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 811-05611

 

Name of Fund: BlackRock MuniVest Fund, Inc. (MVF)

 

Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809

 

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

 

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

 

Date of fiscal year end: 08/31/2011

 

Date of reporting period: 08/31/2011

 

Item 1 – Report to Stockholders

 


 

 

(BLACKROCK LOGO)

August 31, 2011


 

 

Annual Report

 

BlackRock Municipal Bond Investment Trust (BIE)

 

BlackRock Municipal Bond Trust (BBK)

 

BlackRock Municipal Income Investment Quality Trust (BAF)

 

BlackRock Municipal Income Quality Trust (BYM)

 

BlackRock Municipal Income Trust II (BLE)

 

BlackRock MuniHoldings Investment Quality Fund (MFL)

 

BlackRock MuniVest Fund, Inc. (MVF)


 

Not FDIC Insured § No Bank Guarantee § May Lose Value



 

 

 

Table of Contents


 

 

 

 

 

Page

 

 

 

Dear Shareholder

 

3

Annual Report:

 

 

Municipal Market Overview

 

4

Trust Summaries

 

5

The Benefits and Risks of Leveraging

 

12

Derivative Financial Instruments

 

12

Financial Statements:

 

 

Schedules of Investments

 

13

Statements of Assets and Liabilities

 

42

Statements of Operations

 

43

Statements of Changes in Net Assets

 

44

Statements of Cash Flows

 

46

Financial Highlights

 

47

Notes to Financial Statements

 

51

Report of Independent Registered Public Accounting Firm

 

59

Important Tax Information

 

59

Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements

 

60

Automatic Dividend Reinvestment Plans

 

64

Officers and Trustees

 

65

Additional Information

 

68


 

 

 

 

 

 

2

ANNUAL REPORT

AUGUST 31, 2011




 

 

Dear Shareholder

Market volatility has been extraordinary in recent months. Government debt and deficit issues in both the US and Europe have taken a toll on investor sentiment while weaker-than-expected US economic data raised concerns of another recession. Political instability and concerns that central banks have nearly exhausted their stimulus measures have further compounded investor uncertainty. Although markets remain volatile and conditions are highly uncertain, BlackRock remains focused on finding opportunities in this environment.

The pages that follow reflect your fund’s reporting period ended August 31, 2011. Accordingly, the following discussion is intended to provide you with additional perspective on the performance of your investments during that period.

One year ago, the global economy appeared to solidly be in recovery mode and investors were optimistic given the anticipated second round of quantitative easing from the US Federal Reserve (the “Fed”). Stock markets rallied despite the ongoing sovereign debt crisis in Europe and inflationary pressures looming over emerging markets. Fixed income markets, however, saw yields move sharply upward (pushing prices down) especially on the long end of the historically steep yield curve. While high yield bonds benefited from the risk rally, most fixed income sectors declined in the fourth quarter. The tax-exempt municipal market faced additional headwinds as it became evident that the Build America Bond program would not be extended and municipal finance troubles abounded.

The new year brought spikes of volatility as political turmoil swept across the Middle East/North Africa region and as prices of oil and other commodities soared. Natural disasters in Japan disrupted industrial supply chains and concerns mounted over US debt and deficit issues. Equities generally performed well early in the year, however, as investors chose to focus on the continuing stream of strong corporate earnings and positive economic data. Credit markets were surprisingly resilient in this environment and yields regained relative stability in 2011. The tax-exempt market saw relief from its headwinds and steadily recovered from its fourth-quarter lows. Equities, commodities and high yield bonds outpaced higher-quality assets as investors increased their risk tolerance.

However, longer-term headwinds had been brewing. Inflationary pressures intensified in emerging economies, many of which were overheating, and the European debt crisis continued to escalate. Markets were met with a sharp reversal in May when political unrest in Greece pushed the nation closer to defaulting on its debt. This development rekindled fears about the broader debt crisis and its further contagion among peripheral European countries. Concurrently, it became evident that the pace of global economic growth had slowed as higher oil prices and supply chain disruptions finally showed up in economic data. By mid-summer, confidence in policymakers was tarnished as the prolonged US debt ceiling debate revealed the degree of polarization in Washington, DC. The downgrade of the US government’s credit rating on August 5 was the catalyst for the recent turmoil in financial markets. Extreme volatility persisted as Europe’s debt and banking crisis deepened and US economic data continued to weaken. Investors fled from riskier assets, pushing stock and high yield bond indices into negative territory for the six-month period ended August 31, while lower-risk investments including US Treasuries, municipal securities and investment grade corporate bonds posted gains. Twelve-month returns on all asset classes remained positive. Continued low short-term interest rates kept yields on money market securities near their all-time lows.

 

Sincerely,

 

-s- Rob Kapito

 

Rob Kapito

President, BlackRock Advisors, LLC

 

[PHOTO OF ROB KAPITO]

 

“BlackRock remains focused on managing risk and finding opportunities in all market environments.”

 

Rob Kapito

President, BlackRock Advisors, LLC

 


Total Returns as of August 31, 2011


 

 

 

 

 

 

 

 

 

 

6-month

 

12-month

 

US large cap equities

 

(7.23

)%

 

18.50

%

 

(S&P 500 Index)

 

 

 

 

 

 

 

US small cap equities

 

(11.17

)

 

22.19

 

 

(Russell 2000 Index)

 

 

 

 

 

 

 

International equities

 

(11.12

)

 

10.01

 

 

(MSCI Europe, Australasia,

 

 

 

 

 

 

 

Far East Index)

 

 

 

 

 

 

 

Emerging market

 

(5.11

)

 

9.07

 

 

equities (MSCI Emerging

 

 

 

 

 

 

 

Markets Index)

 

 

 

 

 

 

 

3-month Treasury

 

0.08

 

 

0.15

 

 

bill (BofA Merrill Lynch

 

 

 

 

 

 

 

3-Month Treasury

 

 

 

 

 

 

 

Bill Index)

 

 

 

 

 

 

 

US Treasury securities

 

13.04

 

 

6.21

 

 

(BofA Merrill Lynch 10-

 

 

 

 

 

 

 

Year US Treasury Index)

 

 

 

 

 

 

 

US investment grade

 

5.49

 

 

4.62

 

 

bonds (Barclays

 

 

 

 

 

 

 

Capital US Aggregate

 

 

 

 

 

 

 

Bond Index)

 

 

 

 

 

 

 

Tax-exempt municipal

 

6.39

 

 

2.66

 

 

bonds (Barclays Capital

 

 

 

 

 

 

 

Municipal Bond Index)

 

 

 

 

 

 

 

US high yield bonds

 

(1.57

)

 

8.32

 

 

(Barclays Capital US

 

 

 

 

 

 

 

Corporate High Yield 2%

 

 

 

 

 

 

 

Issuer Capped Index)

 

 

 

 

 

 

 


 

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


 

 

 

 

 

 

 

THIS PAGE NOT PART OF YOUR FUND REPORT

3




 

 

Municipal Market Overview

 

     For the 12-Month Period Ended August 31, 2011

At the outset of the 12-month period, investor concerns were focused on the possibility of deflation and a double-dip recession in the US economy thus leading to a flatter municipal yield curve at that time as compared to August 31, 2011. Rates moved lower (and prices higher) across the curve through September 2010, reaching historic lows in August when the yield on 5-year issues touched 1.06%, the 10-year reached 2.18% and the 30-year closed at 3.67%. However, the market took a turn in October amid a “perfect storm” of events that ultimately resulted in the worst quarterly performance for municipals since the Fed tightening cycle of 1994. Treasury yields lost support due to concerns over the US deficit and municipal valuations suffered a quick and severe setback as it became evident that the Build America Bond (“BAB”) program would expire at the end of 2010. The program had opened the taxable market to municipal issuers, successfully alleviating supply pressure in the traditional tax-exempt marketplace and bringing down yields in that space.

(LINE GRAPH)

Towards the end of the fourth quarter 2010, news about municipal finance troubles mounted and damaged confidence among retail investors. From mid-November through year end, weekly outflows from municipal mutual funds averaged over $2.5 billion. Political uncertainty surrounding the midterm elections and tax policies along with the expiration of the BAB program exacerbated the situation. These conditions combined with seasonal illiquidity sapped willful market participation from the trading community. December brought declining demand with no comparable reduction in supply as issuers rushed their deals to market before the BAB program was retired. This supply-demand imbalance led to wider quality spreads and higher yields.

Demand is usually strong at the beginning of a new year, but retail investors continued to move away from municipal mutual funds in 2011. From mid-November, outflows persisted for 29 consecutive weeks, totaling $35.1 billion before the trend finally broke in June. Weak demand has been counterbalanced by lower supply in 2011. According to Thomson Reuters, year-to-date through August, new issuance was down 38% compared to the same period last year. Issuers have been reluctant to bring new deals to the market due to higher interest rates, fiscal policy changes and a reduced need for municipal borrowing. In this positive technical environment, the S&P/Investortools Main Municipal Bond Index gained 4.22% for the second quarter of 2011, its best second-quarter performance since 1992, and municipals outperformed most other fixed income asset classes for the quarter.

On August 5, S&P downgraded the US credit rating from AAA to AA+, leading to the downgrade of 11,000 municipal issues directly linked to the US government debt rating. Nevertheless, the municipal market posted solid gains for the month of August, aided primarily by an exuberant Treasury market, severe volatility in US equities and continued supply constraint in the primary municipal market. For the month of August, the curve flattened due to outperformance in the long-end driven by demand from both traditional and non-traditional buyers.

Overall, the municipal yield curve steepened during the period from August 31, 2010, to August 31, 2011. As measured by Thomson Municipal Market Data, yields on AAA quality-rated 30-year municipals rose 22 basis points (“bps”) to 3.89%, while yields for 5-year maturities rallied by 17 bps to .89%, and 10-year maturities increased by 7 bps to 2.25%. With the exception of the 2- to 5-year range, the yield spread between maturities increased over the past year, with the greatest increase seen in the 5- to 30-year range, where the spread widened by 39 bps, while overall the slope between 2- and 30-year maturities increased by 27 bps to 3.59%.

The fundamental picture for municipalities is improving as most states began their new fiscal year with a balanced budget. Austerity is the general theme across the country, while a small number of states continue to rely on the “kick the can” approach, using aggressive revenue projections and accounting gimmicks to close their shortfalls. As long as economic growth stays positive, tax receipts for states should continue to rise and lead to better credit fundamentals. BlackRock maintains a constructive view of the municipal market, recognizing that careful credit research and security selection remain imperative amid uncertainty in the economic environment.

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

 

 

 

 

 

 

4

ANNUAL REPORT

AUGUST 31, 2011




 

 

 

 

Trust Summary as of August 31, 2011

BlackRock Municipal Bond Investment Trust


 

Trust Overview

 

BlackRock Municipal Bond Investment Trust’s (BIE) (the “Trust”) investment objective is to provide current income exempt from regular federal income tax and Florida intangible personal property tax. The Trust seeks to achieve its investment objective by investing primarily in municipal bonds exempt from federal income taxes (except that the interest may be subject to the federal alternative minimum tax). Under normal market conditions, the Trust invests at least 80% of its assets in municipal bonds that are investment grade quality at the time of investment. The Trust may invest directly in such securities or synthetically through the use of derivatives. Due to the repeal of the Florida intangible personal property tax, the Board approved an amended policy in September 2008, allowing the Trust the flexibility to invest in municipal obligations regardless of geographical location.

 

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

 

Performance

 

For the 12 months ended August 31, 2011, the Trust returned (2.38)% based on market price and 1.29% based on net asset value (“NAV.”) For the same period, the closed-end Lipper General &Insured Municipal Debt Funds (Leveraged) category posted an average return of (0.90)% based on market price and 2.36% based on NAV. All returns reflect reinvestment of dividends. The Trust moved from a premium to NAV to a discount by period end, which accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV. Contributing positively to the Trust’s performance was its exposure to spread sectors, including housing and health bonds, which provided a relatively high degree of incremental income in the low interest rate environment. The Trust’s holdings of premium coupon bonds (6% or higher) and shorter-duration bonds (bonds with lower sensitivity to interest rate movements) performed well as long-term interest rates climbed toward the end of 2010 and into the early part of 2011. Conversely, the Trust’s exposure to bonds with longer duration (greater sensitivity to interest rate movements) and bonds with longer-dated maturities detracted from performance as the municipal yield curve steepened over the 12-month period. US Treasury financial futures contracts used to hedge interest rate risk in the portfolio had a negative impact on performance.

 

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

 

Trust Information


 

 

Symbol on New York Stock Exchange (“NYSE”)

BIE

Initial Offering Date

April 30, 2002

Yield on Closing Market Price as of August 31, 2011 ($14.22)1

6.84%

Tax Equivalent Yield2

10.52%

Current Monthly Distribution per Common Share3

$0.0810

Current Annualized Distribution per Common Share3

$0.9720

Leverage as of August 31, 20114

41%


 

 

 

 

1

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.

 

 

 

 

2

Tax equivalent yield assumes the maximum federal tax rate of 35%.

 

 

 

 

3

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

 

 

 

 

4

Represents Auction Market Preferred Shares (“AMPS”) and tender option bond trusts (“TOBs”) as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to AMPS and TOBs, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Trust, please see The Benefits and Risks of Leveraging on page 12.

The table below summarizes the changes in the Trust’s market price and NAV per share:

 

 

 

 

 

 

 

8/31/11

8/31/10

Change

High

Low

Market Price

$14.22

$15.60

(8.85)%

$15.76

$12.14

Net Asset Value

$14.67

$15.51

(5.42)%

$15.51

$12.76

The following charts show the sector and credit quality allocations of the Trust’s long-term investments:

 

 

 

 

 

Sector Allocations

 

 

 

 

 

8/31/11

8/31/10

Health

23

%

22

%

Transportation

21

18

Utilities

19

 

18

 

County/City/Special District/School District

17

 

19

 

Education

7

 

8

 

State

6

 

8

 

Housing

5

 

5

 

Tobacco

1

1

Corporate

1

 

1

 

 

 

 

 

 

Credit Quality Allocations5

 

 

 

 

 

8/31/11

8/31/10

AAA/Aaa

10

%

14

%

AA/Aa

62

64

A

21

 

17

 

BBB/Baa

6

4

BB/Ba

1

 

 

Not Rated

 

1

 


 

 

 

 

5

Using the higher of Standard & Poor’s (“S&P’s”) or Moody’s Investors Service (“Moody’s”) ratings.


 

 

 

 

 

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

5




 

 

 

 

Trust Summary as of August 31, 2011

BlackRock Municipal Bond Trust


 

Trust Overview

BlackRock Municipal Bond Trust’s (BBK) (the “Trust”) investment objective is to provide current income exempt from regular federal income tax. The Trust seeks to achieve its investment objective by investing primarily in municipal bonds exempt from regular federal income taxes (except that the interest may be subject to the federal alternative minimum tax). The Trust invests, under normal market conditions, at least 80% of its assets in municipal bonds that are investment grade quality. The Trust may invest directly in such securities or synthetically through the use of derivatives.

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

 

Performance

For the 12 months ended August 31, 2011, the Trust returned 1.38% based on market price and 2.02% based on NAV. For the same period, the closed-end Lipper General & Insured Municipal Debt Funds (Leveraged) category posted an average return of (0.90)% based on market price and 2.36% based on NAV. All returns reflect reinvestment of dividends. The Trust’s premium to NAV, which narrowed during the period, accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV. The Trust’s positive performance was derived mostly from its holdings in higher-yielding sectors including health, corporate/industrial development and housing bonds, which provided incremental income. The Trust also benefited from its exposure to lower-quality bonds, which, in addition to offering higher embedded yields, experienced some price appreciation due to spread compression during the period. The Trust was heavily invested in tax-backed credits and moderately invested in the education sector, both of which returned moderately positive performance. Over the period, the Trust maintained a slightly long duration bias and greater exposure to the long end of the yield curve. Although this positioning was favorable as the period drew to a close, it detracted from performance on the whole for the year. The Trust’s allocation to Puerto Rico credits, which underperformed all other states and territories for the period, had a negative impact on returns. US Treasury financial futures contracts used to hedge interest rate risk in the portfolio had a negative impact on performance.

 

 

 

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


 

 

 

 

 

Trust Information

 

 

 

 

 

 

 

 

 

Symbol on NYSE

 

 

BBK

 

Initial Offering Date

 

April 30, 2002

 

Yield on Closing Market Price as of August 31, 2011 ($14.86)1

 

 

7.15%

 

Tax Equivalent Yield2

 

 

11.00%

 

Current Monthly Distribution per Common Share3

 

 

$0.0885

 

Current Annualized Distribution per Common Share3

 

 

$1.0620

 

Leverage as of August 31, 20114

 

 

37%

 


 

 

1

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.

 

 

2

Tax equivalent yield assumes the maximum federal tax rate of 35%.

 

 

3

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

 

 

4

Represents AMPS and TOBs as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to AMPS and TOBs, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Trust, please see The Benefits and Risks of Leveraging on page 12.

The table below summarizes the changes in the Trust’s market price and NAV per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8/31/11

 

8/31/10

 

Change

 

High

 

Low

 

Market Price

 

$

14.86

 

$

15.79

 

 

(5.89

)%

$

16.00

 

$

12.20

 

Net Asset Value

 

$

14.48

 

$

15.29

 

 

(5.30

)%

$

15.30

 

$

12.70

 

The following charts show the sector and credit quality allocations of the Trust’s long-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sector Allocations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8/31/11

 

 

8/31/10

 

Health

 

 

 

21

%

 

 

 

23

%

 

State

 

 

 

14

 

 

 

 

15

 

 

Housing

 

 

 

14

 

 

 

 

14

 

 

County/City/Special District/School District

 

 

 

12

 

 

 

 

13

 

 

Transportation

 

 

 

10

 

 

 

 

9

 

 

Education

 

 

 

10

 

 

 

 

10

 

 

Corporate

 

 

 

10

 

 

 

 

8

 

 

Utilities

 

 

 

7

 

 

 

 

5

 

 

Tobacco

 

 

 

2

 

 

 

 

3

 

 


 

 

 

 

 

 

 

 

 

 

 

 

Credit Quality Allocations5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8/31/11

 

 

8/31/10

 

AAA/Aaa

 

 

 

11

%

 

 

 

26

%

 

AA/Aa

 

 

 

35

 

 

 

 

20

 

 

A

 

 

 

18

 

 

 

 

22

 

 

BBB/Baa

 

 

 

22

 

 

 

 

20

 

 

BB/Ba

 

 

 

1

 

 

 

 

1

 

 

B

 

 

 

6

 

 

 

 

3

 

 

CCC/Caa

 

 

 

1

 

 

 

 

1

 

 

Not Rated6

 

 

 

6

 

 

 

 

7

 

 


 

 

5

Using the higher of S&P’s or Moody’s ratings.

 

 

6

The investment advisor has deemed certain of these non-rated securities to be of investment grade quality. As of August 31, 2011 and August 31, 2010, the market value of these securities was $4,646,558, representing 2%, and $6,207,616, representing 3%, respectively, of the Trust’s long-term investments.


 

 

 

 

 

6

ANNUAL REPORT

AUGUST 31, 2011




 

 

 

 

Trust Summary as of August 31, 2011

BlackRock Municipal Income Investment Quality Trust


 

Trust Overview

Effective November 9, 2010, BlackRock Insured Municipal Income Investment Trust changed its name to BlackRock Municipal Income Investment Quality Trust.

BlackRock Municipal Income Investment Quality Trust’s (BAF) (the “Trust”) investment objective is to provide current income exempt from federal income tax, including the alternative minimum tax and Florida intangible property tax.The Trust seeks to achieve its investment objective by investing, under normal circumstances, at least 80% of its assets in municipal bonds exempt from federal income taxes, including the alternative minimum tax. The Trust also invests primarily in municipal bonds that are investment grade quality at the time of investment. The Trust may invest directly in such securities or synthetically through the use of derivatives. Due to the repeal of the Florida intangible personal property tax, the Board approved an amended policy in September 2008, allowing the Trust the flexibility to invest in municipal obligations regardless of geographical location.

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

 

Performance

Effective November 9, 2010, the Trust’s investment policy was changed by the removal of the insurance investment policy that required at least 80% of its assets to be invested in insured municipal securities. Accordingly, the Trust was moved from the Lipper Insured Municipal Debt Funds (Leveraged) category into the Lipper General Municipal Debt Funds (Leveraged) category. During the period, Lipper combined these categories into one General & Insured Municipal Debt Funds (Leveraged) category. For the 12 months ended August 31, 2011, the Trust returned (5.01)% based on market price and 2.62% based on NAV. For the same period, the closed-end Lipper General & Insured Municipal Debt Funds (Leveraged) category posted an average return of (0.90)% based on market price and 2.36% based on NAV. All returns reflect reinvestment of dividends. The Trust moved from a premium to NAV to a discount by period end, which accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV. Contributing positively to the Trust’s performance was its exposure to spread sectors, including housing and health bonds, which provided a relatively high degree of incremental income in the low interest rate environment. The Trust’s holdings of premium coupon bonds (6% or higher) and shorter-duration bonds (bonds with lower sensitivity to interest rate movements) performed well as long-term interest rates climbed toward the end of 2010 and into the early part of 2011. Conversely, the Trust’s exposure to bonds with longer duration (greater sensitivity to interest rate movements) and bonds with longer-dated maturities detracted from performance as the municipal yield curve steepened over the 12-month period. US Treasury financial futures contracts used to hedge interest rate risk in the portfolio had a negative impact on performance.

 

 

 

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


 

 

 

 

 

Trust Information

 

 

 

 

 

 

 

 

 

Symbol on NYSE

 

 

BAF

 

Initial Offering Date

 

October 31, 2002

 

Yield on Closing Market Price as of August 31, 2011 ($13.92)1

 

 

6.42%

 

Tax Equivalent Yield2

 

 

9.88%

 

Current Monthly Distribution per Common Share3

 

 

$0.0745

 

Current Annualized Distribution per Common Share3

 

 

$0.8940

 

Leverage as of August 31, 20114

 

 

34%

 


 

 

1

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.

 

 

2

Tax equivalent yield assumes the maximum federal tax rate of 35%.

 

 

3

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

 

 

4

Represents AMPS and TOBs as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to AMPS and TOBs, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Trust, please see The Benefits and Risks of Leveraging on page 12.

The table below summarizes the changes in the Trust’s market price and NAV per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8/31/11

 

8/31/10

 

Change

 

High

 

Low

 

Market Price

 

$

13.92

 

$

15.64

 

 

(11.00

)%

$

15.92

 

$

11.92

 

Net Asset Value

 

$

14.50

 

$

15.08

 

 

(3.85

)%

$

15.08

 

$

12.76

 

The following charts show the sector and credit quality allocations of the Trust’s long-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

Sector Allocations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8/31/11

 

 

8/31/10

 

County/City/Special District/School District

 

 

 

34

%

 

 

 

36

%

 

Utilities

 

 

 

22

 

 

 

 

27

 

 

Transportation

 

 

 

16

 

 

 

 

15

 

 

Health

 

 

 

9

 

 

 

 

10

 

 

Education

 

 

 

9

 

 

 

 

 

 

State

 

 

 

8

 

 

 

 

11

 

 

Housing

 

 

 

1

 

 

 

 

1

 

 

Tobacco

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit Quality Allocations5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8/31/11

 

 

8/31/10

 

AAA/Aaa

 

 

 

14

%

 

 

 

59

%

 

AA/Aa

 

 

 

70

 

 

 

 

25

 

 

A

 

 

 

12

 

 

 

 

13

 

 

BBB/Baa

 

 

 

4

 

 

 

 

 

 

Not Rated

 

 

 

 

 

 

 

3

6

 


 

 

5

Using the higher of S&P’s or Moody’s ratings.

 

 

6

The investment advisor has deemed certain of these non-rated securities to be of investment grade quality. As of August 31, 2010, the market value of these securities was $5,171,100, representing 3% of the Trust’s long-term investments.


 

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

7




 

 

 

 

Trust Summary as of August 31, 2011

BlackRock Municipal Income Quality Trust


 

Trust Overview

Effective November 9, 2010, BlackRock Insured Municipal Income Trust changed its name to BlackRock Municipal Income Quality Trust.

BlackRock Municipal Income Quality Trust’s (BYM) (the “Trust”) investment objective is to provide current income exempt from federal income taxes, including the alternative minimum tax. The Trust seeks to achieve its investment objective by investing, under normal circumstances, at least 80% of its assets in municipal bonds exempt from federal income taxes, including the alternative minimum tax. The Trust also invests primarily in municipal bonds that are investment grade quality at the time of investment. The Trust may invest directly in such securities or synthetically through the use of derivatives.

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

 

Performance

Effective November 9, 2010, the Trust’s investment policy was changed by the removal of the insurance investment policy that required at least 80% of its assets to be invested in insured municipal securities. Accordingly, the Trust was moved from the Lipper Insured Municipal Debt Funds (Leveraged) category into the Lipper General Municipal Debt Funds (Leveraged) category. During the period, Lipper combined these categories into one General & Insured Municipal Debt Funds (Leveraged) category. For the 12 months ended August 31, 2011, the Trust returned (2.79)% based on market price and 3.09% based on NAV. For the same period, the closed-end Lipper General & Insured Municipal Debt Funds (Leveraged) category posted an average return of (0.90)% based on market price and 2.36% based on NAV. All returns reflect reinvestment of dividends. The Trust moved from a premium to NAV to a discount by period end, which accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV. The Trust’s exposure to bonds with shorter maturities and shorter durations (lower sensitivity to interest rate movements) contributed positively to performance as yields on the short and intermediate parts of the municipal curve increased to a smaller degree than on the long end (bond prices fall as yields rise). Holdings of premium coupon bonds, which tend to be less sensitive to changes in interest rates, also had a positive impact. Conversely, the Trust’s exposure to longer maturity bonds had a negative impact as the long end of the yield curve steepened during the period (i.e., long-term interest rates increased more than short and intermediate rates). Holdings of tobacco issues also detracted as the sector lagged the broader market. US Treasury financial futures contracts used to hedge interest rate risk in the portfolio had a negative impact on performance.

 

 

 

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


 

Trust Information


 

 

Symbol on NYSE

BYM

Initial Offering Date

October 31, 2002

Yield on Closing Market Price as of August 31, 2011 ($13.85)1

6.67%

Tax Equivalent Yield2

10.26%

Current Monthly Distribution per Common Share3

$0.0770

Current Annualized Distribution per Common Share3

$0.9240

Leverage as of August 31, 20114

38%


 

 

 

 

1

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.

 

 

 

 

2

Tax equivalent yield assumes the maximum federal tax rate of 35%.

 

 

 

 

3

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

 

 

 

 

4

Represents AMPS and TOBs as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to AMPS and TOBs, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Trust, please see The Benefits and Risks of Leveraging on page 12.

The table below summarizes the changes in the Trust’s market price and NAV per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8/31/11

 

8/31/10

 

Change

 

High

 

Low

 

Market Price

 

$

13.85

 

$

15.26

 

 

(9.24

)%

$

15.42

 

$

11.71

 

Net Asset Value

 

$

14.09

 

$

14.64

 

 

(3.76

)%

$

14.69

 

$

12.20

 

The following charts show the sector and credit quality allocations of the Trust’s long-term investments:

 

Sector Allocations

 

 

 

 

 

 

 

 

 

 

8/31/11

 

8/31/10

 

Transportation

 

24

%

 

21

%

 

Utilities

 

21

 

 

24

 

 

County/City/Special District/School District

 

18

 

 

21

 

 

State

 

14

 

 

15

 

 

Health

 

8

 

 

7

 

 

Tobacco

 

6

 

 

6

 

 

Education

 

6

 

 

3

 

 

Corporate

 

2

 

 

2

 

 

Housing

 

1

 

 

1

 

 


 

Credit Quality Allocations5

 

 

 

 

 

 

 

 

 

 

8/31/11

 

8/31/10

 

AAA/Aaa

 

21

%

 

57

%

 

AA/Aa

 

58

 

 

24

 

 

A

 

13

 

 

12

 

 

BBB/Baa

 

8

 

 

5

 

 

Not Rated

 

 

 

2

6

 


 

 

 

 

5

Using the higher of S&P’s or Moody’s ratings

 

 

 

 

6

The investment advisor has deemed certain of these non-rated securities to be of investment grade quality. As of August 31, 2010, the market value of these securities was $10,513,600, representing 2% of the Trust’s long-term investments.


 

 

 

 

 

 

8

ANNUAL REPORT

AUGUST 31, 2011




 

 

 

 

Trust Summary as of August 31, 2011

BlackRock Municipal Income Trust II


 

Trust Overview

BlackRock Municipal Income Trust II’s (BLE) (the “Trust”) investment objective is to provide current income exempt from regular federal income tax. The Trust seeks to achieve its investment objective by investing primarily in municipal bonds exempt from federal income taxes (except that the interest may be subject to the federal alternative minimum tax). The Trust invests, under normal market conditions, at least 80% of its assets in municipal bonds that are investment grade quality at the time of investment. The Trust may invest directly in such securities or synthetically through the use of derivatives.

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

 

Performance

For the 12 months ended August 31, 2011, the Trust returned (0.07)% based on market price and 2.70% based on NAV. For the same period, the closed-end Lipper General & Insured Municipal Debt Funds (Leveraged) category posted an average return of (0.90)% based on market price and 2.36% based on NAV. All returns reflect reinvestment of dividends. The Trust’s premium to NAV, which narrowed during the period, accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV. Security selection contributed positively to performance, particularly among housing, tax-backed, tobacco, transportation and health credits. An emphasis on industrial development bonds had a positive impact as these issues outperformed the broader municipal market during most of the period. In addition, the Trust’s holdings generated a high distribution yield, which over the course of the year had a meaningful impact on returns. Detracting from performance was the Trust’s large exposure to lower-quality bonds when credits widened toward the end of 2010. Additionally, the Trust’s long portfolio duration and yield curve positioning had a negative impact as long rates increased and the yield curve steepened over the period. US Treasury financial futures contracts used to hedge interest rate risk in the portfolio had a negative impact on performance.

 

 

 

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


 

Trust Information


 

 

Symbol on NYSE Amex

BLE

Initial Offering Date

July 30, 2002

Yield on Closing Market Price as of August 31, 2011 ($14.13)1

7.09%

Tax Equivalent Yield2

10.91%

Current Monthly Distribution per Common Share3

$0.0835

Current Annualized Distribution per Common Share3

$1.0020

Leverage as of August 31, 20114

37%


 

 

 

 

1

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.

 

 

 

 

2

Tax equivalent yield assumes the maximum federal tax rate of 35%.

 

 

 

 

3

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

 

 

 

 

4

Represents AMPS and TOBs as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to AMPS and TOBs, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Trust, please see The Benefits and Risks of Leveraging on page 12.

The table below summarizes the changes in the Trust’s market price and NAV per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8/31/11

 

8/31/10

 

Change

 

High

 

Low

 

Market Price

 

$

14.13

 

$

15.22

 

 

(7.16

)%

$

15.35

 

$

11.87

 

Net Asset Value

 

$

13.96

 

$

14.63

 

 

(4.58

)%

$

14.63

 

$

12.41

 

The following charts show the sector and credit quality allocations of the Trust’s long-term investments:

 

Sector Allocations

 

 

 

 

 

 

 

 

 

 

8/31/11

 

8/31/10

 

Health

 

21

%

 

19

%

 

State

 

16

 

 

17

 

 

Transportation

 

13

 

 

11

 

 

Utilities

 

13

 

 

13

 

 

Corporate

 

10

 

 

11

 

 

County/City/Special District

 

10

 

 

12

 

 

Education

 

8

 

 

7

 

 

Housing

 

5

 

 

6

 

 

Tobacco

 

4

 

 

4

 

 


 

Credit Quality Allocations5

 

 

 

 

 

 

 

 

 

 

8/31/11

 

8/31/10

 

AAA/Aaa

 

10

%

 

18

%

 

AA/Aa

 

32

 

 

21

 

 

A

 

26

 

 

30

 

 

BBB/Baa

 

16

 

 

17

 

 

BB/Ba

 

5

 

 

1

 

 

B

 

4

 

 

6

 

 

CCC/Caa

 

 

 

1

 

 

Not Rated6

 

7

 

 

6

 

 


 

 

 

 

5

Using the higher of S&P’s or Moody’s ratings.

 

 

 

 

6

The investment advisor has deemed certain of these non-rated securities to be of investment grade quality. As of August 31, 2011 and August 31, 2010, the market value of these securities was $11,677,703, representing 2%, and $13,839,185, representing 3%, respectively, of the Trust’s long-term investments.


 

 

 

 

 

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

9




 

 

 

 

Trust Summary as of August 31, 2011

BlackRock MuniHoldings Investment Quality Fund


 

Trust Overview

Effective November 9, 2010, BlackRock MuniHoldings Insured Investment Fund changed its name to BlackRock MuniHoldings Investment Quality Fund.

BlackRock MuniHoldings Investment Quality Fund’s (MFL) (the “Trust”) investment objective is to provide shareholders with current income exempt from federal income tax and to provide shareholders with the opportunity to own shares the value of which is exempt from Florida intangible personal property tax. The Trust seeks to achieve its investment objective by investing primarily in long-term, investment grade municipal obligations exempt from federal income taxes (except that the interest may be subject to the federal alternative minimum tax). Under normal market conditions, the Trust invests at least 80% of its assets in municipal obligations with remaining maturities of one year or more. The Trust may invest directly in such securities or synthetically through the use of derivatives. Due to the repeal of the Florida intangible personal property tax, the Board approved an amended policy in September 2008, allowing the Trust the flexibility to invest in municipal obligations regardless of geographical location.

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

 

Performance

Effective November 9, 2010, the Trust’s investment policy was changed by the removal of the insurance investment policy that required at least 80% of its assets to be invested in insured municipal securities. Accordingly, the Trust was moved from the Lipper Insured Municipal Debt Funds (Leveraged) category into the Lipper General Municipal Debt Funds (Leveraged) category. During the period, Lipper combined these categories into one General & Insured Municipal Debt Funds (Leveraged) category. For the 12 months ended August 31, 2011, the Trust returned 1.12% based on market price and 2.01% based on NAV. For the same period, the closed-end Lipper General & Insured Municipal Debt Funds (Leveraged) category posted an average return of (0.90)% based on market price and 2.36% based on NAV. All returns reflect reinvestment of dividends. The Trust’s discount to NAV, which widened during the period, accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV. Contributing positively to the Trust’s performance was its exposure to spread sectors, including housing and health bonds, which provided a relatively high degree of incremental income in the low interest rate environment. The Trust’s holdings of premium coupon bonds (6% or higher) and shorter-duration bonds (bonds with lower sensitivity to interest rate movements) performed well as long-term interest rates climbed toward the end of 2010 and into the early part of 2011. Conversely, the Trust’s exposure to bonds with longer duration (greater sensitivity to interest rate movements) and bonds with longer-dated maturities detracted from performance as the municipal yield curve steepened over the 12-month period. US Treasury financial futures contracts used to hedge interest rate risk in the portfolio had a negative impact on performance.

 

 

 

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


 

Trust Information


 

 

Symbol on NYSE

MFL

Initial Offering Date

September 26, 1997

Yield on Closing Market Price as of August 31, 2011 ($13.84)1

6.63%

Tax Equivalent Yield2

10.20%

Current Monthly Distribution per Common Share3

$0.0765

Current Annualized Distribution per Common Share3

$0.9180

Leverage as of August 31, 20114

40%


 

 

 

 

1

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.

 

 

 

 

2

Tax equivalent yield assumes the maximum federal tax rate of 35%.

 

 

 

 

3

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

 

 

 

 

4

Represents Variable Rate Demand Preferred Shares (“VRDP Shares”) and TOBs as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to VRDP Shares and TOBs, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Trust, please see The Benefits and Risks of Leveraging on page 12.

The table below summarizes the changes in the Trust’s market price and NAV per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8/31/11

 

8/31/10

 

Change

 

High

 

Low

 

Market Price

 

$

13.84

 

$

14.65

 

 

(5.53

)%

$

14.87

 

$

11.68

 

Net Asset Value

 

$

14.00

 

$

14.69

 

 

(4.70

)%

$

14.69

 

$

12.23

 

The following charts show the sector and credit quality allocations of the Trust’s long-term investments:

 

Sector Allocations

 

 

 

 

 

 

 

 

 

 

8/31/11

 

8/31/10

 

Utilities

 

25

%

 

26

%

 

Transportation

 

25

 

 

27

 

 

County/City/Special District/School District

 

18

 

 

18

 

 

Health

 

11

 

 

11

 

 

State

 

10

 

 

12

 

 

Education

 

6

 

 

2

 

 

Housing

 

4

 

 

4

 

 

Tobacco

 

1

 

 

 

 


 

Credit Quality Allocations5

 

 

 

 

 

 

 

 

 

 

8/31/11

 

8/31/10

 

AAA/Aaa

 

12

%

 

64

%

 

AA/Aa

 

72

 

 

24

 

 

A

 

12

 

 

11

 

 

BBB/Baa

 

2

 

 

 

 

Not Rated6

 

2

 

 

1

 

 


 

 

 

 

5

Using the higher of S&P’s or Moody’s ratings.

 

 

 

 

6

The investment advisor has deemed certain of these non-rated securities to be of investment grade quality. As of August 31, 2011 and August 31, 2010, the market value of these securities was $3,979,631, representing less than 1%, and $5,793,997, representing 1%, respectively, of the Trust’s long-term investments.


 

 

 

 

 

 

10

ANNUAL REPORT

AUGUST 31, 2011




 

 

 

 

Trust Summary as of August 31, 2011

BlackRock MuniVest Fund, Inc.


 

Trust Overview

BlackRock MuniVest Fund, Inc.’s (MVF) (the “Trust”) investment objective is to provide shareholders with as high a level of current income exempt from federal income taxes as is consistent with its investment policies and prudent investment management. The Trust seeks to achieve its investment objective by investing at least 80% of its assets in municipal obligations exempt from federal income taxes (except that the interest may be subject to the federal alternative minimum tax). The Trust invests, under normal market conditions, primarily in long term municipal obligations rated investment grade at the time of investment and invests primarily in long term municipal obligations with maturities of more than ten years at the time of investment. The Trust may invest directly in such securities or synthetically through the use of derivatives.

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

 

Performance

For the 12 months ended August 31, 2011, the Trust returned 1.11% based on market price and 2.90% based on NAV. For the same period, the closed-end Lipper General & Insured Municipal Debt Funds (Leveraged) category posted an average return of (0.90)% based on market price and 2.36% based on NAV. All returns reflect reinvestment of dividends. The Trust’s premium to NAV, which narrowed during the period, accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV. The Trust benefited from its higher coupon bond holdings, which performed well in the rising interest rate environment. In addition, the Trust sought investments with valuations that remain attractive relative to their level of credit risk. However, the Trust’s overall long duration stance (greater sensitivity to interest rates) detracted from performance as the municipal market saw long-term interest rates rise and the yield curve steepen over the 12-month period due to municipal credit concerns and the expiration of the BAB program. During the period, the Trust increased its cash position for the purpose of improving portfolio diversification. The elevated cash balance did not have a material impact on performance.

 

 

 

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


 

Trust Information


 

 

Symbol on NYSE Amex

MVF

Initial Offering Date

September 29, 1988

Yield on Closing Market Price as of August 31, 2011 ($9.73)1

7.28%

Tax Equivalent Yield2

11.20%

Current Monthly Distribution per Common Share3

$0.0590

Current Annualized Distribution per Common Share3

$0.7080

Leverage as of August 31, 20114

41%


 

 

 

 

1

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.

 

 

 

 

2

Tax equivalent yield assumes the maximum federal tax rate of 35%.

 

 

 

 

3

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

 

 

 

 

4

Represents AMPS and TOBs as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to AMPS and TOBs, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Trust, please see The Benefits and Risks of Leveraging on page 12.

The table below summarizes the changes in the Trust’s market price and NAV per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8/31/11

 

8/31/10

 

Change

 

High

 

Low

 

Market Price

 

$

9.73

 

$

10.38

 

 

(6.26

)%

$

10.45

 

$

8.53

 

Net Asset Value

 

$

9.55

 

$

10.01

 

 

(4.60

)%

$

10.03

 

$

8.45

 

The following charts show the sector and credit quality allocations of the Trust’s long-term investments:

 

 

 

 

 

 

 

 

Sector Allocations

 

 

 

 

 

 

 

 

 

8/31/11

 

8/31/10

 

Health

 

23

%

 

22

%

 

Transportation

 

17

 

 

13

 

 

Corporate

 

13

 

 

17

 

 

Utilities

 

12

 

 

12

 

 

County/City/Special District/School District

 

9

 

 

10

 

 

Education

 

9

 

 

7

 

 

State

 

8

 

 

8

 

 

Housing

 

7

 

 

7

 

 

Tobacco

 

2

 

 

4

 

 

 

 

 

 

 

 

 

 

Credit Quality Allocations5

 

 

 

 

 

 

 

 

 

8/31/11

 

8/31/10

 

AAA/Aaa

 

12

%

 

23

%

 

AA/Aa

 

46

 

 

35

 

 

A

 

22

 

 

23

 

 

BBB/Baa

 

15

 

 

15

 

 

BB/Ba

 

1

 

 

 

 

B

 

1

 

 

1

 

 

Not Rated6

 

3

 

 

3

 

 


 

 

 

 

5

Using the higher of S&P’s or Moody’s ratings

 

 

 

 

6

The investment advisor has deemed certain of these non-rated securities to be of investment grade quality. As of August 31, 2011 and August 31, 2010, the market value of these securities was $22,724,541 and $21,938,423, each representing 2%, respectively, of the Trust’s long-term investments.


 

 

 

 

 

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

11




 

 

The Benefits and Risks of Leveraging

The Trusts may utilize leverage to seek to enhance the yield and NAV of their common shares (“Common Shares”). However, these objectives cannot be achieved in all interest rate environments.

To leverage, the Trusts issue AMPS or VRDP Shares (collectively, “Preferred Shares”), which pay dividends at prevailing short-term interest rates, and invest the proceeds in long-term municipal bonds. In general, the concept of leveraging is based on the premise that the financing cost of assets to be obtained from leverage, which will be based on short-term interest rates, will normally be lower than the income earned by each Trust on its longer-term portfolio investments. To the extent that the total assets of each Trust (including the assets obtained from leverage) are invested in higher-yielding portfolio investments, each Trust’s shareholders will benefit from the incremental net income.

To illustrate these concepts, assume a Trust’s Common Shares capitalization is $100 million and it issues Preferred Shares 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 3% and long-term interest rates are 6%, the yield curve has a strongly positive slope. In this case, the Trust pays dividends on the $50 million of Preferred Shares based on the lower short-term interest rates.At the same time, the securities purchased by the Trust with assets received from Preferred Shares issuance earn income based on long-term interest rates. In this case, the dividends paid to holders of Preferred Shares (“Preferred Shareholders”) are significantly lower than the income earned on the Trust’s long-term investments, and therefore the Common Shareholders are the beneficiaries of the incremental net income.

If short-term interest rates rise, narrowing the differential between short-term and long-term interest rates, the incremental net income pickup will be reduced or eliminated completely. Furthermore, if prevailing short-term interest rates rise above long-term interest rates, the yield curve has a negative slope. In this case, the Trust pays higher short-term interest rates whereas the Trust’s total portfolio earns income based on lower long-term interest rates.

Furthermore, the value of the Trusts’ portfolio investments generally varies inversely with the direction of long-term interest rates, although other factors can influence the value of portfolio investments. In contrast, the redemption value of the Trusts’ Preferred Shares does not fluctuate in relation to interest rates. As a result, changes in interest rates can influence the Trusts’ NAV positively or negatively in addition to the impact on Trust performance from leverage from Preferred Shares discussed above.

The Trusts may also leverage their assets through the use of TOBs, as described in Note 1 of the Notes to Financial Statements. TOB investments generally will provide the Trusts with economic benefits in periods of declining short-term interest rates, but expose the Trusts to risks during periods of rising short-term interest rates similar to those associated with Preferred Shares issued by the Trusts, as described above. Additionally, fluctuations in the market value of municipal bonds deposited into the TOB trust may adversely affect each Trust’s NAV per share.

The use of leverage may enhance opportunities for increased income to the Trusts and Common Shareholders, but as described above, it also creates risks as short- or long-term interest rates fluctuate. Leverage also will generally cause greater changes in the Trusts’ NAVs, market prices and dividend rates than comparable portfolios without leverage. If the income derived from securities purchased with assets received from leverage exceeds the cost of leverage, the Trusts’ net income will be greater than if leverage had not been used. Conversely, if the income from the securities purchased is not sufficient to cover the cost of leverage, each Trust’s net income will be less than if leverage had not been used, and therefore the amount available for distribution to Common Shareholders will be reduced. Each Trust may be required to sell portfolio securities at inopportune times or at distressed values in order to comply with regulatory requirements applicable to the use of leverage or as required by the terms of leverage instruments, which may cause a Trust to incur losses. The use of leverage may limit each Trust’s ability to invest in certain types of securities or use certain types of hedging strategies, such as in the case of certain restrictions imposed by ratings agencies that rate the Preferred Shares issued by the Trusts. Each Trust will incur expenses in connection with the use of leverage, all of which are borne by the Common Shareholders and may reduce income to the Common Shares.

Under the Investment Company Act of 1940, the Trusts are permitted to issue Preferred Shares in an amount of up to 50% of their total managed assets at the time of issuance. Under normal circumstances, each Trust anticipates that the total economic leverage from Preferred Shares and/or TOBs will not exceed 50% of its total managed assets at the time such leverage is incurred. As of August 31, 2011, the Trusts had economic leverage from Preferred Shares and/or TOBs as a percentage of their total managed assets as follows:

 

 

 

 

 

 

 

Percent of
Leverage

 

BIE

 

41

%

 

BBK

 

37

%

 

BAF

 

34

%

 

BYM

 

38

%

 

BLE

 

37

%

 

MFL

 

40

%

 

MVF

 

41

%

 


 

 

Derivative Financial Instruments

The Trusts may invest in various derivative financial instruments, including financial futures contracts, as specified in Note 2 of the Notes to Financial Statements, which may constitute forms of economic leverage. Such derivative financial instruments are used to obtain exposure to a market without owning or taking physical custody of securities or to hedge market and/or interest rate risks. Derivative financial instruments involve risks, including the imperfect correlation between the value of a derivative financial instrument and the underlying asset, possible default of the counterparty to the transaction or illiquidity of the derivative financial instrument. The Trusts’ ability to use a derivative financial instrument successfully depends on the investment advisor’s ability to predict pertinent market movements accurately, which cannot be assured. The use of derivative financial instruments may result in losses greater than if they had not been used, may require a Trust to sell or purchase portfolio investments at inopportune times or for distressed values, may limit the amount of appreciation a Trust can realize on an investment, may result in lower dividends paid to shareholders or may cause a Trust to hold an investment that it might otherwise sell.The Trusts’ investments in these instruments are discussed in detail in the Notes to Financial Statements.

 

 

 

 

 

 

12

ANNUAL REPORT

AUGUST 31, 2011




 

 

 

 

 

 

Schedule of Investments August 31, 2011

BlackRock Municipal Bond Investment Trust (BIE)

 

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Alaska — 0.2%

 

 

 

 

 

 

 

Northern Tobacco Securitization Corp., RB, Asset-Backed
Series A, 5.00%, 6/01/46

 

$

180

 

$

111,834

 

California — 14.0%

 

 

 

 

 

 

 

Bay Area Toll Authority, Refunding RB, San Francisco
Bay Area, Series F-1, 5.63%, 4/01/44

 

 

720

 

 

776,563

 

California Educational Facilities Authority, RB,
University of Southern California,
Series A, 5.25%, 10/01/38

 

 

700

 

 

750,365

 

California Health Facilities Financing Authority,
Refunding RB, Catholic Healthcare West,
Series A, 6.00%, 7/01/39

 

 

120

 

 

126,814

 

Cucamonga Valley Water District, RB,
Refunding Series A (AGM), 5.00%, 9/01/26

 

 

785

 

 

847,164

 

Grossmont Union High School District, GO,
Election of 2008, Series B, 4.75%, 8/01/45

 

 

950

 

 

929,584

 

Los Angeles Department of Water & Power, RB,
Power System, Sub-Series A-1, 5.25%, 7/01/38

 

 

1,660

 

 

1,753,425

 

San Diego Regional Building Authority California, RB,
County Operations Center & Annex,
Series A, 5.38%, 2/01/36

 

 

850

 

 

899,725

 

State of California, GO, Various Purpose, 6.00%, 3/01/33

 

 

685

 

 

772,899

 

 

 

 

 

 

 

6,856,539

 

Colorado — 1.2%

 

 

 

 

 

 

 

Colorado Health Facilities Authority, Refunding RB,
Catholic Healthcare, Series A, 5.50%, 7/01/34

 

 

580

 

 

603,902

 

Delaware — 1.3%

 

 

 

 

 

 

 

County of Sussex Delaware, RB, NRG Energy, Inc.,
Indian River Project, 6.00%, 10/01/40

 

 

655

 

 

649,354

 

District of Columbia — 1.4%

 

 

 

 

 

 

 

District of Columbia Water & Sewer Authority, RB,
Series A, 5.25%, 10/01/29

 

 

640

 

 

697,965

 

Florida — 0.2%

 

 

 

 

 

 

 

County of St. John’s Florida, RB, CAB (AMBAC),
5.40%, 6/01/32 (a)

 

 

240

 

 

79,022

 

Georgia — 2.4%

 

 

 

 

 

 

 

Municipal Electric Authority of Georgia, Refunding RB,
Project One, Sub-Series D, 6.00%, 1/01/23

 

 

1,000

 

 

1,150,060

 


 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Illinois — 12.0%

 

 

 

 

 

 

 

City of Chicago Illinois, Refunding RB, General,
Third Lien, Series C, 6.50%, 1/01/41

 

$

1,590

 

$

1,790,022

 

County of Cook Illinois, GO, Refunding, Series A,
5.25%, 11/15/33

 

 

900

 

 

951,750

 

Illinois Finance Authority, RB, Navistar International,
Recovery Zone, 6.50%, 10/15/40

 

 

270

 

 

270,526

 

Illinois Finance Authority, Refunding RB:

 

 

 

 

 

 

 

Carle Foundation, Series A 6.00%, 8/15/41

 

 

750

 

 

763,470

 

Northwestern Memorial Hospital 6.00%, 8/15/39

 

 

1,000

 

 

1,077,870

 

OSF Healthcare System 6.00%, 5/15/39

 

 

520

 

 

526,074

 

Railsplitter Tobacco Settlement Authority, RB:

 

 

 

 

 

 

 

5.50%, 6/01/23

 

 

365

 

 

384,100

 

6.00%, 6/01/28

 

 

105

 

 

107,321

 

 

 

 

 

 

 

5,871,133

 

Indiana — 3.1%

 

 

 

 

 

 

 

Indiana Finance Authority, Refunding RB, 5.25%,
10/01/38

 

 

220

 

 

228,419

 

Indiana Municipal Power Agency, RB, Series B, 6.00%,
1/01/39

 

 

1,190

 

 

1,285,700

 

 

 

 

 

 

 

1,514,119

 

Iowa — 0.2%

 

 

 

 

 

 

 

Iowa Tobacco Settlement Authority, RB, Asset-Backed,
Series C, 5.63%, 6/01/46

 

 

140

 

 

98,710

 

Kansas — 2.0%

 

 

 

 

 

 

 

Kansas Development Finance Authority, Refunding RB,
Adventist Health, 5.50%, 11/15/29

 

 

900

 

 

976,536

 

Kentucky — 3.9%

 

 

 

 

 

 

 

Kentucky Economic Development Finance Authority,
Refunding RB, Owensboro Medical Health System,
Series A, 6.38%, 6/01/40

 

 

350

 

 

354,753

 

Louisville & Jefferson County Metropolitan Government,
Refunding RB, Jewish Hospital & St. Mary’s HealthCare,
6.13%, 2/01/37

 

 

675

 

 

681,541

 

Louisville & Jefferson County Metropolitan Government
Parking Authority, RB, Series A, 5.75%, 12/01/34

 

 

800

 

 

879,208

 

 

 

 

 

 

 

1,915,502

 

Louisiana — 0.8%

 

 

 

 

 

 

 

Louisiana Local Government Environmental Facilities &
Community Development Authority, RB, Westlake
Chemical Corp., Series A-1, 6.50%, 11/01/35

 

 

380

 

 

387,839

 

Maine — 1.5%

 

 

 

 

 

 

 

Maine Health & Higher Educational Facilities Authority,
RB, Maine General Medical Center, 7.50%, 7/01/32

 

 

675

 

 

727,461

 


 

Portfolio Abbreviations

To simplify the listings of portfolio holdings in the Schedules of Investments, the names and descriptions of many of the securities have been abbreviated according to the following list:

 

 

ACA

American Capital Access Corp.

