. Fund, Inc.
Assets
Investments in unaffiliated securities, at value* $ 268,718,530 $ 515,074,994
Investments in affiliated securities, at value** 11,739 8,377,520
Cash 23,781 66,903
Interest receivable 3,625,934 5,025,579
Receivable for securities sold 143,646 --
Prepaid expenses and other assets 7,574 9,556
--------------- ---------------
Total assets 272,531,204 528,554,552
--------------- ---------------
Liabilities
Trust certificates 19,112,500 4,325,000
Interest expense payable 219,841 53,292
Unrealized depreciation on interest rate swaps 66,099 --
Payable for securities purchased -- 3,710,724
Payable to investment adviser 117,548 222,405
Payable for other affiliates 1,528 3,184
Dividends payable to shareholders 703,916 1,253,479
Accrued expenses and other liabilities 85,913 137,342
--------------- ---------------
Total liabilities 20,307,345 9,705,426
--------------- ---------------
Preferred Stock
Preferred Stock, at redemption value, par value $.10 per share*** of
AMPS+++ at $25,000 per share liquidation preference 87,038,530 203,080,051
--------------- ---------------
Net Assets Applicable to Common Stock
Net assets applicable to Common Stock $ 165,185,329 $ 315,769,075
=============== ===============
Net Assets Consist of
Undistributed investment income--net $ 1,603,567 $ 1,724,754
Accumulated realized capital losses--net (13,965,152) (23,907,839)
Unrealized appreciation--net 11,136,307 16,439,335
--------------- ---------------
Total accumulated losses--net (1,225,278) (5,743,750)
--------------- ---------------
Common Stock, par value $.10 per share++ 1,117,328 2,124,541
Paid-in capital in excess of par 165,293,279 319,388,284
--------------- ---------------
Net Assets $ 165,185,329 $ 315,769,075
=============== ===============
Net asset value per share of Common Stock $ 14.78 $ 14.86
=============== ===============
Market price $ 13.99 $ 14.40
=============== ===============
* Identified cost on unaffiliated securities $ 257,516,124 $ 498,635,659
=============== ===============
** Identified cost on affiliated securities $ 11,739 $ 8,377,520
=============== ===============
*** Preferred Stock authorized, issued and outstanding:
Series A Shares 1,740 1,360
=============== ===============
Series B Shares 1,740 1,360
=============== ===============
Series C Shares -- 2,400
=============== ===============
Series D Shares -- 1,880
=============== ===============
Series E Shares -- 1,120
=============== ===============
++ Common Stock issued and outstanding 11,173,277 21,245,413
=============== ===============
+++ Auction Market Preferred Stock.
See Notes to Financial Statements.
ANNUAL REPORTS JULY 31, 2007
Statements of Operations
BlackRock
MuniHoldings
BlackRock New Jersey
MuniHoldings Insured
For the Year Ended July 31, 2007 Fund II, Inc. Fund, Inc.
Investment Income
Interest $ 14,446,408 $ 26,127,542
Dividends from affiliates 404 129,645
Total income 14,446,812 26,257,187
Expenses
Investment advisory fees 1,402,442 2,884,899
Interest expense and fees 743,858 725,316
Commission fees 220,631 516,644
Accounting services 103,380 172,704
Professional fees 85,002 83,137
Transfer agent fees 47,027 83,181
Printing and shareholder reports 24,790 48,375
Directors' fees and expenses 30,246 30,353
Listing fees 9,396 9,379
Custodian fees 15,133 27,841
Pricing fees 18,021 20,114
Other 41,745 69,229
--------------- ---------------
Total expenses before waiver and/or reimbursement 2,741,671 4,671,172
Waiver and/or reimbursement of expenses (22) (183,780)
--------------- ---------------
Total expenses after waiver and/or reimbursement 2,741,649 4,487,392
--------------- ---------------
Investment income--net 11,705,163 21,769,795
--------------- ---------------
Realized & Unrealized Gain--Net
Realized gain on investments--net 1,636,714 2,584,163
--------------- ---------------
Change in unrealized appreciation on:
Investments--net (2,040,760) (3,049,991)
Forward interest rate swaps (66,099) --
--------------- ---------------
Total change in unrealized appreciation (2,106,859) (3,049,991)
--------------- ---------------
Total realized and unrealized loss--net (470,145) (465,828)
--------------- ---------------
Dividends to Preferred Shareholders
Investment income--net (3,062,036) (6,513,353)
--------------- ---------------
Net Increase in Net Assets Resulting from Operations $ 8,172,982 $ 14,790,614
=============== ===============
See Notes to Financial Statements.
ANNUAL REPORTS JULY 31, 2007
Statements of Changes in Net Assets BlackRock MuniHoldings Fund II, Inc.
For the Year Ended
July 31,
Increase (Decrease) in Net Assets: 2007 2006
Operations
Investment income--net $ 11,705,163 $ 11,647,817
Realized gain--net 1,636,714 1,242,209
Change in unrealized appreciation--net (2,106,859) (2,518,967)
Dividends to Preferred Stock shareholders (3,062,036) (2,570,803)
--------------- ---------------
Net increase in net assets resulting from operations 8,172,982 7,800,256
--------------- ---------------
Dividends to Common Stock Shareholders
Investment income--net (8,623,062) (10,146,661)
--------------- ---------------
Net decrease in net assets resulting from dividends to Common Stock shareholders ( 8,623,062) (10,146,661)
--------------- ---------------
Common Stock Transactions
Value of shares issued to Common Stock shareholders in reinvestment of dividends 70,232 323,132
--------------- ---------------
Net Assets Applicable to Common Stock
Total decrease in net assets applicable to Common Stock (379,848) (2,023,273)
Beginning of year 165,565,177 167,588,450
--------------- ---------------
End of year* $ 165,185,329 $ 165,565,177
=============== ===============
* Undistributed investment income--net $ 1,645,606 $ 1,625,541
=============== ===============
See Notes to Financial Statements.
BlackRock MuniHoldings New Jersey Insured Fund, Inc.
For the Year Ended
July 31,
Increase (Decrease) in Net Assets: 2007 2006
Operations
Investment income--net $ 21,769,795 $ 21,755,079
Realized gain--net 2,584,163 3,099,555
Change in unrealized appreciation--net (3,049,991) (16,043,661)
Dividends to Preferred Stock shareholders (6,513,353) (5,509,362)
--------------- ---------------
Net increase in net assets resulting from operations 14,790,614 3,301,611
--------------- ---------------
Dividends to Common Stock Shareholders
Investment income--net (15,781,439) (18,365,764)
--------------- ---------------
Net decrease in net assets resulting from dividends to Common Stock
shareholders ( 15,781,439) (18,365,764)
--------------- ---------------
Common Stock Transactions
Value of shares issued to Common Stock shareholders in reinvestment of dividends 1,110,968 1,860,277
--------------- ---------------
Net Assets Applicable to Common Stock
Total increase (decrease) in net assets applicable to Common Stock 120,143 (13,203,876)
Beginning of year 315,648,932 328,852,808
--------------- ---------------
End of year* $ 315,769,075 $ 315,648,932
=============== ===============
* Undistributed investment income--net $ 1,724,754 $ 2,249,751
=============== ===============
See Notes to Financial Statements.
ANNUAL REPORTS JULY 31, 2007
Financial Highlights BlackRock MuniHoldings Fund II, Inc.
The following per share data and ratios have been derived For the Year Ended July 31,
from information provided in the financial statements. 2007 2006 2005 2004 2003
Per Share Operating Performance
Net asset value, beginning of year $ 14.82 $ 15.03 $ 13.98 $ 13.46 $ 13.51
---------- ---------- ---------- ---------- ----------
Investment income--net 1.05++ 1.04++ 1.08++ 1.15++ 1.16++
Realized and unrealized gain (loss)--net (.05) (.11) 1.15 .50 (.15)
Less dividends to Preferred Stock shareholders from
investment income--net (.27) (.23) (.14) (.10) (.10)
---------- ---------- ---------- ---------- ----------
Total from investment operations .73 .70 2.09 1.55 .91
---------- ---------- ---------- ---------- ----------
Less dividends to Common Stock shareholders from
investment income--net (.77) (.91) (1.04) (1.03) (.96)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 14.78 $ 14.82 $ 15.03 $ 13.98 $ 13.46
========== ========== ========== ========== ==========
Market price per share, end of year $ 13.99 $ 14.12 $ 15.25 $ 13.53 $ 13.16
========== ========== ========== ========== ==========
Total Investment Return**
Based on net asset value per share 5.08% 4.89% 15.46% 11.88% 7.15%
========== ========== ========== ========== ==========
Based on market price per share 4.39% (1.50%) 21.04% 10.75% 9.21%
========== ========== ========== ========== ==========
Ratios Based on Average Net Assets Applicable to Common Stock
Total expenses, net of reimbursement and excluding interest
expense* 1.19% 1.18% 1.19% 1.21% 1.26%
========== ========== ========== ========== ==========
Total expenses, net of reimbursement* 1.63% 1.44% 1.27% 1.30% 1.38%
========== ========== ========== ========== ==========
Total expenses* 1.63% 1.44% 1.27% 1.31% 1.38%
========== ========== ========== ========== ==========
Total investment income--net* 6.97% 7.04% 7.38% 8.13% 8.48%
========== ========== ========== ========== ==========
Amount of dividends to Preferred Stock shareholders 1.82% 1.55% .98% .69% .74%
========== ========== ========== ========== ==========
Investment income--net, to Common Stock shareholders 5.15% 5.49% 6.40% 7.44% 7.74%
========== ========== ========== ========== ==========
Ratios Based on Average Net Assets Applicable to Preferred Stock
Dividends to Preferred Stock shareholders 3.52% 2.95% 1.84% 1.23% 1.28%
========== ========== ========== ========== ==========
Supplemental Data
Net assets applicable to Common Stock, end of year
(in thousands) $ 165,185 $ 165,565 $ 167,588 $ 155,583 $ 149,262
========== ========== ========== ========== ==========
Preferred Stock outstanding at liquidation preference,
end of year (in thousands) $ 87,000 $ 87,000 $ 87,000 $ 87,000 $ 87,000
========== ========== ========== ========== ==========
Portfolio turnover 15% 41% 38% 29% 42%
========== ========== ========== ========== ==========
Leverage
Asset coverage per $1,000 $ 2,899 $ 2,903 $ 2,926 $ 2,788 $ 2,716
========== ========== ========== ========== ==========
Dividends Per Share on Preferred Stock Outstanding
Series A--Investment income--net $ 894 $ 754 $ 445 $ 223 $ 279
========== ========== ========== ========== ==========
Series B--Investment income--net $ 866 $ 724 $ 471 $ 395 $ 363
========== ========== ========== ========== ==========
* Do not reflect the effect of dividends to Preferred Stock shareholders.
** Total investment returns based on market value, which can be significantly greater or lesser
than the net asset value, may result in substantially different returns. Total investment
returns exclude the effects of sales charges.
++ Based on average shares outstanding.
See Notes to Financial Statements.
ANNUAL REPORTS JULY 31, 2007
Financial Highlights BlackRock MuniHoldings New Jersey Insured Fund, Inc.
The following per share data and ratios have been derived For the Year Ended July 31,
from information provided in the financial statements. 2007 2006 2005 2004 2003
Per Share Operating Performance
Net asset value, beginning of year $ 14.91 $ 15.62 $ 15.03 $ 14.46 $ 14.90
---------- ---------- ---------- ---------- ----------
Investment income--net* 1.03 1.03 1.04 1.07 1.08
Realized and unrealized gain (loss)--net (.03) (.61) .66 .51 (.54)
Less dividends to Preferred Stock shareholders from
investment income--net (.31) (.26) (.16) (.08) (.09)
---------- ---------- ---------- ---------- ----------
Total from investment operations .69 .16 1.54 1.50 .45
---------- ---------- ---------- ---------- ----------
Less dividends to Common Stock shareholders from
investment income--net (.74) (.87) (.95) (.93) (.89)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 14.86 $ 14.91 $ 15.62 $ 15.03 $ 14.46
========== ========== ========== ========== ==========
Market price per share, end of year $ 14.40 $ 14.98 $ 15.89 $ 14.17 $ 13.59
========== ========== ========== ========== ==========
Total Investment Return***
Based on net asset value per share 4.71% 1.09% 10.63% 10.90% 3.32%
========== ========== ========== ========== ==========
Based on market price per share .99% (.16%) 19.37% 11.24% 1.61%
========== ========== ========== ========== ==========
Ratios Based on Average Net Assets Applicable to Common Stock
Total expenses, net of waiver and reimbursement and excluding
interest expense** 1.17% 1.15% 1.14% 1.13% 1.15%
========== ========== ========== ========== ==========
Total expenses, net of waiver and reimbursement** 1.40% 1.39% 1.25% 1.19% 1.23%
========== ========== ========== ========== ==========
Total expenses** 1.45% 1.45% 1.31% 1.27% 1.31%
========== ========== ========== ========== ==========
Total investment income--net** 6.77% 6.80% 6.69% 6.97% 7.05%
========== ========== ========== ========== ==========
Amount of dividends to Preferred Stock shareholders 2.03% 1.72% 1.02% .54% .61%
========== ========== ========== ========== ==========
Investment income--net, to Common Stock shareholders 4.74% 5.08% 5.67% 6.43% 6.44%
========== ========== ========== ========== ==========
Ratios Based on Average Net Assets Applicable to Preferred
Stock
Dividends to Preferred Stock shareholders 3.21% 2.71% 1.64% .86% .97%
========== ========== ========== ========== ==========
Supplemental Data
Net assets applicable to Common Stock, end of year
(in thousands) $ 315,769 $ 315,649 $ 328,853 $ 316,171 $ 304,126
========== ========== ========== ========== ==========
Preferred Stock outstanding at liquidation preference, end
of year (in thousands) $ 203,000 $ 203,000 $ 203,000 $ 203,000 $ 203,000
========== ========== ========== ========== ==========
Portfolio turnover 17% 16% 29% 8% 28%
========== ========== ========== ========== ==========
Leverage
Asset coverage per $1,000 $ 2,556 $ 2,555 $ 2,620 $ 2,557 $ 2,498
========== ========== ========== ========== ==========
Dividends Per Share on Preferred Stock Outstanding
Series A--Investment income--net $ 802 $ 683 $ 402 $ 206 $ 233
========== ========== ========== ========== ==========
Series B--Investment income--net $ 809 $ 682 $ 403 $ 210 $ 240
========== ========== ========== ========== ==========
Series C--Investment income--net $ 801 $ 689 $ 419 $ 235 $ 247
========== ========== ========== ========== ==========
Series D--Investment income--net $ 805 $ 673 $ 415 $ 210 $ 240
========== ========== ========== ========== ==========
Series E--Investment income--net $ 791 $ 655 $ 394 $ 197 $ 247
========== ========== ========== ========== ==========
* Based on average shares outstanding.
** Do not reflect the effect of dividends to Preferred Stock shareholders.
*** Total investment returns based on market value, which can be significantly greater or lesser than
the net asset value, may result in substantially different returns. Total investment returns exclude
the effects of sales charges.
See Notes to Financial Statements.
ANNUAL REPORTS JULY 31, 2007
Notes to Financial Statements
1. Significant Accounting Policies:
On September 29, 2006, MuniHoldings Fund II, Inc. and MuniHoldings New Jersey
Insured Fund, Inc. were renamed BlackRock MuniHoldings Fund II, Inc. and
BlackRock MuniHoldings New Jersey Insured Fund, Inc. (the "Funds" or
individually as the "Fund"), respectively. The Funds are registered under the
Investment Company Act of 1940, as amended, as non-diversified, closed-end
management investment companies. The Funds' financial statements are prepared
in conformity with U.S. generally accepted accounting principles, which may
require the use of management accruals and estimates. Actual results may
differ from these estimates. The Funds determine and make available for
publication the net asset value of their Common Stock on a daily basis. The
Funds' Common Stock shares are listed on the New York Stock Exchange under the
symbols MUH and MUJ, respectively. The following is a summary of significant
accounting policies followed by the Funds.
(a) Valuation of investments--Municipal bonds are traded primarily in the over-
the-counter ("OTC") markets and are valued at the last available bid price in
the OTC or on the basis of values as obtained by a pricing service. Pricing
services use valuation matrixes that incorporate both dealer-supplied
valuations and valuation models. The procedures of the pricing service and its
valuations are reviewed by the officers of the Funds under the general
direction of the Board of Directors. Such valuations and procedures are
reviewed periodically by the Board of Directors of the Funds. Financial
futures contracts and options thereon, which are traded on exchanges, are
valued at their closing prices as of the close of such exchanges. Options
written or purchased are valued at the last sale price in the case of exchange-
traded options. Options traded in the OTC market are valued at the last asked
price (options written) or the last bid price (options purchased). Swap
agreements are valued by quoted fair values received daily by the Fund's
pricing service. Investments in open-end investment companies are valued at
their net asset value each business day. Securities and other assets for which
market quotations are not readily available are valued at fair value as
determined in good faith by or under the direction of the Board of Directors
of the Funds.
(b) Derivative financial instruments--Each Fund may engage in various portfolio
investment strategies both to increase the return of the Fund and to hedge,
or protect, its exposure to interest rate movements and movements in the
securities markets. Losses may arise due to changes in the value of the
contract or if the counterparty does not perform under the contract.
* Financial futures contracts--Each Fund may purchase or sell financial
futures contracts and options on such financial futures contracts. Financial
futures contracts are contracts for delayed delivery of securities at a
specific future date and at a specific price or yield. Upon entering into a
contract, the Fund deposits, and maintains, as collateral such initial margin
as required by the exchange on which the transaction is effected. Pursuant to
the contract, the Fund agrees to receive from or pay to the broker an amount
of cash equal to the daily fluctuation in value of the contract. Such receipts
or payments are known as variation margin and are recorded by the Fund as
unrealized gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
* Options--Each Fund may write covered call options and purchase call and put
options. When the Fund writes an option, an amount equal to the premium
received by the Fund is reflected as an asset and an equivalent liability. The
amount of the liability is subsequently marked-to-market to reflect the
current market value of the option written. When a security is purchased or
sold through an exercise of an option, the related premium paid (or received)
is added to (or deducted from) the basis of the security acquired or deducted
from (or added to) the proceeds of the security sold. When an option expires
(or the Fund enters into a closing transaction), the Fund realizes a gain or
loss on the option to the extent of the premiums received or paid (or gain or
loss to the extent the cost of the closing transaction exceeds the premium
paid or received).
Written and purchased options are non-income producing investments.
* Forward interest rate swaps--Each Fund may enter into forward interest rate
swaps. In a forward interest rate swap, the Fund and the counterparty agree to
make periodic net payments on a specified notional contract amount, commencing
on a specified future effective date, unless terminated earlier. When the
agreement is closed, the Fund records a realized gain or loss in an amount
equal to the value of the agreement.