AGC

Assured Guaranty Corp.

AGM

Assured Guaranty Municipal Corp.

AMBAC

American Municipal Bond Assurance Corp.

AMT

Alternative Minimum Tax (subject to)

ARB

Airport Revenue Bonds

BHAC

Berkshire Hathaway Assurance Corp.

CAB

Capital Appreciation Bonds

CIFG

CDC IXIS Financial Guaranty

COP

Certificates of Participation

EDA

Economic Development Authority

EDC

Economic Development Corp.

ERB

Education Revenue Bonds

FHA

Federal Housing Administration

GARB

General Airport Revenue Bonds

GO

General Obligation Bonds

HFA

Housing Finance Agency

HRB

Housing Revenue Bonds

IDA

Industrial Development Authority

IDB

Industrial Development Board

ISD

Independent School District

MRB

Mortgage Revenue Bonds

NPFGC

National Public Finance Guarantee Corp.

PILOT

Payment in Lieu of Taxes

PSF-GTD

Permanent School Fund Guaranteed

Q-SBLF

Qualified School Bond Loan Fund

Radian

Radian Group, Inc.

RB

Revenue Bonds

SAN

State Aid Notes

S/F

Single-Family

VRDN

Variable Rate Demand Notes


 

 

 

 

See Notes to Financial Statements.

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

13




 

 

 

 

Schedule of Investments (continued)

BlackRock Municipal Bond Investment Trust (BIE)

 

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Maryland — 1.1%

 

 

 

 

 

 

 

Maryland EDC, Refunding RB, CNX Marine Terminals,
Inc., 5.75%, 9/01/25

 

$

525

 

$

515,996

 

Massachusetts — 3.4%

 

 

 

 

 

 

 

Massachusetts Development Finance Agency,
Refunding RB, Trustees of Deerfield Academy, 5.00%,
10/01/40

 

 

375

 

 

407,482

 

Massachusetts Health & Educational Facilities Authority,
Refunding RB, Partners Healthcare System,
Series B, 5.25%, 7/01/29

 

 

1,000

 

 

1,000,570

 

Massachusetts State College Building Authority, RB,
Series A, 5.50%, 5/01/39

 

 

250

 

 

269,233

 

 

 

 

 

 

 

1,677,285

 

Michigan — 4.3%

 

 

 

 

 

 

 

Kalamazoo Hospital Finance Authority, Refunding RB,
Bronson Methodist Hospital, 5.50%, 5/15/36

 

 

445

 

 

441,987

 

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

 

 

485

 

 

525,973

 

Michigan State Building Authority, Refunding RB,
Facilities Program, Series I, 6.00%, 10/15/38

 

 

500

 

 

534,560

 

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

 

 

530

 

 

615,076

 

 

 

 

 

 

 

2,117,596

 

Multi-State — 6.8%

 

 

 

 

 

 

 

Centerline Equity Issuer Trust, 7.20%, 11/15/52 (b)(c)

 

 

3,000

 

 

3,301,020

 

Nevada — 8.2%

 

 

 

 

 

 

 

City of Las Vegas Nevada, GO, Limited Tax,
Performing Arts Center, 6.00%, 4/01/34

 

 

1,000

 

 

1,102,850

 

County of Clark Nevada, RB:
Motor Vehicle Fuel Tax 5.00%, 7/01/28

 

 

1,130

 

 

1,189,755

 

Series B 5.75%, 7/01/42

 

 

1,630

 

 

1,727,164

 

 

 

 

 

 

 

4,019,769

 

New Jersey — 4.5%

 

 

 

 

 

 

 

New Jersey EDA, Refunding RB, School Facilities
Construction, Series AA, 5.50%, 12/15/29

 

 

750

 

 

807,952

 

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

 

 

620

 

 

644,726

 

New Jersey Transportation Trust Fund Authority, RB,
Transportation Systems, Transportation System,
Series A, 5.88%, 12/15/38

 

 

695

 

 

758,732

 

 

 

 

 

 

 

2,211,410

 

New York — 5.4%

 

 

 

 

 

 

 

City of Troy New York, Refunding RB, Rensselaer
Polytechnic, Series A, 5.13%, 9/01/40

 

 

350

 

 

348,170

 

New York City Transitional Finance Authority, RB,
Fiscal 2009, Series S-3, 5.25%, 1/15/39

 

 

1,000

 

 

1,058,130

 

New York Liberty Development Corp., Refunding RB,
Second Priority, Bank of America Tower at One Bryant
Park Project, 6.38%, 7/15/49

 

 

325

 

 

335,273

 

Triborough Bridge & Tunnel Authority, RB, General,
Series A-2, 5.38%, 11/15/38

 

 

840

 

 

903,470

 

 

 

 

 

 

 

2,645,043

 

North Carolina — 2.6%

 

 

 

 

 

 

 

North Carolina Medical Care Commission, RB,
Novant Health Obligation, Series A, 4.75%, 11/01/43

 

 

1,450

 

 

1,261,239

 

Ohio — 0.3%

 

 

 

 

 

 

 

Buckeye Tobacco Settlement Financing Authority, RB,
Senior Series A-2, 6.50%, 6/01/47

 

 

160

 

 

123,251

 

 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Pennsylvania — 7.4%

 

 

 

 

 

 

 

Pennsylvania Economic Development Financing Authority,
RB, American Water Co. Project, 6.20%, 4/01/39

 

$

300

 

$

325,824

 

Pennsylvania Turnpike Commission, RB:

 

 

 

 

 

 

 

Sub-Series A 5.63%, 12/01/31

 

 

1,070

 

 

1,147,618

 

Sub-Series A 6.00%, 12/01/41

 

 

1,500

 

 

1,582,530

 

Sub-Series C (AGC), 6.25%, 6/01/38

 

 

500

 

 

562,800

 

 

 

 

 

 

 

3,618,772

 

Texas — 11.2%

 

 

 

 

 

 

 

Central Texas Regional Mobility Authority, RB,
Senior Lien, 6.00%, 1/01/41

 

 

890

 

 

849,719

 

Conroe ISD Texas, GO, School Building, Series A,
5.75%, 2/15/35

 

 

470

 

 

538,211

 

Harris County Health Facilities Development Corp.,
Refunding RB, Memorial Hermann Healthcare System,
Series B, 7.13%, 12/01/31

 

 

250

 

 

280,495

 

Lower Colorado River Authority, RB, 5.75%, 5/15/28

 

 

450

 

 

481,320

 

North Texas Tollway Authority, RB, Special Projects System,
Series A, 5.50%, 9/01/41

 

 

900

 

 

968,085

 

North Texas Tollway Authority, RB, System, First Tier,
System, First Tier, Series K-1 (AGC), 5.75%, 1/01/38

 

 

250

 

 

264,360

 

Tarrant County Cultural Education Facilities Finance
Corp., RB, Scott & White Healthcare, 6.00%, 8/15/45

 

 

1,020

 

 

1,070,357

 

Texas Private Activity Bond Surface Transportation Corp.,
RB, Senior Lien, NTE Mobility Partners LLC,
North Tarrant Express Managed Lanes Project,
6.88%, 12/31/39

 

 

1,000

 

 

1,030,650

 

 

 

 

 

 

 

5,483,197

 

Virginia — 1.7%

 

 

 

 

 

 

 

Virginia Public School Authority, RB, School Financing,
School Financing, 6.50%, 12/01/35

 

 

750

 

 

853,283

 

Total Municipal Bonds — 101.1%

 

 

 

 

 

49,467,837

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (d)

 

 

 

 

 

 

 

California — 20.0%

 

 

 

 

 

 

 

California Educational Facilities Authority, RB,
University of Southern California, Series A,
5.25%, 10/01/39

 

 

1,005

 

 

1,076,667

 

Grossmont Union High School District, GO,
Election of 2008, Series B, 5.00%, 8/01/40

 

 

1,300

 

 

1,324,297

 

Los Angeles Community College District California, GO,
Election of 2008:

 

 

 

 

 

 

 

Series A 6.00%, 8/01/33

 

 

2,079

 

 

2,357,267

 

Series C 5.25%, 8/01/39

 

 

1,410

 

 

1,514,777

 

Los Angeles Unified School District California, GO,
Series I, 5.00%, 1/01/34

 

 

200

 

 

205,200

 

San Diego Public Facilities Financing Authority,
Refunding RB, Series B, 5.50%, 8/01/39

 

 

2,234

 

 

2,393,894

 

University of California, RB, Series O, 5.75%, 5/15/34

 

 

810

 

 

895,795

 

 

 

 

 

 

 

9,767,897

 

District of Columbia — 3.7%

 

 

 

 

 

 

 

District of Columbia, RB, Series A, 5.50%, 12/01/30

 

 

735

 

 

832,189

 

District of Columbia Water & Sewer Authority, RB,
Series A, 5.50%, 10/01/39

 

 

899

 

 

978,413

 

 

 

 

 

 

 

1,810,602

 

Florida — 7.2%

 

 

 

 

 

 

 

Jacksonville Economic Development Commission, RB,
Mayo Clinic Jacksonville, Series B, 5.50%, 11/15/36

 

 

3,510

 

 

3,539,414

 


 

 

 

See Notes to Financial Statements.

 

 

 

 

14

ANNUAL REPORT

AUGUST 31, 2011




 

 

 

 

Schedule of Investments (continued)

BlackRock Municipal Bond Investment Trust (BIE)

 

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (d)

 

Par
(000)

 

Value

 

Illinois — 7.8%

 

 

 

 

 

 

 

Illinois Finance Authority, RB, University of Chicago,
Series B, 6.25%, 7/01/38

 

$

1,500

 

$

1,721,190

 

Illinois State Toll Highway Authority, RB, Series B,
5.50%, 1/01/33

 

 

2,000

 

 

2,086,273

 

 

 

 

 

 

 

3,807,463

 

Nevada — 3.4%

 

 

 

 

 

 

 

Clark County Water Reclamation District, GO,
Limited Tax, 6.00%, 7/01/38

 

 

1,500

 

 

1,680,585

 

New Hampshire — 1.3%

 

 

 

 

 

 

 

New Hampshire Health & Education Facilities Authority,
Refunding RB, Dartmouth College, 5.25%, 6/01/39

 

 

585

 

 

635,018

 

New Jersey — 2.1%

 

 

 

 

 

 

 

New Jersey Transportation Trust Fund Authority, RB,
Transportation System, Series A (AGM), 5.00%,
12/15/32

 

 

1,000

 

 

1,025,950

 

New York — 6.1%

 

 

 

 

 

 

 

New York City Municipal Water Finance Authority, RB:

 

 

 

 

 

 

 

Fiscal 2009, Series A 5.75%, 6/15/40

 

 

750

 

 

835,131

 

Series FF-2 5.50%, 6/15/40

 

 

990

 

 

1,082,657

 

New York State Dormitory Authority, ERB, Series B,
5.25%, 3/15/38

 

 

1,000

 

 

1,073,240

 

 

 

 

 

 

 

2,991,028

 

Ohio — 1.7%

 

 

 

 

 

 

 

County of Allen Ohio, Refunding RB, Catholic Healthcare,
Series A, 5.25%, 6/01/38

 

 

840

 

 

840,512

 

South Carolina — 2.2%

 

 

 

 

 

 

 

South Carolina State Public Service Authority, RB,
Santee Cooper, Series A, 5.50%, 1/01/38

 

 

1,005

 

 

1,088,646

 

Texas — 5.4%

 

 

 

 

 

 

 

City of San Antonio Texas, Refunding RB, Series A,
5.25%, 2/01/31

 

 

1,050

 

 

1,148,041

 

Harris County Cultural Education Facilities Finance Corp.,
RB, Hospital, Texas Children’s Hospital Project,
5.50%, 10/01/39

 

 

1,450

 

 

1,507,435

 

 

 

 

 

 

 

2,655,476

 

Virginia — 1.0%

 

 

 

 

 

 

 

Fairfax County IDA Virginia, Refunding RB, Health Care,
Inova Health System, Series A, 5.50%, 5/15/35

 

 

460

 

 

481,989

 

Wisconsin — 1.9%

 

 

 

 

 

 

 

Wisconsin Health & Educational Facilities Authority,
Refunding RB, Froedtert & Community Health, Inc.,
5.25%, 4/01/39

 

 

890

 

 

901,978

 

Total Municipal Bonds Transferred to Tender
Option Bond Trusts — 63.8%

 

 

 

 

 

31,226,558

 

Total Long-Term Investments
(Cost — $76,806,231) — 164.9%

 

 

 

 

 

80,694,395

 

 

 

 

 

 

 

 

 

Short-Term Securities

 

Shares

 

Value

 

FFI Institutional Tax-Exempt Fund, 0.01% (e)(f)

 

 

2,198,525

 

$

2,198,525

 

Total Short-Term Securities
(Cost — $2,198,525) — 4.5%

 

 

 

 

 

2,198,525

 

Total Investments (Cost — $79,004,756*) — 169.4%

 

 

 

 

 

82,892,920

 

Other Assets Less Liabilities — 0.4%

 

 

 

 

 

183,871

 

Liability for TOB Trust Certificates, Including Interest
Expense and Fees Payable — (33.3)%

 

 

 

 

 

(16,284,547

)

AMPS, at Redemption Value — (36.5)%

 

 

 

 

 

(17,851,044

)

Net Assets Applicable to Common Shares — 100.0%

 

 

 

 

$

48,941,200

 

 

 

 

 

 

 

 

 


 

 

*

The cost and unrealized appreciation (depreciation) of investments as of August 31, 2011, as computed for federal income tax purposes, were as follows:


 

 

 

 

 

Aggregate cost

 

$

62,879,677

 

Gross unrealized appreciation

 

$

4,115,394

 

Gross unrealized depreciation

 

 

(377,983

)

Net unrealized appreciation

 

$

3,737,411

 


 

 

(a)

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

 

 

(b)

Security represents a beneficial interest in a trust. The collateral deposited into the trust is federally tax-exempt revenue bonds issued by various state or local governments, or their respective agencies or authorities. The security is subject to remarketing prior to its stated maturity.

 

 

(c)

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

 

 

(d)

Securities represent bonds transferred to a TOB in exchange for which the Trust acquired residual interest certificates. These securities serve as collateral in a financing transaction. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs.

 

 

(e)

Investments in companies considered to be an affiliate of the Trust during the year, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Affiliate

 

Shares Held at
August 31,
2010

 

Net
Activity

 

Shares Held at
August 31,
2011

 

Income

 

FFI Institutional
Tax-Exempt Fund

 

 

1,698,254

 

 

500,271

 

 

2,198,525

 

$

1,362

 


 

 

(f)

Represents the current yield as of report date.

 

 

Financial futures contracts sold as of August 31,2011 were as follows:


 

 

 

 

 

 

 

 

 

 

 

 

Contracts

 

Issue

 

Exchange

 

Expiration

 

Notional
Value

 

Unrealized
Appreciation

 

 

 

10-Year U.S.

 

Chicago

 

December

 

 

 

 

 

14

 

Treasury Note

 

Board of Trade

 

2011

 

$     1,811,442

 

$       5,005

 


 

 

 

 

See Notes to Financial Statements.

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

15




 

 

 

 

Schedule of Investments (concluded)

BlackRock Municipal Bond Investment Trust (BIE)


 

 

Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs are categorized in three broad levels for financial statement purposes as follows:


 

 

 

 

Level 1 — price quotations in active markets/exchanges for identical assets and liabilities

 

 

 

 

Level 2 — other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

 

 

 

Level 3 — unobservable inputs based on the best information available in thecircumstances, to the extent observable inputs are not available (including the Trust’s own assumptions used in determining the fair value of investments and derivative financial instruments)


 

 

 

 

The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument and does not necessarily correspond to the Trust’s perceived risk of investing in those securities. For information about the Trust’s policy regarding valuation of investments and derivative financial instruments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

 

 

 

 

The following tables summarize the inputs used as of August 31, 2011 in determining the fair valuation of the Trust’s investments and derivative financial instruments:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Valuation Inputs

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-Term Investments1

 

 

 

$

80,694,395

 

 

 

$

80,694,395

 

Short-Term Securities

 

$

2,198,525

 

 

 

 

 

 

2,198,525

 

Total

 

$

2,198,525

 

$

80,694,395

 

 

 

$

82,892,920

 


 

 

 

 

1

See above Schedule of Investments for values in each state or political subdivision.


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Valuation Inputs

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Derivative Financial
Instruments2

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate contracts

 

$

5,005

 

 

 

 

 

$

5,005

 


 

 

 

 

2

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


 

 

 

See Notes to Financial Statements.

 

 

 

 

16

ANNUAL REPORT

AUGUST 31, 2011




 

 

 

 

 

Schedule of Investments August 31, 2011

BlackRock Municipal Bond Trust (BBK)

 

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Alabama — 4.3%

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

6.00%, 6/01/34

 

$

1,150

 

$

1,253,868

 

6.00%, 6/01/39

 

 

450

 

 

487,170

 

Birmingham Water Works Board, RB, 4.75%, 1/01/36

 

 

2,100

 

 

2,107,728

 

Hoover City Board of Education, GO, Refunding,
4.25%, 2/15/40

 

 

2,750

 

 

2,640,220

 

 

 

 

 

 

 

6,488,986

 

Arizona — 6.3%

 

 

 

 

 

 

 

Arizona Sports & Tourism Authority, RB, Multipurpose
Stadium Facilities, Series A (NPFGC), 5.00%, 7/01/31

 

 

2,000

 

 

1,845,960

 

Arizona State University, RB, Series D, 5.50%, 7/01/26

 

 

200

 

 

223,866

 

Mohave County Unified School District No. 20 Kingman,
GO, School Improvement Project of 2006,
Series C (AGC), 5.00%, 7/01/26

 

 

200

 

 

216,400

 

Pima County IDA, Refunding IDRB, Tucson Electric Power,
5.75%, 9/01/29

 

 

900

 

 

910,602

 

Salt Verde Financial Corp., RB, Senior:

 

 

 

 

 

 

 

5.00%, 12/01/32

 

 

1,500

 

 

1,321,035

 

5.00%, 12/01/37

 

 

2,065

 

 

1,781,393

 

San Luis Facility Development Corp., RB, Senior Lien,
Regional Detention Center Project:

 

 

 

 

 

 

 

6.25%, 5/01/15

 

 

245

 

 

238,035

 

7.00%, 5/01/20

 

 

300

 

 

295,911

 

7.25%, 5/01/27

 

 

600

 

 

540,390

 

State of Arizona, COP, Department of Administration,
Series A (AGM), 5.00%, 10/01/29

 

 

750

 

 

771,052

 

University Medical Center Corp. Arizona, RB:

 

 

 

 

 

 

 

6.00%, 7/01/39

 

 

900

 

 

899,910

 

6.50%, 7/01/39

 

 

500

 

 

516,335

 

 

 

 

 

 

 

9,560,889

 

California — 17.4%

 

 

 

 

 

 

 

California County Tobacco Securitization Agency, RB,
CAB, Stanislaus, Sub-Series C, 6.30%, 6/01/55 (a)

 

 

4,500

 

 

40,320

 

California Educational Facilities Authority, RB,
Santa Clara University, 5.00%, 2/01/40

 

 

1,000

 

 

1,026,210

 

California Health Facilities Financing Authority,
Refunding RB, Sutter Health, Series B, 5.88%,
8/15/31

 

 

1,900

 

 

2,051,525

 

California HFA, RB, Home Mortgage, Series G, AMT,
5.05%, 2/01/29

 

 

2,285

 

 

2,124,616

 

Carlsbad Unified School District, GO, Election of 2006,
Series B, 6.09%, 5/01/34 (b)

 

 

1,000

 

 

661,410

 

City of San Jose California, RB, San Jose Airport,
Series A1, AMT, 5.75%, 3/01/34

 

 

2,000

 

 

2,050,000

 

Dinuba Unified School District, GO,
Election of 2006 (AGM):

 

 

 

 

 

 

 

5.63%, 8/01/31

 

 

250

 

 

272,193

 

5.75%, 8/01/33

 

 

500

 

 

547,140

 

Hartnell Community College District California, GO,
CAB, Election of 2002, Series D, 7.46%, 8/01/34 (b)

 

 

1,650

 

 

907,632

 

Norwalk-La Mirada Unified School District California,
GO, Refunding, CAB, Election of 2002,
Series E (AGC), 6.47%, 8/01/38 (a)

 

 

8,000

 

 

1,329,440

 

Palomar Community College District, GO, CAB,
Election of 2006, Series B:

 

 

 

 

 

 

 

6.09%, 8/01/30 (a)

 

 

1,500

 

 

443,205

 

6.40%, 8/01/39 (b)

 

 

2,000

 

 

855,060

 

San Diego Community College District California, GO,
CAB, Election of 2002, 6.24%, 8/01/19 (b)

 

 

2,800

 

 

1,803,200

 

State of California, GO, Various Purpose:

 

 

 

 

 

 

 

5.75%, 4/01/31

 

 

2,000

 

 

2,171,080

 

6.00%, 3/01/33

 

 

2,050

 

 

2,313,056

 

6.50%, 4/01/33

 

 

1,950

 

 

2,249,559

 

5.50%, 3/01/40

 

 

2,350

 

 

2,443,765

 


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

California (concluded)

 

 

 

 

 

 

 

State of California, GO, Refunding:

 

 

 

 

 

 

 

(CIFG), 4.50%, 8/01/28

 

$

500

 

$

489,545

 

Veterans AMT, 5.05%, 12/01/36

 

 

1,000

 

 

962,650

 

Val Verde Unified School District California,
Special Tax Bonds, Refunding, Junior Lien,
6.25%, 10/01/28

 

 

1,585

 

 

1,545,961

 

 

 

 

 

 

 

26,287,567

 

Colorado — 2.6%

 

 

 

 

 

 

 

Colorado Health Facilities Authority, RB, Catholic
Health Initiatives, Series D, 6.25%, 10/01/33

 

 

1,070

 

 

1,170,912

 

Park Creek Metropolitan District, RB, Refunding,
Limited Property Tax (AGM), 6.00%, 12/01/38

 

 

1,000

 

 

1,065,620

 

Sand Creek Metropolitan District, GO, Refunding,
Limited Tax, Series B:

 

 

 

 

 

 

 

4.75%, 12/01/35

 

 

1,000

 

 

942,250

 

5.00%, 12/01/40

 

 

800

 

 

732,328

 

 

 

 

 

 

 

3,911,110

 

Connecticut — 0.7%

 

 

 

 

 

 

 

Connecticut State Health & Educational Facility
Authority, RB:

 

 

 

 

 

 

 

Sacred Heart University, Series G, 5.38%, 7/01/31

 

 

400

 

 

405,920

 

Western Connecticut Health, Series M, 5.38%,
7/01/41

 

 

700

 

 

714,686

 

 

 

 

 

 

 

1,120,606

 

Delaware — 0.8%

 

 

 

 

 

 

 

County of Sussex Delaware, RB, NRG Energy, Inc.,
Indian River Project, 6.00%, 10/01/40

 

 

1,200

 

 

1,189,656

 

District of Columbia — 5.9%

 

 

 

 

 

 

 

District of Columbia, Refunding RB, Friendship Public
Charter School Inc. (ACA), 5.25%, 6/01/33

 

 

595

 

 

474,447

 

District of Columbia, Tax Allocation Bonds, Gallery Place
Project (AGM), 5.40%, 7/01/31

 

 

6,000

 

 

6,050,340

 

District of Columbia Tobacco Settlement Financing Corp.,
Refunding RB, Asset-Backed, 6.75%, 5/15/40

 

 

2,500

 

 

2,352,400

 

 

 

 

 

 

 

8,877,187

 

Florida — 7.4%

 

 

 

 

 

 

 

County of Lee Florida, Refunding RB, Lee Airport,
Series A, AMT (AGM), 5.00%, 10/01/28

 

 

2,000

 

 

1,970,560

 

Miami Beach Health Facilities Authority, RB, Mount
Sinai Medical Center of Florida, 6.75%, 11/15/21

 

 

1,180

 

 

1,195,045

 

Palm Beach County Housing Finance Authority, HRB,
Indian Trace Apartments, Series A, AMT (AGM),
5.63%, 1/01/44

 

 

7,255

 

 

7,263,198

 

Stevens Plantation Community Development District,
Special Assessment Bonds, Series A, 7.10%, 5/01/35

 

 

925

 

 

738,076

 

 

 

 

 

 

 

11,166,879

 

Idaho — 1.3%

 

 

 

 

 

 

 

Idaho Health Facilities Authority, Refunding RB,
Trinity Health Group, Series B, 6.25%, 12/01/33

 

 

1,750

 

 

1,925,017

 

Illinois — 7.4%

 

 

 

 

 

 

 

Illinois Finance Authority, RB:

 

 

 

 

 

 

 

MJH Education Assistance IV LLC, Sub-Series B,
5.38%, 6/01/35 (c)(d)

 

 

425

 

 

84,987

 

Navistar International, Recovery Zone, 6.50%,
10/15/40

 

 

1,285

 

 

1,287,506

 

Roosevelt University Project, 6.50%, 4/01/44

 

 

1,000

 

 

1,038,070

 

Rush University Medical Center, Series C, 6.63%,
11/01/39

 

 

650

 

 

689,754

 

Illinois Finance Authority, Refunding RB, Series A:

 

 

 

 

 

 

 

Friendship Village Schaumburg, 5.63%, 2/15/37

 

 

210

 

 

166,939

 

OSF Healthcare System, 6.00%, 5/15/39

 

 

1,040

 

 

1,052,147

 


 

 

 

 

See Notes to Financial Statements.

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

17




 

 

 

 

 

Schedule of Investments (continued)

BlackRock Municipal Bond Trust (BBK)

 

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Illinois (concluded)

 

 

 

 

 

 

 

Railsplitter Tobacco Settlement Authority, RB:

 

 

 

 

 

 

 

6.25%, 6/01/24

 

$

1,000

 

$

1,045,730

 

6.00%, 6/01/28

 

 

1,150

 

 

1,175,415

 

Village of Bolingbrook Illinois, GO, Refunding,
Series B (NPFGC), 6.24%, 1/01/36 (a)

 

 

23,065

 

 

4,694,881

 

 

 

 

 

 

 

11,235,429

 

Indiana — 3.2%

 

 

 

 

 

 

 

County of Monroe Indiana, Multifamily Housing Revenue
Bond Pass-Through Certificates, RB, Series 1,
Canterbury House Apartments, Mandatory Put Bonds,
AMT, 5.90%, 12/01/34 (e)

 

 

1,815

 

 

1,820,391

 

Indiana Finance Authority, Refunding RB, Improvement,
U.S. Steel Corp., 6.00%, 12/01/26

 

 

1,000

 

 

999,990

 

Indiana Finance Authority, Refunding RB, First Lien,
CWA Authority, Series A, 5.25%, 10/01/38

 

 

2,000

 

 

2,076,540

 

 

 

 

 

 

 

4,896,921

 

Iowa — 1.6%

 

 

 

 

 

 

 

Iowa Higher Education Loan Authority, RB, Private
College Facility, Buena Vista University Project,
5.00%, 4/01/31

 

 

875

 

 

895,711

 

Iowa Higher Education Loan Authority, Refunding RB,
Private College Facility:

 

 

 

 

 

 

 

5.75%, 9/01/30

 

 

500

 

 

507,010

 

6.00%, 9/01/39

 

 

1,000

 

 

984,410

 

 

 

 

 

 

 

2,387,131

 

Kansas — 2.9%

 

 

 

 

 

 

 

Wichita Airport Authority, RB, Special, Cessna Citation
Service Center, Series A, AMT, 6.25%, 6/15/32

 

 

5,000

 

 

4,419,800

 

Kentucky — 0.3%

 

 

 

 

 

 

 

Kentucky Economic Development Finance Authority,
RB, Louisville Arena, Sub-Series A-1 (AGC),
6.00%, 12/01/38

 

 

500

 

 

523,925

 

Louisiana — 2.3%

 

 

 

 

 

 

 

Louisiana Local Government Environmental Facilities &
Community Development Authority, RB, Westlake
Chemical Corp, Series A-1, 6.50%, 11/01/35

 

 

1,050

 

 

1,071,661

 

Louisiana Public Facilities Authority, RB, Belle Chasse
Educational Foundation Project, 6.50%, 5/01/31

 

 

400

 

 

412,396

 

Louisiana Public Facilities Authority, Refunding RB,
Entergy Gulf States Louisiana, LLC Project, Series A,
5.00%, 9/01/28

 

 

2,000

 

 

2,042,840

 

 

 

 

 

 

 

3,526,897

 

Maryland — 2.1%

 

 

 

 

 

 

 

Maryland EDC, Refunding RB, CNX Marine Terminals,
Inc., 5.75%, 9/01/25

 

 

500

 

 

491,425

 

Maryland Health & Higher Educational Facilities
Authority, Refunding RB, Doctor’s Community Hospital,
5.63%, 7/01/30

 

 

2,900

 

 

2,641,001

 

 

 

 

 

 

 

3,132,426

 

Michigan — 2.4%

 

 

 

 

 

 

 

Michigan State Building Authority, Refunding RB,
Facilities Program, Series I, 6.25%, 10/15/38

 

 

1,250

 

 

1,355,037

 

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

 

 

1,950

 

 

2,263,014

 

 

 

 

 

 

 

3,618,051

 

Minnesota — 3.9%

 

 

 

 

 

 

 

City of Minneapolis Minnesota, Refunding RB,
Fairview Health Services, Series B (AGC), 6.50%,
11/15/38

 

 

5,350

 

 

5,891,206

 


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Mississippi — 3.3%

 

 

 

 

 

 

 

Mississippi Development Bank, RB, Hinds Community
College District, CAB (AGM), 5.00%, 4/01/36

 

$

845

 

$

870,925

 

Mississippi Development Bank Special Obligation, RB,
Jackson County Limited Tax Note (AGC),
5.50%, 7/01/32

 

 

1,750

 

 

1,866,725

 

University of Southern Mississippi, RB, Campus
Facilities Improvements Project, 5.38%, 9/01/36

 

 

2,100

 

 

2,248,512

 

 

 

 

 

 

 

4,986,162

 

Montana — 1.5%

 

 

 

 

 

 

 

Montana Facility Finance Authority, Refunding RB,
Sisters of Leavenworth, Series A, 4.75%, 1/01/40

 

 

2,350

 

 

2,328,168

 

Multi-State — 7.6%

 

 

 

 

 

 

 

Centerline Equity Issuer Trust, 7.20%, 11/15/52 (f)(g)

 

 

10,500

 

 

11,553,570

 

Nebraska — 1.7%

 

 

 

 

 

 

 

Nebraska Investment Finance Authority, Refunding RB,
Series A:

 

 

 

 

 

 

 

5.90%, 9/01/36

 

 

1,200

 

 

1,308,372

 

6.05%, 9/01/41

 

 

1,110

 

 

1,198,900

 

 

 

 

 

 

 

2,507,272

 

Nevada — 1.1%

 

 

 

 

 

 

 

City of Las Vegas Nevada, Special Assessment Bonds,
Summerlin Area, 5.65%, 6/01/23

 

 

1,305

 

 

1,146,260

 

County of Clark Nevada, Refunding RB, Alexander
Dawson School Nevada Project, 5.00%, 5/15/29

 

 

575

 

 

582,406

 

 

 

 

 

 

 

1,728,666

 

New Jersey — 13.7%

 

 

 

 

 

 

 

Middlesex County Improvement Authority, RB,
Subordinate, Heldrich Center Hotel, Series B,
6.25%, 1/01/37 (c)(d)

 

 

915

 

 

82,350

 

New Jersey EDA, RB:

 

 

 

 

 

 

 

Cigarette Tax, 5.50%, 6/15/24

 

 

3,710

 

 

3,603,597

 

Cigarette Tax (Radian), 5.50%, 6/15/31

 

 

1,500

 

 

1,371,510

 

Continental Airlines Inc. Project, AMT, 7.20%,
11/15/30 (e)

 

 

3,000

 

 

3,000,450

 

New Jersey EDA, Refunding RB, First Mortgage,
Winchester, Series A, 5.80%, 11/01/31

 

 

1,500

 

 

1,480,560

 

New Jersey EDA, Special Assessment Bonds, Refunding,
Kapkowski Road Landfill Project, 6.50%, 4/01/28

 

 

7,500

 

 

7,727,400

 

New Jersey Educational Facilities Authority, Refunding RB:

 

 

 

 

 

 

 

College Of New Jersey, Series D (AGM), 5.00%,
7/01/35

 

 

1,000

 

 

1,025,520

 

University of Medicine & Dentistry, Series B,
7.13%, 12/01/23

 

 

630

 

 

752,384

 

University of Medicine & Dentistry, Series B,
7.50%, 12/01/32

 

 

800

 

 

926,552

 

New Jersey State Housing & Mortgage Finance Agency,
RB, Series AA, 6.50%, 10/01/38

 

 

700

 

 

767,949

 

 

 

 

 

 

 

20,738,272

 

New Mexico — 0.3%

 

 

 

 

 

 

 

Village of Los Ranchos de Albuquerque New Mexico,
Refunding RB, Albuquerque Academy Project,
4.50%, 9/01/40

 

 

500

 

 

482,720

 

New York — 7.1%

 

 

 

 

 

 

 

Albany Industrial Development Agency, RB, New
Covenant Charter School Project, Series A,
7.00%, 5/01/35 (c)(d)

 

 

455

 

 

113,773

 

City of New York, New York, GO, Series A-1,
5.00%, 8/01/35

 

 

200

 

 

211,862

 

Hudson Yards Infrastructure Corp., RB, Series A:

 

 

 

 

 

 

 

5.00%, 2/15/47

 

 

1,000

 

 

953,300

 

(FGIC), 5.00%, 2/15/47

 

 

680

 

 

648,244

 

New York City Housing Development Corp., RB,
Series A, 5.50%, 11/01/34

 

 

3,000

 

 

3,009,300

 


 

 

 

See Notes to Financial Statements.

 

 

18

ANNUAL REPORT

AUGUST 31, 2011




 

 

 

 

 

Schedule of Investments (continued)

BlackRock Municipal Bond Trust (BBK)

 

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

New York (concluded)

 

 

 

 

 

 

 

New York City Industrial Development Agency, RB:

 

 

 

 

 

 

 

American Airlines Inc., JFK International Airport,
AMT, 7.75%, 8/01/31 (e)

 

$

3,165

 

$

3,160,221

 

Queens Baseball Stadium, PILOT (AGC), 6.50%,
1/01/46

 

 

700

 

 

744,751

 

New York Liberty Development Corp., Refunding RB,
Second Priority, Bank of America Tower at One Bryant
Park Project, 6.38%, 7/15/49

 

 

800

 

 

825,288

 

New York State Dormitory Authority, RB, Rochester
Institute of Technology, Series A, 6.00%, 7/01/33

 

 

1,000

 

 

1,098,420

 

 

 

 

 

 

 

10,765,159

 

North Carolina — 7.9%

 

 

 

 

 

 

 

City of Charlotte North Carolina, Refunding RB, Series A,
5.50%, 7/01/34

 

 

225

 

 

239,044

 

Gaston County Industrial Facilities & Pollution Control
Financing Authority North Carolina, RB,
Exempt Facilities, National Gypsum Co. Project,
AMT, 5.75%, 8/01/35

 

 

2,945

 

 

2,245,916

 

North Carolina Capital Facilities Finance Agency, RB,
Duke Energy Carolinas, Series B, 4.38%, 10/01/31

 

 

2,475

 

 

2,421,466

 

North Carolina Medical Care Commission, RB, Series A:

 

 

 

 

 

 

 

Novant Health Obligation, 4.75%, 11/01/43

 

 

4,720

 

 

4,105,550

 

WakeMed, Series A (AGC), 5.88%, 10/01/38

 

 

1,000

 

 

1,032,740

 

North Carolina Medical Care Commission, Refunding RB:

 

 

 

 

 

 

 

Caromont Health (AGC), 4.63%, 2/15/35

 

 

1,000

 

 

982,130

 

University Health System, Series D, 6.25%,
12/01/33

 

 

800

 

 

876,400

 

 

 

 

 

 

 

11,903,246

 

Ohio — 0.3%

 

 

 

 

 

 

 

County of Hancock Ohio, Refunding RB, Blanchard Valley
Regional Health Center, 5.75%, 12/01/26

 

 

395

 

 

406,542

 

Oklahoma — 1.2%

 

 

 

 

 

 

 

Tulsa Airports Improvement Trust, RB, Series A,
Mandatory Put Bonds, AMT, 7.75%, 6/01/35 (e)

 

 

1,725

 

 

1,765,503

 

Oregon — 1.8%

 

 

 

 

 

 

 

City of Portland Oregon, Multifamily Housing Revenue
Bond Pass-Through Certificates, RB, Pacific Tower
Apartments, Series 6, AMT, 6.05%, 11/01/34

 

 

510

 

 

512,351

 

Oregon Health & Science University, RB, Series A,
5.75%, 7/01/39

 

 

750

 

 

806,138

 

Oregon State Facilities Authority, Refunding RB, Limited
College Project, Series A:

 

 

 

 

 

 

 

5.00%, 10/01/34

 

 

850

 

 

862,359

 

5.25%, 10/01/40

 

 

500

 

 

510,110

 

 

 

 

 

 

 

2,690,958

 

Pennsylvania — 3.1%

 

 

 

 

 

 

 

Delaware River Port Authority, RB, Series D (AGM),
5.00%, 1/01/40

 

 

2,600

 

 

2,665,728

 

Pennsylvania Economic Development Financing Authority,
RB, Aqua Pennsylvania Inc. Project, Series B,
4.50%, 12/01/42

 

 

2,000

 

 

1,996,540

 

 

 

 

 

 

 

4,662,268

 

Puerto Rico — 1.2%

 

 

 

 

 

 

 

Puerto Rico Sales Tax Financing Corp., RB,
First Sub-Series A, 5.75%, 8/01/37

 

 

1,000

 

 

1,034,620

 

Puerto Rico Sales Tax Financing Corp., Refunding RB,
CAB, Series A (NPFGC), 5.74%, 8/01/41 (a)

 

 

5,000

 

 

766,050

 

 

 

 

 

 

 

1,800,670

 


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Rhode Island — 1.4%

 

 

 

 

 

 

 

Rhode Island Health & Educational Building Corp., RB,
Hospital Financing, LifeSpan Obligation,
Series A (AGC), 7.00%, 5/15/39

 

$

1,000

 

$

1,136,490

 

State of Rhode Island, COP, Series C, School for the
Deaf (AGC), 5.38%, 4/01/28

 

 

900

 

 

970,461

 

 

 

 

 

 

 

2,106,951

 

Tennessee — 0.2%

 

 

 

 

 

 

 

Memphis-Shelby County Sports Authority Inc.,
Refunding RB, Memphis Arena Project, Series A,
5.38%, 11/01/28

 

 

275

 

 

289,930

 

Texas — 15.0%

 

 

 

 

 

 

 

Harris County Health Facilities Development Corp.,
Refunding RB, Memorial Hermann Healthcare System,
Series B:

 

 

 

 

 

 

 

7.13%, 12/01/31

 

 

500

 

 

560,990

 

7.25%, 12/01/35

 

 

1,750

 

 

1,951,898

 

Harris County Housing Finance Corp., Multifamily
Housing Revenue Bond Pass-Through Certificates, RB,
Series 9, Copperwood Ranch Apartments,
Mandatory Put Bonds, AMT, 5.95%, 11/01/35 (e)

 

 

2,400

 

 

2,422,008

 

Harris County-Houston Sports Authority, Refunding RB,
CAB, Senior Lien, Series G (NPFGC), 6.18%,
11/15/41 (a)

 

 

11,690

 

 

1,340,492

 

Love Field Airport Modernization Corp., RB, Southwest
Airlines Co. Project, 5.25%, 11/01/40

 

 

1,750

 

 

1,638,525

 

Lower Colorado River Authority, Refunding RB (NPFGC),
5.00%, 5/15/13 (h)

 

 

15

 

 

16,172

 

Matagorda County Navigation District No. 1 Texas,
Refunding RB, Central Power & Light Co. Project,
Series A, 6.30%, 11/01/29

 

 

1,500

 

 

1,608,915

 

Texas Private Activity Bond Surface Transportation Corp.,
RB, Senior Lien, Senior Lien, LBJ Infrastructure Group
LLC, LBJ Freeway Managed Lanes Project, 7.00%,
6/30/40

 

 

2,000

 

 

2,076,360

 

Texas State Turnpike Authority, RB (AMBAC):

 

 

 

 

 

 

 

CAB, 6.08%, 8/15/35 (a)

 

 

50,000

 

 

10,456,500

 

First Tier, Series A, 5.00%, 8/15/42

 

 

750

 

 

719,235

 

 

 

 

 

 

 

22,791,095

 

Vermont — 1.1%

 

 

 

 

 

 

 

Vermont Educational & Health Buildings Financing
Agency, RB, Hospital, Fletcher Allen Health, Series A,
4.75%, 12/01/36

 

 

2,000

 

 

1,742,320

 

Virginia — 0.5%

 

 

 

 

 

 

 

Henrico County EDA, RB, Bon Secours Health,
Series B-1 (AGC), 4.50%, 11/01/42

 

 

860

 

 

800,084

 

Washington — 1.0%

 

 

 

 

 

 

 

Washington Health Care Facilities Authority, RB,
MultiCare Health System, Series B (AGC),
6.00%, 8/15/39

 

 

1,400

 

 

1,504,608

 

Wyoming — 0.8%

 

 

 

 

 

 

 

County of Sweetwater Wyoming, Refunding RB,
Idaho Power Co. Project, 5.25%, 7/15/26

 

 

1,200

 

 

1,291,332

 

Total Municipal Bonds — 144.6%

 

 

 

 

 

219,005,179

 


 

 

 

 

See Notes to Financial Statements.

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

19




 

 

 

 

Schedule of Investments (concluded)

BlackRock Municipal Bond Trust (BBK)

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (i)

 

Par
(000)

 

Value

 

Colorado — 2.5%

 

 

 

 

 

 

 

Colorado Health Facilities Authority, RB, Catholic Health,
Series C-7 (AGM), 5.00%, 9/01/36

 

$

3,750

 

$

3,783,600

 

Massachusetts — 1.0%

 

 

 

 

 

 

 

Massachusetts Water Resources Authority, Refunding RB,
General, Series A, 5.00%, 8/01/41

 

 

1,450

 

 

1,501,649

 

New York — 4.1%

 

 

 

 

 

 

 

New York City Municipal Water Finance Authority, RB:

 

 

 

 

 

 

 

Fiscal 2009, Series A, 5.75%, 6/15/40

 

 

450

 

 

501,079

 

Series FF-2, 5.50%, 6/15/40

 

 

405

 

 

442,905

 

New York City Municipal Water Finance Authority,
Refunding RB, Series A, 4.75%, 6/15/30

 

 

3,000

 

 

3,122,940

 

New York State Dormitory Authority, RB, New York
University, Series A, 5.00%, 7/01/38

 

 

2,199

 

 

2,279,035

 

 

 

 

 

 

 

6,345,959

 

Ohio — 2.2%

 

 

 

 

 

 

 

County of Montgomery Ohio, RB, Catholic Health,
Series C-1 (AGM), 5.00%, 10/01/41

 

 

1,260

 

 

1,267,125

 

Ohio Higher Educational Facility Commission,
Refunding RB, Hospital, Cleveland Clinic Health,
Series A, 5.25%, 1/01/33

 

 

2,000

 

 

2,062,840

 

 

 

 

 

 

 

3,329,965

 

Total Municipal Bonds Transferred to Tender
Option Bond Trusts — 9.8%

 

 

 

 

 

14,961,173

 

Total Long-Term Investments
(Cost — $232,083,034) — 154.4%

 

 

 

 

 

233,966,352

 


 

 

 

 

 

 

 

 

 

Short-Term Securities

 

Shares

 

 

 

FFI Institutional Tax-Exempt Fund, 0.01% (j)(k)

 

 

2,247,948

 

 

2,247,948

 

Total Short-Term Securities
(Cost — $2,247,948) — 1.5%

 

 

 

 

 

2,247,948

 

Total Investments (Cost — $234,330,982*) — 155.9%

 

 

 

 

 

236,214,300

 

Other Assets Less Liabilities — 1.7%

 

 

 

 

 

2,563,206

 

Liability for TOB Trust Certificates, Including Interest
Expense and Fees Payable — (4.9)%

 

 

 

 

 

(7,403,992

)

AMPS, at Redemption Value — (52.7)%

 

 

 

 

 

(79,902,319

)

Net Assets Applicable to Common Shares — 100.0%

 

 

 

 

$

151,471,195

 


 

 

 

*

The cost and unrealized appreciation (depreciation) of investments as of August 31, 2011, as computed for federal income tax purposes, were as follows:


 

 

 

 

 

Aggregate cost

 

$

226,098,791

 

Gross unrealized appreciation

 

$

10,055,163

 

Gross unrealized depreciation

 

 

(7,338,802

)

Net unrealized appreciation

 

$

2,716,361

 


 

 

(a)

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

 

(b)

Represents a step-up bond that pays an initial coupon rate for the first period and then a higher coupon rate for the following periods. Rate shown is as of report date.

 

(c)

Issuer filed for bankruptcy and/or is in default of interest payments.

 

(d)

Non-income producing security.

 

(e)

Variable rate security. Rate shown is as of report date.

 

(f)

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

 

(g)

Security represents a beneficial interest in a trust. The collateral deposited into the trust is federally tax-exempt revenue bonds issued by various state or local governments, or their respective agencies or authorities. The security is subject to remarketing prior to its stated maturity.

 

(h)

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

 

(i)

Securities represent bonds transferred to a TOB trust in exchange for which the Trust acquired residual interest certificates. These securities serve as collateral in a financing transaction. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs.

 

(j)

Investments in companies considered to be an affiliate of the Trust during the year, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Affiliate

 

Shares Held at
August 31,
2010

 

Net
Activity

 

Shares Held at
August 31,
2011

 

Income

 

FFI Institutional
Tax-Exempt Fund

 

 

4,831,353

 

 

(2,583,405

)

 

2,247,948

 

$

2,522

 


 

 

(k)

Represents the current yield as of report date.


 

 

 

Fair Value Measurements — Various inputs are used in determining the fair value of investments. These inputs are categorized in three broad levels for financial statement purposes as follows:

 

 

 

 

Level 1 — price quotations in active markets/exchanges for identical assets and liabilities

 

 

 

 

Level 2 — other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

 

 

 

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

 

 

 

 

The categorization of a value determined for investments is based on the pricing transparency of the investment and does not necessarily correspond to the Trust’s perceived risk of investing in those securities. For information about the Trust’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

 

 

 

 

The following table summarizes the inputs used as of August 31, 2011 in determining the fair valuation of the Trust’s investments:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Valuation Inputs

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-Term Investments1

 

 

 

$

233,966,352

 

 

 

$

233,966,352

 

Short-Term
Securities

 

$

2,247,948

 

 

 

 

 

 

2,247,948

 

Total

 

$

2,247,948

 

$

233,966,352

 

 

 

$

236,214,300

 


 

 

 

 

1

See above Schedule of Investments for values in each state or political subdivision.


 

 

 

See Notes to Financial Statements.