ANNUAL REPORTS JULY 31, 2007
Notes to Financial Statements (continued)
* Swaps--Each Fund may enter into swap agreements, which are OTC contracts in
which the Fund and a counterparty agree to make periodic net payments on a
specified notional amount. The net payments can be made for a set period of
time or may be triggered by a pre-determined credit event. The net periodic
payments may be based on a fixed or variable interest rate; the change in
market value of a specified security, basket of securities, or index; or the
return generated by a security. These periodic payments received or made by
the Fund are recorded in the accompanying Statement of Operations as realized
gains or losses, respectively. Gains or losses are also realized upon
termination of the swap agreements. Swaps are marked-to-market daily and
changes in value are recorded as unrealized appreciation (depreciation). Risks
include changes in the returns of the underlying instruments, failure of the
counterparties to perform under the contracts' terms and the possible lack of
liquidity with respect to the swap agreements
(c) Municipal bonds held in trust--The Funds invest in leveraged residual
certificates ("TOB Residuals") issued by tender option bond trusts ("TOBs"). A
TOB is established by a third party sponsor forming a special purpose entity,
into which a Fund, or an agent on behalf of the Fund, transfers municipal
securities. A TOB typically issues two classes of beneficial interests: short-
term floating rate certificates, which are sold to third party investors, and
residual certificates, which are generally issued to the Fund which made the
transfer or to affiliates of the Fund. The Fund's transfer of the municipal
securities to a TOB do not qualify for sale treatment under Statement of
Financial Accounting Standards No. 140 ("FAS 140") "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities,"
therefore the municipal securities deposited into a TOB are presented in the
Fund's schedules of investments and the proceeds from the transactions are
reported as a liability for trust certificates of the Fund. Similarly,
proceeds from residual certificates issued to affiliates, if any, from the
transaction are included in the liability for trust certificates. Interest
income from the underlying security is recorded by the Fund on an accrual
basis. Interest expense incurred on the secured borrowing and other expenses
related to remarketing, administration and trustee services to a TOB are
reported as expenses of a Fund. The floating rate certificates have interest
rates that generally reset weekly and their holders have the option to tender
certificates to the TOB for redemption at par at each reset date. The residual
interests held by the Funds include the right of the Funds (1) to cause the
holders of a proportional share of floating rate certificates to tender their
certificates at par, and (2) to transfer a corresponding share of the municipal
securities from the TOB to the Funds. At July 31, 2007, the aggregate value
of the underlying municipal securities transferred to TOBs and the related
liability for trust certificates were:
Underlying
Municipal
Liability Range of Bonds
for Trust Interest Transferred
Payable Rates to TOBs
BlackRock MuniHoldings 3.661% -
Fund II, Inc. $19,112,500 3.711% $39,865,715
BlackRock MuniHoldings
New Jersey 3.626% -
Insured Fund, Inc. $ 4,325,000 3.666% $ 9,158,534
Financial transactions executed through TOBs generally will underperform the
market for fixed rate municipal bonds in a rising interest rate environment,
but tend to outperform the market for fixed rate bonds when interest rates
decline or remain relatively stable. Should short-term interest rates rise,
the Funds' investments in TOB Residuals likely will adversely affect the
Funds' investment income--net and distributions to shareholders. Fluctuations
in the market value of municipal securities deposited into the TOB may
adversely affect the Funds' net asset value per share.
While the Funds' investment policies and restrictions expressly permit
investments in inverse floating rate securities such as TOB Residuals, they
generally do not allow the Funds to borrow money for purposes of making
investments. The Funds' management believes that the Fund's restrictions on
borrowings do not apply to the secured borrowings deemed to have occurred for
accounting purposes.
(d) Income taxes--It is each Fund's policy to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no federal income tax provision is required.
(e) Security transactions and investment income--Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Realized gains and losses on security transactions are determined on the
identified cost basis. Dividend income is recorded on the ex-dividend dates.
Interest income is recognized on the accrual basis. The Funds amortize all
premiums and discounts on debt securities.
ANNUAL REPORTS JULY 31, 2007
Notes to Financial Statements (continued)
(f) Dividends and distributions--Dividends from net investment income are
declared and paid monthly. Distributions of capital gains are recorded on the
ex-dividend dates.
(g) Recent accounting pronouncements--In July 2006, the Financial Accounting
Standards Board ("FASB") issued Interpretation No. 48 ("FIN 48"), "Accounting
for Uncertainty in Income Taxes--an interpretation of FASB Statement No. 109."
FIN 48 prescribes the minimum recognition threshold a tax position must meet
in connection with accounting for uncertainties in income tax positions taken
or expected to be taken by an entity, including mutual funds, before being
measured and recognized in the financial statements. Adoption of FIN 48 is
required for the last net asset value calculation in the first required
financial statement reporting period for fiscal years beginning after December
15, 2006. The impact on the Funds' financial statements, if any, is currently
being assessed.
In September 2006, Statement of Financial Accounting Standards No. 157, "Fair
Value Measurements" ("FAS 157"), was issued and is effective for fiscal years
beginning after November 15, 2007. FAS 157 defines fair value, establishes a
framework for measuring fair value and expands disclosures about fair value
measurements. At this time, management is evaluating the implications of FAS
157 and its impact on the Funds' financial statements, if any, has not been
determined.
In addition, in February 2007, Statement of Financial Accounting Standards
No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities"
("FAS 159"), was issued and is effective for fiscal years beginning after
November 15, 2007. Early adoption is permitted as of the beginning of a fiscal
year that begins on or before November 15, 2007, provided the entity also
elects to apply the provisions of FAS 157. FAS 159 permits entities to choose
to measure many financial instruments and certain other items at fair value
that are not currently required to be measured at fair value. FAS 159 also
establishes presentation and disclosure requirements designed to facilitate
comparisons between entities that choose different measurement attributes for
similar types of assets and liabilities. At this time, management is
evaluating the implications of FAS 159 and its impact on the Funds' financial
statements, if any, has not been determined.
(h) Reclassification--BlackRock MuniHoldings Fund II, Inc.--U.S. generally
accepted accounting principles require that certain components of net assets
be adjusted to reflect permanent differences between financial and tax
reporting. Accordingly, during the current year, $42,039 has been reclassified
between undistributed net investment income and accumulated net realized
capital losses as a result of permanent differences attributable to
amortization methods on fixed income securities. This reclassification has no
effect on net assets or net asset values per share.
2. Investment Advisory Agreement and Transactions with Affiliates:
On September 29, 2006, BlackRock, Inc. and Merrill Lynch & Co., Inc. ("Merrill
Lynch") combined Merrill Lynch's investment management business, Merrill Lynch
Investment Managers, L.P. ("MLIM") and its affiliates, including Fund Asset
Management, L.P. ("FAM"), with BlackRock, Inc. to create a new independent
company. Merrill Lynch has a 49.8% economic interest and a 45% voting interest
in the combined company and The PNC Financial Services Group, Inc. has
approximately a 34% economic and voting interest. The new company operates
under the BlackRock name and is governed by a board of directors with a
majority of independent members.
On August 15, 2006, shareholders of each Fund approved a new Investment
Advisory Agreement with BlackRock Advisors, Inc. BlackRock Advisors, Inc. was
reorganized into a limited liability company and renamed BlackRock Advisors,
LLC (the "Manager"). The new Investment Advisory Agreement between each Fund
and the Manager became effective on September 29, 2006. Prior to September 29,
2006, FAM was the manager. The general partner of FAM is an indirect, wholly
owned subsidiary of Merrill Lynch, which was the limited partner.
ANNUAL REPORTS JULY 31, 2007
Notes to Financial Statements (continued)
The Manager is responsible for the management of each Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain other
services necessary to the operations of each Fund. For such services, each
Fund pays a monthly fee at an annual rate of .55% of the Fund's average daily
net assets, including proceeds from the issuance of Preferred Stock. The
Manager (and previously FAM) has agreed to reimburse its management fee by the
amount of management fees each Fund pays to the Manager (and previously FAM)
indirectly through its investment as described below:
For the Period
August 1, For the Period
2006 to September 30,
September 29, 2006 to
2006 July 31, 2007
Reimbursement Reimbursement
Investment by FAM by the Manager
Merrill Lynch
BlackRock Institutional
MuniHoldings Tax-Exempt
Fund II, Inc. Fund $ 4 $ 18
BlackRock CMA New
MuniHoldings Jersey
New Jersey Municipal
Insured Money
Fund, Inc. Fund $2,005 $17,493
In addition, for BlackRock MuniHoldings New Jersey Insured Fund, Inc. the
Manager (and previously FAM) has agreed to waive its management fee based
on the proceeds of Preferred Stock that exceeds 35% of the Fund's total net
assets. For the period ended July 31, 2007, the Manager and/or FAM earned and
waived fees for BlackRock MuniHoldings New Jersey Insured Fund, Inc. as
follows:
For the Period For the Period
August 1, 2006 to September 30, 2006 to
September 29, 2006 July 31, 2007
FAM Manager
Fees Fees Fees Fees
Earned Waived Earned Waived
$489,390 $28,255 $2,395,509 $136,027
In addition, the Manager has entered into a sub-advisory agreement with
BlackRock Investment Management, LLC ("BIM") an affiliate of the Manager,
under which the Manager pays BIM for services it provides a fee equal to 59%
of the management fee paid by each Fund to the Manager.
The Funds reimbursed the Manager and/or FAM for certain accounting services.
The reimbursements were as follows:
For the Period For the Period
August 1, 2006 to September 30, 2006
September 29, 2006 to July 31, 2007
Reimbursement Reimbursement
by FAM by the Manager
BlackRock MuniHoldings
Fund II, Inc. $1,065 $4,023
BlackRock MuniHoldings
New Jersey Insured
Fund, Inc. $2,160 $8,323
Prior to September 29, 2006, certain officers and/or directors of the Funds
were officers and/or directors of FAM, MLIM, and/or Merrill Lynch.
Commencing September 29, 2006 certain officers and/or directors of the Funds
are officers and/or directors of BlackRock, Inc. or its affiliates.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
year ended July 31, 2007 were as follows:
BlackRock
MuniHoldings
BlackRock New Jersey
MuniHoldings Insured
Fund II, Inc. Fund, Inc.
Total Purchases $40,686,434 $ 91,984,064
Total Sales $41,954,306 $113,860,012
4. Stock Transactions:
Each Fund is authorized to issue 200,000,000 shares of stock, including
Preferred Stock, par value $.10 per share, all of which were initially
classified as Common Stock. The Board of Directors is authorized, however,
to reclassify any unissued shares of stock without approval of holders of
Common Stock.
Common Stock
BlackRock MuniHoldings Fund II, Inc.
Shares issued and outstanding during the year ended July 31, 2007 and the year
ended July 31, 2006 increased by 4,645 and 21,687, respectively, as a result
of dividend reinvestment.
BlackRock MuniHoldings New Jersey Insured Fund, Inc.
Shares issued and outstanding during the year ended July 31, 2007 and the year
ended July 31, 2006 increased by 72,669 and 122,432, respectively, as a result
of dividend reinvestment.
ANNUAL REPORTS JULY 31, 2007
Notes to Financial Statements (continued)
Preferred Stock
Auction Market Preferred Stock are shares of Preferred Stock of the Funds, with
a liquidation preference of $25,000 per share plus accrued and unpaid dividends
that entitle their holders to receive cash dividends at an annual rate that may
vary for the successive dividend periods. The yields in effect at July 31, 2007
were as follows:
BlackRock
MuniHoldings
BlackRock New Jersey
MuniHoldings Insured
Fund II, Inc. Fund, Inc.
Series A 3.59% 3.10%
Series B 3.60% 3.10%
Series C -- 3.05%
Series D -- 2.95%
Series E -- 3.15%
Each Fund pays commissions to certain broker-dealers at the end of each auction
at an annual rate ranging from .25% to .375%, calculated on the proceeds of
each auction. For the year ended July 31, 2007, Merrill Lynch, Pierce,
Fenner & Smith Inc., an affiliate of the Manager, earned commissions as
follows:
Commissions
BlackRock MuniHoldings Fund II, Inc. $ 62,996
BlackRock MuniHoldings New Jersey
Insured Fund, Inc. $ 249,226
5. Distributions to Shareholders:
Each Fund paid a tax-exempt income dividend to holders of Common Stock in the
amounts of $.063000 per share and $.059000 per share relating to BlackRock
MuniHoldings Fund II, Inc. and BlackRock MuniHoldings New Jersey Insured
Fund, Inc., respectively, on September 4, 2007 to shareholders of record on
August 15, 2007.
BlackRock MuniHoldings Fund II, Inc.
The tax character of distributions paid during the fiscal years ended
July 31, 2007 and July 31, 2006 was as follows:
7/31/2007 7/31/2006
Distributions paid from:
Tax-exempt income $ 11,685,098 $ 12,717,464
-------------- --------------
Total distributions $ 11,685,098 $ 12,717,464
============== ==============
As of July 31, 2007, the components of accumulated earnings (losses) on a tax
basis were as follows:
Undistributed tax-exempt income--net $ 916,198
Undistributed ordinary income--net 42,039
Undistributed long-term capital gains--net --
--------------
Total undistributed earnings--net 958,237
Capital loss carryforward (13,859,278)*
Unrealized gains (losses)--net 11,675,763**
--------------
Total accumulated earnings--net $ (1,225,278)
==============
* On July 31, 2007, the Fund had a net capital loss carryforward of
$13,859,278, of which $872,684 expires in 2008, $12,107,981
expires in 2009, $689,205 expires in 2010 and $189,408 expires
in 2011. This amount will be available to offset like amounts of
any future taxable gains.
** The difference between book-basis and tax-basis net unrealized
gains (losses) is attributable primarily to the tax deferral of losses
on wash sales, the difference between book and tax amortization
methods for premiums and discounts on fixed income securities
and the difference between the book and tax treatment of residual
interests in tender option bond trusts.
BlackRock MuniHoldings New Jersey Insured Fund, Inc.
The tax character of distributions paid during the fiscal years ended
July 31, 2007 and July 31, 2006 was as follows:
7/31/2007 7/31/2006
Distributions paid from:
Tax-exempt income $ 22,294,792 $ 23,875,126
-------------- --------------
Total distributions $ 22,294,792 $ 23,875,126
============== ==============
As of July 31, 2007, the components of accumulated earnings on a tax basis
were as follows:
Undistributed tax-exempt income--net $ 951,189
Undistributed long-term capital gains--net --
--------------
Total undistributed earnings--net 951,189
Capital loss carryforward (23,204,907)*
Unrealized gains (losses)--net 16,509,968**
--------------
Total accumulated losses--net $ (5,743,750)
==============
* On July 31, 2007, the Fund had a net capital loss carryforward of
$23,204,907, of which $22,969,013 expires in 2009 and $235,894
expires in 2011. This amount will be available to offset like amounts
of any future taxable gains.
** The difference between book-basis and tax-basis net unrealized
gains/(losses) is attributable primarily to the tax deferral of losses
on wash sales, the tax deferral of losses on straddles, the difference
between book and tax amortization methods for premiums and
discounts on fixed income securities and the difference between
the book and tax treatment of residual interests in tender option
bond trusts.
ANNUAL REPORTS JULY 31, 2007
Notes to Financial Statements (concluded)
6. Restatement Information:
Subsequent to the initial issuance of their July 31, 2006 financial statements,
the Funds determined that the criteria for sale accounting in FAS 140 had not
been met for certain transfers of municipal bonds, and that these transfers
should have been accounted for as secured borrowings rather than as sales.
As a result, certain financial highlights for each of the three years in the
period ended July 31, 2005 have been restated to give effect to recording the
transfers of the municipal bonds as secured borrowings, including recording
interest on the bonds as interest income and interest on the secured borrowings
as interest expense.
BlackRock MuniHoldings Fund II, Inc.
Financial Highlights
For the Years Ended July 31, 2005, 2004 and 2003
2005 2004 2003
Previously Previously Previously
Reported Restated Reported Restated Reported Restated
Total expenses, net of
reimbursement* 1.19% 1.27% 1.21% 1.30% 1.26% 1.38%
Total expenses* 1.19% 1.27% 1.22% 1.31% 1.26% 1.38%
Portfolio turnover 45.11% 38% 31.03% 29% 44.03% 42%
* Do not reflect the effect of dividends to Preferred Stock shareholders.
BlackRock MuniHoldings New Jersey Insured Fund, Inc.
Financial Highlights
For the Years Ended July 31, 2005, 2004 and 2003
2005 2004 2003
Previously Previously Previously
Reported Restated Reported Restated Reported Restated
Total expenses, net of waiver
and reimbursement** 1.14% 1.25% 1.13% 1.19% 1.15% 1.23%
Total expenses** 1.20% 1.31% 1.21% 1.27% 1.23% 1.31%
Portfolio turnover 29.61% 29% 8.53% 8% 28.89% 28%
** Do not reflect the effect of dividends to Preferred Stock shareholders.
ANNUAL REPORTS JULY 31, 2007
Report of Independent Registered Public Accounting Firm
To the Shareholders and Boards of Directors
of BlackRock MuniHoldings Fund II, Inc. and
BlackRock MuniHoldings New Jersey Insured Fund, Inc.:
We have audited the accompanying statements of net assets, including the
schedules of investments, of BlackRock MuniHoldings Fund II, Inc. (formerly
MuniHoldings Fund II, Inc.) and BlackRock MuniHoldings New Jersey Insured
Fund, Inc. (formerly MuniHoldings New Jersey Insured Fund, Inc.) (the "Funds")
as of July 31, 2007, and the related statements of operations for the year
then ended and the statements of changes in net assets and the financial
highlights for each of the two years in the period then ended. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on the financial
statements and financial highlights based on our audits. The financial
highlights for each of the three years in the period ended July 31, 2005
(before the restatement described in Note 6) were audited by other auditors
whose report, dated September 12, 2005, expressed a qualified opinion on the
financial highlights because of the errors described in Note 6.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. The Funds are not required to have, nor were we engaged to
perform, an audit of their internal control over financial reporting. Our
audits included consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Funds' internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. Our procedures included confirmation of securities owned as of
July 31, 2007, by correspondence with the custodian and brokers; where replies
were not received from brokers, we performed other auditing procedures. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights of BlackRock
MuniHoldings Fund II, Inc. and BlackRock MuniHoldings New Jersey Insured Fund,
Inc. referred to above, present fairly, in all material respects, their
financial position as of July 31, 2007, the results of their operations for
the year then ended and the changes in their net assets and their financial
highlights for each of the two years in the period then ended, in conformity
with accounting principles generally accepted in the United States of America.
We also have audited the adjustments, applied by management, to restate
certain financial highlights for each of the three years in the period ended
July 31, 2005 to correct the errors described in Note 6. These adjustments are
the responsibility of the Funds' management. The audit procedures that we
performed with respect to the adjustments included such tests as we considered
necessary in the circumstances and were designed to obtain reasonable
assurance about whether the adjustments are appropriate and have been properly
applied, in all material respects, to the restated financial highlights for
each of the three years in the period ended July 31, 2005. We did not perform
any audit procedures designed to assess whether any additional adjustments to
such financial highlights might be necessary in order for such financial
highlights to be presented in conformity with generally accepted accounting
principles. In our opinion, the adjustments to the financial highlights for
each of the three years in the period ended July 31, 2005 described in Note 6
are appropriate and have been properly applied, in all material respects.
However, we were not engaged to audit, review, or apply any procedures to such
financial highlights other than with respect to the adjustments described in
Note 6 and, accordingly, we do not express an opinion or any other form of
assurance on such financial highlights.