 

 

 

 

20

ANNUAL REPORT

AUGUST 31, 2011




 

 

 

 

Schedule of Investments August 31, 2011

BlackRock Municipal Income Investment Quality Trust (BAF)

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Alabama — 1.7%

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

6.13%, 6/01/34

 

$

1,000

 

$

1,101,810

 

6.00%, 6/01/39

 

 

1,000

 

 

1,082,600

 

 

 

 

 

 

 

2,184,410

 

Arizona — 0.4%

 

 

 

 

 

 

 

State of Arizona, COP, Department of Administration,
Series A (AGM), 5.25%, 10/01/28

 

 

465

 

 

488,073

 

California — 14.3%

 

 

 

 

 

 

 

California Educational Facilities Authority, RB, University
of Southern California, Series A, 5.25%, 10/01/38

 

 

2,155

 

 

2,310,052

 

California Health Facilities Financing Authority, Refunding
RB, Sutter Health, Series B, 6.00%, 8/15/42

 

 

1,120

 

 

1,206,733

 

County of Sacramento California, RB, Senior Series A
(AGC), 5.50%, 7/01/41

 

 

1,400

 

 

1,448,174

 

Cucamonga Valley Water District, Refunding RB, Series A
(AGM), 5.00%, 9/01/26

 

 

2,000

 

 

2,158,380

 

Los Angeles Community College District California, GO:

 

 

 

 

 

 

 

Election of 2001, Series A (NPFGC), 5.00%, 8/01/32

 

 

1,000

 

 

1,038,310

 

Election of 2008, Series C, 5.25%, 8/01/39

 

 

1,000

 

 

1,074,310

 

Los Angeles Department of Water & Power, RB, Power
System, Sub-Series A-1, 5.25%, 7/01/38

 

 

1,175

 

 

1,241,129

 

Los Angeles Municipal Improvement Corp., Refunding
RB, Real Property, Series B (AGC), 5.50%, 4/01/39

 

 

3,210

 

 

3,289,769

 

Redondo Beach Unified School District, GO, Election of
2008, Series E, 5.50%, 8/01/34

 

 

1,000

 

 

1,080,080

 

San Bernardino Community College District, GO, Election
of 2002, Series A, 6.25%, 8/01/33

 

 

925

 

 

1,047,248

 

San Diego Public Facilities Financing Authority, Refunding
RB, Series B (AGC), 5.38%, 8/01/34

 

 

1,125

 

 

1,205,381

 

San Jacinto Unified School District, GO, Election of 2006
(AGM), 5.25%, 8/01/32

 

 

1,000

 

 

1,036,960

 

 

 

 

 

 

 

18,136,526

 

Colorado — 1.5%

 

 

 

 

 

 

 

Colorado Health Facilities Authority, RB, Hospital, NCMC
Inc. Project, Series B (AGM), 6.00%, 5/15/26

 

 

1,425

 

 

1,600,845

 

Regional Transportation District, COP, Series A, 5.00%,
6/01/25

 

 

300

 

 

317,853

 

 

 

 

 

 

 

1,918,698

 

Florida — 11.7%

 

 

 

 

 

 

 

City of Jacksonville Florida, RB, Series A, 5.25%,
10/01/31

 

 

4,525

 

 

4,850,574

 

City of Miami Florida, RB (NPFGC), 5.25%, 1/01/28

 

 

1,100

 

 

1,151,744

 

Village Center Community Development District, RB,
Series A (NPFGC), 5.00%, 11/01/32

 

 

10,000

 

 

8,820,300

 

 

 

 

 

 

 

14,822,618

 

Georgia — 2.3%

 

 

 

 

 

 

 

City of Atlanta Georgia, Refunding RB, General, Series C,
6.00%, 1/01/30

 

 

2,500

 

 

2,850,550

 

Illinois — 14.7%

 

 

 

 

 

 

 

Chicago Board of Education Illinois, GO, Refunding,
Chicago School Reform Board, Series A (NPFGC),
5.50%, 12/01/26

 

 

745

 

 

789,849

 

Chicago Transit Authority, RB, Federal Transit Administration
Section 5309, Series A (AGC), 6.00%, 6/01/26

 

 

1,300

 

 

1,471,743

 

City of Chicago Illinois, RB, General, Third Lien,
Series C (AGM):

 

 

 

 

 

 

 

5.25%, 1/01/30

 

 

1,000

 

 

1,055,130

 

5.25%, 1/01/35

 

 

435

 

 

451,613

 

City of Chicago Illinois, RB, Third Lien, O’Hare International
Airport, Series A, 5.75%, 1/01/39

 

 

825

 

 

880,786

 


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Illinois (concluded)

 

 

 

 

 

 

 

City of Chicago Illinois, Refunding RB:

 

 

 

 

 

 

 

General, Third Lien, Series C, 6.50%, 1/01/41

 

$

3,740

 

$

4,210,492

 

Second Lien (NPFGC), 5.50%, 1/01/30

 

 

1,000

 

 

1,085,460

 

Illinois Finance Authority, Refunding RB, Carle Foundation,
Series A, 6.00%, 8/15/41

 

 

1,885

 

 

1,918,855

 

Illinois Municipal Electric Agency, RB, Series A (NPFGC):

 

 

 

 

 

 

 

5.25%, 2/01/28

 

 

1,560

 

 

1,637,797

 

5.25%, 2/01/35

 

 

1,000

 

 

1,026,470

 

Railsplitter Tobacco Settlement Authority, RB:

 

 

 

 

 

 

 

5.50%, 6/01/23

 

 

915

 

 

962,882

 

6.00%, 6/01/28

 

 

260

 

 

265,746

 

State of Illinois, RB:

 

 

 

 

 

 

 

(AGM), 5.00%, 6/15/27

 

 

1,000

 

 

1,036,200

 

Build Illinois, Series B, 5.25%, 6/15/28

 

 

1,750

 

 

1,867,285

 

 

 

 

 

 

 

18,660,308

 

Indiana — 2.5%

 

 

 

 

 

 

 

Indiana Finance Authority, Refunding RB, First Lien, CWA
Authority, Series A, 5.25%, 10/01/38

 

 

550

 

 

571,049

 

Indianapolis Local Public Improvement Bond Bank,
Refunding RB, Waterworks Project, Series A (AGC),
5.50%, 1/01/38

 

 

2,415

 

 

2,572,023

 

 

 

 

 

 

 

3,143,072

 

Iowa — 0.3%

 

 

 

 

 

 

 

Iowa Finance Authority, Refunding RB, Iowa Health System
(AGC), 5.25%, 2/15/29

 

 

410

 

 

430,611

 

Louisiana — 4.1%

 

 

 

 

 

 

 

East Baton Rouge Sewerage Commission, RB, Series A,
5.25%, 2/01/39

 

 

1,750

 

 

1,843,205

 

Louisiana State Citizens Property Insurance Corp., RB,
Series C-3 (AGC), 6.13%, 6/01/25

 

 

2,510

 

 

2,787,807

 

New Orleans Aviation Board Louisiana, Refunding GARB,
Restructuring (AGC):

 

 

 

 

 

 

 

Series A-1, 6.00%, 1/01/23

 

 

375

 

 

433,057

 

Series A-2, 6.00%, 1/01/23

 

 

150

 

 

173,223

 

 

 

 

 

 

 

5,237,292

 

Michigan — 16.1%

 

 

 

 

 

 

 

City of Detroit Michigan, RB:

 

 

 

 

 

 

 

Second Lien, Series B (AGM), 6.25%, 7/01/36

 

 

1,700

 

 

1,883,804

 

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

 

 

200

 

 

233,404

 

Second Lien, Series B (NPFGC), 5.50%, 7/01/29

 

 

1,790

 

 

1,853,957

 

Senior Lien, Series B (AGM), 7.50%, 7/01/33

 

 

1,500

 

 

1,773,525

 

Senior Lien, Series B (BHAC), 5.50%, 7/01/35

 

 

4,750

 

 

4,924,610

 

System, Second Lien, Series A (BHAC), 5.50%,
7/01/36

 

 

2,330

 

 

2,421,149

 

City of Detroit Michigan, Refunding RB, Second Lien:

 

 

 

 

 

 

 

Series C-1 (AGM), 7.00%, 7/01/27

 

 

1,800

 

 

2,108,430

 

Series E (BHAC), 5.75%, 7/01/31

 

 

2,300

 

 

2,454,813

 

Michigan State Building Authority, RB, Facilities Program,
Series H (AGM), 5.00%, 10/15/26

 

 

365

 

 

391,130

 

Michigan State Building Authority, Refunding RB,
Facilities Program, Series I (AGC):

 

 

 

 

 

 

 

5.25%, 10/15/24

 

 

565

 

 

625,557

 

5.25%, 10/15/25

 

 

300

 

 

329,571

 

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

 

 

1,205

 

 

1,398,427

 

 

 

 

 

 

 

20,398,377

 

Minnesota — 4.9%

 

 

 

 

 

 

 

City of Minneapolis Minnesota, Refunding RB, Fairview
Health Services, Series B (AGC), 6.50%, 11/15/38

 

 

5,680

 

 

6,254,589

 

Nevada — 1.7%

 

 

 

 

 

 

 

Clark County Water Reclamation District, GO, Series A,
5.25%, 7/01/34

 

 

2,000

 

 

2,122,380

 


 

 

 

 

See Notes to Financial Statements.

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

21




 

 

 

 

Schedule of Investments (continued)

BlackRock Municipal Income Investment Quality Trust (BAF)

 

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

New Jersey — 4.0%

 

 

 

 

 

 

 

New Jersey Health Care Facilities Financing Authority, RB,
Virtua Health (AGC), 5.50%, 7/01/38

 

$

1,300

 

$

1,356,160

 

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

 

 

1,575

 

 

1,637,811

 

New Jersey Transportation Trust Fund Authority, RB,
Transportation System, Series A (AGC), 5.50%,
12/15/38

 

 

2,000

 

 

2,119,140

 

 

 

 

 

 

 

5,113,111

 

New York — 2.9%

 

 

 

 

 

 

 

New York City Transitional Finance Authority, RB, Fiscal
2009:

 

 

 

 

 

 

 

Series S-3, 5.25%, 1/15/39

 

 

900

 

 

952,317

 

Series S-4 (AGC), 5.50%, 1/15/29

 

 

2,465

 

 

2,702,232

 

 

 

 

 

 

 

3,654,549

 

Ohio — 0.1%

 

 

 

 

 

 

 

Ohio Higher Educational Facility Commission, Refunding
RB, Summa Health System, 2010 Project (AGC),
5.25%, 11/15/40

 

 

75

 

 

75,415

 

Puerto Rico — 2.1%

 

 

 

 

 

 

 

Puerto Rico Highway & Transportation Authority, Refunding
RB, Series CC (AGM), 5.50%, 7/01/30

 

 

1,170

 

 

1,237,813

 

Puerto Rico Sales Tax Financing Corp., RB, First
Sub-Series A, 6.38%, 8/01/39

 

 

1,350

 

 

1,459,985

 

 

 

 

 

 

 

2,697,798

 

Texas — 20.4%

 

 

 

 

 

 

 

Austin Community College District, RB, Educational
Facilities Project, Round Rock Campus, 5.25%,
8/01/33

 

 

2,000

 

 

2,107,420

 

City of Austin Texas, Refunding RB, Series A (AGM):

 

 

 

 

 

 

 

5.00%, 11/15/28

 

 

705

 

 

761,626

 

5.00%, 11/15/29

 

 

895

 

 

958,321

 

City of Houston Texas, Refunding RB, Combined, First
Lien, Series A (AGC):

 

 

 

 

 

 

 

6.00%, 11/15/35

 

 

2,600

 

 

2,952,794

 

6.00%, 11/15/36

 

 

2,215

 

 

2,513,981

 

5.38%, 11/15/38

 

 

1,000

 

 

1,078,650

 

Clifton Higher Education Finance Corp., Refunding RB,
Baylor University, 5.25%, 3/01/32

 

 

1,270

 

 

1,370,482

 

Dallas Area Rapid Transit, Refunding RB, Senior Lien,
5.25%, 12/01/38

 

 

2,380

 

 

2,533,105

 

Frisco ISD Texas, GO, School Building (AGC):

 

 

 

 

 

 

 

5.38%, 8/15/39

 

 

1,415

 

 

1,524,450

 

5.50%, 8/15/41

 

 

3,365

 

 

3,658,193

 

Harris County Health Facilities Development Corp.,
Refunding RB, Memorial Hermann Healthcare System,
Series B, 7.13%, 12/01/31

 

 

500

 

 

560,990

 

Lubbock Cooper ISD Texas, GO, School Building (AGC),
5.75%, 2/15/42

 

 

500

 

 

535,605

 

North Texas Tollway Authority, RB, System, First Tier,
Series K-1 (AGC), 5.75%, 1/01/38

 

 

1,500

 

 

1,586,160

 

North Texas Tollway Authority, Refunding RB, System,
First Tier:

 

 

 

 

 

 

 

(AGM), 6.00%, 1/01/43

 

 

1,000

 

 

1,087,780

 

Series A (AGC), 5.75%, 1/01/40

 

 

1,500

 

 

1,576,080

 

Tarrant County Cultural Education Facilities Finance Corp.,
Refunding RB, Christus Health, Series A (AGC),
6.50%, 7/01/37

 

 

1,000

 

 

1,073,930

 

 

 

 

 

 

 

25,879,567

 

Utah — 0.8%

 

 

 

 

 

 

 

City of Riverton Utah, RB, IHC Health Services Inc.,
5.00%, 8/15/41

 

 

1,000

 

 

1,005,190

 


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Virginia — 0.9%

 

 

 

 

 

 

 

Virginia Public School Authority, RB, School Financing,
6.50%, 12/01/35

 

$

1,000

 

$

1,137,710

 

Washington — 1.6%

 

 

 

 

 

 

 

City of Seattle Washington, Refunding RB, Series A,
5.25%, 2/01/36

 

 

1,025

 

 

1,114,605

 

State of Washington, GO, Various Purpose, Series B,
5.25%, 2/01/36

 

 

795

 

 

871,002

 

 

 

 

 

 

 

1,985,607

 

Total Municipal Bonds — 109.0%

 

 

 

 

 

138,196,451

 


 

 

 

 

 

 

 

 

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (a)

 

 

 

 

 

 

 

Alabama — 1.2%

 

 

 

 

 

 

 

Mobile Board of Water & Sewer Commissioners, RB
(NPFGC), 5.00%, 1/01/31

 

 

1,500

 

 

1,542,810

 

California — 11.0%

 

 

 

 

 

 

 

San Diego Community College District California, GO,
Election of 2002 (AGM), 5.00%, 5/01/30

 

 

2,500

 

 

2,580,900

 

San Marcos Unified School District, GO, Election of 2010,
Series A, 5.25%, 8/01/31

 

 

10,680

 

 

11,349,850

 

 

 

 

 

 

 

13,930,750

 

District of Columbia — 0.7%

 

 

 

 

 

 

 

District of Columbia Water & Sewer Authority, RB,
Series A, 6.00%, 10/01/35

 

 

760

 

 

899,181

 

Florida — 10.8%

 

 

 

 

 

 

 

City of Jacksonville Florida, RB, Better Jacksonville
(NPFGC), 5.00%, 10/01/27

 

 

3,930

 

 

4,012,412

 

County of Pinellas Florida, RB (AGM), 5.00%, 10/01/32

 

 

9,500

 

 

9,636,277

 

 

 

 

 

 

 

13,648,689

 

Illinois — 4.9%

 

 

 

 

 

 

 

Chicago Transit Authority, Refunding RB, Federal Transit
Administration Section 5309 (AGM), 5.00%, 6/01/28

 

 

2,999

 

 

3,071,313

 

Illinois State Toll Highway Authority, RB, Series B, 5.50%,
1/01/33

 

 

2,999

 

 

3,129,409

 

 

 

 

 

 

 

6,200,722

 

Kentucky — 0.8%

 

 

 

 

 

 

 

Kentucky State Property & Building Commission,
Refunding RB, Project No. 93 (AGC), 5.25%, 2/01/27

 

 

898

 

 

972,914

 

Nevada — 1.8%

 

 

 

 

 

 

 

Clark County Water Reclamation District, GO, Limited Tax,
6.00%, 7/01/38

 

 

2,000

 

 

2,240,780

 

New Jersey — 0.8%

 

 

 

 

 

 

 

New Jersey EDA, RB, School Facilities Construction,
Series Z (AGC), 6.00%, 12/15/34

 

 

1,000

 

 

1,093,560

 

Texas — 1.9%

 

 

 

 

 

 

 

North Texas Tollway Authority, RB, Special Projects,
System, Series A, 5.50%, 9/01/41

 

 

2,310

 

 

2,484,752

 

Total Municipal Bonds Transferred to
Tender Option Bond Trusts — 33.9%

 

 

 

 

 

43,014,158

 

Total Long-Term Investments
(Cost — $174,150,461) — 142.9%

 

 

 

 

 

181,210,609

 


 

 

 

See Notes to Financial Statements.

 

 

 

 

22

ANNUAL REPORT

AUGUST 31, 2011




 

 

 

 

Schedule of Investments (concluded)

BlackRock Municipal Income Investment Quality Trust (BAF)

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Short-Term Securities

 

Shares

 

Value

 

FFI Institutional Tax-Exempt Fund, 0.01% (b)(c)

 

 

9,230,241

 

$

9,230,241

 

Total Short-Term Securities
(Cost — $9,230,241) — 7.3%

 

 

 

 

 

9,230,241

 

Total Investments (Cost — $183,380,702*) — 150.2%

 

 

 

 

 

190,440,850

 

Other Assets Less Liabilities — 0.7%

 

 

 

 

 

898,545

 

Liability for TOB Trust Certificates, Including
Interest Expense and Fees Payable — (17.6)%

 

 

 

 

 

(22,281,092

)

AMPS, at Redemption Value — (33.3)%

 

 

 

 

 

(42,275,707

)

Net Assets Applicable to Common Shares — 100.0%

 

 

 

 

$

126,782,596

 


 

 

 

*

The cost and unrealized appreciation (depreciation) of investments as of August 31, 2011, as computed for federal income tax purposes, were as follows:


 

 

 

 

 

Aggregate cost

 

$

161,272,002

 

Gross unrealized appreciation

 

$

8,296,059

 

Gross unrealized depreciation

 

 

(1,393,477

)

Net unrealized appreciation

 

$

6,902,582

 


 

 

(a)

Securities represent bonds transferred to a TOB trust in exchange for which the Trust acquired residual interest certificates. These securities serve as collateral in a financing transaction. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs.

 

 

(b)

Investments in companies considered to be an affiliate of the Trust during the year, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Affiliate

 

Shares Held at
August 31,
2010

 

Net
Activity

 

Shares Held at
August 31,
2011

 

Income

 

FFI Institutional
Tax-Exempt Fund

 

 

1,211,264

 

 

8,018,977

 

 

9,230,241

 

$

3,616

 


 

 

(c)

Represents the current yield as of report date.

 

 

Financial futures contracts sold as of August 31, 2011 were as follows:


 

 

 

 

 

 

 

 

 

 

 

Contracts

 

Issue

 

Exchange

 

Expiration

 

Notional
Value

 

Unrealized
Appreciation

32

 

10-Year U.S.

 

Chicago

 

December

 

$4,140,439

 

$11,439

 

 

Treasury Note

 

Board of Trade

 

2011

 

 

 

 


 

 

 

Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs are categorized in three broad levels for financial statement purposes as follows:

 

 

 

Level 1 — price quotations in active markets/exchanges for identical assets and liabilities

 

 

 

 

Level 2 — other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

 

 

 

Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Trust’s own assumptions used in determining the fair value of investments and derivative financial instruments)

 

 

 

 

The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument and does not necessarily correspond to the Trust’s perceived risk of investing in those securities. For information about the Trust’s policy regarding valuation of investments and derivative financial instruments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

 

 

 

 

The following tables summarize the inputs used as of August 31, 2011 in determining the fair valuation of the Trust’s investments and derivative financial instruments:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Valuation Inputs

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-Term Investments1

 

 

 

$

181,210,609

 

 

 

$

181,210,609

 

Short-Term Securities

 

$

9,230,241

 

 

 

 

 

 

9,230,241

 

Total

 

$

9,230,241

 

$

181,210,609

 

 

 

$

190,440,850

 


 

 

 

 

1

See above Schedule of Investments for values in each state or political subdivision.


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Valuation Inputs

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Derivative Financial
Instruments2

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate contracts

 

$

11,439

 

 

 

 

 

$

11,439

 


 

 

 

 

2

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


 

 

 

 

See Notes to Financial Statements.

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

23




 

 

 

 

 

Schedule of Investments August 31, 2011

BlackRock Municipal Income Quality Trust (BYM)

 

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Alabama — 3.8%

 

 

 

 

 

 

 

Alabama State Docks Department, Refunding RB,
6.00%, 10/01/40

 

$

3,800

 

$

3,984,034

 

Birmingham Airport Authority, RB (AGM), 5.50%,
7/01/40

 

 

5,800

 

 

6,046,674

 

Birmingham Special Care Facilities Financing Authority,
RB, Children’s Hospital (AGC), 6.00%, 6/01/39

 

 

1,495

 

 

1,618,487

 

County of Jefferson Alabama, RB, Series A 4.75%,
1/01/25

 

 

2,800

 

 

2,310,112

 

 

 

 

 

 

 

13,959,307

 

Arizona — 1.0%

 

 

 

 

 

 

 

Salt River Project Agricultural Improvement & Power
District, RB, Series A, 5.00%, 1/01/38

 

 

1,500

 

 

1,563,495

 

State of Arizona, COP, Department of Administration,
Series A (AGM):

 

 

 

 

 

 

 

5.00%, 10/01/27

 

 

1,500

 

 

1,566,840

 

5.25%, 10/01/28

 

 

650

 

682,253

 

 

 

 

 

 

 

3,812,588

 

California — 28.2%

 

 

 

 

 

 

 

California Health Facilities Financing Authority, Refunding
RB, St. Joseph Health System, Series A, 5.75%,
7/01/39

 

 

625

 

 

641,981

 

California Infrastructure & Economic Development Bank,
RB, Bay Area Toll Bridges, First Lien, Series A (AMBAC),
5.00%, 1/01/28 (a)

 

 

10,100

 

 

12,662,976

 

Coast Community College District California, GO,
Refunding, CAB, Election of 2002, Series C (AGM):

 

 

 

 

 

 

 

5.58%, 8/01/13 (b)

 

 

7,450

 

 

6,806,841

 

5.40%, 8/01/36 (c)

 

 

4,200

 

 

842,982

 

Fresno Unified School District California, GO, Election of
2001, Series E (AGM), 5.00%, 8/01/30

 

 

1,100

 

 

1,121,065

 

Golden State Tobacco Securitization Corp. California,
RB, Series 2003-A-1 (a):

 

 

 

 

 

 

 

6.63%, 6/01/13

 

 

6,500

 

 

7,194,330

 

6.75%, 6/01/13

 

 

14,500

 

 

16,080,355

 

Los Angeles Municipal Improvement Corp., RB,
Series B1 (NPFGC), 4.75%, 8/01/37

 

 

3,500

 

 

3,184,440

 

Metropolitan Water District of Southern California, RB,
Series B-1 (NPFGC), 5.00%, 10/01/33

 

 

17,500

 

 

17,817,800

 

Monterey Peninsula Community College District, GO,
CAB, Series C (AGM) (c):

 

 

 

 

 

 

 

5.15%, 8/01/31

 

 

13,575

 

 

3,963,357

 

5.16%, 8/01/32

 

 

14,150

 

 

3,775,645

 

Orange County Sanitation District, COP, Series B (AGM),
5.00%, 2/01/31

 

 

2,500

 

 

2,614,400

 

San Diego Unified School District California, GO, CAB,
Election of 2008, Series C, 6.84%, 7/01/38 (c)

 

 

2,000

 

 

364,120

 

San Francisco City & County Public Utilities Commission,
Refunding RB, Series A (AGM)

 

 

 

 

 

 

 

5.00%, 11/01/11 (a)

 

 

3,460

 

 

3,487,680

 

5.00%, 11/01/31

 

 

11,540

 

 

11,555,348

 

San Joaquin Hills Transportation Corridor Agency
California, Refunding RB, CAB, Series A (NPFGC),
5.50%, 1/15/31 (c)

 

 

53,000

 

 

10,012,230

 

San Jose Unified School District Santa Clara County
California, GO, Election of 2002, Series B (NPFGC),
5.00%, 8/01/29

 

 

2,350

 

 

2,431,757

 

 

 

 

 

 

 

104,557,307

 

Colorado — 0.3%

 

 

 

 

 

 

 

Regional Transportation District, COP, Series A, 5.38%,
6/01/31

 

 

960

 

 

1,013,731

 

District of Columbia — 2.4%

 

 

 

 

 

 

 

District of Columbia Tobacco Settlement Financing Corp.,
Refunding RB, Asset-Backed, 6.75%, 5/15/40

 

 

9,500

 

 

8,939,120

 


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Florida — 15.3%

 

 

 

 

 

 

 

Broward County School Board Florida, COP, Series A
(AGM), 5.25%, 7/01/33

 

$

2,000

 

$

2,051,760

 

County of Broward Florida, RB, Series A, 5.25%,
10/01/34

 

 

6,750

 

 

7,222,770

 

County of Duval Florida, COP, Master Lease Program
(AGM), 5.00%, 7/01/33

 

 

3,800

 

 

3,861,218

 

County of Miami-Dade Florida, RB:

 

 

 

 

 

 

 

CAB, Sub-Series A (NPFGC), 5.25%, 10/01/38 (c)

 

 

25,520

 

 

3,887,461

 

Miami International Airport, Series A, 5.50%,
10/01/41

 

 

5,000

 

 

5,132,750

 

Water & Sewer System (AGM), 5.00%, 10/01/39

 

 

10,100

 

 

10,336,542

 

County of Miami-Dade Florida, Refunding RB (AGM),
5.00%, 7/01/35

 

 

1,300

 

 

1,327,820

 

Florida Housing Finance Corp., RB, Homeowner Mortgage,
Series 3, 5.45%, 7/01/33

 

 

3,800

 

 

3,928,022

 

Florida State Department of Environmental Protection,
RB, Series B (NPFGC), 5.00%, 7/01/27

 

 

7,500

 

 

7,916,625

 

Miami-Dade County School Board, COP, RB, Series B
(AGC), 5.25%, 5/01/31

 

 

1,135

 

 

1,188,141

 

Orange County School Board, COP, Series A (AGC),
5.50%, 8/01/34

 

 

6,090

 

 

6,400,529

 

Sarasota County Public Hospital District, RB, Sarasota
Memorial Hospital Project, Series A, 5.63%, 7/01/39

 

 

300

 

 

305,775

 

South Florida Water Management District, COP (AMBAC),
5.00%, 10/01/36

 

 

1,000

 

 

1,010,230

 

Tohopekaliga Water Authority, Refunding RB, Series A,
5.25%, 10/01/36

 

 

2,000

 

 

2,122,100

 

 

 

 

 

 

 

56,691,743

 

Georgia — 2.5%

 

 

 

 

 

 

 

City of Atlanta Georgia, Refunding RB, General, Series C,
6.00%, 1/01/30

 

 

7,500

 

 

8,551,650

 

Gwinnett County Hospital Authority, Refunding RB,
Gwinnett Hospital System Series D (AGM), 5.50%,
7/01/41

 

 

900

 

 

921,195

 

 

 

 

 

 

 

9,472,845

 

Hawaii — 1.4%

 

 

 

 

 

 

 

Hawaii State Harbor, RB, Series A, 5.50%, 7/01/35

 

 

5,000

 

 

5,212,650

 

Illinois — 3.9%

 

 

 

 

 

 

 

Chicago Board of Education Illinois, GO, Refunding,
Chicago School Reform Board, Series A (NPFGC),
5.50%, 12/01/26

 

 

2,500

 

 

2,650,500

 

Chicago Park District, GO, Harbor Facilities, Series C,
5.25%, 1/01/40

 

 

600

 

 

627,894

 

City of Chicago Illinois, RB, Series A (AGC), 5.00%,
1/01/38

 

 

7,310

 

 

7,404,518

 

County of Cook Illinois, GO, Refunding, Series A, 5.25%,
11/15/33

 

 

1,475

 

 

1,559,813

 

Illinois Municipal Electric Agency, RB, Series A (NPFGC),
5.25%, 2/01/27

 

 

1,350

 

 

1,424,007

 

Railsplitter Tobacco Settlement Authority, RB, 6.00%,
6/01/28

 

 

710

 

 

725,691

 

 

 

 

 

 

 

14,392,423

 

Indiana — 2.1%

 

 

 

 

 

 

 

Indiana Finance Authority, Refunding RB, First Lien,
CWA Authority, Series A, 5.25%, 10/01/38

 

 

1,100

 

 

1,142,097

 

Indiana Municipal Power Agency, RB, Series B, 5.75%,
1/01/34

 

 

450

 

 

461,596

 

Indianapolis Local Public Improvement Bond Bank,
Refunding RB, Waterworks Project, Series A (AGC),
5.50%, 1/01/38

 

 

5,750

 

 

6,123,865

 

 

 

 

 

 

 

7,727,558

 


 

 

 

See Notes to Financial Statements.

 

 

 

24

ANNUAL REPORT

AUGUST 31, 2011




 

 

 

 

 

Schedule of Investments (continued)

BlackRock Municipal Income Quality Trust (BYM)

 

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Iowa — 1.4%

 

 

 

 

 

 

 

Iowa Finance Authority, RB, Series A (AGC), 5.63%,
8/15/37

 

$

5,000

 

$

5,236,350

 

Kentucky — 0.4%

 

 

 

 

 

 

 

Kentucky State Property & Buildings Commission,
Refunding RB, Project No. 93 (AGC), 5.25%, 2/01/29

 

 

1,500

 

 

1,599,420

 

Louisiana — 2.1%

 

 

 

 

 

 

 

State of Louisiana, RB, Series A (AGM), 5.00%, 5/01/31

 

 

7,500

 

 

7,809,525

 

Michigan — 3.3%

 

 

 

 

 

 

 

City of Detroit Michigan, RB:

 

 

 

 

 

 

 

System, Second Lien, Series A (BHAC), 5.50%,
7/01/36

 

 

2,900

 

 

3,013,448

 

System, Second Lien, Series B (NPFGC), 5.00%,
7/01/36

 

 

100

 

 

95,743

 

City of Detroit Michigan, Refunding RB, Second Lien,
Series E (BHAC), 5.75%, 7/01/31

 

 

3,000

 

 

3,201,930

 

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

 

 

465

 

 

473,747

 

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

 

 

1,100

 

 

1,192,928

 

Michigan State Building Authority, RB, Refunding
Facilities Program:

 

 

 

 

 

 

 

Series I-A, 5.38%, 10/15/36

 

 

2,000

 

 

2,081,460

 

Series I-A, 5.38%, 10/15/41

 

 

800

 

 

829,992

 

Series II-A, 5.38%, 10/15/36

 

 

1,500

 

 

1,561,095

 

 

 

 

 

 

 

12,450,343

 

Nebraska — 1.2%

 

 

 

 

 

 

 

Nebraska Investment Finance Authority, Refunding RB,
Series A:

 

 

 

 

 

 

 

5.90%, 9/01/36

 

 

2,450

 

 

2,671,260

 

6.05%, 9/01/41

 

 

1,770

 

 

1,911,759

 

 

 

 

 

 

 

4,583,019

 

Nevada — 1.1%

 

 

 

 

 

 

 

County of Clark Nevada, RB, Las Vegas-McCarran
International Airport, Series A (AGC), 5.25%, 7/01/39

 

 

4,100

 

 

4,208,199

 

New Jersey — 0.9%

 

 

 

 

 

 

 

New Jersey Transportation Trust Fund Authority, RB,
Transportation System, Series A, 5.50%, 6/15/41

 

 

3,000

 

 

3,186,360

 

New York — 1.0%

 

 

 

 

 

 

 

New York City Transitional Finance Authority, RB, Fiscal
2009, Series S-4, 5.50%, 1/15/33

 

 

1,950

 

 

2,095,119

 

New York State Dormitory Authority, ERB, Series B,
5.75%, 3/15/36

 

 

1,300

 

 

1,455,753

 

 

 

 

 

 

 

3,550,872

 

North Carolina — 0.9%

 

 

 

 

 

 

 

North Carolina Medical Care Commission, RB, Novant
Health Obligation, Series A, 4.75%, 11/01/43

 

 

3,875

 

 

3,370,552

 

Ohio — 0.5%

 

 

 

 

 

 

 

County of Lucas Ohio, Refunding RB, Promedica
Healthcare, Series A, 6.50%, 11/15/37

 

 

610

 

 

683,426

 

Ohio Higher Educational Facility Commission, Refunding
RB, Summa Health System, 2010 Project (AGC),
5.25%, 11/15/40

 

 

1,125

 

 

1,131,232

 

 

 

 

 

 

 

1,814,658

 

Pennsylvania — 0.2%

 

 

 

 

 

 

 

Pennsylvania Turnpike Commission, RB, Subordinate,
Special Motor, License Fund, Series A, 6.00%,
12/01/36

 

 

625

 

 

712,506

 


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Puerto Rico — 1.8%

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

6.38%, 8/01/39

 

$

5,300

 

$

5,731,791

 

5.50%, 8/01/42

 

 

950

 

 

962,074

 

 

 

 

 

 

 

6,693,865

 

Rhode Island — 0.8%

 

 

 

 

 

 

 

Rhode Island Health & Educational Building Corp.,
Refunding RB, Public Schools Financing Program,
Series E (AGC), 6.00%, 5/15/29

 

 

2,625

 

 

2,909,419

 

South Carolina — 1.5%

 

 

 

 

 

 

 

South Carolina Jobs-EDA, Refunding RB, Palmetto
Health, Series A (AGM), 6.50%, 8/01/39

 

 

260

 

 

282,766

 

South Carolina State Ports Authority, RB, 5.25%,
7/01/40

 

 

5,000

 

 

5,200,250

 

 

 

 

 

 

 

5,483,016

 

Tennessee — 3.3%

 

 

 

 

 

 

 

Knox County Health Educational & Housing Facilities
Board Tennessee, Refunding RB, CAB, Series A
(AGM) (c):

 

 

 

 

 

 

 

5.88%, 1/01/23

 

 

9,110

 

 

4,791,587

 

5.90%, 1/01/24

 

 

8,500

 

 

4,201,210

 

5.91%, 1/01/25

 

 

6,850

 

 

3,186,209

 

 

 

 

 

 

 

12,179,006

 

Texas — 26.9%

 

 

 

 

 

 

 

City of Houston Texas, Refunding RB, Senior Lien, Series A,
5.50%, 7/01/34

 

 

4,165

 

 

4,412,443

 

City of San Antonio Texas, Refunding RB (NPFGC):

 

 

 

 

 

 

 

5.13%, 5/15/29

 

 

9,250

 

 

9,830,068

 

5.13%, 5/15/34

 

 

10,000

 

 

10,617,500

 

Comal ISD, GO, School Building (PSF-GTD), 5.00%,
2/01/36

 

 

2,500

 

 

2,595,075

 

Coppell ISD Texas, GO, Refunding, CAB (PSF-GTD),
5.64%, 8/15/30 (c)

 

 

10,030

 

 

4,477,793

 

County of Harris Texas, GO (NPFGC) (c):

 

 

 

 

 

 

 

5.57%, 8/15/25

 

 

7,485

 

 

4,400,956

 

5.60%, 8/15/28

 

 

10,915

 

 

5,439,490

 

County of Harris Texas, Refunding RB, Senior Lien, Toll
Road (AGM), 5.00%, 8/15/30

 

 

5,510

 

 

5,668,082

 

Harris County-Houston Sports Authority, Refunding RB
(NPFGC) (c):

 

 

 

 

 

 

 

CAB, Junior Lien, Series H, 5.93%, 11/15/38

 

 

5,785

 

 

736,778

 

CAB, Junior Lien, Series H, 5.95%, 11/15/39

 

 

6,160

 

 

727,311

 

Third Lien, Series A-3, 5.97%, 11/15/38

 

 

16,890

 

 

2,095,542

 

Lewisville ISD Texas, GO, Refunding, CAB, School
Building (NPFGC), 4.67%, 8/15/24 (c)

 

 

3,815

 

 

2,136,171

 

Mansfield ISD Texas, GO, School Building (PSF-GTD),
5.00%, 2/15/33

 

 

2,980

 

 

3,144,138

 

North Texas Tollway Authority, Refunding RB, First Tier:

 

 

 

 

 

 

 

Series A, 6.00%, 1/01/28

 

 

625

 

 

676,475

 

System (NPFGC), 5.75%, 1/01/40

 

 

23,050

 

 

23,624,867

 

Texas State Turnpike Authority, RB, First Tier, Series A
(AMBAC), 5.00%, 8/15/42

 

 

20,000

 

 

19,179,600

 

 

 

 

 

 

 

99,762,289

 


 

 

 

 

See Notes to Financial Statements.

 

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

25




 

 

 

 

Schedule of Investments (continued)

BlackRock Municipal Income Quality Trust (BYM)

 

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Washington — 3.4%

 

 

 

 

 

 

 

Chelan County Public Utility District No. 1, RB, Chelan
Hydro System, Series C (AMBAC), 5.13%, 7/01/33

 

$

3,655

 

$

3,679,196

 

County of King Washington, Refunding RB
(AGM), 5.00%, 1/01/36

 

 

2,200

 

 

2,256,672

 

Washington Health Care Facilities Authority, RB:

 

 

 

 

 

 

 

MultiCare Health Care, Series C (AGC), 5.50%,
8/15/43

 

 

5,000

 

 

5,154,100

 

Providence Health & Services, Series A, 5.00%,
10/01/39

 

 

1,000

 

 

993,980

 

Providence Health & Services, Series A, 5.25%,
10/01/39

 

 

675

 

 

687,103

 

 

 

 

 

 

 

12,771,051

 

Wisconsin — 1.1%

 

 

 

 

 

 

 

Wisconsin Health & Educational Facilities Authority, RB:

 

 

 

 

 

 

 

Ascension Health Senior Credit Group, 5.00%,
11/15/33

 

 

1,500

 

 

1,515,990

 

Froedtert & Community Health, 5.25%, 4/01/39

 

 

2,500

 

 

2,534,200

 

 

 

 

 

 

 

4,050,190

 

Total Municipal Bonds — 112.7%

 

 

 

 

 

418,149,912

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (d)

 

 

 

 

 

 

 

Arizona — 0.4%

 

 

 

 

 

 

 

Phoenix Civic Improvement Corp., RB, Junior Lien,
Series A, 5.00%, 7/01/34

 

 

1,300

 

 

1,383,915

 

California — 10.8%

 

 

 

 

 

 

 

California State University, RB, Systemwide, Series A
(AGM), 5.00%, 11/01/33

 

 

3,379

 

 

3,451,252

 

California State University, Refunding RB, Systemwide,
Series A (AGM), 5.00%, 11/01/32

 

 

8,000

 

 

8,282,560

 

Foothill-De Anza Community College District, GO,
Election of 1999, Series C (NPFGC), 5.00%, 8/01/36

 

 

7,500

 

 

7,717,050

 

Los Angeles Community College District California, GO,
Election of 2001, Series A (AGM), 5.00%, 8/01/32

 

 

5,000

 

 

5,196,850

 

San Diego Community College District California, GO,
Election of 2002, 5.25%, 8/01/33

 

 

449

 

 

481,372

 

San Diego County Water Authority, COP, Refunding,
Series 2008-A (AGM), 5.00%, 5/01/33

 

 

4,870

 

 

5,048,339

 

University of California, RB, Series C (NPFGC), 4.75%,
5/15/37

 

 

10,000

 

 

9,882,200

 

 

 

 

 

 

 

40,059,623

 

District of Columbia — 0.3%

 

 

 

 

 

 

 

District of Columbia, RB, Series A, 5.50%, 12/01/30

 

 

1,080

 

 

1,222,809

 

Florida — 5.2%

 

 

 

 

 

 

 

City of Tallahassee Florida, RB (NPFGC):

 

 

 

 

 

 

 

5.00%, 10/01/32

 

 

3,000

 

 

3,086,970

 

5.00%, 10/01/37

 

 

5,000

 

 

5,123,550

 

Florida State Board of Education, GO, Series D, 5.00%,
6/01/37

 

 

2,999

 

 

3,147,255

 

Highlands County Health Facilities Authority, RB, Adventist,
Series C, 5.25%, 11/15/36 (e)

 

 

1,800

 

 

1,816,974

 

Orange County School Board, COP, Series A (NPFGC),
5.00%, 8/01/30

 

 

6,000

 

 

6,091,140

 

 

 

 

 

 

 

19,265,889

 

Hawaii — 2.8%

 

 

 

 

 

 

 

Honolulu City & County Board of Water Supply, RB,
Series A (FGIC), 5.00%, 7/01/33

 

 

10,000

 

 

10,227,100

 


 

 

 

 

 

 

 

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (d)

 

Par
(000)

 

Value

 

Illinois — 8.8%

 

 

 

 

 

 

 

Illinois Finance Authority, RB, Carle Foundation, Series A
(AGM), 6.00%, 8/15/41

 

$

2,400

 

$

2,504,064

 

Illinois State Toll Highway Authority, RB, Series B, 5.50%,
1/01/33

 

 

4,499

 

 

4,694,114

 

Metropolitan Pier & Exposition Authority, RB, McCormick
Place Expansion Project, Series A (NPFGC), 5.00%,
12/15/28

 

 

24,010

 

 

24,167,265

 

State of Illinois, RB, Build Illinois, Series B, 5.25%,
6/15/34

 

 

1,400

 

 

1,444,589

 

 

 

 

 

 

 

32,810,032

 

Massachusetts — 3.6%

 

 

 

 

 

 

 

Massachusetts School Building Authority, RB, Series A
(AGM), 5.00%, 8/15/30

 

 

12,987

 

 

13,540,105

 

Nevada — 1.8%

 

 

 

 

 

 

 

City of Las Vegas Nevada, GO, Limited Tax, Performing
Arts Center, 6.00%, 4/01/39

 

 

4,197

 

 

4,606,711

 

Clark County Water Reclamation District, GO, Series B,
5.75%, 7/01/34

 

 

2,024

 

 

2,261,902

 

 

 

 

 

 

 

6,868,613

 

New York — 4.6%

 

 

 

 

 

 

 

Erie County Industrial Development Agency, RB,
City School District of Buffalo Project, Series A (AGM),
5.75%, 5/01/28

 

 

4,494

 

 

4,930,476

 

Metropolitan Transportation Authority, RB, Series A
(NPFGC), 5.00%, 11/15/31

 

 

7,002

 

 

7,351,043

 

Triborough Bridge & Tunnel Authority, RB, General,
Series A-2, 5.25%, 11/15/34

 

 

4,500

 

 

4,811,085

 

 

 

 

 

 

 

17,092,604

 

Ohio — 0.2%

 

 

 

 

 

 

 

State of Ohio, RB, Cleveland Clinic Health, Series B,
5.50%, 1/01/34

 

 

620

 

 

650,033

 

South Carolina — 0.2%

 

 

 

 

 

 

 

South Carolina State Public Service Authority, RB,
Santee Cooper, Series A, 5.50%, 1/01/38

 

 

600

 

 

649,938

 

Texas — 3.2%

 

 

 

 

 

 

 

North East ISD Texas, GO, School Building (PSF-GTD)
Series A, 5.00%, 8/01/37

 

 

1,500

 

 

1,573,455

 

Northside ISD Texas, GO, School Building (PSF-GTD),
5.13%, 6/15/29

 

 

9,500

 

 

10,180,059

 

 

 

 

 

 

 

11,753,514

 

Utah — 1.4%

 

 

 

 

 

 

 

Utah Transit Authority, RB, Series A (AGM), 5.00%,
6/15/36

 

 

5,000

 

 

5,242,850

 

Virginia — 0.1%

 

 

 

 

 

 

 

Fairfax County IDA Virginia, Refunding RB, Health Care,
Inova Health System, Series A, 5.50%, 5/15/35

 

 

400

 

 

419,120

 

Washington — 1.0%

 

 

 

 

 

 

 

Central Puget Sound Regional Transit Authority, RB,
Series A (AGM), 5.00%, 11/01/32

 

 

3,494

 

 

3,677,574

 

Total Municipal Bonds Transferred to
Tender Option Bond Trusts — 44.4%

 

 

 

 

 

164,863,719

 

Total Long-Term Investments
(Cost — $574,675,678) — 157.1%

 

 

 

 

 

583,013,631

 


 

 

 

See Notes to Financial Statements.

 

 

26

ANNUAL REPORT

AUGUST 31, 2011




 

 

 

 

Schedule of Investments (concluded)

BlackRock Municipal Income Quality Trust (BYM)

 

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Short-Term Securities

 

Par
(000)

 

Value

 

New York — 0.5%

 

 

 

 

 

 

 

City of New York, New York, GO, VRDN, Sub-Series A-6
(AGM Insurance, Dexia Credit Local SBPA), 1.50%,
9/01/11 (e)

 

$

1,700

 

$

1,700,000

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

 

 

Money Market Funds — 1.6%

 

 

 

 

 

 

 

FFI Institutional Tax-Exempt Fund, 0.01% (f)(g)

 

 

5,821,237

 

 

5,821,237

 

Total Short-Term Securities
(Cost — $7,521,237) — 2.1%

 

 

 

 

 

7,521,237

 

Total Investments (Cost — $582,196,195*) — 159.2%

 

 

 

 

 

590,534,868

 

Other Assets Less Liabilities — 1.0%

 

 

 

 

 

3,744,775

 

Liability for TOB Trust Certificates, Including
Interest Expense and Fees Payable — (23.2)%

 

 

 

 

 

(86,011,131

)

AMPS, at Redemption Value — (37.0)%

 

 

 

 

 

(137,254,205

)

Net Assets Applicable to Common Shares — 100.0%

 

 

 

 

$

371,014,307

 

 

 

 

 

 

 

 

 


 

 

*

The cost and unrealized appreciation (depreciation) of investments as of August 31, 2011, as computed for federal income tax purposes, were as follows:


 

 

 

 

 

 

 

 

Aggregate cost

 

 

 

 

$

496,199,453

 

Gross unrealized appreciation

 

 

 

 

$

25,117,947

 

Gross unrealized depreciation

 

 

 

 

 

(16,746,622

)

Net unrealized appreciation

 

 

 

 

$

8,371,325

 


 

 

(a)

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

 

 

(c)

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

 

 

(d)

Securities represent bonds transferred to a TOB in exchange for which the Trust acquired residual interest certificates. These securities serve as collateral in a financing transaction. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs.

 

 

(e)

Variable rate security. Rate shown is as of report date and maturity shown is the date the principal owed can be recovered through demand.

 

 

(f)

Investments in companies considered to be an affiliate of the Trust during the year, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Affiliate

 

Shares Held at
August 31,
2010

 

Net
Activity

 

Shares Held at
August 31,
2011

 

Income

 

FFI Institutional

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax-Exempt Fund

 

 

9,416,737

 

 

(3,595,500)

 

 

5,821,237

 

$

7,116

 


 

 

(g)

Represents the current yield as of report date.

 

 

Financial futures contracts sold as of August 31, 2011 were as follows:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contracts

 

Issue

 

Exchange

 

Expiration

 

Notional
Value

 

Unrealized
Appreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10-Year US

 

 

Chicago

 

 

December

 

 

 

 

 

 

 

     95

 

 

Treasury Note

 

 

Board of Trade

 

 

2011

 

$

12,291,929

 

$

33,960

 


 

 

 

Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs are categorized in three broad levels for financial statement purposes as follows:

 

 

Level 1 — price quotations in active markets/exchanges for identical assets and liabilities

 

 

Level 2 — other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

 

Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Trust’s own assumptions used in determining the fair value of investments and derivative financial instruments)

 

 

The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument and does not necessarily correspond to the Trust’s perceived risk of investing in those securities. For information about the Trust’s policy regarding valuation of investments and derivative financial instruments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

 

 

The following tables summarize the inputs used as of August 31, 2011 in determining the fair valuation of the Trust’s investments and derivative financial instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Valuation Inputs

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-Term Investments1

 

 

 

$

583,013,631

 

 

 

$

583,013,631

 

Short-Term Securities

 

$

5,821,237

 

 

1,700,000

 

 

 

 

7,521,237

 

Total

 

$

5,821,237

 

$

584,713,631

 

 

 

$

590,534,868

 


 

 

 

 

1

See above Schedule of Investments for values in each state or political subdivision.


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Valuation Inputs

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Derivative Financial
Instruments2

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate contracts

 

$

33,960

 

 

 

 

 

$

33,960

 


 

 

 

 

2

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


 

 

 

 

 

 

See Notes to Financial Statements.