Deloitte & Touche LLP
Princeton, New Jersey
September 24, 2007
ANNUAL REPORTS JULY 31, 2007
Automatic Dividend Reinvestment Plan
How the Plan Works--The Funds offer a Dividend Reinvestment Plan (the "Plan")
under which income and capital gains dividends paid by each Fund are
automatically reinvested in additional shares of Common Stock of each Fund.
The Plan is administered on behalf of the shareholders by The Bank of New York
(the "Plan Agent"). Under the Plan, whenever the Funds declare a dividend,
participants in the Plan will receive the equivalent in shares of Common Stock
of each Fund. The Plan Agent will acquire the shares for the participant's
account either (i) through receipt of additional unissued but authorized
shares of each Fund ("newly issued shares") or (ii) by purchase of outstanding
shares of Common Stock on the open market on the New York Stock Exchange or
elsewhere. If, on the dividend payment date, each Fund's net asset value per
share is equal to or less than the market price per share plus estimated
brokerage commissions (a condition often referred to as a "market premium"),
the Plan Agent will invest the dividend amount in newly issued shares. If the
Funds' net asset value per share is greater than the market price per share (a
condition often referred to as a "market discount"), the Plan Agent will
invest the dividend amount by purchasing on the open market additional shares.
If the Plan Agent is unable to invest the full dividend amount in open market
purchases, or if the market discount shifts to a market premium during the
purchase period, the Plan Agent will invest any uninvested portion in newly
issued shares. The shares acquired are credited to each shareholder's account.
The amount credited is determined by dividing the dollar amount of the
dividend by either (i) when the shares are newly issued, the net asset value
per share on the date the shares are issued or (ii) when shares are purchased
in the open market, the average purchase price per share.
Participation in the Plan--Participation in the Plan is automatic, that is, a
shareholder is automatically enrolled in the Plan when he or she purchases
shares of Common Stock of the Funds unless the shareholder specifically elects
not to participate in the Plan. Shareholders who elect not to participate will
receive all dividend distributions in cash. Shareholders who do not wish to
participate in the Plan must advise the Plan Agent in writing (at the address
set forth below) that they elect not to participate in the Plan. Participation
in the Plan is completely voluntary and may be terminated or resumed at any
time without penalty by writing to the Plan Agent.
Benefits of the Plan--The Plan provides an easy, convenient way for
shareholders to make additional, regular investments in the Funds. The Plan
promotes a long-term strategy of investing at a lower cost. All shares
acquired pursuant to the Plan receive voting rights. In addition, if the
market price plus commissions of each Fund's shares is above the net asset
value, participants in the Plan will receive shares of the Funds for less than
they could otherwise purchase them and with a cash value greater than the
value of any cash distribution they would have received. However, there may
not be enough shares available in the market to make distributions in shares
at prices below the net asset value. Also, since each Fund does not redeem
shares, the price on resale may be more or less than the net asset value.
Plan Fees--There are no enrollment fees or brokerage fees for participating in
the Plan. The Plan Agent's service fees for handling the reinvestment of
distributions are paid for by the Funds. However, brokerage commissions may be
incurred when the Funds purchase shares on the open market and shareholders
will pay a pro rata share of any such commissions.
Tax Implications--The automatic reinvestment of dividends and distributions
will not relieve participants of any federal, state or local income tax that
may be payable (or required to be withheld) on such dividends. Therefore,
income and capital gains may still be realized even though shareholders do not
receive cash. Participation in the Plan generally will not effect the tax-
exempt status of exempt interest dividends paid by the Fund. If, when the
Funds' shares are trading at a market premium, the Funds issue shares pursuant
to the Plan that have a greater fair market value than the amount of cash
reinvested, it is possible that all or a portion of the discount from the
market value (which may not exceed 5% of the fair market value of each Fund's
shares) could be viewed as a taxable distribution. If the discount is viewed
as a taxable distribution, it is also possible that the taxable character of
this discount would be allocable to all the shareholders, including
shareholders who do not participate in the Plan. Thus, shareholders who do not
participate in the Plan might be required to report as ordinary income a
portion of their distributions equal to their allocable share of the discount.
Contact Information--All correspondence concerning the Plan, including any
questions about the Plan, should be directed to the Plan Agent at The Bank of
New York, Church Street Station, P.O. Box 11258, New York, NY 10286-1258,
Telephone: 800-432-8224.
ANNUAL REPORTS JULY 31, 2007
Change in Fund's Independent Registered Public Accounting Firm
On August 28, 2006, Ernst & Young LLP ("E&Y") resigned as the Independent
Registered Public Accounting Firm of BlackRock MuniHoldings Fund II, Inc. and
BlackRock MuniHoldings New Jersey Insured Fund, Inc. (the "Funds") because it
was determined that E&Y is not independent of BlackRock, Inc. and the Funds.
E&Y's reports on the financial statements of the Funds for the prior three
fiscal years did not contain an adverse opinion or a disclaimer of opinion and
except for the restatement of information contained in Note 6 to the Financial
Statements, were not qualified or modified as to uncertainty, audit scope or
accounting principles.
In connection with its audits for the prior three fiscal years and through
August 28, 2006 (1) there were no disagreements with E&Y on any matter of
accounting principle or practice, financial statement disclosure or auditing
scope or procedure, whereby such disagreements, if not resolved to the
satisfaction of E&Y, would have caused them to make reference to the subject
matter of the disagreements in connection with their report on the financial
statements for such years; and (2) there have been no reportable events (as
defined in item 304(a)(1)(v) of Regulation S-K).
The Audit Committee of each Fund's Board of Directors approved the engagement
of Deloitte & Touche LLP as each of the Fund's Independent Registered Public
Accounting Firm for the fiscal years ended July 31, 2006 and July 31, 2007.
Officers and Directors
Number of
Funds and
Portfolios in
Position(s) Length of Fund Complex Other Public
Name, Address Held with Time Overseen by Directorships
and Year of Birth Funds Served Principal Occupation(s) During Past 5 Years Director Held by Director
Interested Director
Robert C. Doll, Jr.* Fund 2005 to Vice Chairman and Director of BlackRock, Inc., 120 Funds None
P.O. Box 9011 President present Global Chief Investment Officer for Equities, 161 Portfolios
Princeton, and Chairman of the BlackRock Retail Operating
NJ 08543-9011 Director Committee, and member of the BlackRock
1954 Executive Committee since 2006; President
of the funds advised by Merrill Lynch
Investment Managers, L.P. ("MLIM") and its
affiliates ("MLIM/FAM-advised funds")
from 2005 to 2006 and Chief Investment Officer
thereof from 2001 to 2006; President of MLIM
and Fund Asset Management, L.P. ("FAM") from
2001 to 2006; Co-Head (Americas Region) thereof
from 2000 to 2001 and Senior Vice President from
1999 to 2001; President and Director of Princeton
Services, Inc. ("Princeton Services") and President
of Princeton Administrators, L.P. ("Princeton
Administrators") from 2001 to 2006; Chief
Investment Officer of OppenheimerFunds, Inc. in
1999 and Executive Vice President thereof from
1991 to 1999.
* Mr. Doll is a director, trustee or member of an advisory board of certain
other investment companies for which BlackRock Advisors, LLC and its
affiliates act as investment adviser. Mr. Doll is an "interested person,"
as defined in the Investment Company Act, of the Fund based on his positions
with BlackRock, Inc. and its affiliates. Directors serve until their
resignation, removal or death, or until December 31 of the year in which
they turn 72. As Fund President, Mr. Doll serves at the pleasure of the
Boards of Directors.
ANNUAL REPORTS JULY 31, 2007
Officers and Directors (continued)
Number of
Funds and
Portfolios in
Position(s) Length of Fund Complex Other Public
Name, Address Held with Time Overseen by Directorships
and Year of Birth Funds Served Principal Occupation(s) During Past 5 Years Director Held by Director
Independent Directors*
Ronald W. Forbes** Director 1998 to Professor Emeritus of Finance, School of 46 Funds None
P.O. Box 9095 present Business, State University of New York at 48 Portfolios
Princeton, Albany since 2000 and Professor thereof from
NJ 08543-9095 1989 to 2000; International Consultant, Urban
1940 Institute, Washington, D.C. from 1995 to 1999.
Cynthia A. Montgomery Director 1998 to Professor, Harvard Business School since 1989; 46 Funds Newell
P.O. Box 9095 present Associate Professor, J.L. Kellogg Graduate 48 Portfolios Rubbermaid, Inc.
Princeton, School of Management, Northwestern (manufacturing)
NJ 08543-9095 University from 1985 to 1989; Associate
1952 Professor, Graduate School of Business
Administration, University of Michigan from
1979 to 1985; Director, Harvard Business School
Publishing since 2005; Director, McLean Hospital
since 2005.
Jean Margo Reid Director 2004 to Self-employed consultant since 2001; Counsel 46 Funds None
P.O. Box 9095 present of Alliance Capital Management (investment 48 Portfolios
Princeton, adviser) in 2000; General Counsel, Director and
NJ 08543-9095 Secretary of Sanford C. Bernstein & Co., Inc.
1945 (investment adviser/broker-dealer) from 1997 to
2000; Secretary, Sanford C. Bernstein Fund, Inc.
from 1994 to 2000; Director and Secretary of SCB,
Inc. since 1998; Director and Secretary of SCB
Partners, Inc. since 2000; and Director of
Covenant House from 2001 to 2004.
Roscoe S. Suddarth Director 2000 to President, Middle East Institute, from 46 Funds None
P.O. Box 9095 present 1995 to 2001; Foreign Service Officer, United 48 Portfolios
Princeton, States Foreign Service, from 1961 to 1995 and
NJ 08543-9095 Career Minister from 1989 to 1995; Deputy
1935 Inspector General, U.S. Department of State,
from 1991 to 1994; U.S. Ambassador to the
Hashemite Kingdom of Jordan from 1987 to 1990.