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

27




 

 

 

 

Schedule of Investments August 31, 2011

BlackRock Municipal Income Trust II (BLE)

 

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Arizona — 3.3%

 

 

 

 

 

 

 

Salt River Project Agricultural Improvement & Power
District, RB, Series A, 5.00%, 1/01/38

 

$

2,135

 

$

2,225,375

 

Salt Verde Financial Corp., RB, Senior:

 

 

 

 

 

 

 

5.00%, 12/01/32

 

 

5,635

 

 

4,962,688

 

5.00%, 12/01/37

 

 

3,990

 

 

3,442,013

 

 

 

 

 

 

 

10,630,076

 

Arkansas — 0.5%

 

 

 

 

 

 

 

County of Little River Arkansas, Refunding RB,
Georgia-Pacific Corp. Project, AMT, 5.60%, 10/01/26

 

 

1,825

 

 

1,737,473

 

California — 20.3%

 

 

 

 

 

 

 

Bay Area Toll Authority, Refunding RB, San Francisco Bay
Area, Series F-1, 5.63%, 4/01/44

 

 

2,480

 

 

2,674,829

 

California County Tobacco Securitization Agency, RB,
CAB, Stanislaus, Sub-Series C, 6.30%, 6/01/55 (a)

 

 

9,710

 

 

87,002

 

California Health Facilities Financing Authority, Refunding
RB, Sutter Health, Series B, 6.00%, 8/15/42

 

 

3,500

 

 

3,771,040

 

California HFA, RB, AMT, Home Mortgage:

 

 

 

 

 

 

 

Series G, 5.50%, 8/01/42

 

 

6,455

 

 

6,448,351

 

Series K, 5.50%, 2/01/42

 

 

2,220

 

 

2,208,767

 

California State Public Works Board, RB, Various Capital
Project, Sub-Series I-1, 6.38%, 11/01/34

 

 

1,280

 

 

1,389,568

 

California Statewide Communities Development Authority,
RB, Health Facility, Memorial Health Services, Series A,
5.50%, 10/01/33

 

 

5,000

 

 

5,026,050

 

Los Angeles Department of Airports, RB, Series A,
5.25%, 5/15/39

 

 

860

 

 

895,862

 

Los Angeles Department of Airports, Refunding RB,
Senior, Los Angeles International Airport, Series A,
5.00%, 5/15/40

 

 

6,500

 

 

6,679,660

 

Los Angeles Unified School District California, GO:

 

 

 

 

 

 

 

Series D, 5.00%, 7/01/27

 

 

2,375

 

 

2,544,789

 

Series I, 5.00%, 7/01/26

 

 

1,250

 

 

1,348,987

 

San Francisco City & County Public Utilities Commission,
RB, Series B, 5.00%, 11/01/39

 

 

10,340

 

 

10,739,538

 

San Francisco City & County Redevelopment Agency,
Special Tax Bonds, District No. 6, Mission Bay South
Public Improvements, 6.63%, 8/01/27

 

 

3,120

 

 

3,133,073

 

State of California, GO, Various Purpose:

 

 

 

 

 

 

 

6.00%, 3/01/33

 

 

1,760

 

 

1,985,843

 

6.50%, 4/01/33

 

 

10,670

 

 

12,309,125

 

University of California, RB, Limited Project,
Series B, 4.75%, 5/15/38

 

 

5,095

 

 

5,026,319

 

 

 

 

 

 

 

66,268,803

 

Colorado — 1.5%

 

 

 

 

 

 

 

Colorado Health Facilities Authority, Refunding RB
Series A:

 

 

 

 

 

 

 

Catholic Healthcare, 5.50%, 7/01/34

 

 

2,330

 

 

2,426,019

 

Sisters of Leavenworth, 5.00%, 1/01/40

 

 

1,020

 

 

995,765

 

Park Creek Metropolitan District Colorado, Refunding RB,
Senior, Limited Tax, Property Tax, 5.50%, 12/01/37

 

 

1,375

 

 

1,287,990

 

 

 

 

 

 

 

4,709,774

 

Connecticut — 0.5%

 

 

 

 

 

 

 

Connecticut State Health & Educational Facility
Authority, RB, Ascension Health Senior Credit,
5.00%, 11/15/40

 

 

1,505

 

 

1,533,294

 

Delaware — 1.6%

 

 

 

 

 

 

 

County of Sussex Delaware, RB, NRG Energy, Inc., Indian
River Project, 6.00%, 10/01/40

 

 

1,240

 

 

1,229,311

 

Delaware State EDA, RB, Exempt Facilities, Indian River
Power, 5.38%, 10/01/45

 

 

4,430

 

 

3,942,877

 

 

 

 

 

 

 

5,172,188

 

Municipal Bonds

 


Par
(000)

 

Value

 

District of Columbia — 6.4%

 

 

 

 

 

 

 

District of Columbia, Refunding RB, Friendship Public
Charter School Inc. (ACA), 5.25%, 6/01/33

 

$

1,265

 

$

1,008,698

 

District of Columbia Tobacco Settlement Financing Corp.,
Refunding RB, Asset-Backed:

 

 

 

 

 

 

 

6.50%, 5/15/33

 

 

7,500

 

 

7,490,400

 

6.75%, 5/15/40

 

 

11,500

 

 

10,821,040

 

Metropolitan Washington Airports Authority, RB, First
Senior Lien, Series A:

 

 

 

 

 

 

 

5.00%, 10/01/39

 

 

550

 

 

562,452

 

5.25%, 10/01/44

 

 

865

 

 

887,291

 

 

 

 

 

 

 

20,769,881

 

Florida — 5.1%

 

 

 

 

 

 

 

City of Leesburg Florida, RB, Leesburg Regional Medical
Center Project, 5.50%, 7/01/32

 

 

1,265

 

 

1,216,386

 

County of Miami-Dade Florida, RB, Miami International
Airport, Series A, AMT (AGC), 5.25%, 10/01/38

 

 

2,855

 

 

2,802,268

 

County of Miami-Dade Florida, Refunding RB, Miami
International Airport, Series A-1, 5.38%, 10/01/41

 

 

1,255

 

 

1,273,398

 

Live Oak Community Development District No. 1,
Special Assessment Bonds, Series A, 6.30%,
5/01/34

 

 

3,115

 

 

3,177,581

 

Miami Beach Health Facilities Authority, RB, Mount Sinai
Medical Center of Florida, 6.75%, 11/15/21

 

 

3,900

 

 

3,949,725

 

Mid-Bay Bridge Authority, RB, Series A, 7.25%,
10/01/40

 

 

2,500

 

 

2,529,500

 

Stevens Plantation Community Development District,
Special Assessment Bonds, Series A, 7.10%,
5/01/35

 

 

1,930

 

 

1,539,986

 

 

 

 

 

 

 

16,488,844

 

Georgia — 1.0%

 

 

 

 

 

 

 

DeKalb Private Hospital Authority, Refunding RB,
Children’s Healthcare, 5.25%, 11/15/39

 

 

915

 

 

932,641

 

Private Colleges & Universities Authority, Refunding RB,
Emory University, Series C, 5.00%, 9/01/38

 

 

2,150

 

 

2,254,705

 

 

 

 

 

 

 

3,187,346

 

Guam — 0.7%

 

 

 

 

 

 

 

Territory of Guam, GO, Series A:

 

 

 

 

 

 

 

6.00%, 11/15/19

 

 

695

 

 

704,355

 

6.75%, 11/15/29

 

 

995

 

 

1,022,840

 

7.00%, 11/15/39

 

 

680

 

 

699,917

 

 

 

 

 

 

 

2,427,112

 

Hawaii — 0.5%

 

 

 

 

 

 

 

State of Hawaii, Refunding RB, Series A, 5.25%,
7/01/30

 

 

1,480

 

 

1,553,482

 

Illinois — 12.1%

 

 

 

 

 

 

 

City of Chicago Illinois, RB, O’Hare International Airport,
General, Third Lien, Series A, 5.75%, 1/01/39

 

 

5,000

 

 

5,338,100

 

City of Chicago Illinois, Refunding RB, O’Hare
International Airport, General, Third Lien,
Series C, 6.50%, 1/01/41

 

 

6,430

 

 

7,238,894

 

Illinois Finance Authority, RB:

 

 

 

 

 

 

 

MJH Education Assistance IV LLC, Sub-Series B,
5.38%, 6/01/35 (b)(c)

 

 

900

 

 

179,973

 

Navistar International, Recovery Zone, 6.50%,
10/15/40

 

 

1,675

 

 

1,678,266

 

Illinois Finance Authority, Refunding RB:

 

 

 

 

 

 

 

Central Dupage Health, Series B, 5.50%, 11/01/39

 

 

1,750

 

 

1,794,975

 

Friendship Village Schaumburg, Series A,
5.63%, 2/15/37

 

 

455

 

 

361,702

 

Illinois Sports Facilities Authority, RB, State Tax
Supported (AMBAC), 5.50%, 6/15/30

 

 

13,000

 

 

13,417,820

 

Metropolitan Pier & Exposition Authority, Refunding RB
(AGM), McCormick Place Expansion Project:

 

 

 

 

 

 

 

Series B, 5.00%, 6/15/50

 

 

3,430

 

 

3,250,337

 

Series B-2, 5.00%, 6/15/50

 

 

2,725

 

 

2,582,264

 


 

 

 

See Notes to Financial Statements.

 

 

 

 

28

ANNUAL REPORT

AUGUST 31, 2011




 

 

 

 

Schedule of Investments (continued)

BlackRock Municipal Income Trust II (BLE)

 

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Illinois (concluded)

 

 

 

 

 

 

 

Railsplitter Tobacco Settlement Authority, RB:

 

 

 

 

 

 

 

5.50%, 6/01/23

 

$

1,470

 

$

1,546,925

 

6.00%, 6/01/28

 

 

1,255

 

 

1,282,736

 

State of Illinois, RB, Build Illinois, Series B, 5.25%,
6/15/34

 

 

685

 

 

707,030

 

 

 

 

 

 

 

39,379,022

 

Indiana — 3.4%

 

 

 

 

 

 

 

Indiana Finance Authority, RB, Sisters of St. Francis
Health, 5.25%, 11/01/39

 

 

915

 

 

924,617

 

Indiana Finance Authority, Refunding RB:

 

 

 

 

 

 

 

Ascension Health Senior Credit, Series B-5, 5.00%,
11/15/36

 

 

1,500

 

 

1,499,895

 

First Lien, CWA Authority, Series A, 5.25%, 10/01/38

 

 

1,720

 

 

1,785,824

 

Indiana Health Facility Financing Authority,
Refunding RB:

 

 

 

 

 

 

 

Ascension Health, Series F, 5.38%, 11/15/25

 

 

2,095

 

 

2,150,894

 

Methodist Hospital Inc., 5.38%, 9/15/22

 

 

3,675

 

 

3,457,477

 

Indiana Municipal Power Agency, RB, Series B, 6.00%,
1/01/39

 

 

1,200

 

 

1,296,504

 

 

 

 

 

 

 

11,115,211

 

Kansas — 0.5%

 

 

 

 

 

 

 

Kansas Development Finance Authority, Refunding RB,
Sisters of Leavenworth, Series A, 5.00%, 1/01/40

 

 

1,755

 

 

1,758,440

 

Kentucky — 0.3%

 

 

 

 

 

 

 

Kentucky Economic Development Finance Authority,
Refunding RB, Owensboro Medical Health System,
Series A, 6.38%, 6/01/40

 

 

1,105

 

 

1,120,006

 

Louisiana — 1.1%

 

 

 

 

 

 

 

Louisiana Local Government Environmental Facilities &
Community Development Authority, RB, Westlake
Chemical Corp., Series A-1, 6.50%, 11/01/35

 

 

3,650

 

 

3,725,300

 

Maryland — 1.5%

 

 

 

 

 

 

 

Maryland EDC, RB, Transportation Facilities Project,
Series A, 5.75%, 6/01/35

 

 

475

 

 

466,502

 

Maryland EDC, Refunding RB, CNX Marine
Terminals, Inc., 5.75%, 9/01/25

 

 

1,000

 

 

982,850

 

Maryland Health & Higher Educational Facilities
Authority, RB, Union Hospital Of Cecil County Issue,
5.63%, 7/01/32

 

 

1,000

 

 

1,003,100

 

Maryland Health & Higher Educational Facilities
Authority, Refunding RB, Charlestown Community,
6.25%, 1/01/41

 

 

2,400

 

 

2,476,776

 

 

 

 

 

 

 

4,929,228

 

Massachusetts — 1.0%

 

 

 

 

 

 

 

Massachusetts Bay Transportation Authority, Refunding
RB, Senior Series A, 5.25%, 7/01/29

 

 

2,000

 

 

2,378,800

 

Massachusetts Health & Educational Facilities Authority,
Refunding RB, Partners Healthcare, Series J1, 5.00%,
7/01/39

 

 

955

 

 

966,661

 

 

 

 

 

 

 

3,345,461

 

Michigan — 1.1%

 

 

 

 

 

 

 

Kalamazoo Hospital Finance Authority, Refunding RB,
Bronson Methodist Hospital, 5.50%, 5/15/36

 

 

1,500

 

 

1,489,845

 

Michigan State Hospital Finance Authority, Refunding
RB, Henry Ford Health System, Series A, 5.25%,
11/15/46

 

 

2,305

 

 

2,105,157

 

 

 

 

 

 

 

3,595,002

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Missouri — 2.1%

 

 

 

 

 

 

 

370/Missouri Bottom Road/Taussig Road
Transportation Development District, RB, 7.20%,
5/01/33

 

$

6,000

 

$

5,738,700

 

Missouri State Health & Educational Facilities Authority,
RB, Senior Living Facilities, Lutheran Senior Home,
5.50%, 2/01/42

 

 

1,135

 

 

1,048,593

 

 

 

 

 

 

 

6,787,293

 

Multi-State — 4.2%

 

 

 

 

 

 

 

Centerline Equity Issuer Trust (d)(e):

 

 

 

 

 

 

 

5.75%, 5/15/15

 

 

1,000

 

 

1,079,100

 

6.00%, 5/15/15

 

 

5,000

 

 

5,451,900

 

6.00%, 5/15/19

 

 

3,500

 

 

3,855,495

 

6.30%, 5/15/19

 

 

3,000

 

 

3,315,600

 

 

 

 

 

 

 

13,702,095

 

Nebraska — 0.9%

 

 

 

 

 

 

 

Lancaster County Hospital Authority No. 1, RB,
Immanuel Obligation Group, 5.63%, 1/01/40

 

 

1,245

 

 

1,253,528

 

Sarpy County Hospital Authority No. 1, RB, Immanuel
Obligation Group, 5.63%, 1/01/40

 

 

1,635

 

 

1,646,200

 

 

 

 

 

 

 

2,899,728

 

Nevada — 0.8%

 

 

 

 

 

 

 

County of Clark Nevada, Refunding RB, Alexander
Dawson School Nevada Project, 5.00%, 5/15/29

 

 

2,465

 

 

2,496,749

 

New Jersey — 9.6%

 

 

 

 

 

 

 

New Jersey EDA, RB:

 

 

 

 

 

 

 

Cigarette Tax, 5.75%, 6/15/34

 

 

3,810

 

 

3,536,213

 

Continental Airlines Inc. Project, AMT, 7.20%,
11/15/30 (f)

 

 

10,100

 

 

10,101,515

 

Kapkowski Road Landfill Project, Series 1998B,
AMT, 6.50%, 4/01/31

 

 

10,000

 

 

9,838,500

 

New Jersey EDA, Special Assessment Bonds, Refunding,
Kapkowski Road Landfill Project, 6.50%, 4/01/28

 

 

7,475

 

 

7,701,642

 

 

 

 

 

 

 

31,177,870

 

New York — 3.8%

 

 

 

 

 

 

 

Albany Industrial Development Agency, RB, New
Covenant Charter School Project, Series A, 7.00%,
5/01/35 (b)(c)

 

 

985

 

 

246,299

 

Metropolitan Transportation Authority, Refunding RB,
Transportation, Series D, 5.25%, 11/15/40

 

 

1,325

 

 

1,363,876

 

New York City Industrial Development Agency, RB,
American Airlines Inc., JFK International Airport, AMT,
7.75%, 8/01/31 (f)

 

 

6,700

 

 

6,689,883

 

New York Liberty Development Corp., Refunding RB,
Second Priority, Bank of America Tower at One Bryant
Park Project, 6.38%, 7/15/49

 

 

1,335

 

 

1,377,199

 

Port Authority of New York & New Jersey, RB, JFK
International Air Terminal:

 

 

 

 

 

 

 

6.00%, 12/01/36

 

 

1,410

 

 

1,433,857

 

6.00%, 12/01/42

 

 

1,375

 

 

1,393,150

 

 

 

 

 

 

 

12,504,264

 

North Carolina — 2.2%

 

 

 

 

 

 

 

Gaston County Industrial Facilities & Pollution Control
Financing Authority North Carolina, RB, Exempt
Facilities National Gypsum Co. Project, AMT,
5.75%, 8/01/35

 

 

7,500

 

 

5,719,650

 

North Carolina Medical Care Commission, RB, Duke
University Health System, Series A, 5.00%, 6/01/42

 

 

1,525

 

 

1,546,411

 

 

 

 

 

 

 

7,266,061

 


 

 

 

 

See Notes to Financial Statements.

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

29




 

 

 

 

Schedule of Investments (continued)

BlackRock Municipal Income Trust II (BLE)

 

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Ohio — 2.0%

 

 

 

 

 

 

 

County of Allen Ohio, Refunding RB, Catholic Healthcare,
Series A, 5.25%, 6/01/38

 

$

3,405

 

$

3,407,077

 

County of Montgomery Ohio, Refunding RB, Catholic
Healthcare, Series A, 5.00%, 5/01/39

 

 

3,025

 

 

3,036,253

 

 

 

 

 

 

 

6,443,330

 

Oklahoma — 1.2%

 

 

 

 

 

 

 

Tulsa Airports Improvement Trust, RB, Series A,
Mandatory Put Bonds, AMT, 7.75%, 6/01/35 (f)

 

 

3,925

 

 

4,017,159

 

Pennsylvania — 2.8%

 

 

 

 

 

 

 

Allegheny County Hospital Development Authority,
Refunding RB, Health System, West Penn, Series A,
5.38%, 11/15/40

 

 

2,000

 

 

1,668,620

 

Pennsylvania Economic Development Financing
Authority, RB:

 

 

 

 

 

 

 

Amtrak Project, Series A, AMT, 6.38%, 11/01/41

 

 

5,175

 

 

5,205,118

 

Aqua Pennsylvania Inc. Project, 5.00%, 11/15/40

 

 

2,065

 

 

2,140,786

 

 

 

 

 

 

 

9,014,524

 

Puerto Rico — 5.9%

 

 

 

 

 

 

 

Puerto Rico Sales Tax Financing Corp., RB:

 

 

 

 

 

 

 

CAB, Series A, 6.55%, 8/01/32 (a)

 

 

8,600

 

 

2,359,410

 

CAB, Series A, 6.58%, 8/01/33 (a)

 

 

13,600

 

 

3,440,936

 

CAB, Series A, 6.60%, 8/01/34 (a)

 

 

5,500

 

 

1,283,975

 

CAB, Series A, 6.61%, 8/01/35 (a)

 

 

14,055

 

 

3,029,836

 

CAB, Series A, 6.63%, 8/01/36 (a)

 

 

11,875

 

 

2,389,250

 

First Sub-Series A, 6.50%, 8/01/44

 

 

6,100

 

 

6,662,664

 

 

 

 

 

 

 

19,166,071

 

South Carolina — 3.7%

 

 

 

 

 

 

 

County of Greenwood South Carolina, RB, Facilities,
Self Memorial Hospital:

 

 

 

 

 

 

 

5.50%, 10/01/26

 

 

2,280

 

 

2,281,185

 

5.50%, 10/01/31

 

 

3,250

 

 

3,251,040

 

South Carolina Jobs-EDA, Refunding RB, Palmetto
Health Alliance, Series A, 6.25%, 8/01/31

 

 

2,640

 

 

2,678,280

 

South Carolina State Ports Authority, RB, 5.25%,
7/01/40

 

 

3,595

 

 

3,738,980

 

 

 

 

 

 

 

11,949,485

 

Tennessee — 3.8%

 

 

 

 

 

 

 

Knox County Health Educational & Housing Facilities
Board Tennessee, Refunding RB, CAB, Series A (AGM),
5.77%, 1/01/21 (a)

 

 

20,405

 

 

12,221,575

 

Texas — 15.9%

 

 

 

 

 

 

 

Brazos River Authority, RB, TXU Electric, Series A, AMT,
8.25%, 10/01/30

 

 

2,400

 

 

744,312

 

Brazos River Authority, Refunding RB, TXU Electric Co.
Project, Series C, Mandatory Put Bonds, AMT, 5.75%,
5/01/36 (f)

 

 

1,350

 

 

1,309,500

 

Central Texas Regional Mobility Authority, RB, Senior
Lien, 6.25%, 1/01/46

 

 

2,350

 

 

2,247,093

 

City of Dallas Texas, Refunding RB, 5.00%, 10/01/35

 

 

1,650

 

 

1,777,182

 

City of Houston Texas, RB, Senior Lien, Series A, 5.50%,
7/01/39

 

 

1,675

 

 

1,760,425

 

City of Houston Texas, Refunding RB, Combined, First
Lien, Series A (AGC), 6.00%, 11/15/35

 

 

9,145

 

 

10,385,885

 

Gulf Coast Waste Disposal Authority, Refunding RB,
Series A, AMT, 6.10%, 8/01/24

 

 

5,000

 

 

5,061,000

 

Harris County-Houston Sports Authority, Refunding RB,
Third Lien, Series A-3 (NPFGC), 11/15/36 (a)

 

 

25,375

 

 

3,714,900

 

Lower Colorado River Authority, Refunding RB
(NPFGC) (g):

 

 

 

 

 

 

 

5.00%, 5/15/13

 

 

35

 

 

37,703

 

5.00%, 5/15/13

 

 

30

 

 

32,344

 

Series A, 5.00%, 5/15/13

 

 

5

 

 

5,391

 

 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Texas (concluded)

 

 

 

 

 

 

 

North Texas Tollway Authority, RB, Toll 2nd Tier, Series F,
6.13%, 1/01/31

 

$

6,790

 

$

7,006,397

 

San Antonio Energy Acquisition Public Facility Corp., RB,
Gas Supply, 5.50%, 8/01/24

 

 

3,600

 

 

3,683,484

 

Tarrant County Cultural Education Facilities Finance
Corp., RB, Scott & White Healthcare, 6.00%,
8/15/45

 

 

4,410

 

 

4,627,722

 

Texas Private Activity Bond Surface Transportation
Corp., RB, Senior Lien:

 

 

 

 

 

 

 

LBJ Infrastructure Group LLC, LBJ Freeway Managed
Lanes Project, 7.00%, 6/30/40

 

 

4,210

 

 

4,370,738

 

NTE Mobility Partners LLC, North Tarrant Express
Managed Lanes Project, 6.88%, 12/31/39

 

 

3,650

 

 

3,761,872

 

Texas State Turnpike Authority, RB, First Tier, Series A
(AMBAC), 5.00%, 8/15/42

 

 

1,390

 

 

1,332,982

 

 

 

 

 

 

 

51,858,930

 

Utah — 1.2%

 

 

 

 

 

 

 

City of Riverton Utah, RB, IHC Health Services Inc.,
5.00%, 8/15/41

 

 

3,960

 

 

3,980,552

 

Virginia — 2.7%

 

 

 

 

 

 

 

City of Norfolk Virginia, Refunding RB, Series B
(AMBAC), 5.50%, 2/01/31

 

 

1,240

 

 

1,240,037

 

Halifax County IDA, Refunding RB, Old Dominion
Electric Co-op Project, AMT (AMBAC), 5.63%,
6/01/28

 

 

5,000

 

 

5,108,550

 

Virginia HDA, RB, Sub-Series H-1 (NPFGC), 5.35%,
7/01/31

 

 

2,490

 

 

2,491,295

 

 

 

 

 

 

 

8,839,882

 

Washington — 0.7%

 

 

 

 

 

 

 

Washington Health Care Facilities Authority, RB, Swedish
Health Services, Series A, 6.75%, 11/15/41

 

 

2,190

 

 

2,362,747

 

Wisconsin — 2.1%

 

 

 

 

 

 

 

Wisconsin Health & Educational Facilities Authority, RB:

 

 

 

 

 

 

 

Ascension Health Senior Credit Group, 5.00%,
11/15/30

 

 

1,790

 

 

1,829,756

 

Ascension Health Senior Credit Group, 5.00%,
11/15/33

 

 

910

 

 

919,701

 

Aurora Health Care, 6.40%, 4/15/33

 

 

3,930

 

 

4,012,569

 

 

 

 

 

 

 

6,762,026

 

Wyoming — 1.6%

 

 

 

 

 

 

 

County of Sweetwater Wyoming, Refunding RB, Idaho
Power Co. Project, 5.25%, 7/15/26

 

 

3,355

 

 

3,610,349

 

Wyoming Municipal Power Agency, RB, Series A:

 

 

 

 

 

 

 

5.50%, 1/01/33

 

 

800

 

 

845,416

 

5.50%, 1/01/38

 

 

750

 

 

783,743

 

 

 

 

 

 

 

5,239,508

 

Total Municipal Bonds — 129.6%

 

 

 

 

 

422,135,792

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (h)

 

 

 

 

 

 

 

Alabama — 0.8%

 

 

 

 

 

 

 

Alabama Special Care Facilities Financing Authority-
Birmingham, Refunding RB, Ascension Health Senior
Credit, Series C-2, 5.00%, 11/15/36

 

 

2,519

 

 

2,555,672

 

California — 2.4%

 

 

 

 

 

 

 

California Educational Facilities Authority, RB, University
of Southern California, Series A, 5.25%, 10/01/39

 

 

2,850

 

 

3,053,234

 


 

 

 

See Notes to Financial Statements.

 

 

 

 

30

ANNUAL REPORT

AUGUST 31, 2011




 

 

 

 

Schedule of Investments (continued)

BlackRock Municipal Income Trust II (BLE)

 

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (h)

 

Par
(000)

 

Value

 

California (concluded)

 

 

 

 

 

 

 

Los Angeles Community College District California, GO,
Election of 2001, Series A (AGM), 5.00%, 8/01/32

 

$

2,530

 

$

2,629,606

 

San Diego Community College District California, GO,
Election of 2002, 5.25%, 8/01/33

 

 

1,840

 

 

1,973,623

 

 

 

 

 

 

 

7,656,463

 

Colorado — 2.2%

 

 

 

 

 

 

 

Colorado Health Facilities Authority, RB (AGM),
Catholic Health:

 

 

 

 

 

 

 

Series C-3, 5.10%, 10/01/41

 

 

4,230

 

 

4,267,731

 

Series C-7, 5.00%, 9/01/36

 

 

2,710

 

 

2,734,282

 

 

 

 

 

 

 

7,002,013

 

Connecticut — 3.3%

 

 

 

 

 

 

 

Connecticut State Health & Educational Facility
Authority, RB, Yale University:

 

 

 

 

 

 

 

Series T-1, 4.70%, 7/01/29

 

 

5,170

 

 

5,514,787

 

Series X-3, 4.85%, 7/01/37

 

 

5,130

 

 

5,332,943

 

 

 

 

 

 

 

10,847,730

 

Georgia — 1.5%

 

 

 

 

 

 

 

Private Colleges & Universities Authority, Refunding RB,
Emory University, Series C, 5.00%, 9/01/38

 

 

4,638

 

 

4,864,416

 

Massachusetts — 1.0%

 

 

 

 

 

 

 

Massachusetts Water Resources Authority, Refunding
RB, General, Series A, 5.00%, 8/01/41

 

 

3,150

 

 

3,262,203

 

New Hampshire — 0.7%

 

 

 

 

 

 

 

New Hampshire Health & Education Facilities Authority,
Refunding RB, Dartmouth College, 5.25%, 6/01/39

 

 

2,219

 

 

2,409,810

 

New York — 6.5%

 

 

 

 

 

 

 

New York City Municipal Water Finance Authority, RB,
Series FF-2, 5.50%, 6/15/40

 

 

1,710

 

 

1,870,044

 

New York City Municipal Water Finance Authority, RB,
Second General Resolution, Series HH, 5.00%,
6/15/31

 

 

9,149

 

 

9,837,302

 

New York State Dormitory Authority, ERB, Series F,
5.00%, 3/15/35

 

 

9,284

 

 

9,568,474

 

 

 

 

 

 

 

21,275,820

 

Virginia — 1.9%

 

 

 

 

 

 

 

University of Virginia, Refunding RB, General, 5.00%,
6/01/40

 

 

5,910

 

 

6,324,764

 

Washington — 3.7%

 

 

 

 

 

 

 

Central Puget Sound Regional Transit Authority, RB,
Series A (AGM), 5.00%, 11/01/32

 

 

3,029

 

 

3,188,283

 

State of Washington, GO, Various Purpose, Series E,
5.00%, 2/01/34

 

 

8,113

 

 

8,683,212

 

 

 

 

 

 

 

11,871,495

 

Total Municipal Bonds Transferred to
Tender Option Bond Trusts — 24.0%

 

 

 

 

 

78,070,386

 

Total Long-Term Investments
(Cost — $494,962,132) — 153.6%

 

 

 

 

 

500,206,178

 

 

 

 

 

 

 

 

 

Short-Term Securities

 

Par
(000)

 

Value

 

Michigan — 1.1%

 

 

 

 

 

 

 

Michigan Finance Authority, RB, SAN Detroit School,
Series A-1,6.45%, 2/20/12

 

$

3,580

 

$

3,580,000

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

 

 

Money Market Funds — 3.6%

 

 

 

 

 

 

 

FFI Institutional Tax-Exempt Fund, 0.01% (i)(j)

 

 

11,840,465

 

 

11,840,465

 

Total Short-Term Securities
(Cost — $15,420,465) — 4.7%

 

 

 

 

 

15,420,465

 

Total Investments (Cost — $510,382,597*) — 158.3%

 

 

 

 

 

515,626,643

 

Other Assets Less Liabilities — 1.5%

 

 

 

 

 

4,867,868

 

Liability for TOB Trust Certificates,
Including Interest Expense and Fees Payable — (13.3)%

 

 

 

 

 

(43,476,540

)

AMPS, at Redemption Value — (46.5)%

 

 

 

 

 

(151,305,041

)

Net Assets Applicable to Common Shares — 100.0%

 

 

 

 

$

325,712,930

 


 

 

*

The cost and unrealized appreciation (depreciation) of investments as of August 31, 2011, as computed for federal income tax purposes, were as follows:


 

 

 

 

 

Aggregate cost

 

$

465,989,213

 

Gross unrealized appreciation

 

$

18,364,702

 

Gross unrealized depreciation

 

 

(12,177,989

)

Net unrealized appreciation

 

$

6,186,713

 


 

 

(a)

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

 

 

(b)

Issuer filed for bankruptcy and/or is in default of interest payments.

 

 

(c)

Non-income producing security.

 

 

(d)

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

 

 

(e)

Security represents a beneficial interest in a trust. The collateral deposited into the trust is federally tax-exempt revenue bonds issued by various state or local governments, or their respective agencies or authorities. The security is subject to remarketing prior to its stated maturity.

 

 

(f)

Variable rate security. Rate shown is as of report date.

 

 

(g)

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

 

 

(h)

Securities represent bonds transferred to a TOB in exchange for which the Trust acquired residual interest certificates. These securities serve as collateral in a financing transaction. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs.

 

 

(i)

Investments in companies considered to be an affiliate of the Trust during the year, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Affiliate

 

Shares Held at
August 31,
2010

 

Net
Activity

 

Shares Held at
August 31,
2011

 

Income

 

FFI Institutional
Tax-Exempt Fund

 

 

9,440,330

 

 

2,400,135

 

 

11,840,465

 

$

6,944

 


 

 

(j)

Represents the current yield as of report date.

 

 

Financial futures contracts sold as of August 31, 2011 were as follows:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contracts

 

Issue

 

Exchange

 

Expiration

 

Notional
Value

 

Unrealized
Appreciation

 

49

 

10-Year US
Treasury Note

 

Chicago
Board of Trade

 

December
2011

 

$

6,395,173

 

$

72,641

 


 

 

 

 

See Notes to Financial Statements.

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

31




 

 

 

 

Schedule of Investments (concluded)

BlackRock Municipal Income Trust II (BLE)


 

 

 

Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs are categorized in three broad levels for financial statement purposes as follows:

 

 

 

 

Level 1 — price quotations in active markets/exchanges for identical assets and liabilities

 

 

 

 

Level 2 — other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

 

 

 

Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Trust’s own assumptions used in determining the fair value of investments and derivative financial instruments)

 

 

 

 

The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument and does not necessarily correspond to the Trust’s perceived risk of investing in those securities. For information about the Trust’s policy regarding valuation of investments and derivative financial instruments and other significant accounting policies, please refer to Note 1 of Notes to Financial Statements.

 

 

 

 

The following tables summarize the inputs used as of August 31, 2011 in determining the fair valuation of the Trust’s investments and derivative financial instruments:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Valuation Inputs

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-Term Investments1

 

 

 

$

500,206,178

 

 

 

$

500,206,178

 

Short-Term Securities

 

$

11,840,465

 

 

3,580,000

 

 

 

 

15,420,465

 

Total

 

$

11,840,465

 

$

503,786,178

 

 

 

$

515,626,643

 


 

 

 

 

1

See above Schedule of Investments for values in each state or political subdivision.


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Valuation Inputs

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Derivative Financial Instruments2

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate contracts

 

$

72,641

 

 

 

 

 

$

72,641

 


 

 

 

 

2

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


 

 

 

See Notes to Financial Statements.

 

 

 

 

32

ANNUAL REPORT

AUGUST 31, 2011




 

 

 

Schedule of Investments August 31, 2011

BlackRock MuniHoldings Investment Quality Fund (MFL)

 

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Alabama — 3.3%

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

6.13%, 6/01/34

 

$

4,980

 

$

5,487,014

 

6.00%, 6/01/39

 

 

10,995

 

 

11,903,187

 

 

 

 

 

 

 

17,390,201

 

 

 

 

 

 

 

 

 

Arizona — 2.6%

 

 

 

 

 

 

 

State of Arizona, COP, Department of Administration,
Series A (AGM):

 

 

 

 

 

 

 

5.25%, 10/01/24

 

 

10,260

 

 

11,156,416

 

5.25%, 10/01/28

 

 

2,240

 

 

2,351,149

 

 

 

 

 

 

 

13,507,565

 

 

 

 

 

 

 

 

 

California — 19.9%

 

 

 

 

 

 

 

California Educational Facilities Authority, RB, University
of Southern California, Series A, 5.25%, 10/01/38

 

 

8,920

 

 

9,561,794

 

California Health Facilities Financing Authority,
Refunding RB, Sutter Health, Series B, 6.00%,
8/15/42

 

 

5,370

 

 

5,785,853

 

California State Public Works Board, RB, Various Capital
Projects, Series G-1 (AGC), 5.25%, 10/01/24

 

 

5,000

 

 

5,483,950

 

California State University, RB, Systemwide, Series A
(AGM), 5.00%, 11/01/39

 

 

4,000

 

 

4,056,320

 

City of San Jose California, RB, Series A-1, AMT, 5.75%,
3/01/34

 

 

4,450

 

 

4,561,250

 

County of Sacramento California, RB, Senior Series A
(AGC), 5.50%, 7/01/41

 

 

6,600

 

 

6,827,106

 

Los Angeles Community College District California, GO:

 

 

 

 

 

 

 

Election of 2001, Series A (NPFGC), 5.00%,
8/01/32

 

 

10,000

 

 

10,383,100

 

Election of 2008, Series C, 5.25%, 8/01/39

 

 

7,150

 

 

7,681,316

 

Los Angeles Department of Water & Power, RB, Power
System, Sub-Series A-1, 5.25%, 7/01/38

 

 

5,000

 

 

5,281,400

 

Los Angeles Municipal Improvement Corp., Refunding
RB, Real Property, Series B (AGC), 5.50%, 4/01/39

 

 

2,980

 

 

3,054,053

 

Los Angeles Unified School District California, GO,
Series D, 5.25%, 7/01/25

 

 

3,485

 

 

3,850,507

 

Manteca Financing Authority California, RB, Manteca
Sewer (AGC):

 

 

 

 

 

 

 

5.63%, 12/01/33

 

 

2,450

 

 

2,627,552

 

5.75%, 12/01/36

 

 

3,285

 

 

3,513,735

 

Redondo Beach Unified School District, GO, Election
of 2008, Series E, 5.50%, 8/01/34

 

 

4,110

 

 

4,439,129

 

San Bernardino Community College District, GO,
Election of 2002, Series A, 6.25%, 8/01/33

 

 

3,820

 

 

4,324,851

 

San Diego Public Facilities Financing Authority,
Refunding RB, Series B (AGC), 5.38%, 8/01/34

 

 

4,690

 

 

5,025,100

 

San Jacinto Unified School District, GO, Election of
2006 (AGM), 5.25%, 8/01/32

 

 

3,000

 

 

3,110,880

 

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

 

 

15,000

 

 

15,794,700

 

 

 

 

 

 

 

105,362,596

 

 

 

 

 

 

 

 

 

Colorado — 1.5%

 

 

 

 

 

 

 

Colorado Health Facilities Authority, RB, Hospital, NCMC
Inc. Project, Series B (AGM), 6.00%, 5/15/26

 

 

5,925

 

 

6,656,145

 

Regional Transportation District, COP, Series A, 5.00%,
6/01/25

 

 

1,425

 

 

1,509,802

 

 

 

 

 

 

 

8,165,947

 

 

 

 

 

 

 

 

 

District of Columbia — 0.7%

 

 

 

 

 

 

 

District of Columbia, Refunding RB, Georgetown
University, Series D (BHAC), 5.50%, 4/01/36

 

 

775

 

 

838,116

 

District of Columbia Water & Sewer Authority, RB,
Series A (NPFGC), 5.00%, 10/01/38

 

 

2,545

 

 

2,627,000

 

 

 

 

 

 

 

3,465,116

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

Municipal Bonds

 

 

Par
(000)

 

 

Value

 

Florida — 14.6%

 

 

 

 

 

 

 

County of Lee Florida, RB, Series A, AMT (AGM), 6.00%,
10/01/29

 

$

19,925

 

$

20,031,399

 

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

 

 

3,110

 

 

3,054,051

 

County of Miami-Dade Florida, RB, AMT, Miami
International Airport, Series A:

 

 

 

 

 

 

 

(AGM), 5.13%, 10/01/35

 

 

555

 

 

538,911

 

(AGM), 5.50%, 10/01/41

 

 

3,620

 

 

3,640,887

 

(NPFGC), 6.00%, 10/01/29

 

 

8,000

 

 

8,088,720

 

County of Osceola Florida, RB, Series A (NPFGC),
5.50%, 10/01/27

 

 

5,560

 

 

5,638,507

 

Florida Housing Finance Corp., HRB, Waverly
Apartments, Series C-1, AMT (AGM), 6.30%,
7/01/30

 

 

2,055

 

 

2,076,536

 

Florida Housing Finance Corp., Refunding RB, AMT
(NPFGC) Homeowner Mortgage, Series 2:

 

 

 

 

 

 

 

5.75%, 7/01/14

 

 

445

 

 

445,992

 

5.90%, 7/01/29

 

 

6,450

 

 

6,528,626

 

Jacksonville Port Authority, RB, AMT (AGC), 6.00%,
11/01/38

 

 

6,740

 

 

6,826,339

 

Manatee County Housing Finance Authority, RB,
Series A, AMT (Ginnie Mae), 5.90%, 9/01/40

 

 

2,770

 

 

3,060,241

 

Miami-Dade County Housing Finance Authority
Florida, MRB, Marbrisa Apartments Project, Series 2A,
AMT (AGM), 6.00%, 8/01/26

 

 

2,185

 

 

2,208,336

 

St. Lucie West Services District, Refunding RB, Senior
Lien (NPFGC), 6.00%, 10/01/22

 

 

3,090

 

 

3,162,955

 

Village Center Community Development District, RB,
Series A (NPFGC):

 

 

 

 

 

 

 

5.38%, 11/01/34

 

 

10,775

 

 

9,591,905

 

5.13%, 11/01/36

 

 

1,750

 

 

1,488,078

 

Volusia County IDA, RB, Student Housing, Stetson
University Project, Series A (CIFG), 5.00%, 6/01/35

 

 

800

 

 

682,280

 

 

 

 

 

 

 

77,063,763

 

 

 

 

 

 

 

 

 

Georgia — 2.5%

 

 

 

 

 

 

 

County of Fulton Georgia, RB (NPFGC), 5.25%,
1/01/35

 

 

7,575

 

 

8,008,669

 

Gwinnett County Hospital Authority, Refunding RB,
Gwinnett Hospital System, Series D (AGM), 5.50%,
7/01/41

 

 

5,170

 

 

5,291,754

 

 

 

 

 

 

 

13,300,423

 

 

 

 

 

 

 

 

 

Illinois — 16.0%

 

 

 

 

 

 

 

Chicago Board of Education Illinois, GO, Refunding,
Chicago School Reform Board, Series A (NPFGC),
5.50%, 12/01/26

 

 

3,745

 

 

3,970,449

 

Chicago Transit Authority, RB, Federal Transit
Administration Section 5309, Series A (AGC),
6.00%, 6/01/26

 

 

6,315

 

 

7,149,275

 

City of Chicago Illinois, RB, General, Third Lien,
Series C (AGM), 5.25%, 1/01/35

 

 

4,905

 

 

5,092,322

 

City of Chicago Illinois, RB, Third Lien, O’Hare
International Airport, Series A, 5.75%, 1/01/39

 

 

7,395

 

 

7,895,050

 

City of Chicago Illinois, Refunding RB:

 

 

 

 

 

 

 

General, Third Lien, Series C, 6.50%, 1/01/41

 

 

16,800

 

 

18,913,440

 

General, Third Lien, Series C (AGC), 5.25%,
1/01/23

 

 

3,975

 

 

4,410,143

 

Second Lien (NPFGC), 5.50%, 1/01/30

 

 

4,075

 

 

4,423,249

 

Illinois Finance Authority, RB, University of Chicago,
Series B, 5.50%, 7/01/37

 

 

10,000

 

 

10,814,000

 

Illinois Finance Authority, Refunding RB, Carle
Foundation, Series A, 6.00%, 8/15/41

 

 

4,000

 

 

4,071,840

 

Illinois Municipal Electric Agency, RB, Series A
(NPFGC), 5.25%, 2/01/35

 

 

2,700

 

 

2,771,469

 

Railsplitter Tobacco Settlement Authority, RB:

 

 

 

 

 

 

 

5.50%, 6/01/23

 

 

4,365

 

 

4,593,420

 

6.00%, 6/01/28

 

 

1,245

 

 

1,272,515

 


 

 

 

 

See Notes to Financial Statements.

 

 

 

 

 

 

 

 

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

33




 

 

 

Schedule of Investments (continued)

BlackRock MuniHoldings Investment Quality Fund (MFL)

 

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds

 

 

Par
(000)

 

 

Value

 

Illinois (concluded)

 

 

 

 

 

 

 

State of Illinois, RB:

 

 

 

 

 

 

 

(AGM), 5.00%, 6/15/27

 

$

3,000

 

$

3,108,600

 

Build Illinois, Series B, 5.25%, 6/15/26

 

 

5,625

 

 

6,079,500

 

 

 

 

 

 

 

84,565,272

 

 

 

 

 

 

 

 

 

Indiana — 3.4%

 

 

 

 

 

 

 

Indiana Finance Authority, Refunding RB, 5.25%,
10/01/38

 

 

2,620

 

 

2,720,268

 

Indianapolis Local Public Improvement Bond Bank,
Refunding RB, Waterworks Project, Series A (AGC),
5.50%, 1/01/38

 

 

14,105

 

 

15,022,107

 

 

 

 

 

 

 

17,742,375

 

 

 

 

 

 

 

 

 

Iowa — 0.7%

 

 

 

 

 

 

 

Iowa Finance Authority, Refunding RB, Iowa Health
System (AGC), 5.25%, 2/15/29

 

 

3,375

 

 

3,544,661

 

 

 

 

 

 

 

 

 

Kentucky — 0.5%

 

 

 

 

 

 

 

Kentucky State Property & Buildings Commission,
Refunding RB, Project No. 93 (AGC), 5.25%, 2/01/28

 

 

2,500

 

 

2,690,450

 

Louisiana — 1.4%

 

 

 

 

 

 

 

Louisiana State Citizens Property Insurance Corp., RB,
Series C-3 (AGC), 6.13%, 6/01/25

 

 

5,475

 

 

6,080,973

 

New Orleans Aviation Board Louisiana, Refunding RB,
GARB, Restructuring (AGC):

 

 

 

 

 

 

 

Series A-1, 6.00%, 1/01/23

 

 

500

 

 

577,410

 

Series A-2, 6.00%, 1/01/23

 

 

720

 

 

831,470

 

 

 

 

 

 

 

7,489,853

 

 

 

 

 

 

 

 

 

Michigan — 16.7%

 

 

 

 

 

 

 

City of Detroit Michigan, RB:

 

 

 

 

 

 

 

Second Lien, Series B (AGM), 6.25%, 7/01/36

 

 

6,320

 

 

7,003,318

 

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

 

 

850

 

 

991,967

 

Second Lien, Series B (NPFGC), 5.50%, 7/01/29

 

 

7,490

 

 

7,757,618

 

Senior Lien, Series B (AGM), 7.50%, 7/01/33

 

 

6,600

 

 

7,803,510

 

System, Second Lien, Series A (BHAC), 5.50%,
7/01/36

 

 

20,540

 

 

21,343,525

 

City of Detroit Michigan, Refunding RB:

 

 

 

 

 

 

 

Second Lien, Series E (BHAC), 5.75%, 7/01/31

 

 

6,000

 

 

6,403,860

 

Senior Lien, Series C-1 (AGM), 7.00%, 7/01/27

 

 

9,055

 

 

10,606,574

 

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

 

 

6,015

 

 

6,326,517

 

Michigan State Building Authority, RB, Facilities Program,
Series H (AGM), 5.00%, 10/15/26

 

 

1,760

 

 

1,885,998

 

Michigan State Building Authority, Refunding RB,
Facilities Program, Series I (AGC):

 

 

 

 

 

 

 

5.25%, 10/15/22

 

 

6,150

 

 

6,959,278

 

5.25%, 10/15/24

 

 

2,755

 

 

3,050,281

 

5.25%, 10/15/25

 

 

1,435

 

 

1,576,448

 

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

 

 

5,780

 

 

6,707,806

 

 

 

 

 

 

 

88,416,700

 

 

 

 

 

 

 

 

 

Minnesota — 2.1%

 

 

 

 

 

 

 

City of Minneapolis Minnesota, Refunding RB, Fairview
Health Services, Series B (AGC), 6.50%, 11/15/38

 

 

9,900

 

 

10,901,484

 

 

 

 

 

 

 

 

 

Nebraska — 1.0%

 

 

 

 

 

 

 

Nebraska Investment Finance Authority, Refunding RB,
Series A:

 

 

 

 

 

 

 

5.90%, 9/01/36

 

 

3,650

 

 

3,979,631

 

6.05%, 9/01/41

 

 

1,275

 

1,377,115

 

 

 

 

 

 

 

5,356,746

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

Municipal Bonds

 

 

Par
(000)

 

 

Value

 

Nevada — 7.4%

 

 

 

 

 

 

 

Clark County Water Reclamation District, GO, Series A,
5.25%, 7/01/34

 

$

11,140

 

$

11,821,657

 

County of Clark Nevada, RB:

 

 

 

 

 

 

 

Las Vegas-McCarran International Airport, Series A
(AGC), 5.25%, 7/01/39

 

 

12,380

 

 

12,706,708

 

Subordinate Lien, Series A-2 (NPFGC), 5.00%,
7/01/36

 

 

14,500

 

 

14,529,290

 

 

 

 

 

 

 

39,057,655

 

 

 

 

 

 

 

 

 

New Jersey — 2.2%

 

 

 

 

 

 

 

New Jersey Health Care Facilities Financing Authority,
RB, Virtua Health (AGC), 5.50%, 7/01/38

 

 

6,500

 

 

6,780,800

 

New Jersey Higher Education Student Assistance
Authority, RB, Series 1, AMT, 5.75%, 12/01/28

 

 

4,475

 

 

4,607,281

 

 

 

 

 

 

 

11,388,081

 

 

 

 

 

 

 

 

 

New York — 7.4%

 

 

 

 

 

 

 

New York City Municipal Water Finance Authority, RB:

 

 

 

 

 

 

 

Fiscal 2009, Series EE, 5.25%, 6/15/40

 

 

7,500

 

 

8,074,800

 

Series FF-2, 5.50%, 6/15/40

 

 

4,000

 

 

4,375,480

 

New York City Municipal Water Finance Authority,
Refunding RB, Series D, 5.00%, 6/15/37

 

 

5,000

 

 

5,140,200

 

New York City Municipal Water Finance Authority,
Second General Resolution, Series EE, 5.38%,
6/15/43

 

 

3,475

 

 

3,811,345

 

New York City Transitional Finance Authority, RB,
Sub-Series S-2A, 5.00%, 7/15/30

 

 

7,110

 

 

7,636,851

 

New York City Transitional Finance Authority, RB,
Fiscal 2009:

 

 

 

 

 

 

 

Series S-3, 5.25%, 1/15/39

 

 

5,625

 

 

5,951,981

 

Series S-4 (AGC), 5.50%, 1/15/29

 

 

4,000

 

 

4,384,960

 

 

 

 

 

 

 

39,375,617

 

 

 

 

 

 

 

 

 

Ohio — 1.5%

 

 

 

 

 

 

 

Ohio Higher Educational Facility Commission, Refunding
RB, Summa Health System, 2010 Project (AGC),
5.25%, 11/15/40

 

 

7,725

 

 

7,767,797

 

 

 

 

 

 

 

 

 

Pennsylvania — 1.0%

 

 

 

 

 

 

 

Pennsylvania Turnpike Commission, RB, Sub-Series A,
6.00%, 12/01/41

 

 

4,945

 

 

5,217,074

 

 

 

 

 

 

 

 

 

Puerto Rico — 2.1%

 

 

 

 

 

 

 

Puerto Rico Highway & Transportation Authority,
Refunding RB, Series CC (AGM), 5.50%, 7/01/30

 

 

4,000

 

 

4,231,840

 

Puerto Rico Sales Tax Financing Corp., RB, First
Sub-Series A, 6.38%, 8/01/39

 

 

6,610

 

 

7,148,517

 

 

 

 

 

 

 

11,380,357

 

 

 

 

 

 

 

 

 

Texas — 18.9%

 

 

 

 

 

 

 

City of Austin Texas, Refunding RB, Series A (AGM):

 

 

 

 

 

 

 

5.00%, 11/15/28

 

 

3,360

 

 

3,629,875

 

5.00%, 11/15/29

 

 

4,255

 

 

4,556,041

 

City of Houston Texas, Refunding RB, Combined First
Lien, Series A (AGC):

 

 

 

 

 

 

 

6.00%, 11/15/35

 

 

12,700

 

 

14,423,263

 

6.00%, 11/15/36

 

 

9,435

 

 

10,708,536

 

5.38%, 11/15/38

 

 

5,000

 

 

5,393,250

 

Clifton Higher Education Finance Corp., Refunding RB,
Baylor University, 5.25%, 3/01/32

 

 

5,690

 

 

6,140,193

 

Dallas Area Rapid Transit, Refunding RB, Senior Lien,
5.25%, 12/01/38

 

 

10,110

 

 

10,760,377

 

Harris County Health Facilities Development Corp.,
Refunding RB, Memorial Hermann Healthcare
System, Series B, 7.25%, 12/01/35

 

 

1,500

 

 

1,673,055

 

Lower Colorado River Authority, Refunding RB, LCRA
Transmission Services Project (AGC), 5.50%,
5/15/36

 

 

3,295

 

 

3,491,909

 

Lubbock Cooper ISD Texas, GO, School Building (AGC),
5.75%, 2/15/42

 

 

2,300

 

 

2,463,783

 


 

 

 

See Notes to Financial Statements.

 

 

 

 

34

ANNUAL REPORT

AUGUST 31, 2011




 

 

 

 

Schedule of Investments (continued)

BlackRock MuniHoldings Investment Quality Fund (MFL)

 

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Texas (concluded)

 

 

 

 

 

 

 

North Texas Tollway Authority, RB, System, First Tier,
Series K-1 (AGC), 5.75%, 1/01/38

 

$

12,400

 

$

13,112,256

 

North Texas Tollway Authority, Refunding RB, System,
First Tier:

 

 

 

 

 

 

 

(AGM), 6.00%, 1/01/43

 

 

5,555

 

 

6,042,618

 

Series A (AGC), 5.75%, 1/01/40

 

 

7,000

 

 

7,355,040

 

Series A (NPFGC), 5.13%, 1/01/28

 

 

7,795

 

 

7,991,278

 

Tarrant County Cultural Education Facilities Finance
Corp., Refunding RB, Christus Health, Series A
(AGC), 6.50%, 7/01/37

 

 

1,770

 

 

1,900,856

 

 

 

 

 

 

 

99,642,330

 

Utah — 1.2%

 

 

 

 

 

 

 

City of Riverton Utah, RB, IHC Health Services Inc.,
5.00%, 8/15/41

 

 

6,375

 

 

6,408,086

 

Virginia — 0.9%

 

 

 

 

 

 

 

Virginia Public School Authority, RB, School Financing,
School Financing, 6.50%, 12/01/35

 

 

4,300

 

 

4,892,153

 

Washington — 1.5%

 

 

 

 

 

 

 

City of Seattle Washington, Refunding RB, Series A,
5.25%, 2/01/36

 

 

4,200

 

 

4,567,164

 

State of Washington, GO, Various Purpose, Series B,
5.25%, 2/01/36

 

 

3,290

 

 

3,604,524

 

 

 

 

 

 

 

8,171,688

 

Total Municipal Bonds — 131.0%

 

 

 

 

 

692,263,990

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (a)

 

 

 

 

 

 

 

Alabama — 1.3%

 

 

 

 

 

 

 

Mobile Board of Water & Sewer Commissioners, RB
(NPFGC), 5.00%, 1/01/31

 

 

6,500

 

 

6,685,510

 

California — 3.0%

 

 

 

 

 

 

 

California State University, Refunding RB, Systemwide,
Series A (AGM), 5.00%, 11/01/32

 

 

7,960

 

 

8,241,147

 

Los Angeles Unified School District California, GO,
Series I, 5.00%, 1/01/34

 

 

2,400

 

 

2,462,400

 

San Diego Community College District California, GO,
Election of 2002 (AGM), 5.00%, 5/01/30

 

 

5,000

 

 

5,161,800

 

 

 

 

 

 

 

15,865,347

 

District of Columbia — 0.8%

 

 

 

 

 

 

 

District of Columbia Water & Sewer Authority, RB,
Series A, 6.00%, 10/01/35

 

 

3,381

 

 

3,998,991

 

Florida — 4.9%

 

 

 

 

 

 

 

City of Jacksonville Florida, RB, Better Jacksonville
(NPFGC), 5.00%, 10/01/27

 

 

10,000

 

 

10,209,700

 

Hillsborough County Aviation Authority, RB, Series A,
AMT (AGC), 5.50%, 10/01/38

 

 

10,657

 

 

10,806,053

 

Lee County Housing Finance Authority, RB, Multi-County
Program, Series A-2 AMT (Ginnie Mae), 6.00%,
9/01/40

 

 

4,140

 

 

4,707,387

 

 

 

 

 

 

 

25,723,140

 

Illinois — 1.5%

 

 

 

 

 

 

 

Chicago Transit Authority, Refunding RB, Federal Transit
Administration Section 5309 (AGM), 5.00%, 6/01/28

 

 

7,737

 

 

7,923,988

 

Indiana — 1.9%

 

 

 

 

 

 

 

Indiana Health & Educational Facilities Financing
Authority, Refunding RB, St. Francis, Series E (AGM),
5.25%, 5/15/41

 

 

9,850

 

 

10,004,153

 


 

 

 

 

 

 

 

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (a)

 

Par
(000)

 

Value

 

Kentucky — 0.1%

 

 

 

 

 

 

 

Kentucky State Property & Building Commission,
Refunding RB, Project No. 93 (AGC), 5.25%,
2/01/27

 

$

404

 

$

437,811

 

Nevada — 2.7%

 

 

 

 

 

 

 

Clark County Water Reclamation District, GO:

 

 

 

 

 

 

 

Limited Tax, 6.00%, 7/01/38

 

 

8,000

 

 

8,963,120

 

Series B, 5.50%, 7/01/29

 

 

5,008

 

 

5,526,954

 

 

 

 

 

 

 

14,490,074

 

New Jersey — 3.9%

 

 

 

 

 

 

 

New Jersey EDA, RB, School Facilities Construction,
Series Z (AGC), 6.00%, 12/15/34

 

 

4,350

 

 

4,756,986

 

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

 

 

7,532

 

 

7,832,412

 

New Jersey Transportation Trust Fund Authority, RB,
Transportation System, Series A (AGM), 5.00%,
12/15/32

 

 

8,000

 

 

8,207,600

 

 

 

 

 

 

 

20,796,998

 

New York — 3.8%

 

 

 

 

 

 

 

New York City Municipal Water Finance Authority, RB,
Series FF-2, 5.50%, 6/15/40

 

 

4,994

 

 

5,462,495

 

New York State Dormitory Authority, ERB, Series B,
5.25%, 3/15/38

 

 

13,500

 

 

14,488,740

 

 

 

 

 

 

 

19,951,235

 

Texas — 4.4%

 

 

 

 

 

 

 

City of San Antonio Texas, Refunding RB, Series A,
5.25%, 2/01/31

 

 

12,027

 

 

13,153,273

 

North Texas Tollway Authority, RB, Special Projects
System, Series A, 5.50%, 9/01/41

 

 

9,640

 

 

10,369,266

 

 

 

 

 

 

 

23,522,539

 

Total Municipal Bonds Transferred to Tender
Option Bond Trusts — 28.3%

 

 

 

 

 

149,399,786

 

Total Long-Term Investments
(Cost — $805,149,036) — 159.3%

 

 

 

 

 

841,663,776

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-Term Securities

 

Shares

 

 

 

 

FFI Institutional Tax-Exempt Fund, 0.01% (b)(c)

 

 

22,122,505

 

 

22,122,505

 

Total Short-Term Securities
(Cost — $22,122,505) — 4.2%

 

 

 

 

 

22,122,505

 

Total Investments (Cost — $827,271,541*) — 163.5%

 

 

 

 

 

863,786,281

 

Other Assets Less Liabilities — 2.7%

 

 

 

 

 

14,009,475

 

Liability for TOB Trust Certificates, Including Interest
Expense and Fees Payable — (14.2)%

 

 

 

 

 

(75,022,893

)

VRDP Shares, at Liquidation Value — (52.0)%

 

 

 

 

 

(274,600,000

)

Net Assets Applicable to Common Shares — 100.0%

 

 

 

 

$

528,172,863

 


 

 

 

 

See Notes to Financial Statements.

 

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

35




 

 

 

 

 

Schedule of Investments (concluded)

BlackRock MuniHoldings Investment Quality Fund (MFL)


 

 

*

The cost and unrealized appreciation (depreciation) of investments as of August 31, 2011, as computed for federal income tax purposes, were as follows:


 

 

 

 

 

 

 

Aggregate cost

 

$

752,539,943

 

 

Gross unrealized appreciation

 

$

38,398,612

 

 

Gross unrealized depreciation

 

 

(2,117,333

)

 

Net unrealized appreciation

 

$

36,281,279

 


 

 

(a)

Securities represent bonds transferred to a TOB trust in exchange for which the Trust acquired residual interest certificates. These securities serve as collateral in a financing transaction. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs.

 

 

(b)

Investments in companies considered to be an affiliate of the Trust during the year, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Affiliate

 

Shares Held at
August 31,
2010

 

Net
Activity

 

Shares Held at
August 31,
2011

 

Income

 

 

FFI Institutional

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax-Exempt Fund

 

 

32,301,054

 

 

(10,178,549

)

 

22,122,505

 

$

28,084

 


 

 

(c)

Represents the current yield as of report date.

 

 

Financial futures contracts sold as of August 31, 2011 were as follows:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contracts

 

Issue

 

Exchange

 

Expiration

 

Notional
Value

 

Unrealized
Appreciation

 

 

     125

 

10-Year US
Treasury Note

 

Chicago
Board of Trade

 

December
2011

 

$

16,173,591

 

$

44,684

 


 

 

 

 

Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs are categorized in three broad levels for financial statement purposes as follows:

 

 

 

Level 1 — price quotations in active markets/exchanges for identical assets and liabilities

 

 

 

 

Level 2 — other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

 

 

 

 

Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Trust’s own assumptions used in determining the fair value of investments and derivative financial instruments)

 

 

 

The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument and does not necessarily correspond to the Trust’s perceived risk of investing in those securities. For information about the Trust’s policy regarding valuation of investments and derivative financial instruments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

 

 

 

 

The following tables summarize the inputs used as of August 31, 2011 in determining the fair valuation of the Trust’s investments and derivative financial instruments:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Valuation Inputs

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-Term Investments1

 

 

 

$

841,663,776

 

 

 

$

841,663,776

 

Short-Term Securities

 

$

22,122,505

 

 

 

 

 

 

22,122,505

 

Total

 

$

22,122,505

 

$

841,663,776

 

 

 

$

863,786,281

 


 

 

 

 

1

See above Schedule of Investments for values in each state or political subdivision.


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Valuation Inputs

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Derivative Financial
Instruments2

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate contracts

 

$

44,684

 

 

 

 

 

$

44,684

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

2

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


 

 

 

See Notes to Financial Statements.

 

 

 

36

ANNUAL REPORT

AUGUST 31, 2011




 

 

 

 

Schedule of Investments August 31, 2011

BlackRock MuniVest Fund, Inc. (MVF)

 

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Alabama — 3.5%

 

 

 

 

 

 

 

Alabama State Docks Department, Refunding RB,
6.00%, 10/01/40

 

$

7,610

 

$

7,978,552

 

Camden IDB Alabama, RB, Weyerhaeuser Co. Project,
Series A, 6.13%, 12/01/13 (a)

 

 

2,550

 

 

2,864,186

 

Prattville IDB Alabama, RB, International Paper Co.
Project, Series A, AMT, 4.75%, 12/01/30

 

 

3,475

 

 

3,040,277

 

Selma IDB Alabama, Refunding RB, International
Paper Co. Project, Series B, 5.50%, 5/01/20

 

 

5,000

 

 

5,060,700

 

Selma IDB, RB, Gulf Opportunity Zone, International
Paper, 5.80%, 5/01/34

 

 

1,850

 

 

1,863,857

 

 

 

 

 

 

 

20,807,572

 

Alaska — 0.1%

 

 

 

 

 

 

 

Northern Tobacco Securitization Corp., RB,
Asset-Backed, Series A, 5.00%, 6/01/46

 

 

1,250

 

 

776,625

 

Arizona — 2.8%

 

 

 

 

 

 

 

Maricopa County IDA Arizona, RB, Arizona Charter
Schools Project, Series A, 6.75%, 7/01/29

 

 

4,100

 

 

2,745,073

 

Maricopa County Pollution Control Corp., Refunding RB,
Southern California Edison Co., Series A, 5.00%,
6/01/35

 

 

3,300

 

 

3,393,984

 

Phoenix Civic Improvement Corp., RB, Junior Lien,
Series A, 5.00%, 7/01/40

 

 

2,000

 

 

2,015,500

 

Pima County IDA, RB, Arizona Charter School Project,
Series E, 7.25%, 7/01/31

 

 

1,995

 

 

1,997,813

 

Pima County IDA, Refunding RB:

 

 

 

 

 

 

 

Arizona Charter, Series I, 6.10%, 7/01/24 (a)(b)

 

 

110

 

 

120,567

 

Arizona Charter, Series I, 6.10%, 7/01/24 (b)

 

 

370

 

 

350,741

 

Arizona Charter, Series I, 6.30%, 7/01/31 (a)(b)

 

 

230

 

 

252,929

 

Arizona Charter, Series I, 6.30%, 7/01/31 (b)

 

 

740

 

 

677,137

 

Charter Schools II, Series A, 6.75%, 7/01/21

 

 

900

 

 

900,738

 

Charter Schools II, Series O, 5.00%, 7/01/26

 

 

5

 

 

4,134

 

Salt Verde Financial Corp., RB, Senior, 5.00%,
12/01/37

 

 

5,000

 

 

4,313,300

 

 

 

 

 

 

 

16,771,916

 

California — 10.1%

 

 

 

 

 

 

 

California HFA, RB, Home Mortgage, Series K, AMT,
5.50%, 2/01/42

 

 

2,900

 

 

2,885,326

 

California Health Facilities Financing Authority,
Refunding RB:

 

 

 

 

 

 

 

Catholic Healthcare West, Series A, 6.00%,
7/01/34

 

 

1,055

 

 

1,125,421

 

State Joseph Health System, Series A, 5.75%,
7/01/39

 

 

5,000

 

 

5,135,850

 

Sutter Health, Series B, 6.00%, 8/15/42

 

 

5,600

 

 

6,033,664

 

California State Public Works Board, RB, Department
of Mental Health, Coalinga, Series A:

 

 

 

 

 

 

 

5.50%, 6/01/23

 

 

6,000

 

 

6,170,700

 

5.13%, 6/01/29

 

 

10,435

 

 

10,451,383

 

California Statewide Communities Development
Authority, RB, Health Facility, Memorial Health
Services, Series A, 6.00%, 10/01/23

 

 

4,240

 

 

4,404,385

 

Golden State Tobacco Securitization Corp. California,
RB, Asset-Backed, Series A-3, 7.88%, 6/01/13 (a)

 

 

10,725

 

 

12,096,835

 

Los Angeles Department of Airports, RB, Series A,
5.25%, 5/15/39

 

 

1,200

 

 

1,250,040

 

State of California, GO, Various Purpose, 6.50%,
4/01/33

 

 

9,700

 

 

11,190,114

 

 

 

 

 

 

 

60,743,718

 

Colorado — 1.1%

 

 

 

 

 

 

 

Colorado Health Facilities Authority, RB, Catholic Health
Initiatives, Series D, 6.25%, 10/01/33

 

 

2,500

 

 

2,735,775

 

Colorado Health Facilities Authority, Refunding RB,
Evangelical Lutheran, Series A, 5.25%, 6/01/34

 

 

3,000

 

 

2,847,120

 

 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Colorado (concluded)

 

 

 

 

 

 

 

Colorado Housing & Finance Authority, Refunding RB,
S/F Program, Senior Series A-2, AMT:

 

 

 

 

 

 

 

6.60%, 5/01/28

 

$

340

 

$

347,317

 

7.50%, 4/01/31

 

 

130

 

 

133,769

 

Regional Transportation District, COP, Series A, 5.38%,
6/01/31

 

 

385

 

 

406,548

 

 

 

 

 

 

 

6,470,529

 

Connecticut — 0.4%

 

 

 

 

 

 

 

Mohegan Tribe of Indians of Connecticut, RB,
Public Improvement, Priority Distribution, 6.25%,
1/01/31

 

 

2,810

 

 

2,239,177

 

Delaware — 0.2%

 

 

 

 

 

 

 

County of Sussex Delaware, RB, NRG Energy, Inc.,
Indian River Project, 6.00%, 10/01/40

 

 

1,500

 

 

1,487,070

 

District of Columbia — 0.2%

 

 

 

 

 

 

 

Metropolitan Washington Airports Authority, RB,
First Senior Lien, Series A:

 

 

 

 

 

 

 

5.00%, 10/01/39

 

 

415

 

 

424,396

 

5.25%, 10/01/44

 

 

650

 

 

666,750

 

 

 

 

 

 

 

1,091,146

 

Florida — 5.0%

 

 

 

 

 

 

 

County of Miami-Dade Florida, GO, Building Better
Communities Program:

 

 

 

 

 

 

 

Series B, 6.38%, 7/01/28

 

 

4,630

 

 

5,196,805

 

Series B-1, 5.63%, 7/01/38

 

 

5,000

 

 

5,301,750

 

County of Miami-Dade Florida, Refunding RB,
Miami International Airport:

 

 

 

 

 

 

 

AMT (AGC), 5.00%, 10/01/40

 

 

10,000

 

 

9,430,000

 

Series A-1, 5.38%, 10/01/41

 

 

10,290

 

 

10,440,851

 

 

 

 

 

 

 

30,369,406

 

Georgia — 2.3%

 

 

 

 

 

 

 

City of Atlanta Georgia, Refunding RB, General,
Series B, AMT, 5.00%, 1/01/29

 

 

1,070

 

 

1,085,076

 

DeKalb County Hospital Authority Georgia, RB, DeKalb
Medical Center, Inc. Project, 6.13%, 9/01/40

 

 

3,570

 

 

3,578,568

 

DeKalb Private Hospital Authority, Refunding RB,
Childrens Healthcare, 5.25%, 11/15/39

 

 

3,335

 

 

3,399,299

 

Municipal Electric Authority of Georgia, RB, Series W:

 

 

 

 

 

 

 

6.60%, 1/01/18

 

 

4,540

 

 

5,228,763

 

6.60%, 1/01/18 (c)

 

 

250

 

 

275,568

 

 

 

 

 

 

 

13,567,274

 

Hawaii — 0.9%

 

 

 

 

 

 

 

Hawaii State Harbor, RB, Series A, 5.25%, 7/01/35

 

 

5,000

 

 

5,212,650

 

Illinois — 11.1%

 

 

 

 

 

 

 

City of Chicago Illinois, ARB, General, Third Lien,
Series B-2, AMT (NPFGC), 6.00%, 1/01/27

 

 

17,080

 

 

17,514,686

 

Illinois Finance Authority, RB:

 

 

 

 

 

 

 

Advocate Health Care Network, Series D, 6.50%,
11/01/38

 

 

9,700

 

 

10,615,389

 

Community, 6.50%, 7/01/22

 

 

1,060

 

 

959,586

 

Community Rehabilitation, 6.50%, 7/01/12 (a)

 

 

1,080

 

 

1,146,830

 

Illinois Finance Authority, Refunding RB:

 

 

 

 

 

 

 

Northwestern Memorial Hospital, Series A,
6.00%, 8/15/39

 

 

9,000

 

 

9,700,830

 

OSF Healthcare System, Series A, 6.00%, 5/15/39

 

 

5,140

 

 

5,200,035

 

Railsplitter Tobacco Settlement Authority, RB, 6.00%,
6/01/28

 

 

2,645

 

 

2,703,455

 

Regional Transportation Authority, RB:

 

 

 

 

 

 

 

Series A (AMBAC), 7.20%, 11/01/20

 

 

3,290

 

 

3,980,111

 

Series C (NPFGC), 7.75%, 6/01/20

 

 

4,000

 

 

4,941,760

 

Village of Hodgkins Illinois, RB, MBM Project, AMT,
6.00%, 11/01/23

 

 

10,000

 

 

10,003,100

 

 

 

 

 

 

 

66,765,782

 


 

 

 

 

See Notes to Financial Statements.

 

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

37




 

 

 

 

Schedule of Investments (continued)

BlackRock MuniVest Fund, Inc. (MVF)

 

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Indiana — 4.6%

 

 

 

 

 

 

 

Indiana Health & Educational Facilities Financing
Authority, RB, Clarian Health Obligation, Series A,
5.25%, 2/15/40

 

$

8,980

 

$

8,810,637

 

Indiana Transportation Finance Authority, RB, Series A,
6.80%, 12/01/16

 

 

7,280

 

 

8,225,381

 

Indianapolis Local Public Improvement Bond Bank,
Refunding RB, Series D, 6.75%, 2/01/14

 

 

10,210

 

 

10,872,833

 

 

 

 

 

 

 

27,908,851

 

Iowa — 0.1%

 

 

 

 

 

 

 

Iowa Tobacco Settlement Authority, RB, Asset-Backed,
Series C, 5.63%, 6/01/46

 

 

1,000

 

 

705,070

 

Kansas — 0.3%

 

 

 

 

 

 

 

Sedgwick & Shawnee Counties Kansas, RB,
Mortgage-Backed Securities Program, Series A-4,
AMT (Ginnie Mae), 5.95%, 12/01/33

 

 

1,665

 

 

1,748,150

 

Kentucky — 1.2%

 

 

 

 

 

 

 

County of Owen Kentucky, RB, Kentucky American
Water Co., Series B, 5.63%, 9/01/39

 

 

1,000

 

 

993,720

 

Kentucky Economic Development Finance Authority,
RB, Owensboro Medical Health System, Series A,
6.50%, 3/01/45

 

 

4,000

 

 

4,076,920

 

Kentucky Economic Development Finance Authority,
Refunding RB, Owensboro Medical Health System,
Series A, 6.38%, 6/01/40

 

 

2,000

 

 

2,027,160

 

 

 

 

 

 

 

7,097,800

 

Louisiana — 0.4%

 

 

 

 

 

 

 

Louisiana Local Government Environmental Facilities &
Community Development Authority, RB, Westlake
Chemical Corp., Series A-1, 6.50%, 11/01/35

 

 

2,615

 

 

2,668,947

 

Maine — 1.2%

 

 

 

 

 

 

 

Maine Health & Higher Educational Facilities Authority,
RB, Series A, 5.00%, 7/01/39

 

 

5,000

 

 

5,022,200

 

Portland New Public Housing Authority Maine,
Refunding RB, Senior Living, Series A:

 

 

 

 

 

 

 

5.70%, 8/01/21

 

 

775

 

 

783,990

 

6.00%, 2/01/34

 

 

1,190

 

 

1,148,743

 

 

 

 

 

 

 

6,954,933

 

Maryland — 1.9%

 

 

 

 

 

 

 

Maryland Community Development Administration,
RB, AMT, 5.10%, 9/01/37

 

 

1,835

 

 

1,844,597

 

Maryland Community Development Administration,
Refunding RB, Residential, Series D, 4.90%, 9/01/42

 

 

3,250

 

 

3,129,717

 

Maryland Health & Higher Educational Facilities
Authority, Refunding RB:

 

 

 

 

 

 

 

Charlestown Community, 6.25%, 1/01/41

 

 

2,000

 

 

2,063,980

 

University of Maryland Medical System, 5.00%,
7/01/34

 

 

2,100

 

 

2,117,472

 

University of Maryland Medical System, 5.13%,
7/01/39

 

 

2,100

 

 

2,124,843

 

 

 

 

 

 

 

11,280,609

 

Massachusetts — 6.2%

 

 

 

 

 

 

 

Massachusetts Bay Transportation Authority, Refunding
RB, General Transportation System, Series A, 7.00%,
3/01/19

 

 

3,010

 

 

3,692,457

 

Massachusetts HFA, HRB, Series A, AMT, 5.20%,
12/01/37

 

 

3,000

 

 

3,011,580

 

Massachusetts HFA, RB, S/F, Series 130, AMT, 5.00%,
12/01/32

 

 

2,500

 

 

2,483,625

 

Massachusetts HFA, Refunding HRB, Series D, AMT,
4.85%, 6/01/40

 

 

2,000

 

 

1,939,520

 

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

 

 

6,550

 

 

6,549,411

 

 

 

 

 

 

 

 

 

Municipal Bonds

 

Par
(000)

 

Value

 

Massachusetts (concluded)

 

 

 

 

 

 

 

Massachusetts Water Resources Authority, RB,
Series A, 6.50%, 7/15/19

 

$

16,000

 

$

19,584,480

 

 

 

 

 

 

 

37,261,073

 

Michigan — 4.2%

 

 

 

 

 

 

 

City of Detroit Michigan, RB, Second Lien, Series B (AGM):

 

 

 

 

 

 

 

6.25%, 7/01/36

 

 

2,500

 

 

2,770,300

 

7.00%, 7/01/36

 

 

1,250

 

 

1,458,775

 

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

 

 

1,660

 

 

1,800,237

 

Michigan State Hospital Finance Authority, Refunding RB:

 

 

 

 

 

 

 

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

 

 

7,950

 

 

7,260,735

 

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

 

 

7,285

 

 

7,517,100

 

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

 

 

4,100

 

 

4,758,132

 

 

 

 

 

 

 

25,565,279

 

Mississippi — 5.3%

 

 

 

 

 

 

 

County of Lowndes Mississippi, Refunding RB,
Weyerhaeuser Co. Project:

 

 

 

 

 

 

 

Series A, 6.80%, 4/01/22

 

 

9,160

 

 

9,731,859

 

Series B, 6.70%, 4/01/22

 

 

4,500

 

 

4,747,455

 

Mississippi Business Finance Corp., Refunding RB,
System Energy Resource Inc. Project:

 

 

 

 

 

 

 

5.88%, 4/01/22

 

 

15,000

 

 

14,962,950

 

5.90%, 5/01/22

 

 

2,250

 

 

2,244,510

 

 

 

 

 

 

 

31,686,774

 

Nevada — 0.9%

 

 

 

 

 

 

 

County of Clark Nevada, RB, Series B, 5.75%, 7/01/42

 

 

5,000

 

 

5,298,050

 

New Hampshire — 0.4%

 

 

 

 

 

 

 

New Hampshire Health & Education Facilities Authority,
Refunding RB, Elliot Hospital, Series B, 5.60%,
10/01/22

 

 

2,400

 

 

2,510,784

 

New Jersey — 5.1%

 

 

 

 

 

 

 

New Jersey EDA, RB, Cigarette Tax:

 

 

 

 

 

 

 

5.50%, 6/15/24

 

 

9,080

 

 

8,819,585

 

5.75%, 6/15/34

 

 

3,695

 

 

3,429,477

 

New Jersey EDA, Refunding RB, School Facilities
Construction, Series AA, 5.25%, 12/15/33

 

 

10,000

 

 

10,440,700

 

New Jersey State Housing & Mortgage Finance Agency,
RB, Series AA, 6.38%, 10/01/28

 

 

1,445

 

 

1,559,661

 

Tobacco Settlement Financing Corp. New Jersey,
RB, 7.00%, 6/01/13 (a)

 

 

5,980

 

 

6,674,278

 

 

 

 

 

 

 

30,923,701

 

New York — 4.1%

 

 

 

 

 

 

 

Metropolitan Transportation Authority, RB, Series 2008C:

 

 

 

 

 

 

 

6.25%, 11/15/23

 

 

3,245

 

 

3,829,619

 

6.50%, 11/15/28

 

 

14,925

 

 

17,494,488

 

Port Authority of New York & New Jersey, RB, JFK
International Air Terminal, 6.00%, 12/01/36

 

 

3,165

 

 

3,218,552

 

 

 

 

 

 

 

24,542,659

 

North Carolina — 0.5%

 

 

 

 

 

 

 

Gaston County Industrial Facilities & Pollution Control
Financing Authority North Carolina, RB, Exempt
Facilities, National Gypsum Co. Project, AMT, 5.75%,
8/01/35

 

 

4,105

 

 

3,130,555

 

Ohio — 1.0%

 

 

 

 

 

 

 

Buckeye Tobacco Settlement Financing Authority, RB,
Senior, Series A-2, 6.50%, 6/01/47

 

 

1,125

 

 

866,610

 

County of Butler Ohio, RB, UC Health, 5.50%, 11/01/40

 

 

3,500

 

 

3,171,105

 

County of Lucas Ohio, Refunding RB, Promedica
Healthcare, Series A, 6.50%, 11/15/37

 

 

1,915

 

 

2,145,509

 

 

 

 

 

 

 

6,183,224

 


 

 

 

See Notes to Financial Statements.

 

 

38

ANNUAL REPORT

AUGUST 31, 2011




 

 

 

 

Schedule of Investments (continued)

BlackRock MuniVest Fund, Inc. (MVF)

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 


Municipal Bonds

 

 

Par
(000)

 

 

Value

 

Pennsylvania — 1.6%

 

 

 

 

 

 

 

Chester County IDA, RB, Aqua Pennsylvania Inc. Project,
Series A, AMT (NPFGC), 5.00%, 2/01/40

 

$

540

 

$

544,050

 

Delaware River Port Authority, RB, Series D, 5.00%,
1/01/40

 

 

195

 

 

199,930

 

Lycoming County Authority, Refunding RB, Susquehanna
Health System Project, Series A, 5.75%, 7/01/39

 

 

3,950

 

 

3,785,917

 

Pennsylvania Economic Development Financing
Authority, Refunding RB, Aqua Pennsylvania Inc.
Project, Series A, AMT, 5.00%, 12/01/34

 

 

2,780

 

 

2,823,007

 

Philadelphia Authority for Industrial Development, RB:

 

 

 

 

 

 

 

Arbor House Inc. Project, Series E, 6.10%, 7/01/33

 

 

1,000

 

 

961,460

 

Rieder House Project, Series A, 6.10%, 7/01/33

 

 

1,355

 

 

1,302,778

 

 

 

 

 

 

 

9,617,142

 

Puerto Rico — 2.7%

 

 

 

 

 

 

 

Puerto Rico Sales Tax Financing Corp., RB,
First Sub-Series A, 6.38%, 8/01/39

 

 

13,000

 

 

14,059,110

 

Puerto Rico Sales Tax Financing Corp., Refunding RB,
CAB, Series A (NPFGC), 5.69%, 8/01/41 (d)

 

 

15,000

 

 

2,298,150

 

 

 

 

 

 

 

16,357,260

 

South Carolina — 1.0%

 

 

 

 

 

 

 

County of Georgetown South Carolina, Refunding RB,
International Paper Co. Project, Series A, AMT, 5.55%,
12/01/29

 

 

1,000

 

 

989,730

 

County of Richland South Carolina, Refunding RB,
International Paper Co. Project, AMT, 6.10%, 4/01/23

 

 

5,000

 

 

5,085,850

 

 

 

 

 

 

 

6,075,580

 

Texas — 13.3%

 

 

 

 

 

 

 

Brazos River Authority, Refunding RB, Texas Utility Co.,
Series, AMT, 7.70%, 4/01/33

 

 

3,055

 

 

916,897

 

Brazos River Harbor Navigation District, Refunding RB,
Dow Chemical Co. Project, Series A-7, AMT, 6.63%,
5/15/33

 

 

11,460

 

 

11,677,855

 

Central Texas Regional Mobility Authority, RB, Senior Lien:

 

 

 

 

 

 

 

5.75%, 1/01/31

 

 

1,000

 

 

978,240

 

6.00%, 1/01/41

 

 

4,300

 

 

4,105,382

 

City of Houston Texas, RB, Senior Lien, Series A, 5.50%,
7/01/34

 

 

8,335

 

 

8,830,182

 

Gulf Coast Waste Disposal Authority, Refunding RB,
Series A, AMT, 6.10%, 8/01/24

 

 

4,000

 

 

4,048,800

 

Harris County Health Facilities Development Corp.,
Refunding RB, Memorial Hermann Healthcare System,
Series B:

 

 

 

 

 

 

 

7.13%, 12/01/31

 

 

3,500

 

 

3,926,930

 

7.25%, 12/01/35

 

 

5,400

 

 

6,022,998

 

Houston Industrial Development Corp., RB, Senior,
Air Cargo, AMT, 6.38%, 1/01/23

 

 

1,785

 

 

1,567,587

 

La Vernia Higher Education Finance Corp., RB, KIPP Inc.,
6.25%, 8/15/39

 

 

925

 

 

952,972

 

Love Field Airport Modernization Corp., RB, Southwest
Airlines Co. Project, 5.25%, 11/01/40

 

 

3,600

 

 

3,370,680

 

Matagorda County Navigation District No. 1 Texas,
Refunding RB, CenterPoint Energy Project, 5.60%,
3/01/27 (e)

 

 

9,355

 

 

9,651,179

 

North Texas Tollway Authority, Refunding RB, First Tier,
Series A, 6.25%, 1/01/39

 

 

3,500

 

 

3,738,980

 

Tarrant County Cultural Education Facilities Finance
Corp., RB, Scott & White Healthcare, 6.00%, 8/15/45

 

 

5,000

 

 

5,246,850

 

Texas Private Activity Bond Surface Transportation Corp.,
RB, Senior Lien:

 

 

 

 

 

 

 

LBJ Infrastructure Group LLC, LBJ Freeway Managed
Lanes Project, 7.00%, 6/30/40

 

 

10,000

 

 

10,381,800

 

NTE Mobility Partners LLC, North Tarrant Express
Managed Lanes Project, 6.88%, 12/31/39

 

 

4,710

 

 

4,854,362

 

 

 

 

 

 

 

80,271,694

 

 

 

 

 

 

 

 

 

Municipal Bonds

 

 

Par
(000)

 

 

Value

 

U. S. Virgin Islands — 1.3%

 

 

 

 

 

 

 

United States Virgin Islands, Refunding RB,
Senior Secured, Hovensa Coker Project, AMT, 6.50%,
7/01/21

 

$

8,000

 

$

7,935,600

 

Vermont — 0.2%

 

 

 

 

 

 

 

Vermont Educational & Health Buildings Financing
Agency, RB, Developmental & Mental Health, Series A,
6.38%, 6/15/22

 

 

1,000

 

 

967,600

 

Virginia — 2.8%

 

 

 

 

 

 

 

Chesterfield County IDA, Refunding RB, Virginia
Electric & Power Co., Series A, 5.88%, 6/01/17

 

 

1,425

 

 

1,457,661

 

City of Norfolk Virginia, Refunding RB, Series B (AMBAC),
5.50%, 2/01/31

 

 

3,550

 

 

3,550,107

 

City of Portsmouth Virginia, GO, Refunding, Series D,
5.00%, 7/15/34

 

 

3,105

 

 

3,332,441

 

Fairfax County EDA, Refunding RB, Goodwin House Inc.:

 

 

 

 

 

 

 

5.13%, 10/01/37

 

 

2,000

 

 

1,854,940

 

5.13%, 10/01/42

 

 

6,015

 

 

5,489,289

 

Virginia HDA, Refunding RB, Sub-Series A3, AMT, 5.05%,
7/01/26

 

 

1,325

 

 

1,353,421

 

 

 

 

 

 

 

17,037,859

 

Washington — 4.7%

 

 

 

 

 

 

 

Energy Northwest, Refunding RB,
Series B, 7.13%, 7/01/16

 

 

14,320

 

 

18,297,809

 

Seattle Housing Authority Washington, HRB,
Replacement Housing Projects, 6.13%, 12/01/32

 

 

2,230

 

 

2,097,516

 

Washington Health Care Facilities Authority,
Refunding RB, Catholic Health Initiatives, Series D,
6.38%, 10/01/36

 

 

7,000

 

 

7,624,400

 

 

 

 

 

 

 

28,019,725

 

West Virginia — 0.4%

 

 

 

 

 

 

 

West Virginia Hospital Finance Authority, Refunding RB,
Charleston, Series A, 5.63%, 9/01/32

 

 

2,500

 

 

2,532,925

 

Wisconsin — 1.5%

 

 

 

 

 

 

 

City of Milwaukee Wisconsin, RB, Senior, Air Cargo, AMT,
6.50%, 1/01/25

 

 

1,485

 

 

1,300,890

 

Wisconsin Health & Educational Facilities Authority, MRB,
Hudson Memorial Hospital (FHA), 5.70%, 1/15/29

 

 

4,500

 

 

4,615,065

 

Wisconsin Health & Educational Facilities Authority, RB,
SynergyHealth Inc., 6.00%, 11/15/32

 

 

3,040

 

 

3,096,969

 

 

 

 

 

 

 

9,012,924

 

Wyoming — 0.8%

 

 

 

 

 

 

 

County of Sweetwater Wyoming, Refunding RB,
Idaho Power Co. Project, 5.25%, 7/15/26

 

 

4,500

 

 

4,842,495

 

Total Municipal Bonds — 105.4%

 

 

 

 

 

634,440,128

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (f)

 

 

 

 

 

 

 

Arizona — 0.6%

 

 

 

 

 

 

 

Phoenix Civic Improvement Corp., RB, Junior Lien,
Series A, 5.00%, 7/01/34

 

 

3,500

 

 

3,725,925

 

California — 5.3%

 

 

 

 

 

 

 

Los Angeles Community College District California, GO,
Election of 2008, Series A, 6.00%, 8/01/33

 

 

9,586

 

 

10,868,361

 

University of California, RB, Series O, 5.25%, 5/15/39

 

 

20,000

 

 

21,179,800

 

 

 

 

 

 

 

32,048,161

 


 

 

 

 

See Notes to Financial Statements.

 

 

 

 

 

 

 

 

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

39




 

 

 

 

Schedule of Investments (continued)

BlackRock MuniVest Fund, Inc. (MVF)

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (f)

 

Par
(000)

 

Value

 

Connecticut — 2.1%

 

 

 

 

 

 

 

Connecticut State Health & Educational Facility Authority,
RB, Yale University, Series Z-3, 5.05%, 7/01/42

 

$

12,000

 

$

12,687,480

 

District of Columbia — 1.4%

 

 

 

 

 

 

 

District of Columbia Water & Sewer Authority, RB,
Series A, 5.50%, 10/01/39

 

 

7,495

 

 

8,153,445

 

Florida — 4.0%

 

 

 

 

 

 

 

County of Miami-Dade Florida, RB, Water & Sewer
System (AGM), 5.00%, 10/01/39

 

 

14,747

 

 

15,092,230

 

Miami-Dade County Expressway Authority, RB, Series A
(AGC), 5.00%, 7/01/35

 

 

8,900

 

 

9,097,135

 

 

 

 

 

 

 

24,189,365

 

Illinois — 3.4%

 

 

 

 

 

 

 

City of Chicago Illinois, Refunding RB, Second Lien (AGM),
5.25%, 11/01/33

 

 

1,330

 

 

1,381,178

 

Illinois Finance Authority, RB, University of Chicago,
Series B, 6.25%, 7/01/38

 

 

10,000

 

 

11,474,600

 

Illinois State Toll Highway Authority, RB, Series B, 5.50%,
1/01/33

 

 

6,999

 

 

7,301,955

 

 

 

 

 

 

 

20,157,733

 

Kentucky — 5.4%

 

 

 

 

 

 

 

Kentucky Economic Development Finance Authority,
Refunding RB, St. Elizabeth, Series A, 5.50%, 5/01/39

 

 

8,003

 

 

8,305,871

 

Kentucky Housing Corp., Refunding RB, Series L, AMT,
5.25%, 1/01/38

 

 

7,110

 

 

7,168,657

 

Lexington-Fayette Urban County Airport Board,
Refunding RB, Series A, 5.00%, 7/01/27

 

 

7,001

 

 

7,521,455

 

Louisville & Jefferson County Metropolitan Government
Parking Authority, RB, Series A, 5.38%, 12/01/39

 

 

9,195

 

 

9,704,771

 

 

 

 

 

 

 

32,700,754

 

Maryland — 0.8%

 

 

 

 

 

 

 

Maryland State Transportation Authority, RB,
Transportation Facility Project (AGM), 5.00%, 7/01/41

 

 

4,710

 

 

4,963,021

 

Nevada — 2.9%

 

 

 

 

 

 

 

Clark County Water Reclamation District, GO, Series B,
5.75%, 7/01/34

 

 

15,789

 

 

17,642,836

 

New York — 4.9%

 

 

 

 

 

 

 

New York City Municipal Water Finance Authority, RB:

 

 

 

 

 

 

 

Series DD, 5.00%, 6/15/37

 

 

24,199

 

 

25,214,361

 

Series FF-2, 5.50%, 6/15/40

 

 

4,154

 

 

4,543,877

 

 

 

 

 

 

 

29,758,238

 

North Carolina — 3.1%

 

 

 

 

 

 

 

North Carolina Capital Facilities Finance Agency,
Refunding RB:

 

 

 

 

 

 

 

Duke University Project, Series A, 5.00%, 10/01/41

 

 

12,678

 

 

13,208,598

 

Wake Forest University, 5.00%, 1/01/38

 

 

5,000

 

 

5,262,850

 

 

 

 

 

 

 

18,471,448

 

Ohio — 3.7%

 

 

 

 

 

 

 

County of Allen Ohio, Refunding RB, Catholic Healthcare,
Series A, 5.25%, 6/01/38

 

 

2,870

 

 

2,871,751

 

County of Montgomery Ohio, Refunding RB, Catholic
Healthcare, Series A, 5.50%, 5/01/34

 

 

5,470

 

 

5,709,258

 

Ohio Higher Educational Facility Commission,
Refunding RB, Hospital, Cleveland Clinic Health,
Series A, 5.25%, 1/01/33

 

 

4,400

 

 

4,538,248

 

State of Ohio, RB, Cleveland Clinic Health, Series B,
5.50%, 1/01/34

 

 

8,500

 

 

8,911,740

 

 

 

 

 

 

 

22,030,997

 


 

 

 

 

 

 

 

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (f)

 

Par
(000)

 

Value

 

Oregon — 2.2%

 

 

 

 

 

 

 

Oregon State Housing & Community Services
Department, HRB, Series A, AMT, 4.95%, 7/01/30

 

$

13,000

 

$

12,936,013

 

South Carolina — 0.5%

 

 

 

 

 

 

 

South Carolina State Housing Finance & Development
Authority, Refunding RB, Series B-1, 5.55%, 7/01/39

 

 

3,149

 

 

3,257,172

 

Texas — 8.1%

 

 

 

 

 

 

 

Harris County Health Facilities Development Corp.,
Refunding RB, School Health Care System, Series B,
5.75%, 7/01/27

 

 

20,970

 

 

26,066,549

 

Houston Higher Education Finance Corp., RB, Rice
University Project, Series A, 5.00%, 5/15/40

 

 

10,000

 

 

10,690,476

 

Texas Department of Housing & Community Affairs,
MRB, Series B, AMT (Ginnie Mae), 5.25%, 9/01/32

 

 

6,276

 

 

6,350,925

 

Texas State University Systems, Refunding RB (AGM),
5.00%, 3/15/30

 

 

5,667

 

 

5,892,580

 

 

 

 

 

 

 

49,000,530

 

Virginia — 1.2%

 

 

 

 

 

 

 

Fairfax County IDA Virginia, Refunding RB, Health Care,
Inova Health System, Series A, 5.50%, 5/15/35

 

 

2,099

 

 

2,200,382

 

Virginia Small Business Financing Authority,
Refunding RB, Sentara Healthcare, 5.00%, 11/01/40

 

 

5,002

 

 

5,132,160

 

 

 

 

 

 

 

7,332,542

 

Washington — 4.4%

 

 

 

 

 

 

 

Central Puget Sound Regional Transit Authority, RB,
Series A:

 

 

 

 

 

 

 

5.00%, 11/01/36

 

 

6,000

 

 

6,281,310

 

(AGM), 5.00%, 11/01/32

 

 

14,007

 

 

14,741,864

 

Central Puget Sound Regional Transit Authority,
Washington, RB, Series A, 5.00%, 11/01/34

 

 

5,000

 

 

5,234,425

 

 

 

 

 

 

 

26,257,599

 

Wisconsin — 1.0%

 

 

 

 

 

 

 

Wisconsin Health & Educational Facilities Authority,
Refunding RB, Froedtert & Community Health Inc.,
5.25%, 4/01/39

 

 

6,099

 

 

6,182,097

 

Total Municipal Bonds Transferred
to Tender Option Bond Trusts — 55.0%

 

 

 

 

 

331,495,356

 

Total Long-Term Investments
(Cost — $923,430,894) — 160.4%

 

 

 

 

 

965,935,484

 


 

 

 

 

 

 

 

 

Short-Term Securities

 

 

Shares

 

 

 

 

FFI Institutional Tax-Exempt Fund, 0.01% (g)(h)

 

 

44,571,921

 

 

44,571,921

 

Total Short-Term Securities
(Cost — $44,571,921) — 7.4%

 

 

 

 

 

44,571,921

 

Total Investments (Cost — $968,002,815*) — 167.8%

 

 

 

 

 

1,010,507,405

 

Other Assets Less Liabilities — 1.5%

 

 

 

 

 

8,929,561

 

Liability for TOB Trust Certificates, Including Interest
Expense and Fees Payable — (28.8)%

 

 

 

 

 

(173,362,595

)

AMPS, at Redemption Value — (40.5)%

 

 

 

 

 

(243,840,340

)

Net Assets Applicable to Common Shares — 100.0%

 

 

 

 

$

602,234,031

 


 

 

 

See Notes to Financial Statements.

 

 

 

 

40

ANNUAL REPORT

AUGUST 31, 2011




 

 

 

 

Schedule of Investments (concluded)

BlackRock MuniVest Fund, Inc. (MVF)


 

 

*

The cost and unrealized appreciation (depreciation) of investments as of August 31, 2011, as computed for federal income tax purposes, were as follows:


 

 

 

 

 

Aggregate cost

 

$

797,039,177

 

Gross unrealized appreciation

 

$

52,771,946

 

Gross unrealized depreciation

 

 

(12,554,565

)

Net unrealized appreciation

 

$

40,217,381

 


 

 

(a)

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

 

 

(b)

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

 

 

(c)

Security is collateralized by Municipal or US Treasury obligations.

 

 

(d)

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

 

 

(e)

Variable rate security. Rate shown is as of report date.

 

 

(f)

Securities represent bonds transferred to a TOB trust in exchange for which the Trust acquired residual interest certificates. These securities serve as collateral in a financing transaction. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs.

 

 

(g)

Investments in companies considered to be an affiliate of the Trust during the year, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Affiliate

 

Shares Held at
August 31,
2010

 

Net
Activity

 

Shares Held at
August 31,
2011

 

Income

 

FFI Institutional
Tax-Exempt Fund

 

 

4,494,923

 

 

40,076,998

 

 

44,571,921

 

$

19,015

 


 

 

 

(h)

Represents the current yield as of report date.

 

 

Fair Value Measurements — Various inputs are used in determining the fair value of investments. These inputs are categorized in three broad levels for financial statement purposes as follows:

 

 

 

 

Level 1 — price quotations in active markets/exchanges for identical assets and liabilities

 

 

 

 

Level 2 — other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

 

 

 

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

 

 

 

 

The categorization of a value determined for investments is based on the pricing transparency of the investment and does not necessarily correspond to the Trust’s perceived risk of investing in those securities. For information about the Trust’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

 

 

 

 

The following table summarizes the inputs used as of August 31, 2011 in determining the fair valuation of the Trust’s investments:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Valuation Inputs

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-Term Investments1

 

 

 

$

965,935,484

 

 

 

$

965,935,484

 

Short-Term Securities

 

$

44,571,921

 

 

 

 

 

 

44,571,921

 

Total

 

$

44,571,921

 

$

965,935,484

 

 

 

$

1,010,507,405

 


 

 

 

1

See above Schedule of Investments for values in each state or political subdivision.


 

 

 

 

See Notes to Financial Statements.