Richard R. West Director 1998 to Professor of Finance from 1984 to 1995, Dean 46 Funds Bowne & Co., Inc.
P.O. Box 9095 present from 1984 to 1993 and since 1995 Dean Emeritus 48 Portfolios (financial
Princeton, of New York University's Leonard N. Stern printers);
NJ 08543-9095 School of Business Administration. Vornado Realty
1938 Trust (real estate
company);
Alexander's, Inc
(real estate
company)
* Directors serve until their resignation, removal or death, or until December 31
of the year in which they turn 72.
** Chairman of each Board of Directors and Audit Committee.
ANNUAL REPORTS JULY 31, 2007
Officers and Directors (concluded)
Position(s) Length of
Name, Address Held with Time
and Year of Birth Funds Served Principal Occupation(s) During Past 5 Years
Fund Officers*
Donald C. Burke Vice 1993 to Managing Director of BlackRock, Inc. since 2006; Managing Director of Merrill
P.O. Box 9011 President present Lynch Investment Managers, L.P. ("MLIM") and Fund Asset Management, L.P. ("FAM")
Princeton, and and in 2006; First Vice President of MLIM and FAM from 1997 to 2005 and Treasurer
NJ 08543-9011 Treasurer 1999 to thereof from 1999 to 2006; Vice President of MLIM and FAM from 1990 to 1997.
1960 present
Karen Clark Fund Chief 2007 to Managing Director of BlackRock, Inc. and Chief Compliance Officer of certain
P.O. Box 9011 Compliance present BlackRock-advised funds since 2007; Director of BlackRock, Inc. from 2005 to
Princeton, Officer 2007; Principal and Senior Compliance Officer, State Street Global Advisors,
NJ 08543-9011 from 2001 to 2005; Principal Consultant, PricewaterhouseCoopers, LLP from 1998
1965 to 2001; and Branch Chief, Division of Investment Management and Office of
Compliance Inspections and Examinations, U.S. Securities and Exchange Commission,
from 1993 to 1998.
Alice A. Pellegrino Secretary 2004 to Director of BlackRock, Inc. from 2006 to 2007; Director (Legal Advisory) of MLIM
P.O. Box 9011 2007 from 2002 to 2006; Vice President of MLIM from 1999 to 2002; Attorney associated
Princeton, with MLIM from 1997 to 1999; Secretary of MLIM, FAM, FAM Distributors, Inc. and
NJ 08543-9011 Princeton Services from 2004 to 2006.
1960
* Officers of the Funds serve at the pleasure of the Boards of Directors.
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agents
Common Stock:
The Bank of New York
101 Barclay Street - 11 East
New York, NY 10286
Preferred Stock:
The Bank of New York
101 Barclay Street - 7 West
New York, NY 10286
Investment Objectives
BlackRock MuniHoldings Fund II, Inc. seeks to provide shareholders with current
income exempt from federal income taxes by investing primarily in a portfolio
of long-term, investment grade municipal obligations the interest on which, in
the opinion of bond counsel to the issuer, is exempt from federal income taxes.
BlackRock MuniHoldings New Jersey Insured Fund, Inc. seeks to provide
shareholders with current income exempt from federal income tax and New Jersey
personal income taxes by investing in a portfolio of long-term, investment
grade municipal obligations the interest on which, in the opinion of bond
counsel to the issuer, is exempt from federal income tax and New Jersey
personal income taxes.
ANNUAL REPORTS JULY 31, 2007
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 nonpublic 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 nonpublic information from and about
you from different sources, including the following: (i) information we
receive from you or, if applicable, your financial intermediary, on
applications, forms or other documents; (ii) information about your
transactions with us, our affiliates, or others; (iii) information we receive
from a consumer reporting agency; and (iv) from visits to our Web sites.
BlackRock does not sell or disclose to nonaffiliated third parties any
nonpublic 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
nonpublic 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 nonpublic personal information of its Clients, including procedures
relating to the proper storage and disposal of such information.
Important Tax Information
All of the net investment income distributions paid by BlackRock MuniHoldings
Fund II, Inc. and BlackRock MuniHoldings New Jersey Insured Fund, Inc. during
the taxable year ended July 31, 2007 qualify as tax-exempt interest dividends
for federal income tax purposes.
Fund Certification
In February 2007, MuniHoldings Fund II, Inc. and MuniHoldings New Jersey
Insured Fund, Inc. filed their Chief Executive Officer Certification for the
prior year with the New York Stock Exchange pursuant to Section 303A.12(a) of
the New York Stock Exchange Corporate Governance Listing Standards.
The Funds' Chief Executive Officer and Chief Financial Officer Certifications
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 were filed with the
Funds' Form N-CSR and are available on the Securities and Exchange
Commission's Web site at http://www.sec.gov.
ANNUAL REPORTS JULY 31, 2007
Item 2 - Code of Ethics - The registrant has adopted a code of ethics, as of
the end of the period covered by this report, that applies to the
registrant's principal executive officer, principal financial
officer and principal accounting officer, or persons performing
similar functions. A copy of the code of ethics is available
without charge at www.blackrock.com.
Item 3 - Audit Committee Financial Expert - The registrant's board of
directors has determined that (i) the registrant has the following
audit committee financial experts serving on its audit committee and
(ii) each audit committee financial expert is independent:
(1) Ronald W. Forbes, (2) Richard R. West, and (3) Edward D. Zinbarg
(retired as of December 31, 2006).
Item 4 - Principal Accountant Fees and Services
(a) Audit Fees - Fiscal Year Ended July 31, 2007 - $51,350
Fiscal Year Ended July 31, 2006 - $26,500
(b) Audit-Related Fees - Fiscal Year Ended July 31, 2007 - $3,500
Fiscal Year Ended July 31, 2006 - $3,500
The nature of the services include assurance and related services
reasonably related to the performance of the audit of financial
statements not included in Audit Fees.
(c) Tax Fees - Fiscal Year Ended July 31, 2007 - $6,100
Fiscal Year Ended July 31, 2006 - $6,000
The nature of the services include tax compliance, tax advice and
tax planning.
(d) All Other Fees - Fiscal Year Ended July 31, 2007 - $0
Fiscal Year Ended July 31, 2006 - $0
(e)(1) The registrant's audit committee (the "Committee") has
adopted policies and procedures with regard to the pre-approval of
services. Audit, audit-related and tax compliance services provided
to the registrant on an annual basis require specific pre-approval
by the Committee. The Committee also must approve other non-audit
services provided to the registrant and those non-audit services
provided to the registrant's affiliated service providers that
relate directly to the operations and the financial reporting of the
registrant. Certain of these non-audit services that the Committee
believes are a) consistent with the SEC's auditor independence rules
and b) routine and recurring services that will not impair the
independence of the independent accountants may be approved by the
Committee without consideration on a specific case-by-case basis
("general pre-approval"). However, such services will only be
deemed pre-approved provided that any individual project does not
exceed $5,000 attributable to the registrant or $50,000 for all of
the registrants the Committee oversees. Any proposed services
exceeding the pre-approved cost levels will require specific pre-
approval by the Committee, as will any other services not subject to
general pre-approval (e.g., unanticipated but permissible services).
The Committee is informed of each service approved subject to
general pre-approval at the next regularly scheduled in-person board
meeting.
(e)(2) 0%
(f) Not Applicable
(g) Fiscal Year Ended July 31, 2007 - $716,433
Fiscal Year Ended July 31, 2006 - $2,196,250
(h) The registrant's audit committee has considered and determined
that the provision of non-audit services that were rendered to the
registrant's investment adviser and any entity controlling,
controlled by, or under common control with the investment adviser
that provides ongoing services to the registrant that were not pre-
approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation
S-X is compatible with maintaining the principal accountant's
independence.
Regulation S-X Rule 2-01(c)(7)(ii) - $225,000, 0%
Item 5 - Audit Committee of Listed Registrants - The following individuals
are members of the registrant's separately-designated standing audit
committee established in accordance with Section 3(a)(58)(A) of the
Exchange Act (15 U.S.C. 78c(a)(58)(A)):
Ronald W. Forbes
Cynthia A. Montgomery
Jean Margo Reid
Roscoe S. Suddarth
Richard R. West
Edward D. Zinbarg (retired as of December 31, 2006)
Item 6 - Schedule of Investments - The registrant's Schedule of Investments
is included as part of the Report to Stockholders filed under Item 1
of this form.
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies -
Proxy Voting Policies and Procedures Applicable to the Fund
-----------------------------------------------------------
Each Fund's Board of Directors has delegated to the Manager
authority to vote all proxies relating to the Fund's portfolio
securities. The Manager has adopted policies and procedures (the
"Proxy Voting Procedures") with respect to the voting of proxies
related to the portfolio securities held in the account of one or
more of its clients, including a Fund. Pursuant to these Proxy
Voting Procedures, the Manager's primary objective when voting
proxies is to make proxy voting decisions solely in the best
interests of each Fund and its shareholders, and to act in a manner
that the Manager believes is most likely to enhance the economic
value of the securities held by the Fund. The Proxy Voting
Procedures are designed to ensure that the Manager considers the
interests of its clients, including each Fund, and not the interests
of the Manager, when voting proxies and that real (or perceived)
material conflicts that may arise between the Manager's interest and
those of the Manager's clients are properly addressed and resolved.