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

41





 

Statements of Assets and Liabilities


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

August 31, 2011


BlackRock
Municipal Bond
Investment Trust
(BIE)


BlackRock
Municipal
Bond Trust
(BBK)


BlackRock
Municipal Income
Investment
Quality Trust
(BAF)


BlackRock
Municipal Income
Quality Trust
(BYM)


BlackRock
Municipal
Income Trust II
(BLE)


BlackRock
MuniHoldings
Investment
Quality Fund
(MFL)


BlackRock
MuniVest
Fund, Inc.
(MVF)


Assets























Investments at value — unaffiliated1

 

$

80,694,395

 

$

233,966,352

 

$

181,210,609

 

$

584,713,631

 

$

503,786,178

 

$

841,663,776

 

$

965,935,484

 

Investments at value — affiliated2

 

 

2,198,525

 

 

2,247,948

 

 

9,230,241

 

 

5,821,237

 

 

11,840,465

 

 

22,122,505

 

 

44,571,921

 

Cash

 

 

 

 

 

 

 

 

 

 

 

 

82,527

 

 

 

Cash pledged as collateral for financial futures contracts

 

 

38,280

 

 

175,000

 

 

57,300

 

 

170,000

 

 

205,000

 

 

200,000

 

 

 

Interest receivable

 

 

966,420

 

 

3,098,162

 

 

2,089,690

 

 

5,869,139

 

 

6,943,001

 

 

10,782,870

 

 

13,203,824

 

Investments sold receivable

 

 

367,929

 

 

441,204

 

 

1,710,460

 

 

1,087,924

 

 

 

 

5,874,758

 

 

13,000

 

Margin variation receivable

 

 

4,978

 

 

 

 

11,379

 

 

33,780

 

 

19,141

 

 

44,445

 

 

 

Income receivable — affiliated

 

 

16

 

 

78

 

 

51

 

 

206

 

 

189

 

 

377

 

 

482

 

Deferred offering costs

 

 

 

 

 

 

 

 

 

 

 

 

733,216

 

 

 

Prepaid expenses

 

 

3,799

 

 

29,143

 

 

22,261

 

 

47,610

 

 

49,589

 

 

27,929

 

 

59,943

 

Other assets

 


4,108



19,360



12,654



50,477



46,067



95,098



103,651


Total assets

 


84,278,450



239,977,247



194,344,645



597,794,004



522,889,630



881,627,501



1,023,888,305

























Accrued Liabilities























Bank overdraft

 

 

 

 

 

 

3,215

 

 

3,686

 

 

 

 

 

 

12,662

 

Investments purchased payable

 

 

847,367

 

 

 

 

2,158,896

 

 

968,418

 

 

 

 

 

 

 

Income dividends payable — Common Shares

 

 

270,136

 

 

925,962

 

 

651,300

 

 

2,027,605

 

 

1,948,477

 

 

2,885,245

 

 

3,721,950

 

Investment advisory fees payable

 

 

42,310

 

 

122,215

 

 

88,951

 

 

277,208

 

 

221,056

 

 

380,966

 

 

432,495

 

Interest expense and fees payable

 

 

8,715

 

 

4,844

 

 

14,826

 

 

47,041

 

 

25,823

 

 

57,834

 

 

111,748

 

Officer’s and Trustees’ fees payable

 

 

5,703

 

 

21,742

 

 

15,226

 

 

53,573

 

 

50,773

 

 

100,656

 

 

108,693

 

Other accrued expenses payable

 


36,143



129,822



87,662



183,871



174,813



464,878



175,539


Total accrued liabilities

 


1,210,374



1,204,585



3,020,076



3,561,402



2,420,942



3,889,579



4,563,087

























Other Liabilities











 

 

 

 

 

 

 

 

 

 

 

 

TOB trust certificates

 

 

16,275,832

 

 

7,399,148

 

 

22,266,266

 

 

85,964,090

 

 

43,450,717

 

 

74,965,059

 

 

173,250,847

 

VRDP Shares, at liquidation value of $100,000 per share3,4

 

 

 

 

 

 

 

 

 

 

 

 

274,600,000

 

 

 

Total other liabilities

 

 

16,275,832

 

 

7,399,148

 

 

22,266,266

 

 

85,964,090

 

 

43,450,717

 

 

349,565,059

 

 

173,250,847

 

Total Liabilities

 

 

17,486,206

 

 

8,603,733

 

 

25,286,342

 

 

89,525,492

 

 

45,871,659

 

 

353,454,638

 

 

177,813,934

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AMPS at Redemption Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$25,000 per share at liquidation preference, plus unpaid dividends3,4

 

 

17,851,044

 

 

79,902,319

 

 

42,275,707

 

 

137,254,205

 

 

151,305,041

 

 

 

 

243,840,340

 

Net Assets Applicable to Common Shareholders

 

$

48,941,200

 

$

151,471,195

 

$

126,782,596

 

$

371,014,307

 

$

325,712,930

 

$

528,172,863

 

$

602,234,031

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Assets Applicable to Common Shareholders Consist of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Paid-in capital5,6,7

 

$

47,263,421

 

$

148,751,371

 

$

124,044,616

 

$

373,734,462

 

$

331,549,576

 

$

525,102,482

 

$

572,687,213

 

Undistributed net investment income

 

 

972,385

 

 

3,704,555

 

 

2,196,256

 

 

7,240,631

 

 

7,319,075

 

 

9,718,432

 

 

15,202,097

 

Accumulated net realized loss

 

 

(3,187,775

)

 

(2,868,049

)

 

(6,529,863

)

 

(18,332,699

)

 

(18,472,408

)

 

(43,207,475

)

 

(28,159,869

)

Net unrealized appreciation/depreciation

 

 

3,893,169

 

 

1,883,318

 

 

7,071,587

 

 

8,371,913

 

 

5,316,687

 

 

36,559,424

 

 

42,504,590

 

Net Assets Applicable to Common Shareholders

 

$

48,941,200

 

$

151,471,195

 

$

126,782,596

 

$

371,014,307

 

$

325,712,930

 

$

528,172,863

 

$

602,234,031

 

Net asset value per Common Share

 

$

14.67

 

$

14.48

 

$

14.50

 

$

14.09

 

$

13.96

 

$

14.00

 

$

9.55

 

1

Investments at cost — unaffiliated

 

$

76,806,231

 

$

232,083,034

 

$

174,150,461

 

$

576,375,678

 

$

498,542,132

 

$

805,149,036

 

$

923,430,894

 

2

Investments at cost — affiliated

 

$

2,198,525

 

$

2,247,948

 

$

9,230,241

 

$

5,821,237

 

$

11,840,465

 

$

22,122,505

 

$

44,571,921

 

3

AMPS/VRDP Shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Par value $0.001 per share

 

 

714

 

 

3,196

 

 

1,691

 

 

5,490

 

 

6,052

 

 

 

 

 

 

Par value $0.10 per share

 

 

 

 

 

 

 

 

 

 

 

 

2,746

 

 

9,753

 

4

AMPS/VRDP Shares authorized

 

 

unlimited

 

 

unlimited

 

 

unlimited

 

 

unlimited

 

 

unlimited

 

 

1 million

 

 

10 million

 

5

Common Shares outstanding

 

 

3,335,018

 

 

10,462,982

 

 

8,742,277

 

 

26,332,663

 

 

23,335,130

 

 

37,715,624

 

 

63,083,905

 

6

Par value per Common Share

 

$

0.001

 

$

0.001

 

$

0.001

 

$

0.001

 

$

0.001

 

$

0.10

 

$

0.10

 

7

Common Shares authorized

 

 

unlimited

 

 

unlimited

 

 

unlimited

 

 

unlimited

 

 

unlimited

 

 

unlimited

 

 

150 million

 


 

 

 

See Notes to Financial Statements.

 

 

42

ANNUAL REPORT

AUGUST 31, 2011




 

 

Statements of Operations


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended August 31, 2011

 

BlackRock
Municipal Bond
Investment Trust
(BIE)

 

BlackRock
Municipal
Bond Trust
(BBK)

 

BlackRock
Municipal Income
Investment
Quality Trust
(BAF)

 

BlackRock
Municipal Income
Quality Trust
(BYM)

 

BlackRock
Municipal
Income Trust II
(BLE)

 

BlackRock
MuniHoldings
Investment
Quality Fund
(MFL)

 

BlackRock
MuniVest
Fund, Inc.
(MVF)

 

Investment Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest

 

$

4,219,761

 

$

13,699,962

 

$

9,468,630

 

$

29,864,640

 

$

28,642,764

 

$

42,330,355

 

$

53,565,816

 

Income — affiliated

 

 

1,681

 

 

3,980

 

 

4,627

 

 

11,312

 

 

10,923

 

 

35,749

 

 

27,227

 

Total income

 

 

4,221,442

 

 

13,703,942

 

 

9,473,257

 

 

29,875,952

 

 

28,653,687

 

 

42,366,104

 

 

53,593,043

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment advisory

 

 

529,489

 

 

1,520,184

 

 

1,044,608

 

 

3,164,615

 

 

2,794,572

 

 

4,691,505

 

 

5,009,806

 

Professional

 

 

71,600

 

 

91,044

 

 

111,261

 

 

230,094

 

 

129,304

 

 

274,660

 

 

217,440

 

Accounting services

 

 

22,850

 

 

57,430

 

 

38,462

 

 

72,184

 

 

80,399

 

 

119,430

 

 

118,511

 

Remarketing fees on Preferred Shares

 

 

19,020

 

 

91,871

 

 

38,825

 

 

147,164

 

 

226,080

 

 

404,156

 

 

365,332

 

Transfer agent

 

 

18,607

 

 

25,703

 

 

19,659

 

 

33,332

 

 

37,204

 

 

72,036

 

 

95,503

 

Printing

 

 

10,332

 

 

25,659

 

 

16,111

 

 

58,813

 

 

48,369

 

 

38,037

 

 

41,644

 

Registration

 

 

9,372

 

 

9,548

 

 

9,548

 

 

9,747

 

 

10,092

 

 

13,294

 

 

27,191

 

Custodian

 

 

7,953

 

 

17,501

 

 

12,864

 

 

27,584

 

 

27,914

 

 

37,943

 

 

41,852

 

Officer and Trustees

 

 

5,703

 

 

17,641

 

 

14,812

 

 

42,991

 

 

40,516

 

 

65,433

 

 

71,009

 

Liquidity fees

 

 

 

 

 

 

 

 

 

 

 

 

337,915

 

 

 

Miscellaneous

 

 

32,493

 

 

37,099

 

 

41,150

 

 

63,725

 

 

59,353

 

 

122,280

 

 

107,843

 

Total expenses excluding interest expense, fees and amortization of offering costs

 

 

727,419

 

 

1,893,680

 

 

1,347,300

 

 

3,850,249

 

 

3,453,803

 

 

6,176,689

 

 

6,096,131

 

Interest expense, fees and amortization of offering costs1

 

 

128,245

 

 

52,377

 

 

177,260

 

 

605,038

 

 

286,018

 

 

813,299

 

 

1,363,748

 

Total expenses

 

 

855,664

 

 

1,946,057

 

 

1,524,560

 

 

4,455,287

 

 

3,739,821

 

 

6,989,988

 

 

7,459,879

 

Less fees waived by advisor

 

 

(68,275

)

 

(195,144

)

 

(18,488

)

 

(52,804

)

 

(256,553

)

 

(396,095

)

 

(7,907

)

Total expenses after fees waived

 

 

787,389

 

 

1,750,913

 

 

1,506,072

 

 

4,402,483

 

 

3,483,268

 

 

6,593,893

 

 

7,451,972

 

Net investment income

 

 

3,434,053

 

 

11,953,029

 

 

7,967,185

 

 

25,473,469

 

 

25,170,419

 

 

35,772,211

 

 

46,141,071

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Realized and Unrealized Gain (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net realized gain (loss) from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments

 

 

(657,632

)

 

1,107,673

 

 

(355,445

)

 

(1,542,701

)

 

45,256

 

 

(10,448,145

)

 

(6,584,123

)

Financial futures contracts

 

 

(399,035

)

 

(1,126,872

)

 

(601,250

)

 

(2,536,336

)

 

(1,974,396

)

 

(3,943,433

)

 

(2,361,123

)

 

 

 

(1,056,667

)

 

(19,199

)

 

(956,695

)

 

(4,079,037

)

 

(1,929,140

)

 

(14,391,578

)

 

(8,945,246

)

Net change in unrealized appreciation/depreciation on:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments

 

 

(1,903,677

)

 

(9,146,768

)

 

(4,124,784

)

 

(10,963,735

)

 

(15,104,004

)

 

(11,969,240

)

 

(20,763,919

)

Financial futures contracts

 

 

5,005

 

 

 

 

11,439

 

 

33,960

 

 

72,641

 

 

44,684

 

 

 

 

 

 

(1,898,672

)

 

(9,146,768

)

 

(4,113,345

)

 

(10,929,775

)

 

(15,031,363

)

 

(11,924,556

)

 

(20,763,919

)

Total realized and unrealized loss

 

 

(2,955,339

)

 

(9,165,967

)

 

(5,070,040

)

 

(15,008,812

)

 

(16,960,503

)

 

(26,316,134

)

 

(29,709,165

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends to AMPS Shareholders From

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

(63,456

)

 

(283,174

)

 

(151,046

)

 

(487,609

)

 

(537,485

)

 

(903,388

)

 

(1,048,890

)

Net Increase in Net Assets Applicable to Common Shareholders Resulting from Operations

 

$

415,258

 

$

2,503,888

 

$

2,746,099

 

$

9,977,048

 

$

7,672,431

 

$

8,552,689

 

$

15,383,016

 


 

 

 

 

1

Related to TOBs and/or VRDP Shares.


 

 

 

 

See Notes to Financial Statements.

 

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

43




 

 

Statements of Changes in Net Assets


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BlackRock Municipal Bond
Investment Trust (BIE)

 

 

BlackRock Municipal
Bond Trust (BBK)

 

 

 

Year Ended August 31,

 

 

Year Ended August 31,

 

Increase (Decrease) in Net Assets Applicable to Common Shareholders:

 

2011

 

2010

 

 

2011

 

2010

 

Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

$

3,434,053

 

$

3,388,502

 

 

$

11,953,029

 

$

11,874,327

 

Net realized gain (loss)

 

 

(1,056,667

)

 

28,656

 

 

 

(19,199

)

 

3,649,094

 

Net change in unrealized appreciation/depreciation

 

 

(1,898,672

)

 

4,203,415

 

 

 

(9,146,768

)

 

16,824,854

 

Dividends to AMPS Shareholders from net investment income

 

 

(63,456

)

 

(73,259

)

 

 

(283,174

)

 

(326,106

)

Net increase in net assets applicable to Common Shareholders resulting from operations

 

 

415,258

 

 

7,547,314

 

 

 

2,503,888

 

 

32,022,169

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends to Common Shareholders From

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

(3,197,548

)

 

(3,052,054

)

 

 

(10,954,081

)

 

(10,597,613

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Share Transactions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reinvestment of common dividends

 

 

15,928

 

 

9,559

 

 

 

705,295

 

 

761,779

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Assets Applicable to Common Shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total increase (decrease) in net assets applicable to Common Shareholders

 

 

(2,766,362

)

 

4,504,819

 

 

 

(7,744,898

)

 

22,186,335

 

Beginning of year

 

 

51,707,562

 

 

47,202,743

 

 

 

159,216,093

 

 

137,029,758

 

End of year

 

$

48,941,200

 

$

51,707,562

 

 

$

151,471,195

 

$

159,216,093

 

Undistributed net investment income

 

$

972,385

 

$

800,253

 

 

$

3,704,555

 

$

2,996,707

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BlackRock Municipal Income
Investment Quality Trust (BAF)

 

 

 

BlackRock Municipal
Income Quality Trust (BYM)

 

 

 

Year Ended August 31,

 

 

Year Ended August 31,

 

Increase (Decrease) in Net Assets Applicable to Common Shareholders:

 

2011

 

2010

 

 

2011

 

2010

 

Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

$

7,967,185

 

$

8,227,690

 

 

$

25,473,469

 

$

25,205,226

 

Net realized gain (loss)

 

 

(956,695

)

 

(3,125,131

)

 

 

(4,079,037

)

 

616,249

 

Net change in unrealized appreciation/depreciation

 

 

(4,113,345

)

 

11,392,593

 

 

 

(10,929,775

)

 

25,550,335

 

Dividends to AMPS Shareholders from net investment income

 

 

(151,046

)

 

(172,818

)

 

 

(487,609

)

 

(558,436

)

Net increase in net assets applicable to Common Shareholders resulting from operations

 

 

2,746,099

 

 

16,322,334

 

 

 

9,977,048

 

 

50,813,374

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends to Common Shareholders From

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

(7,789,105

)

 

(7,442,276

)

 

 

(24,311,680

)

 

(22,281,818

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Share Transactions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reinvestment of common dividends

 

 

53,170

 

 

67,819

 

 

 

786,119

 

 

697,165

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Assets Applicable to Common Shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total increase (decrease) in net assets applicable to Common Shareholders

 

 

(4,989,836

)

 

8,947,877

 

 

 

(13,548,513

)

 

29,228,721

 

Beginning of year

 

 

131,772,432

 

 

122,824,555

 

 

 

384,562,820

 

 

355,334,099

 

End of year

 

$

126,782,596

 

$

131,772,432

 

 

$

371,014,307

 

$

384,562,820

 

Undistributed net investment income

 

$

2,196,256

 

$

2,351,959

 

 

$

7,240,631

 

$

6,872,762

 


 

 

 

See Notes to Financial Statements.

 

 

44

ANNUAL REPORT

AUGUST 31, 2011




 

 

Statements of Changes in Net Assets


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BlackRock Municipal
Income Trust II (BLE)

 

BlackRock MuniHoldings
Investment Quality Fund (MFL)

 

 

 

Year Ended August 31,

 

Year Ended August 31,

 

Increase (Decrease) in Net Assets Applicable to Common Shareholders:

 

2011

 

2010

 

2011

 

2010

 

Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

$

25,170,419

 

$

25,062,944

 

$

35,772,211

 

$

36,114,076

 

Net realized gain (loss)

 

 

(1,929,140

)

 

(1,380,128

)

 

(14,391,578

)

 

5,303,256

 

Net change in unrealized appreciation/depreciation

 

 

(15,031,363

)

 

42,483,321

 

 

(11,924,556

)

 

33,786,326

 

Dividends to AMPS Shareholders from net investment income

 

 

(537,485

)

 

(619,323

)

 

(903,388

)

 

(1,120,623

)

Net increase in net assets applicable to Common Shareholders resulting from operations

 

 

7,672,431

 

 

65,546,814

 

 

8,552,689

 

 

74,083,035

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends to Common Shareholders From

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

(23,242,731

)

 

(22,569,858

)

 

(34,274,513

)

 

(31,867,551

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Share Transactions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reinvestment of common dividends

 

 

1,014,192

 

 

1,222,581

 

 

528,154

 

 

138,384

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Assets Applicable to Common Shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

Total increase (decrease) in net assets applicable to Common Shareholders

 

 

(14,556,108

)

 

44,199,537

 

 

(25,193,670

)

 

42,353,868

 

Beginning of year

 

 

340,269,038

 

 

296,069,501

 

 

553,366,533

 

 

511,012,665

 

End of year

 

$

325,712,930

 

$

340,269,038

 

$

528,172,863

 

$

553,366,533

 

Undistributed net investment income

 

$

7,319,075

 

$

5,957,971

 

$

9,718,432

 

$

9,074,078

 


 

 

 

 

 

 

 

 

 

 

BlackRock MuniVest
Fund, Inc. (MVF)

 

 

 

Year Ended August 31,

 

Increase (Decrease) in Net Assets Applicable to Common Shareholders:

 

2011

 

2010

 

Operations

 

 

 

 

 

 

 

Net investment income

 

$

46,141,071

 

$

45,513,965

 

Net realized gain (loss)

 

 

(8,945,246

)

 

6,158,635

 

Net change in unrealized appreciation/depreciation

 

 

(20,763,919

)

 

54,194,616

 

Dividends to AMPS Shareholders from net investment income

 

 

(1,048,890

)

 

(1,128,079

)

Net increase in net assets applicable to Common Shareholders resulting from operations

 

 

15,383,016

 

 

104,739,137

 

 

 

 

 

 

 

 

 

Dividends to Common Shareholders From

 

 

 

 

 

 

 

Net investment income

 

 

(44,113,394

)

 

(40,403,913

)

 

 

 

 

 

 

 

 

Capital Share Transactions

 

 

 

 

 

 

 

Reinvestment of common dividends

 

 

5,769,177

 

 

4,970,652

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Assets Applicable to Common Shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total increase (decrease) in net assets applicable to Common Shareholders

 

 

(22,961,201

)

 

69,305,876

 

Beginning of year

 

 

625,195,232

 

 

555,889,356

 

End of year

 

$

602,234,031

 

$

625,195,232

 

Undistributed net investment income

 

$

15,202,097

 

$

14,225,505

 


 

 

 

 

See Notes to Financial Statements.

 

 

 

 

 

 

 

 

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

45




 

 

Statements of Cash Flows


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended August 31, 2011

 

BlackRock
Municipal Bond
Investment Trust
(BIE)

 

BlackRock
Municipal Income
Investment
Quality Trust
(BAF)

 

BlackRock
Municipal Income
Quality Trust
(BYM)

 

BlackRock
MuniHoldings
Investment
Quality Fund
(MFL)

 

BlackRock
MuniVest
Fund, Inc.
(MVF)

 

Cash Provided by Operating Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net increase in net assets resulting from operations, excluding dividends to AMPS Shareholders

 

$

478,714

 

$

2,897,145

 

$

10,464,657

 

$

9,456,077

 

$

16,431,906

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Increase) decrease in interest receivable

 

 

(76,630

)

 

319,589

 

 

(340,887

)

 

(50,935

)

 

534,811

 

(Increase) decrease in interest receivable — affiliated

 

 

 

 

2

 

 

(9

)

 

(36

)

 

(115

)

Increase in cash pledged as collateral for financial futures contracts

 

 

(38,280

)

 

(57,300

)

 

(170,000

)

 

(200,000

)

 

 

(Increase) decrease in other assets

 

 

70

 

 

(42

)

 

(488

)

 

(7,751

)

 

(9,813

)

Increase (decrease) in investment advisory fees payable

 

 

3,263

 

 

2,531

 

 

23,692

 

 

9,227

 

 

(2,429

)

Increase (decrease) in interest expense and fees payable

 

 

114

 

 

(13,815

)

 

(3,380

)

 

(1,306

)

 

(3,496

)

Increase (decrease) in other affiliates payable

 

 

(255

)

 

(625

)

 

(1,838

)

 

(2,698

)

 

(3,134

)

Increase in other accrued expenses payable

 

 

9,471

 

 

12,427

 

 

60,402

 

 

351,364

 

 

38,532

 

Increase (decrease) in prepaid expenses

 

 

 

 

(1,355

)

 

(10,855

)

 

16,773

 

 

(16,942

)

Increase in margin variation receivable

 

 

(4,978

)

 

(11,379

)

 

(33,780

)

 

(44,445

)

 

 

Increase in Officer’s and Trustees’ fees payable

 

 

268

 

 

905

 

 

1,199

 

 

10,232

 

 

11,447

 

Net realized and unrealized loss on investments

 

 

2,561,239

 

 

4,480,271

 

 

12,506,436

 

 

22,417,385

 

 

27,357,855

 

Amortization of premium and accretion of discount on investments

 

 

95,929

 

 

301,626

 

 

(3,865,680

)

 

1,716,149

 

 

1,156,850

 

Amortization of deferred offering costs

 

 

 

 

 

 

 

 

120,298

 

 

 

Proceeds from sales of long-term investments

 

 

22,086,222

 

 

79,105,286

 

 

110,346,085

 

 

240,125,755

 

 

140,290,031

 

Purchases of long-term investments

 

 

(21,376,922

)

 

(61,211,704

)

 

(113,694,012

)

 

(252,477,561

)

 

(100,671,962

)

Net proceeds from sales (purchases) of short-term securities

 

 

(500,271

)

 

(8,018,977

)

 

3,595,500

 

 

10,178,459

 

 

(40,076,998

)

Cash provided by operating activities

 

 

3,237,954

 

 

17,804,585

 

 

18,877,042

 

 

31,616,987

 

 

45,036,543

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Used for Financing Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash receipts from TOB trust certificates

 

 

 

 

6,995,000

 

 

5,049,578

 

 

6,995,000

 

 

 

Cash payments for TOB trust certificates

 

 

 

 

(16,924,998

)

 

 

 

(3,097,658

)

 

(5,868,999

)

Cash payments on redemption of AMPS

 

 

 

 

 

 

 

 

(274,650,000

)

 

 

Cash receipts on issuance of VRDP Shares

 

 

 

 

 

 

 

 

274,600,000

 

 

 

Cash payments for offering costs

 

 

 

 

 

 

 

 

(853,615

)

 

 

Cash dividends paid to Common Shareholders

 

 

(3,174,201

)

 

(7,726,932

)

 

(23,442,317

)

 

(33,611,565

)

 

(38,120,164

)

Cash dividends paid to AMPS Shareholders

 

 

(63,753

)

 

(150,870

)

 

(487,989

)

 

(916,350

)

 

(1,059,749

)

Increase (decrease) in bank overdraft

 

 

 

 

3,215

 

 

3,686

 

 

(272

)

 

12,369

 

Cash used for financing activities

 

 

(3,237,954

)

 

(17,804,585

)

 

(18,877,042

)

 

(31,534,460

)

 

(45,036,543

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net increase in cash

 

 

 

 

 

 

 

$

82,527

 

 

 

Cash at beginning of year

 

 

 

 

 

 

 

 

 

 

 

Cash at end of year

 

 

 

 

 

 

 

$

82,527

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Flow Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid during the year for interest and fees

 

$

128,131

 

$

191,075

 

$

608,418

 

$

694,207

 

$

1,367,244

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noncash Financing Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital shares issued in reinvestment of dividends paid to Common Shareholders

 

$

15,928

 

$

53,170

 

$

786,119

 

$

528,154

 

$

5,769,177

 


 

 

 

A Statement of Cash Flows is presented when a Trust had a significant amount of borrowing during the year, based on the average borrowing outstanding in relation to average total assets.


 

 

 

See Notes to Financial Statements.

 

 

 

 

46

ANNUAL REPORT

AUGUST 31, 2011



 

 

 

Financial Highlights


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BlackRock Municipal
Bond Investment Trust (BIE)

 

BlackRock Municipal
Bond Trust (BBK)

 

 

 

Year Ended August 31,

 

Year Ended August 31,

 

 

 

2011

 

2010

 

2009

 

2008

 

2007

 

2011

 

2010

 

2009

 

2008

 

2007

 

Per Share Operating Performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, beginning of year

 

$

15.51

 

$

14.16

 

$

14.86

 

$

15.45

 

$

16.22

 

 

$

15.29

 

$

13.23

 

$

13.96

 

$

15.57

 

$

16.35

 

Net investment income

 

 

1.03

1

 

1.02

1

 

1.03

1

 

1.16

1

 

1.15

 

 

 

1.14

1

 

1.14

1

 

1.14

1

 

1.23

1

 

1.20

 

Net realized and unrealized gain (loss)

 

 

(0.89

)

 

1.27

 

 

(0.76

)

 

(0.51

)

 

(0.67

)

 

 

(0.87

)

 

1.97

 

 

(0.83

)

 

(1.48

)

 

(0.63

)

Dividends and distributions to AMPS
Shareholders from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

(0.02

)

 

(0.02

)

 

(0.13

)

 

(0.30

)

 

(0.32

)

 

 

(0.03

)

 

(0.03

)

 

(0.13

)

 

(0.28

)

 

(0.32

)

Net realized gain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(0.03

)

 

 

Net increase (decrease) from
investment operations

 

 

0.12

 

 

2.27

 

 

0.14

 

 

0.35

 

 

0.16

 

 

 

0.24

 

 

3.08

 

 

0.18

 

 

(0.56

)

 

0.25

 

Dividends and distributions to Common
Shareholders from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

(0.96

)

 

(0.92

)

 

(0.84

)

 

(0.94

)

 

(0.93

)

 

 

(1.05

)

 

(1.02

)

 

(0.91

)

 

(0.95

)

 

(1.03

)

Net realized gain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(0.10

)

 

 

Total dividends and distributions to
Common Shareholders

 

 

(0.96

)

 

(0.92

)

 

(0.84

)

 

(0.94

)

 

(0.93

)

 

 

(1.05

)

 

(1.02

)

 

(0.91

)

 

(1.05

)

 

(1.03

)

Net asset value, end of year

 

$

14.67

 

$

15.51

 

$

14.16

 

$

14.86

 

$

15.45

 

 

$

14.48

 

$

15.29

 

$

13.23

 

$

13.96

 

$

15.57

 

Market price, end of year

 

$

14.22

 

$

15.60

 

$

13.20

 

$

14.28

 

$

15.82

 

 

$

14.86

 

$

15.79

 

$

13.80

 

$

13.89

 

$

16.50

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Investment Returns2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Based on net asset value

 

 

1.29

%

 

16.80

%

 

2.43

%

 

2.34

%

 

0.95

%

 

 

2.02

%

 

24.13

%

 

2.52

%

 

(3.77

)%

 

1.09

%

Based on market price

 

 

(2.38

)%

 

26.02

%

 

(0.64

) %

 

(3.95

)%

 

0.40

%

 

 

1.38

%

 

22.90

%

 

7.48

%

 

(9.65

)%

 

(2.09

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios to Average Net Assets Applicable to Common Shareholders

 

Total expenses3

 

 

1.81

%

 

1.57

%

 

1.71

%

 

1.54

%

 

1.43

%

 

 

1.33

%

 

1.29

%

 

1.51

%

 

1.39

%

 

1.28

%

Total expenses after fees waived and before fees paid indirectly3

 

 

1.66

%

 

1.35

%

 

1.36

%

 

1.13

%

 

0.98

%

 

 

1.19

%

 

1.08

%

 

1.19

%

 

1.01

%

 

0.84

%

Total expenses after fees waived and paid indirectly3

 

 

1.66

%

 

1.35

%

 

1.36

%

 

1.13

%

 

0.96

%

 

 

1.19

%

 

1.08

%

 

1.19

%

 

1.01

%

 

0.83

%

Total expenses after fees waived and paid indirectly and excluding interest expense and fees3,4

 

 

1.39

%

 

1.15

%

 

1.25

%

 

1.09

%

 

0.96

%

 

 

1.16

%

 

1.05

%

 

1.10

%

 

0.98

%

 

0.83

%

Net investment income3

 

 

7.25

%

 

6.92

%

 

7.98

%

 

7.52

%

 

7.22

%

 

 

8.15

%

 

8.08

%

 

9.67

%

 

8.25

%

 

7.36

%

Dividends to AMPS Shareholders

 

 

0.13

%

 

0.15

%

 

1.01

%

 

1.99

%

 

2.01

%

 

 

0.19

%

 

0.22

%

 

1.11

%

 

1.87

%

 

1.94

%

Net investment income to Common Shareholders

 

 

7.12

%

 

6.77

%

 

6.97

%

 

5.53

%

 

5.21

%

 

 

7.96

%

 

7.86

%

 

8.56

%

 

6.38

%

 

5.42

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Data

 

Net assets applicable to Common Shareholders, end of year (000)

 

$

48,941

 

$

51,708

 

$

47,203

 

$

49,532

 

$

51,384

 

 

$

151,471

 

$

159,216

 

$

137,030

 

$

144,116

 

$

159,900

 

AMPS Shares outstanding at $25,000 liquidation preference, end of year (000)

 

$

17,850

 

$

17,850

 

$

17,850

 

$

26,175

 

$

29,775

 

 

$

79,900

 

$

79,900

 

$

79,900

 

$

80,500

 

$

90,500

 

Portfolio turnover

 

 

25

%

 

47

%

 

71

%

 

30

%

 

23

%

 

 

27

%

 

51

%

 

46

%

 

27

%

 

14

%

Asset coverage per AMPS at $25,000 liquidation preference, end of year (000)

 

$

93,546

 

$

97,421

 

$

91,112

 

$

72,318

 

$

68,149

 

 

$

72,394

 

$

74,819

 

$

67,877

 

$

69,766

 

$

69,176

 


 

 

 

 

1

Based on average Common Shares outstanding.

 

 

 

 

2

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. Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

 

 

 

 

3

Do not reflect the effect of dividends to AMPS Shareholders.

 

 

 

 

4

Interest expense and fees relate to TOBs. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs.


 

 

 

 

See Notes to Financial Statements.

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

47



 

 

 

Financial Highlights


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BlackRock Municipal Income
Investment Quality Trust (BAF)

 

BlackRock Municipal
Income Quality Trust (BYM)

 

 

 

Year Ended August 31,

 

Year Ended August 31,

 

 

 

2011

 

2010

 

2009

 

2008

 

2007

 

2011

 

2010

 

2009

 

2008

 

2007

 

Per Share Operating Performance

 

Net asset value, beginning of year

 

$

15.08

 

$

14.06

 

$

14.23

 

$

14.68

 

$

15.24

 

$

14.64

 

$

13.55

 

$

14.04

 

$

14.82

 

$

15.54

 

Net investment income

 

 

0.91

1

 

0.94

1

 

0.91

1

 

0.99

1

 

1.01

 

 

 

0.97

1

 

0.96

1

 

0.91

1

 

1.04

1

 

1.03

 

Net realized and unrealized gain (loss)

 

 

(0.58

)

 

0.95

 

 

(0.27

)

 

(0.46

)

 

(0.56

)

 

 

(0.58

)

 

1.00

 

 

(0.55

)

 

(0.83

)

 

(0.67

)

Dividends and distributions to AMPS Shareholders from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

(0.02

)

 

(0.02

)

 

(0.09

)

 

(0.28

)

 

(0.31

)

 

 

(0.02

)

 

(0.02

)

 

(0.10

)

 

(0.26

)

 

(0.28

)

Net realized gain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(0.02

)

Net increase (decrease) from investment operations

 

 

0.31

 

 

1.87

 

 

0.55

 

 

0.25

 

 

0.14

 

 

 

0.37

 

 

1.94

 

 

0.26

 

 

(0.05

)

 

0.06

 

Dividends and distributions to Common Shareholders from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

(0.89

)

 

(0.85

)

 

(0.72

)

 

(0.70

)

 

(0.70

)

 

 

(0.92

)

 

(0.85

)

 

(0.75

)

 

(0.73

)

 

(0.73

)

Net realized gain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(0.05

)

Total dividends and distributions to Common Shareholders

 

 

(0.89

)

 

(0.85

)

 

(0.72

)

 

(0.70

)

 

(0.70

)

 

 

(0.92

)

 

(0.85

)

 

(0.75

)

 

(0.73

)

 

(0.78

)

Net asset value, end of year

 

$

14.50

 

$

15.08

 

$

14.06

 

$

14.23

 

$

14.68

 

 

$

14.09

 

$

14.64

 

$

13.55

 

$

14.04

 

$

14.82

 

Market price, end of year

 

$

13.92

 

$

15.64

 

$

13.01

 

$

12.42

 

$

13.55

 

 

$

13.85

 

$

15.26

 

$

13.69

 

$

13.19

 

$

14.35

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Investment Return2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Based on net asset value

 

 

2.62

%

 

13.93

%

 

5.36

%

 

2.22

%

 

1.17

%

 

 

3.09

%

 

14.74

%

 

2.83

%

 

(0.16

)%

 

0.48

%

Based on market price

 

 

(5.01

)%

 

27.70

%

 

11.70

%

 

(3.35

)%

 

2.54

%

 

 

(2.79

)%

 

18.42

%

 

10.58

%

 

(3.13

)%

 

3.20

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio to Average Net Assets Applicable to Common Shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total expenses3

 

 

1.25

%

 

1.23

%

 

1.60

%

 

1.33

%

 

1.19

%

 

 

1.25

%

 

1.15

%

 

1.38

%

 

1.24

%

 

1.12

%

Total expenses after fees waived and before fees paid indirectly3

 

 

1.23

%

 

1.14

%

 

1.40

%

 

1.05

%

 

0.87

%

 

 

1.24

%

 

1.06

%

 

1.20

%

 

0.98

%

 

0.80

%

Total expenses after fees waived and paid indirectly3

 

 

1.23

%

 

1.14

%

 

1.40

%

 

1.05

%

 

0.86

%

 

 

1.24

%

 

1.06

%

 

1.20

%

 

0.98

%

 

0.80

%

Total expenses after fees waived and paid indirectly and excluding interest expense and fees3,4

 

 

1.09

%

 

0.97

%

 

0.98

%

 

0.91

%

 

0.86

%

 

 

1.07

%

 

0.92

%

 

0.93

%

 

0.86

%

 

0.80

%

Net investment income

 

 

6.51

%

 

6.54

%

 

7.04

%

 

6.71

%

 

6.70

%

 

 

7.15

%

 

6.85

%

 

7.23

%

 

7.08

%

 

6.67

%

Dividends to AMPS Shareholders

 

 

0.12

%

 

0.14

%

 

0.66

%

 

1.92

%

 

2.05

%

 

 

0.14

%

 

0.15

%

 

0.76

%

 

1.80

%

 

1.79

%

Net investment income to Common Shareholders

 

 

6.39

%

 

6.40

%

 

6.38

%

 

4.79

%

 

4.65

%

 

 

7.01

%

 

6.70

%

 

6.47

%

 

5.28

%

 

4.88

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets applicable to Common Shareholders, end of year (000)

 

$

126,783

 

$

131,772

 

$

122,825

 

$

124,305

 

$

128,215

 

 

$

371,014

 

$

384,563

 

$

355,334

 

$

368,133

 

$

388,275

 

AMPS Shares outstanding at $25,000 liquidation preference, end of year (000)

 

$

42,275

 

$

42,275

 

$

42,275

 

$

44,375

 

$

76,000

 

 

$

137,250

 

$

137,250

 

$

137,250

 

$

149,925

 

$

228,975

 

Portfolio turnover

 

 

33

%

 

26

%

 

45

%

 

29

%

 

13

%

 

 

19

%

 

13

%

 

18

%

 

39

%

 

17

%

Asset coverage per AMPS at $25,000 liquidation preference, end of year (000)

 

$

99,975

 

$

102,926

 

$

97,637

 

$

95,044

 

$

67,187

 

 

$

92,580

 

$

95,049

 

$

89,725

 

$

86,398

 

$

67,402

 


 

 

 

 

1

Based on average Common Shares outstanding.

 

 

 

 

2

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. Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

 

 

 

 

3

Do not reflect the effect of dividends to AMPS Shareholders.

 

 

 

 

4

Interest expense, fees and amortization of offering costs relate to TOBs. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs.


 

 

 

See Notes to Financial Statements.

 

 

 

 

48

ANNUAL REPORT

AUGUST 31, 2011




 

 

Financial Highlights


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BlackRock Municipal
Income Trust II (BLE)

 

BlackRock MuniHoldings
Investment Quality Fund (MFL)

 

 

 

Year Ended August 31,

 

Year Ended August 31,

 

 

 

2011

 

2010

 

2009

 

2008

 

2007

 

2011

 

2010

 

2009

 

2008

 

2007

 

Per Share Operating Performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, beginning of year

 

$

14.63

 

$

12.78

 

$

13.60

 

$

15.08

 

$

15.82

 

$

14.69

 

$

13.57

 

$

13.50

 

$

14.09

 

$

14.75

 

Net investment income

 

 

1.08

1

 

1.08

1

 

1.09

1

 

1.17

1

 

1.17

 

 

0.95

1

 

0.96

1

 

0.94

1

 

1.01

1

 

1.07

1

Net realized and unrealized gain (loss)

 

 

(0.73

)

 

1.77

 

 

(0.95

)

 

(1.50

)

 

(0.66

)

 

(0.71

)

 

1.04

 

 

(0.03

)

 

(0.61

)

 

(0.66

)

Dividends to AMPS Shareholders from net investment income

 

 

(0.02

)

 

(0.03

)

 

(0.12

)

 

(0.30

)

 

(0.32

)

 

(0.02

)

 

(0.03

)

 

(0.13

)

 

(0.32

)

 

(0.35

)

Net increase (decrease) from investment operations

 

 

0.33

 

 

2.82

 

 

0.02

 

 

(0.63

)

 

0.19

 

 

0.22

 

 

1.97

 

 

0.78

 

 

0.08

 

 

0.06

 

Dividends Common Shareholders from net investment income

 

 

(1.00

)

 

(0.97

)

 

(0.84

)

 

(0.85

)

 

(0.93

)

 

(0.91

)

 

(0.85

)

 

(0.71

)

 

(0.67

)

 

(0.72

)

Net asset value, end of year

 

$

13.96

 

$

14.63

 

$

12.78

 

$

13.60

 

$

15.08

 

$

14.00

 

$

14.69

 

$

13.57

 

$

13.50

 

$

14.09

 

Market price, end of year

 

$

14.13

 

$

15.22

 

$

13.45

 

$

13.27

 

$

15.05

 

$

13.84

 

$

14.65

 

$

12.63

 

$

11.61

 

$

12.86

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Investment Return2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Based on net asset value

 

 

2.70

%

 

22.83

%

 

1.54

%

 

(4.15

)%

 

1.02

%

 

2.01

%

 

15.22

%

 

7.36

%

 

1.16

%

 

0.59

%

Based on market price

 

 

(0.07

)%

 

21.42

%

 

9.52

%

 

(6.29

)%

 

(7.38

)%

 

1.12

%

 

23.46

%

 

16.19

%

 

(4.68

)%

 

(5.76

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio to Average Net Assets Applicable to Common Shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total expenses3

 

 

1.18

%

 

1.16

%

 

1.36

%

 

1.24

%

 

1.12

%

 

1.37

%

 

1.17

%

 

1.32

%

 

1.54

%

 

1.54

%

Total expenses after fees waived and before fees paid indirectly3

 

 

1.10

%

 

1.08

%

 

1.19

%

 

1.07

%

 

0.90

%

 

1.30

%

 

1.09

%

 

1.20

%

 

1.42

%

 

1.46

%

Total expenses after fees waived and paid indirectly3

 

 

1.10

%

 

1.08

%

 

1.19

%

 

1.07

%

 

0.89

%

 

1.30

%

 

1.09

%

 

1.20

%

 

1.42

%

 

1.46

%

Total expenses after fees waived and paid indirectly and excluding interest expense and fees3,4

 

 

1.01

%

 

0.99

%

 

1.05

%

 

1.00

%

 

0.89

%

 

 

 

 

 

 

 

 

 

 

Total expenses after fees waived and paid indirectly and excluding interest expense, fees and amortization of offering costs3,5

 

 

 

 

 

 

 

 

 

 

 

 

1.14

%

 

1.01

%

 

1.07

%

 

1.13

%

 

1.12

%

Net investment income3

 

 

7.94

%

 

7.89

%

 

9.69

%

 

8.09

%

 

7.43

%

 

7.03

%

 

6.85

%

 

7.48

%

 

7.23

%

 

7.30

%

Dividends to AMPS Shareholders

 

 

0.17

%

 

0.20

%

 

1.07

%

 

2.04

%

 

2.01

%

 

0.18

%

 

0.21

%

 

1.05

%

 

2.31

%

 

2.40

%

Net investment income to Common Shareholders

 

 

7.77

%

 

7.69

%

 

8.62

%

 

6.05

%

 

5.42

%

 

6.85

%

 

6.64

%

 

6.43

%

 

4.92

%

 

4.90

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets applicable to Common Shareholders, end of year (000)

 

$

325,713

 

$

340,269

 

$

296,070

 

$

314,889

 

$

347,563

 

$

528,173

 

$

553,367

 

$

511,013

 

$

508,698

 

$

530,903

 

AMPS outstanding at $25,000 liquidation preference, end of year (000)

 

$

151,300

 

$

151,300

 

$

151,300

 

$

166,050

 

$

205,550

 

 

 

$

274,650

 

$

274,650

 

$

296,125

 

$

363,250

 

VRDP Shares outstanding at $100,000 liquidation value, end of year (000)

 

 

 

 

 

 

 

 

 

 

 

$

274,600

 

 

 

 

 

 

 

 

 

Portfolio turnover

 

 

16

%

 

29

%

 

19

%

 

21

%

 

12

%

 

32

%

 

38

%

 

40

%

 

25

%

 

22

%

Asset coverage per AMPS at $25,000 liquidation preference, end of year

 

$

78,819

 

$

81,226

 

$

73,923

 

$

72,419

 

$

67,279

 

 

 

$

75,371

 

$

71,516

 

$

67,958

 

$

61,555

 

Asset coverage per VRDP Share at $100,000 liquidation value, end of year

 

 

 

 

 

 

 

 

 

 

 

$

292,343

 

 

 

 

 

 

 

 

 


 

 

 

 

1

Based on average Common Shares outstanding.

 

 

 

 

2

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. Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

 

 

 

 

3

Do not reflect the effect of dividends to AMPS Shareholders.

 

 

 

 

4

Interest expense and fees relate to TOBs. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs.

 

 

 

 

5

Interest expense, fees and amortization of offering costs relate to TOBs and/or VRDP Shares. See Note 1 and Note 7 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs and VRDP Shares, respectively.


 

 

 

 

See Notes to Financial Statements.

 

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

49




 

 

Financial Highlights


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BlackRock MuniVest Fund, Inc. (MVF)

 

 

 

Year Ended August 31,

 

 

 

2011

 

2010

 

2009

 

2008

 

2007

 

Per Share Operating Performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, beginning of year

 

$

10.01

 

$

8.98

 

$

8.91

 

$

9.39

 

$

9.93

 

Net investment income1

 

 

0.73

 

 

0.73

 

 

0.70

 

 

0.67

 

 

0.73

 

Net realized and unrealized gain (loss)

 

 

(0.47

)

 

0.97

 

 

(0.03

)

 

(0.45

)

 

(0.55

)

Dividends to AMPS Shareholders from net investment income

 

 

(0.02

)

 

(0.02

)

 

(0.06

)

 

(0.18

)

 

(0.20

)

Net increase (decrease) from investment operations

 

 

0.24

 

 

1.68

 

 

0.61

 

 

0.04

 

 

(0.02

)

Dividends to Common Shareholders from net investment income

 

 

(0.70

)

 

(0.65

)

 

(0.54

)

 

(0.52

)

 

(0.52

)

Net asset value, end of year

 

$

9.55

 

$

10.01

 

$

8.98

 

$

8.91

 

$

9.39

 

Market price, end of year

 

$

9.73

 

$

10.38

 

$

8.91

 

$

8.33

 

$

9.35

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Investment Return2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Based on net asset value

 

 

2.90

%

 

19.31

%

 

8.18

%

 

0.51

%

 

(0.30

)%

Based on market price

 

 

1.11

%

 

24.69

%

 

14.81

%

 

(5.63

)%

 

2.05

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio to Average Net Assets Applicable to Common Shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total expenses3

 

 

1.28

%

 

1.22

%

 

1.53

%

 

1.58

%

 

1.66

%

Total expenses after fees waived and before fees paid indirectly3

 

 

1.28

%

 

1.22

%

 

1.50

%

 

1.58

%

 

1.66

%

Total expenses after fees waived and paid indirectly and excluding interest expense and fees3,4

 

 

1.05

%

 

1.03

%

 

1.14

%

 

1.10

%

 

1.02

%

Net investment income3

 

 

7.93

%

 

7.71

%

 

8.74

%

 

7.34

%

 

7.33

%

Dividends to AMPS Shareholders

 

 

0.18

%

 

0.19

%

 

0.78

%

 

1.94

%

 

1.98

%

Net investment income to Common Shareholders

 

 

7.75

%

 

7.52

%

 

7.96

%

 

5.40

%

 

5.35

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets applicable to Common Shareholders, end of year (000)

 

$

602,234

 

$

625,195

 

$

555,889

 

$

551,027

 

$

579,079

 

AMPS outstanding at $25,000 liquidation preference, end of year (000)

 

$

243,825

 

$

243,825

 

$

243,825

 

$

275,700

 

$

334,000

 

Portfolio turnover

 

 

10

%

 

25

%

 

31

%

 

41

%

 

39

%

Asset coverage per AMPS at $25,000 liquidation preference, end of year

 

$

86,749

 

$

89,106

 

$

81,999

 

$

74,993

 

$

68,380

 


 

 

 

 

1

Based on average shares outstanding.

 

 

 

 

2

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. Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

 

 

 

 

3

Do not reflect the effect of dividends to AMPS Shareholders.

 

 

 

 

4

Interest expense and fees relate to TOBs. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs.


 

 

 

See Notes to Financial Statements.

 

 

 

50

ANNUAL REPORT

AUGUST 31, 2011




 

 

Notes to Financial Statements

1. Organization and Significant Accounting Policies:

BlackRock Municipal Bond Investment Trust (“BIE”) and BlackRock Municipal Bond Trust (“BBK”) (collectively the “Bond Trusts”), BlackRock Municipal Income Investment Quality Trust (“BAF”), BlackRock Municipal Income Quality Trust (“BYM”) and BlackRock Municipal Income Trust II (“BLE”) are organized as Delaware statutory trusts. BlackRock MuniHoldings Investment Quality Fund (“MFL”) and BlackRock MuniVest Fund, Inc. (“MVF”) are organized as a Massachusetts business trust and as a Maryland corporation, respectively. BIE, BBK, BAF, BYM, BLE, MFL and MVF are referred to herein collectively as the “Trusts.” BBK, BYM and BLE are registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as diversified, closed-end management investment companies. BAF, BIE, MFL and MVF are registered under the 1940 Act as non-diversified, closed-end management investment companies. The Trusts’ financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. The Board of Directors and the Boards of Trustees are referred to throughout this report as the “Board of Trustees” or the “Board.”The Trusts determine and make available for publication the NAV of their Common Shares on a daily basis.

The following is a summary of significant accounting policies followed by the Trusts:

Valuation: US GAAP defines fair value as the price the Trusts would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Trusts fair value their financial instruments at market value using independent dealers or pricing services under policies approved by each Trust’s Board. Municipal investments (including commitments to purchase such investments on a “when-issued” basis) are valued on the basis of prices provided by dealers or pricing services. In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from dealers, pricing matrixes, market transactions in comparable investments and information with respect to various relationships between investments. Financial futures contracts traded on exchanges are valued at their last sale price. Investments in open-end registered investment companies are valued at NAV each business day. Short-term securities with remaining maturities of 60 days or less may be valued at amortized cost, which approximates fair value.

In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the market value of such investment or if a price is not available, the investment will be valued in accordance with a policy approved by the Board as reflecting fair value (“Fair Value Assets”). When determining the price for Fair Value Assets, the investment advisor and/or the sub-advisor seeks to determine the price that each Trust might reasonably expect to receive from the current sale of that asset in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the investment advisor and/or sub-advisor deems relevant. The pricing of all Fair Value Assets is subsequently reported to the Board or a committee thereof.

Zero-Coupon Bonds: The Trusts may invest in zero-coupon bonds, which are normally issued at a significant discount from face value and do not provide for periodic interest payments. Zero-coupon bonds may experience greater volatility in market value than similar maturity debt obligations which provide for regular interest payments.

Forward Commitments and When-Issued Delayed Delivery Securities: The Trusts may purchase securities on a when-issued basis and may purchase or sell securities on a forward commitment basis. Settlement of such transactions normally occurs within a month or more after the purchase or sale commitment is made. The Trusts may purchase securities under such conditions with the intention of actually acquiring them, but may enter into a separate agreement to sell the securities before the settlement date. Since the value of securities purchased may fluctuate prior to settlement, the Trusts may be required to pay more at settlement than the security is worth. In addition, the Trusts are not entitled to any of the interest earned prior to settlement. When purchasing a security on a delayed delivery basis, the Trusts assume the rights and risks of ownership of the security, including the risk of price and yield fluctuations. In the event of default by the counterparty, the Trusts’ maximum amount of loss is the unrealized appreciation of unsettled when-issued transactions, which is shown in the Schedules of Investments.

Municipal Bonds Transferred to TOBS: The Trusts leverage their assets through the use of TOBs. A TOB is established by a third party sponsor forming a special purpose entity, into which one or more funds, or an agent on behalf of the funds, transfers municipal bonds. Other funds managed by the investment advisor may also contribute municipal bonds to a TOB into which a Trust has contributed bonds. A TOB typically issues two classes of beneficial interests: short-term floating rate certificates, which are sold to third party investors, and residual certificates (“TOB Residuals”), which are generally issued to the participating funds that made the transfer. The TOB Residuals held by a Trust include the right of a Trust (1) to cause the holders of a proportional share of the short-term floating rate certificates to tender their certificates at par, including during instances of a rise in short-term interest rates, and (2) to transfer, within seven days, a corresponding share of the municipal bonds from the TOB to a Trust. The TOB may also be terminated without the consent of a Trust upon the occurrence of certain events as defined in the TOB agreements. Such termination events may include the bankruptcy or default of the municipal bond, a substantial downgrade in credit quality of the municipal bond, the inability of the TOB to obtain quarterly or annual renewal of the liquidity support agreement, a substantial decline in market value of the municipal bond or the inability to remarket the short-term floating rate certificates to third party investors. During the year ended August 31, 2011, no TOBs that the Trusts participated in were terminated without the consent of the Trusts.