In order to implement the Proxy Voting Procedures, the Manager has
formed a Proxy Voting Committee (the "Committee"). The Committee,
which is a subcommittee of the Manager's Equity Investment Policy
Oversight Committee ("EIPOC"), is comprised of a senior member of
the Manager's equity management group who is also a member of EIPOC,
one or more other senior investment professionals appointed by
EIPOC, portfolio managers and investment analysts appointed by EIPOC
and any other personnel EIPOC deems appropriate. The Committee will
also include two non-voting representatives from the Manager's Legal
Department appointed by the Manager's General Counsel. The
Committee's membership shall be limited to full-time employees of
the Manager. No person with any investment banking, trading, retail
brokerage or research responsibilities for the Manager's affiliates
may serve as a member of the Committee or participate in its
decision making (except to the extent such person is asked by the
Committee to present information to the Committee on the same basis
as other interested knowledgeable parties not affiliated with the
Manager might be asked to do so). The Committee determines how to
vote the proxies of all clients, including a Fund, that have
delegated proxy voting authority to the Manager and seeks to ensure
that all votes are consistent with the best interests of those
clients and are free from unwarranted and inappropriate influences.
The Committee establishes general proxy voting policies for the
Manager and is responsible for determining how those policies are
applied to specific proxy votes, in light of each issuer's unique
structure, management, strategic options and, in certain
circumstances, probable economic and other anticipated consequences
of alternate actions. In so doing, the Committee may determine to
vote a particular proxy in a manner contrary to its generally stated
policies. In addition, the Committee will be responsible for
ensuring that all reporting and recordkeeping requirements related
to proxy voting are fulfilled.
The Committee may determine that the subject matter of a recurring
proxy issue is not suitable for general voting policies and requires
a case-by-case determination. In such cases, the Committee may elect
not to adopt a specific voting policy applicable to that issue. The
Manager believes that certain proxy voting issues require investment
analysis - such as approval of mergers and other significant
corporate transactions - akin to investment decisions, and are,
therefore, not suitable for general guidelines. The Committee may
elect to adopt a common position for the Manager on certain proxy
votes that are akin to investment decisions, or determine to permit
the portfolio manager to make individual decisions on how best to
maximize economic value for a Fund (similar to normal buy/sell
investment decisions made by such portfolio managers). While it is
expected that the Manager will generally seek to vote proxies over
which the Manager exercises voting authority in a uniform manner for
all the Manager's clients, the Committee, in conjunction with a
Fund's portfolio manager, may determine that the Fund's specific
circumstances require that its proxies be voted differently.
To assist the Manager in voting proxies, the Committee has retained
Institutional Shareholder Services ("ISS"). ISS is an independent
adviser that specializes in providing a variety of fiduciary-level
proxy-related services to institutional investment managers, plan
sponsors, custodians, consultants, and other institutional
investors. The services provided to the Manager by ISS include in-
depth research, voting recommendations (although the Manager is not
obligated to follow such recommendations), vote execution, and
recordkeeping. ISS will also assist the Fund in fulfilling its
reporting and recordkeeping obligations under the Investment Company
Act.
The Manager's Proxy Voting Procedures also address special
circumstances that can arise in connection with proxy voting. For
instance, under the Proxy Voting Procedures, the Manager generally
will not seek to vote proxies related to portfolio securities that
are on loan, although it may do so under certain circumstances. In
addition, the Manager will vote proxies related to securities of
foreign issuers only on a best efforts basis and may elect not to
vote at all in certain countries where the Committee determines that
the costs associated with voting generally outweigh the benefits.
The Committee may at any time override these general policies if it
determines that such action is in the best interests of a Fund.
From time to time, the Manager may be required to vote proxies in
respect of an issuer where an affiliate of the Manager (each, an
"Affiliate"), or a money management or other client of the Manager,
including investment companies for which the Manager provides
investment advisory, administrative and/or other services (each, a
"Client"), is involved. The Proxy Voting Procedures and the
Manager's adherence to those procedures are designed to address such
conflicts of interest. The Committee intends to strictly adhere to
the Proxy Voting Procedures in all proxy matters, including matters
involving Affiliates and Clients. If, however, an issue representing
a non-routine matter that is material to an Affiliate or a widely
known Client is involved such that the Committee does not reasonably
believe it is able to follow its guidelines (or if the particular
proxy matter is not addressed by the guidelines) and vote
impartially, the Committee may, in its discretion for the purposes
of ensuring that an independent determination is reached, retain an
independent fiduciary to advise the Committee on how to vote or to
cast votes on behalf of the Manager's clients.
In the event that the Committee determines not to retain an
independent fiduciary, or it does not follow the advice of such an
independent fiduciary, the Committee may pass the voting power to a
subcommittee, appointed by EIPOC (with advice from the Secretary of
the Committee), consisting solely of Committee members selected by
EIPOC. EIPOC shall appoint to the subcommittee, where appropriate,
only persons whose job responsibilities do not include contact with
the Client and whose job evaluations would not be affected by the
Manager's relationship with the Client (or failure to retain such
relationship). The subcommittee shall determine whether and how to
vote all proxies on behalf of the Manager's clients or, if the proxy
matter is, in their judgment, akin to an investment decision, to
defer to the applicable portfolio managers, provided that, if the
subcommittee determines to alter the Manager's normal voting
guidelines or, on matters where the Manager's policy is case-by-
case, does not follow the voting recommendation of any proxy voting
service or other independent fiduciary that may be retained to
provide research or advice to the Manager on that matter, no proxies
relating to the Client may be voted unless the Secretary, or in the
Secretary's absence, the Assistant Secretary of the Committee
concurs that the subcommittee's determination is consistent with the
Manager's fiduciary duties.
In addition to the general principles outlined above, the Manager
has adopted voting guidelines with respect to certain recurring
proxy issues that are not expected to involve unusual circumstances.
These policies are guidelines only, and the Manager may elect to
vote differently from the recommendation set forth in a voting
guideline if the Committee determines that it is in a Fund's best
interest to do so. In addition, the guidelines may be reviewed at
any time upon the request of a Committee member and may be amended
or deleted upon the vote of a majority of Committee members present
at a Committee meeting at which there is a quorum.
The Manager has adopted specific voting guidelines with respect to
the following proxy issues:
* Proposals related to the composition of the board of directors of
issuers other than investment companies. As a general matter, the
Committee believes that a company's board of directors (rather than
shareholders) is most likely to have access to important, nonpublic
information regarding a company's business and prospects, and is,
therefore, best-positioned to set corporate policy and oversee
management. The Committee, therefore, believes that the foundation
of good corporate governance is the election of qualified,
independent corporate directors who are likely to diligently
represent the interests of shareholders and oversee management of
the corporation in a manner that will seek to maximize shareholder
value over time. In individual cases, the Committee may look at a
nominee's number of other directorships, history of representing
shareholder interests as a director of other companies or other
factors, to the extent the Committee deems relevant.
* Proposals related to the selection of an issuer's independent
auditors. As a general matter, the Committee believes that corporate
auditors have a responsibility to represent the interests of
shareholders and provide an independent view on the propriety of
financial reporting decisions of corporate management. While the
Committee will generally defer to a corporation's choice of auditor,
in individual cases, the Committee may look at an auditors' history
of representing shareholder interests as auditor of other companies,
to the extent the Committee deems relevant.
* Proposals related to management compensation and employee
benefits. As a general matter, the Committee favors disclosure of an
issuer's compensation and benefit policies and opposes excessive
compensation, but believes that compensation matters are normally
best determined by an issuer's board of directors, rather than
shareholders. Proposals to "micro-manage" an issuer's compensation
practices or to set arbitrary restrictions on compensation or
benefits will, therefore, generally not be supported.
* Proposals related to requests, principally from management, for
approval of amendments that would alter an issuer's capital
structure. As a general matter, the Committee will support requests
that enhance the rights of common shareholders and oppose requests
that appear to be unreasonably dilutive.
* Proposals related to requests for approval of amendments to an
issuer's charter or by-laws. As a general matter, the Committee
opposes poison pill provisions.
* Routine proposals related to requests regarding the formalities of
corporate meetings.
* Proposals related to proxy issues associated solely with holdings
of investment company shares. As with other types of companies, the
Committee believes that a fund's board of directors (rather than its
shareholders) is best positioned to set fund policy and oversee
management. However, the Committee opposes granting boards of
directors authority over certain matters, such as changes to a
fund's investment objective, which the Investment Company Act
envisions will be approved directly by shareholders.
* Proposals related to limiting corporate conduct in some manner
that relates to the shareholder's environmental or social concerns.
The Committee generally believes that annual shareholder meetings
are inappropriate forums for discussion of larger social issues, and
opposes shareholder resolutions "micromanaging" corporate conduct or
requesting release of information that would not help a shareholder
evaluate an investment in the corporation as an economic matter.
While the Committee is generally supportive of proposals to require
corporate disclosure of matters that seem relevant and material to
the economic interests of shareholders, the Committee is generally
not supportive of proposals to require disclosure of corporate
matters for other purposes.
Information about how a Fund voted proxies relating to securities
held in the Fund's portfolio during the most recent 12 month period
ended June 30 is available without charge (1) at www.blackrock.com
and (2) on the Commission's web site at http://www.sec.gov.
Item 8 - Portfolio Managers of Closed-End Management Investment Companies -
as of July 31, 2007
(a)(1) BlackRock MuniHoldings Fund II, Inc. is managed by a team of
investment professionals comprised of Theodore R. Jaeckel, Jr., CFA,
Managing Director at BlackRock, and Walter O'Connor, Managing
Director at BlackRock. Each is a member of BlackRock's municipal
tax-exempt management group. Mr. Jaeckel and Mr. O'Connor are
responsible for setting the Fund's overall investment strategy and
overseeing the management of the Fund. Mr. Jaeckel is also the
Fund's lead portfolio manager and is responsible for the day-to-day
management of the Fund's portfolio and the selection of its
investments. Mr. O'Connor has been a member of the Fund's management
team since 2006 and Mr. Jaeckel has been the Fund's portfolio
manager since 2006.