The cash received by the TOB from the sale of the short-term floating rate certificates, less transaction expenses, is paid to a Trust, in exchange for TOB trust certificates. The Trusts typically invest the cash in additional municipal bonds. Each Trust’s transfer of the municipal bonds to a TOB is accounted for as a secured borrowing, therefore the municipal bonds deposited into a TOB are presented in the Trusts’ Schedules of Investments and the TOB trust certificates are shown in other liabilities in the Statements of Assets and Liabilities.

Interest income, including amortization and accretion of premiums and discounts, from the underlying municipal bonds is recorded by the Trusts on an

 

 

 

 

 

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

51




 

 

Notes to Financial Statements (continued)

accrual basis. Interest expense incurred on the secured borrowing and other expenses related to remarketing, administration and trustee services to a TOB are shown as interest expense, fees and amortization of offering costs in the Statements of Operations. The short-term 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. At August 31, 2011, the aggregate value of the underlying municipal bonds transferred to TOBs, the related liability for TOB trust certificates and the range of interest rates on the liability for TOB trust certificates were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

Underlying
Municipal
Bonds
Transferred to
TOBs

 

 



Liability for
TOB Trust
Certificates

 



Range of
Interest
Rates

BIE

 

$

31,226,558

 

$

16,275,832

 

0.21% – 0.27

%

BBK

 

$

14,961,173

 

$

7,399,148

 

0.14% – 0.27

%

BAF

 

$

43,014,158

 

$

22,266,266

 

0.21% – 0.31

%

BYM

 

$

164,863,719

 

$

85,964,090

 

0.21% – 0.31

%

BLE

 

$

78,070,386

 

$

43,450,717

 

0.14% – 0.27

%

MFL

 

$

149,399,786

 

$

74,965,059

 

0.21% – 0.31

%

MVF

 

$

331,495,356

 

$

173,250,847

 

0.14% – 0.36

%

For the year ended August 31, 2011, the Trusts’ average TOB trust certificates outstanding and the daily weighted average interest rate, including fees, were as follows:

 

 

 

 

 

 

 

 

 

 

Average TOB
Trust Certificates
Outstanding

 

 

Daily Weighted
Average
Interest Rate

 

BIE

 

$

16,275,832

 

 

0.79

%

BBK

 

$

7,399,148

 

 

0.71

%

BAF

 

25,339,334

 

 

0.70

%

BYM

 

$

81,823,815

 

 

0.74

%

BLE

 

$

39,902,340

 

 

0.72

%

MFL

 

$

69,464,052

 

 

0.81

%

MVF

 

$

175,868,813

 

 

0.77

%

Should short-term interest rates rise, the Trusts’ investments in TOBs may adversely affect the Trusts’ net investment income and dividends to Common Shareholders. Also, fluctuations in the market values of municipal bonds deposited into the TOB may adversely affect the Trusts’ NAV per share.

Segregation and Collateralization: In cases in which the 1940 Act and the interpretive positions of the Securities and Exchange Commission (“SEC”) require that the Trusts either deliver collateral or segregate assets in connection with certain investments (e.g., financial futures contracts), the Trusts will, consistent with SEC rules and/or certain interpretive letters issued by the SEC, segregate collateral or designate on their books and records cash or liquid securities having a market value at least equal to the amount that would otherwise be required to be physically segregated. Furthermore, based on requirements and agreements with certain exchanges and third party broker-dealers, each party to such transactions has requirements to deliver/deposit securities as collateral for certain investments.

Investment Transactions and Investment Income: For financial reporting purposes, investment transactions are recorded on the dates the transactions are entered into (the trade dates). Realized gains and losses on investment transactions are determined on the identified cost basis. Dividend income is recorded on the ex-dividend dates. Interest income, including amortization and accretion of premiums and discounts on debt securities, is recognized on the accrual basis.

Dividends and Distributions: Dividends from net investment income are declared and paid monthly. Distributions of capital gains are recorded on the ex-dividend dates. The amount and timing of dividends and distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP. Dividends and distributions to AMPS and VRDP Shareholders are accrued and determined as described in Note 7.

Income Taxes: It is each Trust’s policy to comply with the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no federal income tax provision is required.

Each Trust files US federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Trusts’ US federal tax returns remains open for each of the four years ended August 31, 2011. The statutes of limitations on each Trust’s state and local tax returns may remain open for an additional year depending upon the jurisdiction. Management does not believe there are any uncertain tax positions that require recognition of a tax liability.

Recent Accounting Standard: In May 2011, the Financial Accounting Standards Board issued amended guidance to improve disclosure about fair value measurements which will require the following disclosures for fair value measurements categorized as Level 3: quantitative information about the unobservable inputs and assumptions used in the fair value measurement, a description of the valuation policies and procedures and a narrative description of the sensitivity of the fair value measurement to changes in unobservable inputs and the interrelationships between those unobservable inputs. In addition, the amounts and reasons for all transfers in and out of Level 1 and Level 2 will be required to be disclosed. The amended guidance is effective for financial statements for fiscal years beginning after December 15, 2011 and interim periods within those fiscal years. Management is evaluating the impact of this guidance on the Trusts’ financial statements and disclosures.

Deferred Compensation and BlackRock Closed-End Share Equivalent Investment Plan: Under the deferred compensation plan approved by each Trust’s Board, independent Trustees (“Independent Trustees”) may defer a portion of their annual complex-wide compensation. Deferred amounts earn an approximate return as though equivalent dollar amounts had been invested in common shares of certain other BlackRock Closed-End Funds selected by the Independent Trustees. This has approximately the same economic effect for the Independent Trustees as if the Independent Trustees had invested the deferred amounts directly in certain other BlackRock Closed-End Funds.

The deferred compensation plan is not funded and obligations thereunder represent general unsecured claims against the general assets of each Trust. Each Trust may, however, elect to invest in common shares of certain other BlackRock Closed-End Funds selected by the Independent Trustees in order to match its deferred compensation obligations. Investments to cover each Trust’s deferred compensation liability, if any, are included in other assets in the Statements of Assets and Liabilities. Dividends and distributions from

 

 

 

 

 

 

52

ANNUAL REPORT

AUGUST 31, 2011




 

 

Notes to Financial Statements (continued)

the BlackRock Closed-End Fund investments under the plan are included in income — affiliated in the Statements of Operations.

Offering Costs: MFL incurred costs in connection with its issuance of VRDP Shares, which were recorded as a deferred charge and will be amortized over the 30-year life of the VRDP Shares with the exception of upfront fees paid to the liquidity provider which are amortized over the life of the liquidity agreement. Amortization of these costs is included in interest expense, fees and amortization of offering costs in the Statements of Operations.

Other: Expenses directly related to a Trust are charged to that Trust. Other operating expenses shared by several funds are pro rated among those funds on the basis of relative net assets or other appropriate methods.

The Trusts have an arrangement with the custodians whereby fees may be reduced by credits earned on uninvested cash balances, which, if applicable, are shown as fees paid indirectly in the Statements of Operations. The custodians impose fees on overdrawn cash balances, which can be offset by accumulated credits earned or may result in additional custody charges.

2. Derivative Financial Instruments:

The Trusts engage in various portfolio investment strategies using derivative contracts both to increase the returns of the Trusts and to economically hedge, or protect, their exposure to certain risks such as interest rate risk. These contracts may be transacted on an exchange.

Losses may arise if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument or if the counterparty does not perform under the contract. Counterparty risk related to exchange-traded financial futures contracts is deemed to be minimal due to the protection against defaults provided by the exchange on which these contracts trade.

Financial Futures Contracts: The Trusts purchase or sell financial futures contracts and options on financial futures contracts to gain exposure to, or economically hedge against, changes in interest rates (interest rate risk). Financial futures contracts are agreements between the Trusts and counterparty to buy or sell a specific quantity of an underlying instrument at a specified price and at a specified date. Depending on the terms of the particular contract, futures contracts are settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount on the settlement date. Pursuant to the contract, the Trusts agree 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 margin variation and are recorded by the Trusts as unrealized appreciation or depreciation. When the contract is closed, the Trusts record 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. The use of financial futures contracts involves the risk of an imperfect correlation in the movements in the price of financial futures contracts, interest rates and the underlying assets.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure:

 

 

 

Fair Values of Derivative Financial Instruments as of August 31, 2011

 

 

 

Assets Derivatives

 

 

 

 

 

BIE

 

BAF

 

BYM

 

BLE

 

MFL

 

 

 

Statement of Assets and
Liabilities Location

 

Value

 

Interest rate contracts

 

Net unrealized appreciation/depreciation*

 

$

5,005

 

$

11,439

 

$

33,960

 

$

72,641

 

$

44,684

 


 

 

 

 

*

Includes cumulative appreciation/depreciation on financial futures contracts as reported in the Schedules of Investments. Only current day’s margin variation is reported within the Statements of Assets and Liabilities.


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Effect of Derivative Financial Instruments in the Statements of Operations
Year Ended August 31, 2011

 

 

 

Net Realized Loss From

 

 

 

BIE

 

BBK

 

BAF

 

BYM

 

BLE

 

MFL

 

MVF

 

Interest rate contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial futures contracts

 

$

(399,035

)

$

(1,126,872

)

$

(601,250

)

$

(2,536,336

)

$

(1,974,396

)

$

(3,943,433

)

$

(2,361,123

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Change in Unrealized Appreciation/Depreciation on

 

 

 

BIE

 

BBK

 

BAF

 

BYM

 

BLE

 

MFL

 

MVF

 

Interest rate contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial futures contracts

 

$

5,005

 

 

 

$

11,439

 

$

33,960

 

$

72,641

 

$

44,684

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the year ended August 31, 2011, the average quarterly balances of outstanding derivative financial instruments were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BIE

 

BBK

 

BAF

 

BYM

 

BLE

 

MFL

 

MVF

 

Financial futures contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average number of contracts sold

 

 

24

 

 

40

 

 

40

 

 

144

 

 

126

 

 

246

 

 

190

 

Average notional value of contracts sold

 

$

2,833,869

 

$

4,706,019

 

$

4,799,730

 

$

17,383,047

 

$

15,228,034

 

$

29,563,661

 

$

22,635,733

 


 

 

 

 

 

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

53




 

 

Notes to Financial Statements (continued)

3. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. (“PNC”) and Barclays Bank PLC (“Barclays”) are the largest stockholders of BlackRock, Inc. (“BlackRock”). Due to the ownership structure, PNC is an affiliate for 1940 Act purposes, but Barclays is not.

Each Trust entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the “Manager”), the Trusts’ investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services. The Manager is responsible for the management of each Trust’s portfolio and provides the necessary personnel, facilities, equipment and certain other services necessary to the operations of each Trust. For such services, each Trust pays the Manager a monthly fee based on a percentage of each Trust’s average weekly net assets except MFL and MVF, which are based on average daily net assets at the following annual rates:

 

 

 

 

 

BIE

 

 

0.65

%

BBK

 

 

0.65

%

BAF

 

 

0.55

%

BYM

 

 

0.55

%

BLE

 

 

0.55

%

MFL

 

 

0.55

%

MVF

 

 

0.50

%

Average weekly net assets and average daily net assets are the average weekly or the average daily value of each Trust’s total assets minus the sum of its accrued liabilities.

The Manager voluntarily agreed to waive a portion of the investment advisory fee with respect to BAF and BYM, as a percentage of average weekly net assets, at an annual rate of 0.05% through October 2010. With respect to the Bond Trusts, the waiver, as a percentage of average weekly net assets was 0.10% through April 2011 and is 0.05% through April 2012. With respect to BLE, the waiver, as a percentage of average weekly assets, is 0.05% through July 2012. With respect to MFL, the Manager voluntarily agreed to waive its investment advisory fees on the proceeds of Preferred Shares and TOBs that exceed 35% of total assets minus the sum of its accrued liabilities. For the year ended August 31, 2011, the Manager waived the following amounts, which are included in fees waived by advisor in the Statements of Operations:

 

 

 

 

 

BIE

 

$

67,652

 

BBK

 

$

194,147

 

BAF

 

$

16,941

 

BYM

 

$

50,268

 

BLE

 

$

254,056

 

MFL

 

$

384,071

 

The Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees each Trust pays to the Manager indirectly through its investment in affiliated money market funds, however the Manager does not waive its investment advisory fees by the amount of investment advisory fees paid in connection with each Trust’s investment in other affiliated investment companies, if any. These amounts are shown as, or included in, fees waived by advisor in the Statements of Operations. For the year ended August 31, 2011, the amounts waived were as follows:

 

 

 

 

 

BIE

 

$

623

 

BBK

 

$

997

 

BAF

 

$

1,547

 

BYM

 

$

2,536

 

BLE

 

$

2,497

 

MFL

 

$

12,024

 

MVF

 

$

7,907

 

The Manager entered into sub-advisory agreements with BlackRock Financial Management, Inc. (“BFM”), an affiliate of the Manager, with respect to BAF, BYM, the Bond Trusts and BLE, and BlackRock Investment Management, LLC (“BIM”), an affiliate of the Manager, with respect to MFL and MVF. The Manager pays BFM and BIM, for services they provide, a monthly fee that is a percentage of the investment advisory fees paid by each Trust to the Manager.

For the period September 1, 2010 through December 31, 2010, each Trust reimbursed the Manager for certain accounting services, which are included in accounting services in the Statements of Operations. The reimbursements were as follows:

 

 

 

 

 

BIE

 

$

276

 

BBK

 

$

784

 

BAF

 

$

634

 

BYM

 

$

1,735

 

BLE

 

$

1,694

 

MFL

 

$

2,759

 

MVF

 

$

3,220

 

Effective January 1, 2011, the Trusts no longer reimburse the Manager for accounting services.

Certain officers and/or trustees of the Trusts are officers and/or trustees of BlackRock or its affiliates. The Trusts reimburse the Manager for compensation paid to the Trusts’ Chief Compliance Officer.

4. Investments:

Purchases and sales of investments, excluding short-term securities, for the year ended August 31, 2011, were as follows:

 

 

 

 

 

 

 

 

 

 

Purchases

 

Sales

 

BIE

 

$

19,784,253

 

$

21,131,198

 

BBK

 

$

61,558,417

 

$

61,595,254

 

BAF

 

$

62,597,383

 

$

80,023,648

 

BYM

 

$

113,676,887

 

$

110,021,623

 

BLE

 

$

78,660,935

 

$

85,501,956

 

MFL

 

$

248,796,270

 

$

241,936,503

 

MVF

 

$

98,671,962

 

$

138,263,031

 


 

 

 

 

 

 

54

ANNUAL REPORT

AUGUST 31, 2011




 

 

Notes to Financial Statements (continued)

5. Income Tax Information:

Reclassifications: US GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or net asset values per share. The following permanent differences as of August 31, 2011 attributable to amortization methods on fixed income securities and non-deductible expenses were reclassified to the following accounts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BIE

 

BBK

 

BAF

 

BYM

 

BLE

 

MFL

 

MVF

 

Paid-in capital

 

 

 

 

 

 

 

 

 

 

 

$

(4,733

)

 

 

Undistributed net investment income

 

$

(917

)

$

(7,926

)

$

(182,737

)

$

(306,311

)

$

(29,099

)

$

50,044

 

$

(2,195

)

Accumulated net realized loss

 

$

917

 

$

7,926

 

$

182,737

 

$

306,311

 

$

29,099

 

$

(45,311

)

$

2,195

 

The tax character of distributions paid during the fiscal years ended August 31, 2011 and August 31, 2010 was as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BIE

 

 

BBK

 

 

BAF

 

 

BYM

 

 

BLE

 

 

MFL

 

 

MVF

 

Tax-exempt income

8/31/2011

$

3,261,004

$

11,214,922

$

7,940,151

$

24,799,289

$

23,780,216

$

35,428,904

$

45,150,857

 

 

8/31/2010

 

 

3,125,313

 

 

10,923,719

 

 

7,615,094

 

 

22,840,254

 

 

23,189,181

 

 

32,988,174

 

 

41,531,992

 

Ordinary income

8/31/2011

 

 

 

 

22,333

 

 

 

 

 

 

 

 

 

 

11,427

 

Total distributions

 

8/31/2011

 

$

3,261,004

 

$

11,237,255

 

$

7,940,151

 

$

24,799,289

 

$

23,780,216

 

$

35,428,904

 

$

45,162,284

 

 

 

8/31/2010

 

$

3,125,313

 

$

10,923,719

 

$

7,615,094

 

$

22,840,254

 

$

23,189,181

 

$

32,988,174

 

$

41,531,992

 

As of August 31, 2011, the tax components of accumulated net earnings (losses) were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BIE

 

 

BBK

 

 

BAF

 

 

BYM

 

 

BLE

 

 

MFL

 

 

MVF

 

Undistributed tax-exempt income

 

$

720,555

 

$

3,064,105

 

$

2,105,456

 

$

6,381,909

 

$

6,691,316

 

$

9,041,888

 

$

14,461,417

 

Undistributed ordinary income

 

 

271

 

 

20,491

 

 

894

 

 

3,698

 

 

7,674

 

 

6,764

 

 

14,048

 

Capital loss carryforwards

 

 

(2,077,246

)

 

(2,405,531

)

 

(4,896,649

)

 

(13,379,609

)

 

(16,959,474

)

 

(27,845,574

)

 

(12,895,146

)

Net unrealized gains*

 

 

3,034,199

 

 

2,040,759

 

 

5,528,279

 

 

4,273,847

 

 

4,423,838

 

 

21,867,303

 

 

27,966,499

 

Total

 

$

1,677,779

 

$

2,719,824

 

$

2,737,980

 

$

(2,720,155

)

$

(5,836,646

)

$

3,070,381

 

$

29,546,818

 


 

 

*

The differences between book-basis and tax-basis net unrealized gains were attributable primarily to the tax deferral of losses on wash sales and straddles, amortization methods for premiums and discounts on fixed income securities, the accrual of income on securities in default, the realization for tax purposes of unrealized gains/losses on certain futures contracts, the deferral of post-October capital losses for tax purposes, the tax treatment of residual interests in TOBs, the timing and recognition of partnership income and the deferral of compensation to trustees.

As of August 31, 2011, the Trusts had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expires August 31,

 

 

BIE

 

 

BBK

 

 

BAF

 

 

BYM

 

 

BLE

 

 

MFL

 

 

MVF

 

2012

 

 

 

 

 

 

 

 

 

$

5,097,889

 

$

1,643,296

 

 

 

2013

 

 

 

 

 

$

178,996

 

 

 

 

 

 

7,986,138

 

 

 

2015

 

$

30,026

 

 

 

 

 

$

1,522,202

 

 

 

 

 

 

 

2016

 

 

 

$

180,076

 

 

250,838

 

 

3,217,765

 

 

1,648,836

 

 

 

 

 

2017

 

 

 

 

2,225,455

 

 

 

 

6,430,212

 

 

3,397,830

 

 

6,481,433

 

$

7,618,622

 

2018

 

 

1,329,063

 

 

 

 

1,516,661

 

 

2,209,430

 

 

4,366,226

 

 

11,734,707

 

 

 

2019

 

 

718,157

 

 

 

 

2,950,154

 

 

 

 

2,448,693

 

 

 

 

5,276,524

 

Total

 

$

2,077,246

 

$

2,405,531

 

$

4,896,649

 

$

13,379,609

 

$

16,959,474

 

$

27,845,574

 

$

12,895,146

 

Under the recently enacted Regulated Investment Company Modernization Act of 2010, capital losses incurred by the Trusts after August 31, 2011 will not be subject to expiration. In addition, any such losses must be utilized prior to the losses incurred in pre-enactment taxable years.

 

 

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

55




 


Notes to Financial Statements (continued)

6. Concentration, Market and Credit Risk:

Each Trust invests a substantial amount of its assets in issuers located in a single state or limited number of states. Please see the Schedules of Investments for concentrations in specific states.

Many municipalities insure repayment of their bonds, which may reduce the potential for loss due to credit risk. The market value of these bonds may fluctuate for other reasons, including market perception of the value of such insurance, and there is no guarantee that the insurer will meet its obligation.

In the normal course of business, the Trusts invest in securities and enter into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (issuer credit risk). The value of securities held by the Trusts may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Trusts; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to issuer credit risk, the Trusts may be exposed to counterparty credit risk, or the risk that an entity with which the Trusts have unsettled or open transactions may fail to or be unable to perform on its commitments. The Trusts manage counterparty credit risk by entering into transactions only with counterparties that they believe have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Trusts to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Trusts’ exposure to market, issuer and counterparty credit risks with respect to these financial assets is generally approximated by their value recorded in the Trusts’ Statements of Assets and Liabilities, less any collateral held by the Trusts.

As of August 31, 2011, BIE invested a significant portion of its assets in securities in the Health and Transportation sectors. BBK, BLE and MVF each invested a significant portion of its assets in securities in the Health sectors. BAF invested a significant portion of its assets in securities in the County/City/Special District/School District and Utilities sectors. BYM and MFL each invested a significant portion of its assets in securities in the Transportation and Utilities sectors. Changes in economic conditions affecting the County/City/Special District/School District, Health, Transportation and Utilities sectors would have a greater impact on the Trusts and could affect the value, income and/or liquidity of positions in such securities.

7. Capital Share Transactions:

Each Trust, except for MFL and MVF, is authorized to issue an unlimited number of shares, including AMPS and VRDP Shares, par value $0.001 per share, all of which were initially classified as Common Shares. Each Trust’s Board is authorized, however, to reclassify any unissued Common Shares to Preferred Shares without approval of Common Shareholders.

MFL is authorized to issue an unlimited number of shares, including 1 million AMPS and VRDP Shares, par value $0.10 per share.

MVF is authorized to issue 160 million shares, 150 million of which were initially classified as Common Shares, par value $0.10 per share and 10 million of which were classified as AMPS and VRDP Shares, par value $0.10 per share.

Common Shares

For the years shown, shares issued and outstanding increased by the following amounts as a result of dividend reinvestment:

 

 

 

 

 

 

 

 

 

 

Year Ended August 31,

 

 

 

2011

 

2010

 

BIE

 

 

1,042

 

 

639

 

BBK

 

 

50,072

 

 

54,302

 

BAF

 

 

3,544

 

 

4,686

 

BYM

 

 

57,519

 

 

49,706

 

BLE

 

 

74,401

 

 

90,383

 

MFL

 

 

38,214

 

 

9,752

 

MVF

 

 

621,454

 

 

526,507

 

AMPS

The AMPS are redeemable at the option of BIF, BBK, BAF, BYM, BLE and MVF (collectively, the “AMPS Funds”), in whole or in part, on any dividend payment date at their liquidation preference per share plus any accumulated and unpaid dividends whether or not declared. The AMPS are also subject to mandatory redemption at their liquidation preference plus any accumulated and unpaid dividends, whether or not declared, if certain requirements relating to the composition of the assets and liabilities of the AMPS Funds, as set forth in the AMPS Funds’ Articles Supplementary/Statement of Preferences/Certificate of Designation (the “Governing Instrument”) are not satisfied.

From time to time in the future, each AMPS Fund may effect repurchases of its AMPS at prices below their liquidation preference as agreed upon by the Trust and seller. Each AMPS Fund also may redeem its AMPS from time to time as provided in the applicable Governing Instrument. Each AMPS Fund intends to effect such redemptions and/or repurchases to the extent necessary to maintain applicable asset coverage requirements or for such other reasons as the Board may determine.

The AMPS Funds had the following series of AMPS outstanding, effective yields and reset frequency as of August 31, 2011:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series

 

AMPS

 

Effective
Yield

 

Reset
Frequency
Days

 

BIE

 

 

W-7

 

 

714

 

 

0.27

%

 

7

 

BBK

 

 

T-7

 

 

1,598

 

 

0.29

%

 

7

 

 

 

 

R-7

 

 

1,598

 

 

0.31

%

 

7

 

BAF

 

 

M-7

 

 

1,691

 

 

0.31

%

 

7

 

BYM

 

 

M-7

 

 

1,830

 

 

0.31

%

 

7

 

 

 

 

R-7

 

 

1,830

 

 

0.31

%

 

7

 

 

 

 

F-7

 

 

1,830

 

 

0.31

%

 

7

 

BLE

 

 

M-7

 

 

1,513

 

 

0.31

%

 

7

 

 

 

 

T-7

 

 

1,513

 

 

0.29

%

 

7

 

 

 

 

W-7

 

 

1,513

 

 

0.27

%

 

7

 

 

 

 

R-7

 

 

1,513

 

 

0.31

%

 

7

 

MVF

 

 

A

 

 

1,460

 

 

0.20

%

 

28

 

 

 

 

B

 

 

1,460

 

 

0.18

%

 

28

 

 

 

 

C

 

 

1,460

 

 

0.23

%

 

28

 

 

 

 

D

 

 

1,460

 

 

0.17

%

 

28

 

 

 

 

E

 

 

2,190

 

 

0.17

%

 

7

 

 

 

 

F

 

 

1,723

 

 

1.36

%

 

7

 


 

 

 

 

 

 

56

ANNUAL REPORT

AUGUST 31, 2011




 

Notes to Financial Statements (continued)

Dividends on seven-day and 28-day AMPS are cumulative at a rate which is reset every seven or 28 days, respectively, based on the results of an auction. If the AMPS fail to clear the auction on an auction date, each Trust is required to pay the maximum applicable rate on the AMPS to holders of such shares for successive dividend periods until such time as the shares are successfully auctioned. The maximum applicable rate on all series of AMPS (except for MVF) is the higher of 110% of the AA commercial paper rate or 100% of 90% of the Kenny S&P 30-day High Grade Index divided by 1.00 minus the marginal tax rate. The maximum applicable rate on the Preferred Shares for MVF Series A, B, C, D and E is 110% of the interest equivalent of the 60-day commercial paper rate and for Series F is the Higher of 110% plus or times (i) the Telerate/BBA LIBOR or (ii) 90% of the Kenny S&P 30-Day High Grade Index divided by 1.00 minus the marginal tax rate. The low, high and average dividend rates on the AMPS for each Trust for the year ended August 31, 2011 were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series

 

 

Low

 

 

High

 

 

Average

 

BIE

 

 

W-7

 

 

0.11

%

 

0.50

%

 

0.35

%

 

BBK

 

 

T-7

 

 

0.11

%

 

0.50

%

 

0.35

%

 

 

 

R-7

 

 

0.11

%

 

0.50

%

 

0.35

%

 

BAF

 

 

M-7

 

 

0.11

%

 

0.50

%

 

0.36

%

 

BYM

 

 

M-7

 

 

0.11

%

 

0.50

%

 

0.36

%

 

 

 

R-7

 

 

0.11

%

 

0.50

%

 

0.39

%

 

 

 

F-7

 

 

0.11

%

 

0.50

%

 

0.35

%

 

BLE

 

 

M-7

 

 

0.11

%

 

0.50

%

 

0.36

%

 

 

 

T-7

 

 

0.11

%

 

0.50

%

 

0.35

%

 

 

 

W-7

 

 

0.11

%

 

0.50

%

 

0.35

%

 

 

 

R-7

 

 

0.11

%

 

0.50

%

 

0.35

%

 

MFL

 

 

A

 

 

0.11

%

 

0.50

%

 

0.37

%

 

 

 

B

 

 

0.13

%

 

0.50

%

 

0.37

%

 

 

 

C

 

 

0.12

%

 

0.50

%

 

0.37

%

 

 

 

D

 

 

0.11

%

 

0.50

%

 

0.37

%

 

 

 

E

 

 

0.12

%

 

0.50

%

 

0.37

%

 

MVF

 

 

A

 

 

0.12

%

 

0.28

%

 

0.21

%

 

 

 

B

 

 

0.13

%

 

0.28

%

 

0.21

%

 

 

 

C

 

 

0.14

%

 

0.28

%

 

0.22

%

 

 

 

D

 

 

0.13

%

 

0.26

%

 

0.21

%

 

 

 

E

 

 

0.12

%

 

0.28

%

 

0.21

%

 

 

 

F

 

 

1.26

%

 

1.56

%

 

1.43

%

Since February 13, 2008, the AMPS of the Trusts failed to clear any of their auctions. As a result, the AMPS dividend rates were reset to the maximum applicable rate, which ranged from 0.11% to 1.56% for the year ended August 31, 2011. A failed auction is not an event of default for the Trusts but it has a negative impact on the liquidity of AMPS. A failed auction occurs when there are more sellers of a Trust’s AMPS than buyers. A successful auction for the Trusts’ AMPS may not occur for some time, if ever, and even if liquidity does resume, AMPS Shareholders may not have the ability to sell the AMPS at their liquidation preference.

The AMPS Funds pay commissions of 0.15% on the aggregate principal amount of all shares that fail to clear their auctions and 0.25% on the aggregate principal amount of all shares that successfully clear their auctions. Certain broker dealers have individually agreed to reduce commissions for failed auctions.

During the year ended August 31, 2011, MFL announced the following redemptions of AMPS at a price of $25,000 per share plus any accrued and unpaid dividends through the redemption date:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series

 

Redemption
Date

 

Shares
Redeemed

 

Aggregate
Principal

 

MFL

 

 

A

 

 

7/20/11

 

1,584

 

$

39,600,000

 

 

 

 

B

 

 

7/18/11

 

2,642

 

$

66,050,000

 

 

 

 

C

 

 

7/19/11

 

2,601

 

$

65,025,000

 

 

 

 

D

 

 

7/21/11

 

1,633

 

$

40,825,000

 

 

 

 

E

 

 

7/22/11

 

2,526

 

$

63,150,000

 

MFL financed the AMPS redemptions with the proceeds received from the issuance of VRDP Shares.

AMPS issued and outstanding remained constant for the years ended August 31, 2011 and August 31, 2010 for all other Trusts.

VRDP Shares

MFL has issued Series W-7 VRDP Shares, $100,000 liquidation value per share, in a privately negotiated offering. The VRDP Shares were offered to qualified institutional buyers as defined pursuant to Rule 144A under the Securities Act of 1933 and include a liquidity feature that allows the VRDP Shareholders to have their shares purchased by the liquidity provider in the event of a failed remarketing. MFL is required to redeem the VRDP Shares owned by the liquidity provider after six months of continuous, unsuccessful remarketing. The VRDP Shares issued for the year ended August 31, 2011 were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series

 

Issue
Date

 

Shares
Issued

 

Maturity
Date

 

MFL

 

 

W-7

 

 

6/30/11

 

 

2,746

 

 

7/01/41

 

MFL has entered into a fee agreement with the liquidity provider that required an initial commitment and a per annum liquidity fee to be paid to the liquidity provider. These fees are shown as liquidity fees in the Statements of Operations.

Dividends on the VRDP Shares are payable monthly at a variable rate set weekly by the remarketing agent. In the event of a failed remarketing, the dividend rate of the VRDP Shares will be reset to a maximum rate. The maximum rate is determined based on, among other things, the long-term preferred share rating assigned to the VRDP Shares and the length of time that the VRDP Shares fail to be remarketed. For financial reporting purposes, the liquidation value of VRDP Shares is recorded as a liability in the Statements of Assets and Liabilities. Unpaid dividends are included in interest expense and fees payable in the Statements of Assets and Liabilities, and the dividends paid on the VRDP Shares are included as a component of interest expense, fees and amortization of offering costs in the Statements of Operations. Dividends paid to holders of VRDP Shares are generally classified as tax-exempt income for tax-reporting purposes.

 

 

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

57




 

 

Notes to Financial Statements (concluded)

The short-term ratings on the VRDP Shares are directly related to the short-term ratings of the liquidity provider. Changes in the credit quality of the liquidity provider could cause a change in the short-term credit ratings of the VRDP Shares. The liquidity provider may be terminated prior to the scheduled termination date if the liquidity provider fails to maintain short-term debt ratings in one of the two highest rating categories.

Subject to certain conditions, VRDP Shares may be redeemed, in whole or in part, at any time at the option of MFL. The redemption price per VRDP Share is equal to the liquidation value per share plus any outstanding unpaid dividends. In the event of an optional redemption of VRDP Shares prior to the initial termination date of the fee agreement, MFL must pay the liquidity provider fees on such redeemed VRDP Shares for the remaining term of the fee agreement up to the initial termination date. MFL is required to redeem certain of its outstanding VRDP Shares if it fails to maintain certain asset coverage and basic maintenance amount requirements.

All of MFL’s VRDP Shares have successfully remarketed since issuance, with an annualized dividend rate of 0.36% for the year ended August 31, 2011.

Preferred Shares

MFL’s Preferred Shares rank prior to MFL’s Common Shares as to the payment of dividends by MFL and distribution of assets upon dissolution or liquidation of MFL. The 1940 Act prohibits the declaration of any dividend on MFL’s Common Shares or the repurchase of MFL’s Common Shares if MFL fails to maintain the asset coverage of at least 200% of the liquidation preference of the outstanding Preferred Shares. In addition, pursuant to the Preferred Shares’ governing instrument, MFL is restricted from declaring and paying dividends on classes of shares ranking junior to or on parity with the Preferred Shares or repurchasing such shares if MFL fails to declare and pay dividends on the Preferred Shares, redeem any Preferred Shares required to be redeemed under the Preferred Shares governing instrument or comply with the basic maintenance amount requirement of the rating agencies then rating the Preferred Shares.

The holders of Preferred Shares have voting rights equal to the holders of Common Shares (one vote per share) and will vote together with holders of Common Shares (one vote per share) as a single class. However, the holders of Preferred Shares, voting as a separate class, are also entitled to elect two Trustees for each Trust. In addition, the 1940 Act requires that along with approval by shareholders that might otherwise be required, the approval of the holders of a majority of any outstanding Preferred Shares, voting separately as a class would be required to (a) adopt any plan of reorganization that would adversely affect the Preferred Shares, (b) change a Trust’s sub-classification as a closed-end investment company or change its fundamental investment restrictions or (c) change its business so as to cease to be an investment company.

8. Subsequent Events:

Management’s evaluation of the impact of all subsequent events on the Trusts’ financial statements was completed through the date the financial statements were issued and the following items were noted:

The Trusts will pay a net investment income dividend in the following amounts per share on October 3, 2011 to Common Shareholders of record on September 15, 2011:

 

 

 

 

 

 

 

 

Common
Dividend
Per Share

 

BIE

 

$

0.0810

 

BBK

 

$

0.0885

 

BAF

 

$

0.0745

 

BYM

 

$

0.0770

 

BLE

 

$

0.0835

 

MFL

 

$

0.0765

 

MVF

 

$

0.0590

 

 

 

 

 

 

The dividends declared on AMPS or VRDP Shares for the period September 1, 2011 to September 30, 2011 were as follows:

 

 

 

 

 

 

 

 

 

 

 

Series

 

 

Dividends
Declared

 

BIE AMPS

 

 

W-7

 

$

4,534

 

BIE VRDP

 

 

W-7

 

$

2,453

 

BBK AMPS

 

 

T-7

 

$

8,166

 

 

 

 

R-7

 

$

10,019

 

BAF AMPS

 

 

M-7

 

$

8,506

 

BYM AMPS

 

 

M-7

 

$

9,205

 

 

 

 

R-7

 

$

11,474

 

 

 

 

F-7

 

$

9,260

 

BLE AMPS

 

 

M-7

 

$

7,610

 

 

 

 

T-7

 

$

7,731

 

 

 

 

W-7

 

$

9,608

 

 

 

 

R-7

 

$

9,487

 

MFL VRDP

 

 

W7

 

$

71,546

 

MVF AMPS

 

 

A  

 

$

5,548

 

 

 

 

B  

 

$

4,935

 

 

 

 

C  

 

$

6,701

 

 

 

 

D  

 

$

4,614

 

 

 

 

E  

 

$

7,030

 

 

 

 

F  

 

$

44,350

 

 

 

 

 

 

 

 

 

On September 15, 2011, BIE issued 178 Series W-7 VRDP Shares, $100,000 liquidation value per share with a maturity date of October 1, 2041 and total proceeds received of $17,800,000 in a private offering of VRDP Shares with qualified institutional buyers, as defined in Rule 144A under the Securities Act of 1933 to finance the AMPS redemption.

On September 15, 2011, BIE entered into a Fee Agreement (the “Agreement”) with a financial institution in relation to the refinancing of AMPS. Pursuant to the terms of the Agreement, effective September 15, 2011, BIE will pay a liquidity fee to provide a liquidity feature in the event of a failed remarketing of VRDP Shares.

On October 6, 2011, BIE redeemed 714 Series W-7 AMPS at a price of $25,000 per share plus any accrued and unpaid dividends.

 

 

 

 

 

 

58

ANNUAL REPORT

AUGUST 31, 2011




 

 

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Trustees of
BlackRock Municipal Bond Investment Trust
BlackRock Municipal Bond Trust
BlackRock Municipal Income Investment Quality Trust
BlackRock Municipal Income Quality Trust
BlackRock Municipal Income Trust II
BlackRock MuniHoldings Investment Quality Fund
and to the Shareholders and Board of Directors of
BlackRock MuniVest Fund, Inc.:

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of BlackRock Municipal Bond Investment Trust, BlackRock Municipal Bond Trust, BlackRock Municipal Income Investment Quality Trust (formerly BlackRock Insured Municipal Income Investment Trust), BlackRock Municipal Income Quality Trust (formerly BlackRock Insured Municipal Income Trust), BlackRock Municipal Income Trust II, BlackRock MuniHoldings Investment Quality Fund (formerly BlackRock MuniHoldings Insured Investment Fund), and BlackRock MuniVest Fund, Inc. (the “Trusts”) as of August 31, 2011, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. We have also audited the statements of cash flows of BlackRock Municipal Bond Investment Trust, BlackRock Municipal Income Investment Quality Trust, BlackRock Municipal Income Quality Trust, BlackRock MuniHoldings Investment Quality Fund, and BlackRock MuniVest Fund, Inc. for the year ended August 31, 2011. These financial statements and financial highlights are the responsibility of the Trusts’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

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 audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Trusts 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 Trusts’ 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, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of August 31, 2011, by correspondence with the custodians 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 referred to above present fairly, in all material respects, the financial positions of BlackRock Municipal Bond Investment Trust, BlackRock Municipal Bond Trust, BlackRock Municipal Income Investment Quality Trust, BlackRock Municipal Income Quality Trust, BlackRock Municipal Income Trust II, BlackRock MuniHoldings Investment Quality Fund, and BlackRock MuniVest Fund, Inc. as of August 31, 2011, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the statements of cash flows referred to above present fairly, in all material respects, the cash flows of BlackRock Municipal Bond Investment Trust, BlackRock Municipal Income Investment Quality Trust, BlackRock Municipal Income Quality Trust, BlackRock MuniHoldings Investment Quality Fund, and BlackRock MuniVest Fund, Inc. for the year ended August 31, 2011, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP
Boston, Massachusetts
October 28, 2011

 

 

Important Tax Information (Unaudited)

The following table summarizes the taxable per share distributions paid by BBK and MVF during the taxable year ended August 31, 2011.

 

 

 

 

 

 

 

 

BBK

 

 

Payable Date

 

 

Ordinary Income

 

Common Shareholders

 

 

12/31/10

 

$

0.002077

 

AMPS:

 

 

 

 

 

 

 

Series T-7

 

 

12/08/10

 

$

0.21

 

Series R-7

 

 

11/26/10

 

$

0.21

 

 

MVF

 

 

Payable Date

 

 

Ordinary Income

 

Common Shareholders

 

 

12/31/10

 

$

0.000177

 

AMPS:

 

 

 

 

 

 

 

Series A

 

 

12/13/10

 

$

0.02

 

Series B

 

 

12/20/10

 

$

0.01

 

Series C

 

 

12/27/10

 

$

0.02

 

Series E

 

 

12/20/10

 

$

0.02

 

Series F

 

 

12/15/10

 

$

0.10

 

All other net investment income distributions paid by BBK and MVF during the taxable year ended August 31, 2011 qualify as tax-exempt interest dividends for federal income tax purposes.

All of the net investment income distributions paid by BIE, BAF, BYM, BLE and MFL during the taxable year ended August 31, 2011 qualify as tax-exempt interest dividends for federal income tax purposes.

 

 

 

 

 

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

59




 

 

Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements

The Board of Directors or Trustees, as applicable (each, a “Board,” collectively, the “Boards,” and the members of which are referred to as “Board Members”) of BlackRock Municipal Bond Investment Trust (“BIE”), BlackRock Municipal Bond Trust (“BBK”), BlackRock Municipal Income Investment Quality Trust (“BAF”), BlackRock Municipal Income Quality Trust (“BYM”), BlackRock Municipal Income Trust II (“BLE”), BlackRock MuniHoldings Investment Quality Fund (“MFL”) and BlackRock MuniVest Fund, Inc. (“MVF” and together with BIE, BBK, BAF, BYM,BLE and MFL, each a “Fund,” and, collectively, the “Funds”) met on April 14, 2011 and May 12–13, 2011 to consider the approval of each Fund’s investment advisory agreement (each, an “Advisory Agreement”) with BlackRock Advisors, LLC (the “Manager”), each Fund’s investment advisor. The Board of each Fund also considered the approval of the sub-advisory agreement (each, a “Sub-Advisory Agreement”) between the Manager and BlackRock Financial Management, Inc. or BlackRock Investment Management, LLC, as applicable (the “Sub-Advisor”), with respect to each Fund. The Manager and the Sub-Advisor are referred to herein as “BlackRock.” The Advisory Agreements and the Sub-Advisory Agreements are referred to herein as the “Agreements.”

Activities and Composition of the Board

Each Board consists of eleven individuals, nine of whom are not “interested persons” of such Fund as defined in the Investment Company Act of 1940 (the “1940 Act”) (the “Independent Board Members”). The Board Members are responsible for the oversight of the operations of the Funds and perform the various duties imposed on the directors of investment companies by the 1940 Act. The Independent Board Members have retained independent legal counsel to assist them in connection with their duties. The Chairman of the Board is an Independent Board Member. Each Board has established five standing committees: an Audit Committee, a Governance and Nominating Committee, a Compliance Committee, a Performance Oversight Committee and an Executive Committee, each of which is composed of Independent Board Members (except for the Executive Committee, which also has one interested Board Member) and is chaired by an Independent Board Member. The Boards of BIE, BBK, BAF, BYM, BLE and MVF also have established a Committee on Auction Market Preferred Shares. In addition, the Board of MFL had established a Committee on Auction Market Preferred Shares prior to the redemption of all of MFL’s outstanding auction market preferred shares. Further, each Board established an ad hoc committee, the Joint Product Pricing Committee, which consisted of Independent Board Members and the directors/trustees of the boards of certain other BlackRock-managed funds, who were not “interested persons” of their respective funds.

The Agreements

Pursuant to the 1940 Act, the Boards are required to consider the continuation of the Agreements on an annual basis. In connection with this process, the Boards assessed, among other things, the nature, scope and quality of the services provided to the Funds by BlackRock, its personnel and its affiliates, including investment management, administrative and shareholder services, oversight of fund accounting and custody, marketing services, risk oversight, compliance program and assistance in meeting applicable legal and regulatory requirements.

The Boards, acting directly and through their respective committees, considered at each of their meetings, and from time to time as appropriate, factors that are relevant to its annual consideration of the renewal of the Agreements, including the services and support provided by BlackRock to the Funds and their shareholders. Among the matters the Boards considered were: (a) investment performance for one-, three- and five-year periods, as applicable, against peer funds, and applicable benchmarks, if any, as well as senior management’s and portfolio managers’ analysis of the reasons for any over performance or underperformance against their peers and/or benchmark, as applicable; (b) fees, including advisory and other amounts paid to BlackRock and its affiliates by the Funds for services such as call center and fund accounting; (c) Fund operating expenses and how BlackRock allocates expenses to the Funds; (d) the resources devoted to, risk oversight of, and compliance reports relating to, implementation of the Funds’ investment objectives, policies and restrictions; (e) the Funds’ compliance with its Code of Ethics and other compliance policies and procedures; (f) the nature, cost and character of non-investment management services provided by BlackRock and its affiliates; (g) BlackRock’s and other service providers’ internal controls and risk and compliance oversight mechanisms; (h) BlackRock’s implementation of the proxy voting policies approved by the Boards; (i) execution quality of portfolio transactions; (j) BlackRock’s implementation of the Funds’ valuation and liquidity procedures; (k) an analysis of contractual and actual management fee ratios for products with similar investment objectives across the open-end fund, closed-end fund and institutional account product channels, as applicable; (l) BlackRock’s compensation methodology for its investment professionals and the incentives it creates; and (m) periodic updates on BlackRock’s business.

Board Considerations in Approving the Agreements

The Approval Process: Prior to the April 14, 2011 meeting, the Boards requested and received materials specifically relating to the Agreements. The Boards are engaged in a process with BlackRock to review periodically the nature and scope of the information provided to better assist their deliberations. The materials provided in connection with the April meeting included (a) information independently compiled and prepared by Lipper, Inc. (“Lipper”) on Fund fees and expenses and the investment performance of the Funds as compared with a peer group of funds as determined by Lipper and a customized peer group selected by BlackRock (collectively, “Peers”); (b) information on the profitability of the Agreements to BlackRock and a discussion of fall-out benefits to BlackRock and its affiliates and significant shareholders; (c) a general analysis provided by BlackRock concerning investment management fees (a combination of the advisory fee and the administration fee, if any) charged to other clients, such as institutional clients and open-end funds, under similar investment mandates, as applicable; (d) the impact of economies of scale; (e) a summary of aggregate amounts paid by each Fund to BlackRock and (f) if applicable, a comparison of management fees to similar BlackRock closed-end funds, as classified by Lipper.

 

 

 

 

 

 

60

ANNUAL REPORT

AUGUST 31, 2011




 

 

Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements (continued)

At an in-person meeting held on April 14, 2011, the Boards reviewed materials relating to their consideration of the Agreements. As a result of the discussions that occurred during the April 14, 2011 meeting, and as a culmination of the Boards’ year-long deliberative process, the Boards presented BlackRock with questions and requests for additional information. BlackRock responded to these requests with additional written information in advance of the May 12–13, 2011 Board meeting.

At an in-person meeting held on May 12–13, 2011, each Board, including the Independent Board Members, unanimously approved the continuation of the Advisory Agreement between the Manager and its Fund and the Sub-Advisory Agreement between the Manager and the Sub-Advisor with respect to its Fund, each for a one-year term ending June 30, 2012. In approving the continuation of the Agreements, the Boards considered: (a) the nature, extent and quality of the services provided by BlackRock; (b) the investment performance of the Funds and BlackRock; (c) the advisory fee and the cost of the services and profits to be realized by BlackRock and its affiliates from their relationship with the Funds; (d) economies of scale; (e) fall-out benefits to BlackRock as a result of its relationship with the Funds; and (f) other factors deemed relevant by the Board Members.

The Boards also considered other matters they deemed important to the approval process, such as services related to the valuation and pricing of Fund portfolio holdings, direct and indirect benefits to BlackRock and its affiliates and significant shareholders from their relationship with Funds and advice from independent legal counsel with respect to the review process and materials submitted for the Boards’ review. The Boards noted the willingness of BlackRock personnel to engage in open, candid discussions with the Boards. The Boards did not identify any particular information as controlling, and each Board Member may have attributed different weights to the various items considered.

A. Nature, Extent and Quality of the Services Provided by BlackRock: The Boards, including the Independent Board Members, reviewed the nature, extent and quality of services provided by BlackRock, including the investment advisory services and the resulting performance of the Funds. Throughout the year, the Boards compared Fund performance to the performance of a comparable group of closed-end funds and/or the performance of a relevant benchmark, if any. The Boards met with BlackRock’s senior management personnel responsible for investment operations, including the senior investment officers. Each Board also reviewed the materials provided by its Fund’s portfolio management team discussing Fund performance and the Fund’s investment objective, strategies and outlook.

The Boards considered, among other factors, the number, education and experience of BlackRock’s investment personnel generally and their Funds’ portfolio management teams, investments by portfolio managers in the funds they manage, BlackRock’s portfolio trading capabilities, BlackRock’s use of technology, BlackRock’s commitment to compliance, BlackRock’s credit analysis capabilities, BlackRock’s risk analysis capabilities and BlackRock’s approach to training and retaining portfolio managers and other research, advisory and management personnel. The Boards engaged in a review of BlackRock’s compensation structure with respect to their Funds’ portfolio management teams and BlackRock’s ability to attract and retain high-quality talent and create performance incentives.

In addition to advisory services, the Boards considered the quality of the administrative and non-investment advisory services provided to the Funds. BlackRock and its affiliates provide the Funds with certain services (in addition to any such services provided to the Funds by third parties) and officers and other personnel as are necessary for the operations of the Funds. In addition to investment advisory services, BlackRock and its affiliates provide the Funds with other services, including (i) preparing disclosure documents, such as the prospectus and the statement of additional information in connection with the initial public offering and periodic shareholder reports; (ii) preparing communications with analysts to support secondary market trading of the Funds; (iii) assisting with daily accounting and pricing; (iv) preparing periodic filings with regulators and stock exchanges; (v) overseeing and coordinating the activities of other service providers; (vi) organizing Board meetings and preparing the materials for such Board meetings; (vii) providing legal and compliance support; and (viii) performing other administrative functions necessary for the operation of the Funds, such as tax reporting, fulfilling regulatory filing requirements and call center services. The Boards reviewed the structure and duties of BlackRock’s fund administration, accounting, legal and compliance departments and considered BlackRock’s policies and procedures for assuring compliance with applicable laws and regulations.