Mr. Jaeckel joined BlackRock in 2006. Prior to joining BlackRock, he
was a Managing Director (Municipal Tax-Exempt Fund Management) of
Merrill Lynch Investment Managers, L.P. ("MLIM") from 2005 to 2006
and a Director of MLIM from 1997 to 2005. He has been a portfolio
manager with BlackRock or MLIM since 1991.
Mr. O'Connor joined BlackRock in 2006. Prior to joining BlackRock,
he was a Managing Director (Municipal Tax-Exempt Fund Management) of
MLIM from 2003 to 2006 and was a Director of MLIM from 1997 to 2002.
He has been a portfolio manager with BlackRock or MLIM since 1991.
(a)(2) As of July 31, 2007:
(iii) Number of Other Accounts and
(ii) Number of Other Accounts Managed Assets for Which Advisory Fee is
and Assets by Account Type Performance-Based
Other Other
(i) Name of Registered Other Pooled Registered Other Pooled
Portfolio Investment Investment Other Investment Investment Other
Manager Companies Vehicles Accounts Companies Vehicles Accounts
Walter
O'Connor 80 0 0 0 0 0
$28,755,263,843 $ 0 $0 $0 $ 0 $0
Theodore R.
Jaeckel, Jr. 80 1 0 0 1 0
$28,755,263,843 $33,459,212 $0 $0 $33,459,212 $0
(iv) Potential Material Conflicts of Interest
BlackRock has built a professional working environment, firm-wide
compliance culture and compliance procedures and systems designed to
protect against potential incentives that may favor one account over
another. BlackRock has adopted policies and procedures that address
the allocation of investment opportunities, execution of portfolio
transactions, personal trading by employees and other potential
conflicts of interest that are designed to ensure that all client
accounts are treated equitably over time. Nevertheless, BlackRock
furnishes investment management and advisory services to numerous
clients in addition to the Fund, and BlackRock may, consistent with
applicable law, make investment recommendations to other clients or
accounts (including accounts which are hedge funds or have
performance or higher fees paid to BlackRock, or in which portfolio
managers have a personal interest in the receipt of such fees),
which may be the same as or different from those made to the Fund.
In addition, BlackRock, its affiliates and any officer, director,
stockholder or employee may or may not have an interest in the
securities whose purchase and sale BlackRock recommends to the Fund.
BlackRock, or any of its affiliates, or any officer, director,
stockholder, employee or any member of their families may take
different actions than those recommended to the Fund by BlackRock
with respect to the same securities. Moreover, BlackRock may refrain
from rendering any advice or services concerning securities of
companies of which any of BlackRock's (or its affiliates') officers,
directors or employees are directors or officers, or companies as to
which BlackRock or any of its affiliates or the officers, directors
and employees of any of them has any substantial economic interest
or possesses material non-public information. Each portfolio manager
also may manage accounts whose investment strategies may at times be
opposed to the strategy utilized for the Fund. In this connection,
it should be noted that certain portfolio managers currently manage
certain accounts that are subject to performance fees. In addition,
certain portfolio managers assist in managing certain hedge funds
and may be entitled to receive a portion of any incentive fees
earned on such funds and a portion of such incentive fees may be
voluntarily or involuntarily deferred. Additional portfolio managers
may in the future manage other such accounts or funds and may be
entitled to receive incentive fees.
As a fiduciary, BlackRock owes a duty of loyalty to its clients and
must treat each client fairly. When BlackRock purchases or sells
securities for more than one account, the trades must be allocated
in a manner consistent with its fiduciary duties. BlackRock attempts
to allocate investments in a fair and equitable manner among client
accounts, with no account receiving preferential treatment. To this
end, BlackRock has adopted a policy that is intended to ensure that
investment opportunities are allocated fairly and equitably among
client accounts over time. This policy also seeks to achieve
reasonable efficiency in client transactions and provide BlackRock
with sufficient flexibility to allocate investments in a manner that
is consistent with the particular investment discipline and client
base.
(a)(3) As of July 31, 2007:
Portfolio Manager Compensation
Compensation Program
The elements of total compensation for portfolio managers on
BlackRock's municipal team include a fixed base salary, annual
performance-based cash and stock compensation (cash and stock bonus)
and other benefits. BlackRock has balanced these components of pay
to provide these portfolio managers with a powerful incentive to
achieve consistently superior investment performance. By design,
compensation levels for these portfolio managers fluctuate--both up
and down--with the relative investment performance of the portfolios
that they manage.
Base compensation
Like that of many asset management firms, base salaries
represent a relatively small portion of a portfolio manager's total
compensation. This approach serves to enhance the motivational value
of the performance-based (and therefore variable) compensation
elements of the compensation program.
Performance-Based Compensation
BlackRock believes that the best interests of investors are
served by recruiting and retaining exceptional asset management
talent and managing their compensation within a consistent and
disciplined framework that emphasizes pay for performance in the
context of an intensely competitive market for talent. To that end,
BlackRock and its affiliates portfolio manager incentive
compensation is based on a formulaic compensation program.
BlackRock's formulaic portfolio manager compensation program
includes: investment performance relative to a subset of single-
state, closed-end, leveraged municipal debt funds over 1-, 3- and
5-year performance periods and a measure of operational efficiency.
Portfolio managers are compensated based on the pre-tax performance
of the products they manage. If a portfolio manager's tenure is less
than 5 years, performance periods will reflect time in position.
Portfolio managers are compensated based on products they manage. A
discretionary element of portfolio manager compensation may include
consideration of: financial results, expense control, profit
margins, strategic planning and implementation, quality of client
service, market share, corporate reputation, capital allocation,
compliance and risk control, leadership, workforce diversity,
supervision, technology and innovation. All factors are considered
collectively by BlackRock management.
Long-Term Retention and Incentive Plan (LTIP)
The LTIP is a long-term incentive plan that seeks to reward
certain key employees. The plan provides for the grant of awards
that are expressed as an amount of cash that, if properly vested and
subject to the attainment of certain performance goals, will be
settled in cash and/or in BlackRock, Inc. common stock.
Cash Bonus
Performance-based compensation is distributed to portfolio
managers in a combination of cash and stock. Typically, the cash
bonus, when combined with base salary, represents more than 60% of
total compensation for portfolio managers.
Stock Bonus
A portion of the dollar value of the total annual performance-
based bonus is paid in restricted shares of BlackRock stock. Paying
a portion of annual bonuses in stock puts compensation earned by a
portfolio manager for a given year "at risk" based on the company's
ability to sustain and improve its performance over future periods.
The ultimate value of stock bonuses is dependent on future BlackRock
stock price performance. As such, the stock bonus aligns each
portfolio manager's financial interests with those of the BlackRock
shareholders and encourages a balance between short-term goals and
long-term strategic objectives. Management strongly believes that
providing a significant portion of competitive performance-based
compensation in stock is in the best interests of investors and
shareholders. This approach ensures that portfolio managers
participate as shareholders in both the "downside risk" and "upside
opportunity" of the company's performance. Portfolio managers
therefore have a direct incentive to protect BlackRock's reputation
for integrity.
Other Compensation Programs
Portfolio managers who meet relative investment performance
and financial management objectives during a performance year are
eligible to participate in a deferred cash program. Awards under
this program are in the form of deferred cash that may be
benchmarked to a menu of BlackRock mutual funds (including their own
fund) during a five-year vesting period. The deferred cash program
aligns the interests of participating portfolio managers with the
investment results of BlackRock products and promotes continuity of
successful portfolio management teams.
Other Benefits
Portfolio managers are also eligible to participate in broad-
based plans offered generally to employees of BlackRock and its
affiliates, including broad-based retirement, 401(k), health, and
other employee benefit plans.
(a)(4) Beneficial Ownership of Securities. As of July 31, 2007,
none of Messrs. Jaeckel and O'Connor beneficially owned any stock
issued by the Fund.
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable
Item 10 - Submission of Matters to a Vote of Security Holders - The
registrant's Nominating Committee will consider nominees to the
Board recommended by shareholders when a vacancy becomes available.
Shareholders who wish to recommend a nominee should send nominations
which include biographical information and set forth the
qualifications of the proposed nominee to the registrant's
Secretary. There have been no material changes to these procedures.
Item 11 - Controls and Procedures
11(a) - The registrant's principal executive and principal financial
officers or persons performing similar functions have concluded that
the registrant's disclosure controls and procedures (as defined in
Rule 30a-3(c) under the Investment Company Act of 1940, as amended
(the "1940 Act")) are effective as of a date within 90 days of the
filing of this report based on the evaluation of these controls and
procedures required by Rule 30a-3(b) under the 1940 Act and
Rule 13a-15(b) under the Securities and Exchange Act of 1934, as
amended.
11(b) - There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the
1940 Act (17 CFR 270.30a-3(d)) that occurred during the second
fiscal quarter of the period covered by this report that have
materially affected, or are reasonably likely to materially affect,
the registrant's internal control over financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - See Item 2
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
12(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
BlackRock MuniHoldings Fund II, Inc.
By: /s/ Robert C. Doll, Jr.
-----------------------
Robert C. Doll, Jr.,
Chief Executive Officer (principal executive officer) of
BlackRock MuniHoldings Fund II, Inc.
Date: September 20, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Robert C. Doll, Jr.
-----------------------
Robert C. Doll, Jr.,
Chief Executive Officer (principal executive officer) of
BlackRock MuniHoldings Fund II, Inc.
Date: September 20, 2007
By: /s/ Donald C. Burke
--------------------
Donald C. Burke,
Chief Financial Officer (principal financial officer) of
BlackRock MuniHoldings Fund II, Inc.
Date: September 20, 2007