B. The Investment Performance of the Fund and BlackRock: The Boards, including the Independent Board Members, also reviewed and considered the performance history of their Funds. In preparation for the April 14, 2011 meeting, the Boards worked with BlackRock and Lipper to develop a template for, and was provided with reports independently prepared by Lipper, which included a comprehensive analysis of each Fund’s performance. The Boards also reviewed a narrative and statistical analysis of the Lipper data that was prepared by BlackRock, which analyzed various factors that affect Lipper’s rankings. In connection with its review, each Board received and reviewed information regarding the investment performance of its Fund as compared to funds in that Fund’s applicable Lipper category and a customized peer group selected by BlackRock. The Boards were provided with a description of the methodology used by Lipper to select peer funds. The Boards and each Board’s Performance Oversight Committee regularly review, and meet with Fund management to discuss, the performance of the Funds throughout the year.

The Board of each of BAF and MFL noted that, in general, its respective Fund performed better than its Peers in that the Fund’s performance was at or above the median of its Customized Lipper Peer Group Composite in two of the one-, three- and five-year periods reported.

The Board of each of BBK, BYM, BLE and MVF noted that, in general, its respective Fund performed better than its Peers in that the Fund’s performance was at or above the median of its Customized Lipper Peer Group Composite in each of the one-, three- and five-year periods reported.

 

 

 

 

 

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

61




 

 

Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements (continued)

The Board of BIE noted that the Fund performed below the median of its Customized Lipper Peer Group Composite in the one- and three-year periods reported, but that the Fund performed at or above the median of its Customized Lipper Peer Group Composite in the five-year period reported. The Board of BIE and BlackRock reviewed and discussed the reasons for the Fund’s underperformance during the one- and three-year periods compared with its Peers. The Board of BIE was informed that, among other things, performance over the three-year period was hindered by exposure to Florida insured bonds backed by monoline insurers.

The Board of BIE discussed with BlackRock its strategy for improving the Fund’s performance and BlackRock’s commitment to providing the resources necessary to assist the Fund’s portfolio managers and to improve the Fund’s performance, in part through the repositioning of the Fund’s portfolio.

The Boards noted that BlackRock has made changes to the organization of the overall fixed income group management structure designed to result in a strengthened leadership team.

C. Consideration of the Advisory/Management Fees and the Cost of the Services and Profits to be Realized by BlackRock and its Affiliates from their Relationship with the Fund: Each Board, including the Independent Board Members, reviewed its Fund’s contractual management fee ratio compared with the other funds in its Lipper category. It also compared the Fund’s total expense ratio, as well as actual management fee ratio, to those of other funds in its Lipper category. The Boards considered the services provided and the fees charged by BlackRock to other types of clients with similar investment mandates, including separately managed institutional accounts.

The Boards received and reviewed statements relating to BlackRock’s financial condition and profitability with respect to the services it provided the Funds. The Boards were also provided with a profitability analysis that detailed the revenues earned and the expenses incurred by BlackRock for services provided to the Funds. The Boards reviewed BlackRock’s profitability with respect to the Funds and other funds the Boards currently oversee for the year ended December 31, 2010 compared to available aggregate profitability data provided for the years ended December 31, 2009, and December 31, 2008. The Boards reviewed BlackRock’s profitability with respect to other fund complexes managed by the Manager and/or its affiliates. The Boards reviewed BlackRock’s assumptions and methodology of allocating expenses in the profitability analysis, noting the inherent limitations in allocating costs among various advisory products. The Boards recognized that profitability may be affected by numerous factors including, among other things, fee waivers and expense reimbursements by the Manager, the types of funds managed, expense allocations and business mix, and the difficulty of comparing profitability as a result of those factors.

The Boards noted that, in general, individual fund or product line profitability of other advisors is not publicly available. The Boards considered BlackRock’s overall operating margin, in general, compared to the operating margin for leading investment management firms whose operations include advising closed-end funds, among other product types. That data indicates that operating margins for BlackRock, in general and with respect to its registered funds, are generally consistent with margins earned by similarly situated publicly traded competitors. In addition, the Boards considered, among other things, certain third party data comparing BlackRock’s operating margin with that of other publicly-traded asset management firms. That third party data indicates that larger asset bases do not, in themselves, translate to higher profit margins.

In addition, the Boards considered the cost of the services provided to the Funds by BlackRock, and BlackRock’s and its affiliates’ profits relating to the management of the Funds and the other funds advised by BlackRock and its affiliates. As part of its analysis, the Boards reviewed BlackRock’s methodology in allocating its costs to the management of the Funds. The Boards also considered whether BlackRock has the financial resources necessary to attract and retain high-quality investment management personnel to perform its obligations under the Agreements and to continue to provide the high quality of services that is expected by the Boards.

The Board of each of BBK, BAF, BYM, BLE, MFL and MVF noted that its respective Fund’s contractual management fee ratio (a combination of the advisory fee and the administration fee, if any) was lower than or equal to the median contractual management fee ratio paid by the Fund’s Peers, in each case before taking into account any expense reimbursements or fee waivers.

The Board of BIE noted that the Fund’s contractual management fee ratio (a combination of the advisory fee and the administration fee, if any) was above the median contractual management fee ratio paid by the Fund’s Peers, in each case before taking into account any expense reimbursements or fee waivers. The Board of BIE also noted, however, that the Fund’s contractual management fee ratio was reasonable relative to the median contractual management fee ratio paid by the Fund’s peers.

D. Economies of Scale: Each Board, including the Independent Board Members, considered the extent to which economies of scale might be realized as the assets of its Fund increase. Each Board also considered the extent to which its Fund benefits from such economies and whether there should be changes in the advisory fee rate or structure in order to enable the Fund to participate in these economies of scale, for example through the use of breakpoints in the advisory fee based upon the asset level of the Fund. Based on the ad hoc Joint Product Pricing Committees’ and the Boards’ review and consideration of this issue, the Boards concluded that closed-end funds are typically priced at scale at a fund’s inception; therefore, the implementation of breakpoints was not necessary.

 

 

 

 

 

 

62

ANNUAL REPORT

AUGUST 31, 2011




 

 

Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements (concluded)

The Boards noted that most closed-end funds do not have fund level breakpoints because closed-end funds generally do not experience substantial growth after the initial public offering. The Boards noted that only one closed-end fund in the Fund Complex has breakpoints in its advisory fee structure.

E. Other Factors Deemed Relevant by the Board Members: The Boards, including the Independent Board Members, also took into account other ancillary or “fall-out” benefits that BlackRock or its affiliates and significant shareholders may derive from their respective relationships with the Funds, both tangible and intangible, such as BlackRock’s ability to leverage its investment professionals who manage other portfolios and risk management personnel, an increase in BlackRock’s profile in the investment advisory community, and the engagement of BlackRock’s affiliates as service providers to the Funds, including securities lending services. The Boards also considered BlackRock’s overall operations and its efforts to expand the scale of, and improve the quality of, its operations. The Boards also noted that BlackRock may use and benefit from third party research obtained by soft dollars generated by certain registered fund transactions to assist in managing all or a number of its other client accounts. The Boards further noted that BlackRock’s funds may invest in affiliated ETFs without any offset against the management fees payable by the funds to BlackRock.

In connection with its consideration of the Agreements, the Boards also received information regarding BlackRock’s brokerage and soft dollar practices. The Boards received reports from BlackRock which included information on brokerage commissions and trade execution practices throughout the year.

The Boards noted the competitive nature of the closed-end fund marketplace and that shareholders are able to sell their Fund shares in the secondary market if they believe that the Fund’s fees and expenses are too high or if they are dissatisfied with the performance of the Fund.

Conclusion

Each Board, including the Independent Board Members, unanimously approved the continuation of the Advisory Agreement between the Manager and its Fund for a one-year term ending June 30, 2012 and the Sub-Advisory Agreement between the Manager and the Sub-Advisor, with respect to its Fund, for a one-year term ending June 30, 2012. As part of its approval, the Boards considered the detailed review of BlackRock’s fee structure, as it applies to the Funds, conducted by the ad hoc Joint Product Pricing Committee. Based upon their evaluations of all of the aforementioned factors in their totality, the Boards, including the Independent Board Members, were satisfied that the terms of the Agreements were fair and reasonable and in the best interest of the Funds and their shareholders. In arriving at their decision to approve the Agreements, the Boards did not identify any single factor or group of factors as all-important or controlling, but considered all factors together, and different Board Members may have attributed different weights to the various factors considered. The Independent Board Members were also assisted by the advice of independent legal counsel in making these determinations. The contractual fee arrangements for the Funds reflect the results of several years of review by the Board Members and predecessor Board Members, and discussions between such Board Members (and predecessor Board Members) and BlackRock. As a result, the Board Members’ conclusions may be based in part on their consideration of these arrangements in prior years.

 

 

 

 

 

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

63




 

 

Automatic Dividend Reinvestment Plans

Pursuant to each Trust’s Dividend Reinvestment Plan (the “Reinvestment Plan”), Common Shareholders are automatically enrolled to have all distributions of dividends and capital gains reinvested by BNY Mellon Shareowner Services for MFL and MVF and Computershare Trust Company, N.A. for BIE, BBK, BAF, BYM and BLE (individually, the “Reinvestment Plan Agent” or together, the “Reinvestment Plan Agents”) in the respective Trust’s shares pursuant to the Reinvestment Plan. Shareholders who do not participate in the Reinvestment Plan will receive all distributions in cash paid by check and mailed directly to the shareholders of record (or if the shares are held in street name or other nominee name, then to the nominee) by the Reinvestment Plan Agent, which serves as agent for the shareholders in administering the Reinvestment Plan.

After the Trusts declare a dividend or determine to make a capital gain distribution, the Reinvestment Plan Agents will acquire shares for the participants’ accounts, depending upon the following circumstances, either (i) through receipt of unissued but authorized shares from the Trust (“newly issued shares”) or (ii) by purchase of outstanding shares on the open market or on the Trust’s primary exchange (“open-market purchases”). If, on the dividend payment date, the net asset value per share (“NAV”) is equal to or less than the market price per share plus estimated brokerage commissions (such condition often referred to as a “market premium”), the Reinvestment Plan Agent will invest the dividend amount in newly issued shares on behalf of the participants. The number of newly issued shares to be credited to each participant’s account will be determined by dividing the dollar amount of the dividend by the NAV on the date the shares are issued. However, if the NAV is less than 95% of the market price on the dividend payment date, the dollar amount of the dividend will be divided by 95% of the market price on the dividend payment date. If, on the dividend payment date, the NAV is greater than the market price per share plus estimated brokerage commissions (such condition often referred to as a “market discount”), the Reinvestment Plan Agent will invest the dividend amount in shares acquired on behalf of the participants in open-market purchases. If the Reinvestment Plan Agents are 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 Reinvestment Plan Agents will invest any un-invested portion in newly issued shares. Investments in newly issued shares made in this manner would be made pursuant to the same process described above and the date of issue for such newly issued shares will substitute for the dividend payment date.

Participation in the Reinvestment Plan is completely voluntary and may be terminated or resumed at any time without penalty by notice if received and processed by the Reinvestment Plan Agent prior to the dividend record date. Additionally, the Reinvestment Plan Agent seeks to process notices received after the record date but prior to the payable date and such notices often will become effective by the payable date. Where late notices are not processed by the applicable payable date, such termination or resumption will be effective with respect to any subsequently declared dividend or other distribution.

The Reinvestment Plan Agent’s fees for the handling of the reinvestment of dividends and distributions will be paid by each Trust. However, each participant will pay a pro rata share of brokerage commissions incurred with respect to the Reinvestment Plan Agent’s open-market purchases in connection with the reinvestment of dividends and distributions. The automatic reinvestment of dividends and distributions will not relieve participants of any federal income tax that may be payable on such dividends or distributions.

Each Trust reserves the right to amend or terminate the Reinvestment Plan. There is no direct service charge to participants in the Reinvestment Plan; however, each Trust reserves the right to amend the Reinvestment Plan to include a service charge payable by the participants. Participants that request a sale of shares through Computershare Trust Company, N.A. are subject to a $2.50 sales fee and a $0.15 per share sold brokerage commission. Participants that request a sale of shares through BNY Mellon Share-owner Services are subject to a $0.02 per share sold brokerage commission. All correspondence concerning the Reinvestment Plan should be directed to the respective Reinvestment Plan Agent: BNY Mellon Shareowner Services, P.0. Box 358035, Pittsburgh, PA 15252-8035, Telephone: (866) 216-0242 for shareholders of MFL and MVF or Computershare Trust Company, N.A., P.O. Box 43078, Providence, RI 02940-3078, Telephone: (800) 699-1BFM or overnight correspondence should be directed to the Reinvestment Plan Agent at 250 Royall Street, Canton, MA 02021 for shareholders of BIE, BBK, BAF, BYM and BLE.

 

 

 

 

 

 

64

ANNUAL REPORT

AUGUST 31, 2011




 

 

Officers and Trustees


 

 

 

 

 

 

 

 

 

 

 

Name, Address
and Year of Birth

 

Position(s)
Held with
Trusts

 

Length
of Time
Served as
a Trustee2

 

Principal Occupation(s) During Past Five Years

 

Number of BlackRock-
Advised Registered
Investment Companies
(“RICs”) Consisting of
Investment Portfolios
(“Portfolios”) Overseen

 

Public
Directorships

Independent Trustees1

Richard E. Cavanagh
55 East 52nd Street
New York, NY 10055
1946

 

Chairman of the
Board and Trustee

 

Since
1994

 

Trustee, Aircraft Finance Trust from 1999 to 2009; Director, The Guardian Life Insurance Company of America since 1998; Trustee, Educational Testing Service from 1997 to 2009 and Chairman thereof from 2005 to 2009; Senior Advisor, The Fremont Group since 2008 and Director thereof since 1996; Adjunct Lecturer, Harvard University since 2007; President and Chief Executive Officer, The Conference Board, Inc. (global business research organization) from 1995 to 2007.

 

96 RICs consisting of
96 Portfolios

 

Arch Chemical (chemical and allied products)

Karen P. Robards
55 East 52nd Street
New York, NY 10055
1950

 

Vice Chairperson
of the Board,
Chairperson of
the Audit
Committee and
Trustee

 

Since
2007

 

Partner of Robards & Company, LLC (financial advisory firm) since 1987; Co-founder and Director of the Cooke Center for Learning and Development (a not-for-profit organization) since 1987; Director of Care Investment Trust, Inc. (health care real estate investment trust) from 2007 to 2010; Director of Enable Medical Corp. from 1996 to 2005; Investment Banker at Morgan Stanley from 1976 to 1987.

 

96 RICs consisting of
96 Portfolios

 

AtriCure, Inc. (medical devices)

Michael J. Castellano
55 East 52nd Street
New York, NY 10055
1946

 

Trustee and
Member of the
Audit Committee

 

Since
2011

 

Managing Director and Chief Financial Officer of Lazard Group LLC from 2001 to 2011; Chief Financial Officer of Lazard Ltd from 2004 to 2011; Director, Support Our Aging Religions (non-profit) since 2009; Director, National Advisory Board of Church Management at Villanova University since 2010.

 

96 RICs consisting of
96 Portfolios

 

None

Frank J. Fabozzi
55 East 52nd Street
New York, NY 10055
1948

 

Trustee and
Member of the
Audit Committee

 

Since
1988

 

Editor of and Consultant for The Journal of Portfolio Management since 1986; Professor of Finance, EDHEC Business School since 2011; Professor in the Practice of Finance and Becton Fellow, Yale University School of Management from 2006 to 2011; Adjunct Professor of Finance and Becton Fellow, Yale University from 1994 to 2006.

 

96 RICs consisting of
96 Portfolios

 

None

Kathleen F. Feldstein
55 East 52nd Street
New York, NY 10055
1941

 

Trustee

 

Since
2005

 

President of Economics Studies, Inc. (private economic consulting firm) since 1987; Chair, Board of Trustees, McLean Hospital from 2000 to 2008 and Trustee Emeritus thereof since 2008; Member of the Board of Partners Community Healthcare, Inc. from 2005 to 2009; Member of the Corporation of Partners HealthCare since 1995; Trustee, Museum of Fine Arts, Boston since 1992; Member of the Visiting Committee to the Harvard University Art Museum since 2003; Director, Catholic Charities of Boston since 2009.

 

96 RICs consisting of
96 Portfolios

 

The McClatchy Company (publishing); BellSouth (telecommunications); Knight Ridder (publishing)

James T. Flynn
55 East 52nd Street
New York, NY 10055
1939

 

Trustee and
Member of the
Audit Committee

 

Since
2007

 

Chief Financial Officer of JPMorgan & Co., Inc. from 1990 to 1995.

 

96 RICs consisting of
96 Portfolios

 

None

Jerrold B. Harris
55 East 52nd Street
New York, NY 10055
1942

 

Trustee

 

Since
2007

 

Trustee, Ursinus College since 2000; Director, Troemner LLC (scientific equipment) since 2000; Director of Delta Waterfowl Foundation since 2001; President and Chief Executive Officer, VWR Scientific Products Corporation from 1990 to 1999.

 

96 RICs consisting of
96 Portfolios

 

BlackRock Kelso Capital Corp. (business development company)


 

 

 

 

 

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

65




 

 

Officers and Trustees (continued)


 

 

 

 

 

 

 

 

 

 

 

Name, Address
and Year of Birth

 

Position(s)
Held with
Trusts

 

Length
of Time
Served as
a Trustee2

 

Principal Occupation(s) During Past Five Years

 

Number of BlackRock-
Advised Registered
Investment Companies
(“RICs”) Consisting of
Investment Portfolios
(“Portfolios”) Overseen

 

Public
Directorships

Independent Trustees1 (concluded)

R. Glenn Hubbard
55 East 52nd Street
New York, NY 10055
1958

 

Trustee

 

Since
2004

 

Dean, Columbia Business School since 2004; Columbia faculty member since 1988; Co-Director, Columbia Business School’s Entrepreneurship Program from 1997 to 2004; Chairman, U.S. Council of Economic Advisers under the President of the United States from 2001 to 2003; Chairman, Economic Policy Committee of the OECD from 2001 to 2003.

 

96 RICs consisting of
96 Portfolios

 

ADP (data and information services); KKR Financial Corporation (finance); Metropolitan Life Insurance Company (insurance)

W. Carl Kester
55 East 52nd Street
New York, NY 10055
1951

 

Trustee and
Member of the
Audit Committee

 

Since
2007

 

George Fisher Baker Jr. Professor of Business Administration, Harvard Business School; Deputy Dean for Academic Affairs from 2006 to 2010; Chairman of the Finance Department, Harvard Business School from 2005 to 2006; Senior Associate Dean and Chairman of the MBA Program of Harvard Business School, from 1999 to 2005; Member of the faculty of Harvard Business School since 1981.

 

96 RICs consisting of
96 Portfolios

 

None


 

 

 

 

 

1

Trustees serve until their resignation, removal or death, or until December 31 of the year in which they turn 72. In 2011, the Board of Trustees unanimously approved extending the mandatory retirement age for James T. Flynn by one additional year, which the Board believes would be in the best interest of shareholders.

 

 

 

 

2

Date shown is the earliest date a person has served for any of the Trusts covered by this annual report. Following the combination of Merrill Lynch Investment Managers, L.P. (“MLIM”) and BlackRock, Inc. (“BlackRock”) in September 2006, the various legacy MLIM and legacy BlackRock Fund boards were realigned and consolidated into three new Fund boards in 2007. As a result, although the chart shows certain Trustees as joining the Trust’s board in 2007, each Trustee first became a member of the board of Trustees of other legacy MLIM or legacy BlackRock Funds as follows: Richard E. Cavanagh, 1994; Frank J. Fabozzi, 1988; Kathleen F. Feldstein, 2005; James T. Flynn, 1996; Jerrold B. Harris, 1999; R. Glenn Hubbard, 2004; W. Carl Kester, 1995 and Karen P. Robards, 1998.


 

 

 

 

 

 

 

 

 

 

 

Interested Trustees3

Paul L. Audet
55 East 52nd Street
New York, NY 10055
1953

 

President4
and Trustee

 

Since
2011

 

Senior Managing Director, BlackRock, Inc., and Head of BlackRock’s Real Estate business from 2008 to 2011; Member of BlackRock’s Global Operating and Corporate Risk Management Committees and of the BlackRock Alternative Investors Executive Committee and Investment Committee for the Private Equity Fund of Funds business since 2008; Head of BlackRock’s Global Cash Management business from 2005 to 2010; Acting Chief Financial Officer of BlackRock from 2007 to 2008; Chief Financial Officer of BlackRock from 1998 to 2005; Senior Vice President of Finance at PNC Bank Corp. and Chief Financial Officer of the Investment Management and Mutual Fund Processing businesses from 1996 to 1998 and Head of PNC’s Mergers & Acquisitions unit from 1992 to 1998; Member of PNC’s Corporate Asset-Liability Committee and Marketing Committees from 1992 to 1998; Chief Financial Officer of PNC’s eastern operations from 1991 to 1992; Senior Vice President of First Fidelity Bancorporation, responsible for the Corporate Finance, Asset-Liability Committee, and Mergers & Acquisitions functions from 1986 to 1991.

 

96 RICs consisting of
96 Portfolios

 

None

Henry Gabbay
55 East 52nd Street
New York, NY 10055
1947

 

Trustee

 

Since
2007

 

Consultant, BlackRock, Inc. from 2007 to 2008; Managing Director, BlackRock, Inc. from 1989 to 2007; Chief Administrative Officer, BlackRock Advisors, LLC from 1998 to 2007; President of BlackRock Funds and BlackRock Bond Allocation Target Shares from 2005 to 2007; Treasurer of certain closed-end funds in the BlackRock fund complex from 1989 to 2006.

 

158 RICs consisting of
283 Portfolios

 

None


 

 

 

 

 

3

Mr. Audet is an “interested person,” as defined in the 1940 Act, of the Trusts based on his position with BlackRock, Inc. and its affiliates. Mr. Gabbay is an “interested person” of the Trusts based on his former positions with BlackRock, Inc. and its affiliates as well as his ownership of BlackRock, Inc. and The PNC Financial Services Group, Inc. securities. Trustees serve until their resignation, removal or death, or until December 31 of the year in which they turn 72.

 

 

 

 

4

For MFL.


 

 

 

 

 

 

66

ANNUAL REPORT

AUGUST 31, 2011




 

 

Officers and Trustees (concluded)


 

 

 

 

 

 

 

Name, Address
and Year of Birth

 

Position(s)
Held with
Trusts

 

Length
of Time
Served

 

Principal Occupation(s) During Past Five Years

Officers1

John M. Perlowski
55 East 52nd Street
New York, NY 10055
1964

 

President2 and
Chief Executive
Officer

 

Since
2011

 

Managing Director of BlackRock, Inc. since 2009; Global Head of BlackRock Fund Administration since 2009; Managing Director and Chief Operating Officer of the Global Product Group at Goldman Sachs Asset Management, L.P. from 2003 to 2009; Treasurer of Goldman Sachs Mutual Funds from 2003 to 2009 and Senior Vice President thereof from 2007 to 2009; Director of Goldman Sachs Offshore Funds from 2002 to 2009; Director of Family Resource Network (charitable foundation) since 2009.

Anne Ackerley
55 East 52nd Street
New York, NY 10055
1962

 

Vice
President

 

Since
20073

 

Managing Director of BlackRock, Inc. since 2000; President and Chief Executive Officer of the BlackRock-advised funds from 2009 to 2011; Vice President of the BlackRock-advised funds from 2007 to 2009; Chief Operating Officer of BlackRock’s Global Client Group since 2009; Chief Operating Officer of BlackRock’s U.S. Retail Group from 2006 to 2009; Head of BlackRock’s Mutual Fund Group from 2000 to 2006.

Brendan Kyne
55 East 52nd Street
New York, NY 10055
1977

 

Vice
President

 

Since
2009

 

Managing Director of BlackRock, Inc. since 2010; Director of BlackRock, Inc. from 2008 to 2009; Head of Product Development and Management for BlackRock’s U.S. Retail Group since 2009, Co-head thereof from 2007 to 2009;Vice President of BlackRock, Inc. from 2005 to 2008.

Neal Andrews
55 East 52nd Street
New York, NY 10055
1966

 

Chief
Financial
Officer

 

Since
2007

 

Managing Director of BlackRock, Inc. since 2006; Senior Vice President and Line of Business Head of Fund Accounting and Administration at PNC Global Investment Servicing (U.S.) Inc. from 1992 to 2006.

Jay Fife
55 East 52nd Street
New York, NY 10055
1970

 

Treasurer

 

Since
2007

 

Managing Director of BlackRock, Inc. since 2007; Director of BlackRock, Inc. in 2006; Assistant Treasurer of the MLIM and Fund Asset Management, L.P. advised funds from 2005 to 2006; Director of MLIM Fund Services Group from 2001 to 2006.

Brian Kindelan
55 East 52nd Street
New York, NY 10055
1959

 

Chief Compliance
Officer and
Anti-Money
Laundering Officer

 

Since
2007

 

Chief Compliance Officer of the BlackRock-advised funds since 2007; Managing Director and Senior Counsel of BlackRock, Inc. since 2005.

Ira P. Shapiro
55 East 52nd Street
New York, NY 10055
1963

 

Secretary

 

Since
2010

 

Managing Director of BlackRock, Inc. since 2009; Managing Director and Associate General Counsel of Barclays Global Investors from 2008 to 2009 and Principal thereof from 2004 to 2008.


 

 

 

 

 

1

Officers of the Trusts serve at the pleasure of the Board.

 

 

 

 

2

President for all Trusts except MFL.

 

 

 

 

3

Ms. Ackerley was President and Chief Executive Officer from 2009 to 2011.


 

Investment Advisor

BlackRock Advisors, LLC

Wilmington, DE 19809

 

Sub-Advisors

BlackRock Investment

Management, LLC4

Princeton, NJ 08540

 

BlackRock Financial

Management, Inc.5

New York, NY 10055

 

Custodians

The Bank of New York Mellon4

New York, NY 10286

 

State Street Bank and

Trust Company5

Boston, MA 02111

 

Transfer Agents

Common Shares:

BNY Mellon Shareowner Services4

Jersey City, NJ 07310

 

Computershare Trust Company, N.A.5

Providence, RI 02940

 

AMPS Auction Agent

BNY Mellon Shareowner Services6

Jersey City, NJ 07310

 

VRDP Tender and Paying Agent

The Bank of New York Mellon7

New York, NY 10289

 

VRDP Remarketing Agent

Merrill Lynch, Pierce, Fenner & Smith7

New York, NY 10036

 

Accounting Agent

State Street Bank and

Trust Company

Boston, MA 02116

 

Independent Registered

Public Accounting Firm

Deloitte & Touche LLP

Boston, MA 02116

 

Legal Counsel

Skadden, Arps, Slate,

Meagher & Flom LLP

New York, NY 10036

 

Address of the Trusts

100 Bellevue Parkway

Wilmington, DE 19809


 

 

4

For MFL and MVF.

 

 

5

For BIE, BBK, BAF, BYM and BLE.

 

 

6

For all Trusts except MFL.

 

 

7

For MFL.


 

 

 

 

 

 

 

Effective April 14, 2011, Michael J. Castellano became Trustee of the Trusts and Member of the Audit Committee.

 

 

 

 

 

Effective July 28, 2011, Richard S. Davis resigned as Trustee of the Trusts, and Paul L. Audet became Trustee of the Trusts.

 

 

 

 


 

 

 

 

 

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

67




 

 

Additional Information


 

Proxy Results

The Annual Meeting of Shareholders was held on July 28, 2011 for shareholders of record on May 31, 2011 to elect trustee nominees for each Trust. There were no broker non-votes with regard to any of the Trusts.

Approved the Class I Trustees as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Paul L. Audet

 

Michael J. Castellano

 

R. Glenn Hubbard

 

 

 

Votes For

 

Votes
Withheld

 

Abstain

 

Votes For

 

Votes
Withheld

 

Abstain

 

Votes For

 

Votes
Withheld

 

Abstain

 

BIE

 

2,936,610

 

43,191

 

0

 

2,936,610

 

43,191

 

0

 

2,936,610

 

43,191

 

0

 

BBK

 

9,468,850

 

256,093

 

0

 

9,449,032

 

275,911

 

0

 

9,478,069

 

246,874

 

0

 

BAF

 

6,883,291

 

235,018

 

0

 

6,829,605

 

288,704

 

0

 

6,857,997

 

260,312

 

0

 

BYM

 

21,800,588

 

542,144

 

0

 

21,813,444

 

529,288

 

0

 

21,748,168

 

594,564

 

0

 

BLE

 

19,511,831

 

351,554

 

0

 

19,523,236

 

340,149

 

0

 

19,467,155

 

396,230

 

0

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

W. Carl Kester1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Votes For

 

Votes
Withheld

 

Abstain

 

 

 

 

 

 

 

 

 

 

 

 

 

BIE

 

699

 

2

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

BBK

 

2,922

 

11

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

BAF

 

1,659

 

4

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

BYM

 

4,090

 

225

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

BLE

 

4,731

 

24

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

1

Voted on by holders of Preferred Shares only.

For the Trusts listed above, Trustees whose term of office continued after the Annual Meeting of Shareholders because they were not up for election are Richard E. Cavanagh, Frank J. Fabozzi, Kathleen F. Feldstein, James T. Flynn, Henry Gabbay, Jerrold B. Harris and Karen P. Robards.

Approved the Trustees as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Paul L. Audet

 

Michael J. Castellano

 

Richard E. Cavanagh

 

 

 

Votes For

 

Votes
Withheld

 

Abstain

 

Votes For

 

Votes
Withheld

 

Abstain

 

Votes For

 

Votes
Withheld

 

Abstain

 

MFL

 

31,224,866

 

904,571

 

0

 

31,215,400

 

914,037

 

0

 

31,217,450

 

911,987

 

0

 

MVF

 

55,655,635

 

2,001,528

 

0

 

55,662,708

 

1,994,455

 

0

 

55,727,991

 

1,929,172

 

0

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Frank J. Fabozzi1

 

Kathleen F. Feldstein

 

James T. Flynn

 

 

 

Votes For

 

Votes
Withheld

 

Abstain

 

Votes For

 

Votes
Withheld

 

Abstain

 

Votes For

 

Votes
Withheld

 

Abstain

 

MFL

 

9,396

 

39

 

0

 

31,130,487

 

998,950

 

0

 

31,208,114

 

921,323

 

0

 

MVF

 

7,945

 

199

 

0

 

55,428,565

 

2,228,598

 

0

 

55,557,213

 

2,099,950

 

0

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Henry Gabbay

 

Jerrold B. Harris

 

R. Glenn Hubbard

 

 

 

Votes For

 

Votes
Withheld

 

Abstain

 

Votes For

 

Votes
Withheld

 

Abstain

 

Votes For

 

Votes
Withheld

 

Abstain

 

MFL

 

31,196,298

 

933,139

 

0

 

31,210,349

 

919,088

 

0

 

31,128,575

 

1,000,862

 

0

 

MVF

 

55,692,596

 

1,964,567

 

0

 

55,560,568

 

2,096,595

 

0

 

55,811,661

 

1,845,502

 

0

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

W. Carl Kester1

 

Karen P. Robards

 

 

 

 

 

Votes For

 

Votes
Withheld

 

Abstain

 

Votes For

 

Votes
Withheld

 

Abstain

 

 

 

 

 

 

 

MFL

 

9,396

 

39

 

0

 

31,184,700

 

944,737

 

0

 

 

 

 

 

 

 

MVF

 

7,945

 

199

 

0

 

55,601,905

 

2,055,258

 

0

 

 

 

 

 

 

 


 

 

 

 

1

Voted on by holders of Preferred Shares only.

 

 

 

 

 

 

 

68

ANNUAL REPORT

AUGUST 31, 2011




 

 

Additional Information (continued)


 

Fund Certification

Certain Trusts are listed for trading on the NYSE and have filed with the NYSE their annual chief executive officer certification regarding compliance with the NYSE’s listing standards. The Trusts filed with the SEC the certification of its chief executive officer and chief financial officer required by section 302 of the Sarbanes-Oxley Act.

 

Dividend Policy

The Trusts’ 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 Trusts 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 Trusts for any particular month may be more or less than the amount of net investment income earned by the Trusts during such month. The Trusts’ current accumulated but undistributed net investment income, if any, is disclosed in the Statements of Assets and Liabilities, which comprises part of the financial information included in this report.

 

General Information

On July 29, 2010, the Manager announced that a derivative complaint had been filed by shareholders of BYM, BAF and BIE on July 27, 2010 in the Supreme Court of the State of New York, New York County. The complaint names the Manager, BlackRock, Inc. and certain of the trustees, officers and portfolio managers of BYM, BAF and BIE as defendants. The complaint alleges, among other things, that the parties named in the complaint breached fiduciary duties owed to BYM, BAF and BIE and their Common Shareholders by redeeming auction-market preferred shares, auction rate preferred securities, auction preferred shares and auction rate securities (collectively, “AMPS”) at their liquidation preference. The complaint seeks unspecified damages for losses purportedly suffered by BYM, BAF and BIE as a result of the prior redemptions and injunctive relief preventing BYM, BAF and BIE from redeeming AMPS at their liquidation preference in the future. The Manager, BlackRock, Inc. and the other parties named in the complaint believe that the claims asserted in the complaint are without merit and intend to vigorously defend themselves in the litigation.

On August 11, 2010, the Manager announced that a derivative complaint had been filed by shareholders of MFL on August 3, 2010 in the Supreme Court of the State of New York, New York County. The complaint names the Manager, BlackRock, Inc. and certain of the directors, officers and portfolio managers of MFL as defendants. The complaint alleges, among other things, that the parties named in the complaint breached fiduciary duties owed to MFL and its Common Shareholders by redeeming AMPS at their liquidation preference. The complaint seeks unspecified damages for losses purportedly suffered by MFL as a result of the prior redemptions and injunctive relief preventing MFL from redeeming AMPS at their liquidation preference in the future. The Manager, BlackRock, Inc. and the other parties named in the complaint believe that the claims asserted in the complaint are without merit and intend to vigorously defend themselves in the litigation.

On September 27, 2010, the Manager announced that the directors of MVF had received a demand letter sent on behalf of certain of MVF’s Common Shareholders. The demand letter alleged that the Manager and MVF’s officers and Board breached fiduciary duties owed to MVF and its Common Shareholders by redeeming at par certain of MVF’s Preferred Shares, and demanded that the Board take action to remedy those alleged breaches. In response to the demand letter, the Board established a Demand Review Committee (the “Committee”) of the independent members of the Board to investigate the claims made in the demand letter with the assistance of independent counsel. Based upon its investigation, the Committee recommended that the Board reject the demand specified in the demand letter. After reviewing the findings of the Committee, the Board unanimously adopted the Committee’s recommendation and unanimously voted to reject the demand.

The Trusts do not make available copies of their Statements of Additional Information because the Trusts’ shares are not continuously offered, which means that the Statement of Additional Information of each Trust has not been updated after completion of the respective Trust’s offerings and the information contained in each Trust’s Statement of Additional Information may have become outdated.

Other than the revisions discussed in the Board Approvals on page 71, there were no material changes in the Trusts’ investment objectives or policies or to the Trusts’ charters or by-laws that would delay or prevent a change of control of the Trusts that were not approved by the shareholders or in the principal risk factors associated with investment in the Trusts. There have been no changes in the persons who are primarily responsible for the day-to-day management of the Trusts’ portfolios.

Quarterly performance, semi-annual and annual reports and other information regarding the Trusts may be found on BlackRock’s website, which can be accessed at http://www.blackrock.com. This reference to BlackRock’s website is intended to allow investors public access to information regarding the Trusts and does not, and is not intended to, incorporate BlackRock’s website into this report.

 

 

 

 

 

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

69




 

 

Additional Information (continued)


 

General Information (concluded)

Electronic Delivery

Electronic copies of most financial reports are available on the Trusts’ websites or shareholders can sign up for e-mail notifications of quarterly statements, annual and semi-annual reports by enrolling in the Trusts’ electronic delivery program.

Shareholders Who Hold Accounts with Investment Advisors, Banks or Brokerages:

Please contact your financial advisor to enroll. Please note that not all investment advisors, banks or brokerages may offer this service.

Householding

The Trusts will mail only one copy of shareholder documents, including annual and semi-annual reports and proxy statements, to shareholders with multiple accounts at the same address. This practice is commonly called “householding” and is intended to reduce expenses and eliminate duplicate mailings of shareholder documents. Mailings of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please call (800) 441-7762.

Availability of Quarterly Schedule of Investments

Each Trust files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Trusts’ Forms N-Q are available on the SEC’s website at http://www.sec.gov and may also be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on how to access documents on the SEC’s website without charge may be obtained by calling (800) SEC-0330. Each Trust’s Forms N-Q may also be obtained upon request and without charge by calling (800) 441-7762.

Availability of Proxy Voting Policies and Procedures

A description of the policies and procedures that the Trusts use to determine how to vote proxies relating to portfolio securities is available (1) without charge, upon request, by calling (800) 441-7762; (2) at http://www.blackrock.com; and (3) on the SEC’s website at http://www.sec.gov.

Availability of Proxy Voting Record

Information about how the Trusts voted proxies relating to securities held in the Trusts’ portfolios during the most recent 12-month period ended June 30 is available upon request and without charge (1) at http://www.blackrock.com or by calling (800) 441-7762 and (2) on the SEC’s website at http://www.sec.gov.

Availability of Trust Updates

BlackRock will update performance and certain other data for the Trusts on a monthly basis on its website in the “Closed-end Funds” section of http://www.blackrock.com. Investors and others are advised to periodically check the website for updated performance information and the release of other material information about the Trusts.

 

 

 

 

 

 

70

ANNUAL REPORT

AUGUST 31, 2011




 

 

Additional Information (concluded)


 

Board Approvals

On September 1, 2010, the Boards of BAF, BYM and MFL (the “Insured Funds”) approved changes to certain investment policies of the Insured Funds.

Historically, under normal market conditions, each Insured Fund had been required to invest at least 80% of its assets in municipal bonds either (i) insured under an insurance policy purchased by the Insured Fund or (ii) insured under an insurance policy obtained by the issuer of the municipal bond or any other party. In September 2008, the Insured Funds adopted an amended investment policy of purchasing only municipal bonds insured by insurance providers with claims-paying abilities rated investment grade at the time of investment (the “Insurance Investment Policy”).

Following the onset of the credit and liquidity crises, the claims-paying ability rating of most of the municipal bond insurance providers has been lowered by the rating agencies. These downgrades have called into question the long-term viability of the municipal bond insurance market, which has the potential to severely limit the ability of the Manager to manage the Insured Funds under the Insurance Investment Policy.

As a result, on September 1, 2010, the Manager recommended, and the Boards of the Insured Funds approved, the removal of the Insurance Investment Policy. As a result of this investment policy change, the Insured Funds will not be required to dispose of assets currently held within the Insured Funds. The Insured Funds will maintain, and have no current intention to amend, their investment policy of, under normal market conditions, generally investing in municipal obligations rated investment grade at the time of investment.

As each Insured Fund increases the amount of its assets that are invested in municipal obligations that are not insured, each Insured Fund’s shareholders will be exposed to the risk of the failure of such securities’ issuers to pay interest and repay principal and will not have the benefit of protection provided under municipal bond insurance policies. As a result, shareholders will be more dependent on the analytical ability of the Manager to evaluate the credit quality of issuers of municipal obligations in which each Insured Fund invests. The Boards of the Insured Funds believe that the removal of the Insurance Investment Policy is in the best interests of each Insured Fund and its shareholders because it believes that the potential benefits from increased flexibility outweigh the potential increase in risk from the lack of insurance policies provided by weakened insurance providers. Of course, the new investment policy cannot assure that each Insured Fund will achieve its investment objective.

As disclosed in each Insured Fund’s prospectus, each Insured Fund is required to provide shareholders 60 days notice of a change to the Insurance Investment Policy. Accordingly, a notice describing the changes discussed above was mailed to shareholders of record as of September 1, 2010. The new investment policy took effect on November 9, 2010. The Manager has been gradually repositioning each Insured Fund’s portfolio over time, and during such period, each Insured Fund may continue to hold a substantial portion of its assets in insured municipal bonds. At this time, the repositioning of each Insured Fund’s portfolio is still taking place, and the Insured Funds will continue to be subject to risks associated with investing a substantial portion of their assets in insured municipal bonds until the repositioning is complete. No action is required by shareholders of the Insured Funds in connection with this change.

In connection with this change in non-fundamental policy, each of the Insured Funds underwent a name change to reflect its new portfolio characteristics.

Each Insured Fund continues to trade on the NYSE under its current ticker symbol.

The approved changes did not alter any Insured Fund’s investment objective.

 

BlackRock Privacy Principles

BlackRock is committed to maintaining the privacy of its current and former fund investors and individual clients (collectively, “Clients”) and to safeguarding their non-public personal information. The following information is provided to help you understand what personal information BlackRock collects, how we protect that information and why in certain cases we share such information with select parties.

If you are located in a jurisdiction where specific laws, rules or regulations require BlackRock to provide you with additional or different privacy-related rights beyond what is set forth below, then BlackRock will comply with those specific laws, rules or regulations.

BlackRock obtains or verifies personal non-public information from and about you from different sources, including the following: (i) information we receive from you or, if applicable, your financial intermediary, on applications, forms or other documents; (ii) information about your transactions with us, our affiliates, or others; (iii) information we receive from a consumer reporting agency; and (iv) from visits to our websites.

BlackRock does not sell or disclose to non-affiliated third parties any non-public personal information about its Clients, except as permitted by law or as is necessary to respond to regulatory requests or to service Client accounts. These non-affiliated third parties are required to protect the confidentiality and security of this information and to use it only for its intended purpose.

We may share information with our affiliates to service your account or to provide you with information about other BlackRock products or services that may be of interest to you. In addition, BlackRock restricts access to non-public personal information about its Clients to those BlackRock employees with a legitimate business need for the information. BlackRock maintains physical, electronic and procedural safeguards that are designed to protect the non-public personal information of its Clients, including procedures relating to the proper storage and disposal of such information.

 

 

 

 

 

 

 

 

 

ANNUAL REPORT

AUGUST 31, 2011

71



This report is transmitted to shareholders only. It is not a prospectus. Past performance results shown in this report should not be considered a representation of future performance. The Trusts have leveraged their Common Shares, which creates risks for Common Shareholders, including the likelihood of greater volatility of net asset value and market price of the Common Shares, and the risk that fluctuations in the short-term dividend rates of the Preferred Shares, including AMPS, which are currently set at the maximum reset rate as a result of failed auctions, may reduce the Common Shares’ yield. Statements and other information herein are as dated and are subject to change.

GO PAPERLESS LOGO

 

 

#CEF-NTL-7-8/11

BLACKROCK LOGO


Item 2 –

Code of Ethics – The registrant (or the “Fund”) has adopted a code of ethics, as of the end of the period covered by this report, applicable to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. During the period covered by this report, there have been no amendments to or waivers granted under the code of ethics. 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 (the “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:

 

 

 

Frank J. Fabozzi

 

James T. Flynn

 

W. Carl Kester

 

Karen P. Robards

 

 

 

The registrant’s board of directors has determined that W. Carl Kester and Karen P. Robards qualify as financial experts pursuant to Item 3(c)(4) of Form N-CSR.

 

 

 

Prof. Kester has a thorough understanding of generally accepted accounting principles, financial statements and internal control over financial reporting as well as audit committee functions. Prof. Kester has been involved in providing valuation and other financial consulting services to corporate clients since 1978. Prof. Kester’s financial consulting services present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the registrant’s financial statements.

 

 

 

Ms. Robards has a thorough understanding of generally accepted accounting principles, financial statements and internal control over financial reporting as well as audit committee functions. Ms. Robards has been President of Robards & Company, a financial advisory firm, since 1987. Ms. Robards was formerly an investment banker for more than 10 years where she was responsible for evaluating and assessing the performance of companies based on their financial results. Ms. Robards has over 30 years of experience analyzing financial statements. She also is a member of the audit committee of one publicly held company and a non-profit organization.

 

 

 

Under applicable securities laws, a person determined to be an audit committee financial expert will not be deemed an “expert” for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and board of directors in the absence of such designation or identification. The designation or identification of a person as an audit committee financial expert does not affect the duties, obligations, or liability of any other member of the audit committee or board of directors.

 


Item 4 –

Principal Accountant Fees and Services

 

 

 

The following table presents fees billed by Deloitte & Touche LLP (“D&T”) in each of the last two fiscal years for the services rendered to the Fund:

 

 

(a) Audit Fees

(b) Audit-Related Fees1

(c) Tax Fees2

(d) All Other Fees3

Entity Name

Current
Fiscal Year
End

Previous
Fiscal Year
End

Current
Fiscal Year
End

Previous
Fiscal Year
End

Current
Fiscal Year
End

Previous
Fiscal Year
End

Current
Fiscal Year
End

Previous
Fiscal Year
End

 

 

 

 

 

 

 

 

 

BlackRock MuniVest Fund, Inc.

$35,600

$34,600

$3,500

$3,500

$20,600

$6,100

$0

$0

 

 

The following table presents fees billed by D&T that were required to be approved by the registrant’s audit committee (the “Committee”) for services that relate directly to the operations or financial reporting of the Fund and that are rendered on behalf of BlackRock Advisors, LLC (“Investment Adviser” or “BlackRock”) and entities controlling, controlled by, or under common control with BlackRock (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) that provide ongoing services to the Fund (“Fund Service Providers”):

 

 

Current Fiscal Year End

Previous Fiscal Year End

(b) Audit-Related Fees1

$0

$0

(c) Tax Fees2

$0

$0

(d) All Other Fees3

$3,030,000

$2,950,000

 

1 The nature of the services includes assurance and related services reasonably related to the performance of the audit of financial statements not included in Audit Fees.

2 The nature of the services includes tax compliance, tax advice and tax planning.

3 Aggregate fees borne by BlackRock in connection with the review of compliance procedures and attestation thereto performed by D&T with respect to all of the registered closed-end funds and some of the registered open-end funds advised by BlackRock.

 

 

 

(e)(1) Audit Committee Pre-Approval Policies and Procedures:

 

 

 

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 Investment Adviser and Fund 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”). The term of any general pre-approval is 12 months from the date of the pre-approval, unless the Committee provides for a different period. Tax or other non-audit services provided to the registrant which have a direct impact on the operations or financial reporting of the registrant will only be deemed pre-approved provided that any individual project does not exceed $10,000 attributable to the registrant or $50,000 per project. For this purpose, multiple projects will be aggregated to determine if they exceed the previously mentioned cost levels.

 


 

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. At this meeting, an analysis of such services is presented to the Committee for ratification. The Committee may delegate to the Committee Chairman the authority to approve the provision of and fees for any specific engagement of permitted non-audit services, including services exceeding pre-approved cost levels.

 

 

 

(e)(2) None of the services described in each of Items 4(b) through (d) were approved by the Committee pursuant to the de minimis exception in paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

 

 

 

(f) Not Applicable

 

 

 

(g) The aggregate non-audit fees paid to the accountant for services rendered by the accountant to the registrant, the Investment Adviser and the Fund Service Providers were:

 

Entity Name

Current Fiscal Year End

Previous Fiscal Year End

 

 

 

BlackRock MuniVest Fund, Inc.

$24,100

$20,377

 

 

Additionally, SAS No. 70 fees for the current and previous fiscal years of $3,030,000 and $2,950,000, respectively, were billed by D&T to the Investment Adviser.

 

 

 

(h) The Committee has considered and determined that the provision of non-audit services that were rendered to the Investment Adviser, and the Fund Service Providers 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.

 

 

Item 5 –

Audit Committee of Listed Registrants

 

 

(a) 

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 Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(58)(A)):

     

 

 

Michael Castellano

 

 

Frank J. Fabozzi

 

 

James T. Flynn

 

 

W. Carl Kester

 

 

Karen P. Robards

 

 

 

 

(b) 

Not Applicable

 

Item 6 –

Investments

 

(a) The registrant’s Schedule of Investments is included as part of the Report to Stockholders filed under Item 1 of this Form.

 

(b) Not Applicable due to no such divestments during the semi-annual period covered since the previous Form N-CSR filing.

 


Item 7 –

Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies – The board of directors has delegated the voting of proxies for the Fund’s portfolio securities to the Investment Adviser pursuant to the Investment Adviser’s proxy voting guidelines. Under these guidelines, the Investment Adviser will vote proxies related to Fund securities in the best interests of the Fund and its stockholders. From time to time, a vote may present a conflict between the interests of the Fund’s stockholders, on the one hand, and those of the Investment Adviser, or any affiliated person of the Fund or the Investment Adviser, on the other. In such event, provided that the Investment Adviser’s Equity Investment Policy Oversight Committee, or a sub-committee thereof (the “Oversight Committee”) is aware of the real or potential conflict or material non-routine matter and if the Oversight Committee does not reasonably believe it is able to follow its general voting guidelines (or if the particular proxy matter is not addressed in the guidelines) and vote impartially, the Oversight Committee may retain an independent fiduciary to advise the Oversight Committee on how to vote or to cast votes on behalf of the Investment Adviser’s clients. If the Investment Adviser determines not to retain an independent fiduciary, or does not desire to follow the advice of such independent fiduciary, the Oversight Committee shall determine how to vote the proxy after consulting with the Investment Adviser’s Portfolio Management Group and/or the Investment Adviser’s Legal and Compliance Department and concluding that the vote cast is in its client’s best interest notwithstanding the conflict. A copy of the Fund’s Proxy Voting Policy and Procedures are attached as Exhibit 99.PROXYPOL. Information on how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge, (i) at www.blackrock.com and (ii) on the SEC’s website at http://www.sec.gov.

 

 

Item 8 –

Portfolio Managers of Closed-End Management Investment Companies – as of August 31, 2011.

 

 

(a)(1)

The Fund is managed by a team of investment professionals comprised of Phillip Soccio, CFA, Director at BlackRock, 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. Each is jointly responsible for the day-to-day management of the registrant’s portfolio, which includes setting the registrant’s overall investment strategy, overseeing the management of the registrant and/or selection of its investments. Messrs. Soccio, Jaeckel and O’Connor have been members of the registrant’s portfolio management team since 2008, 2006 and 2006, respectively.

 

Portfolio Manager

Biography

Phillip Soccio

Director of BlackRock since 2009; Vice President of BlackRock from 2005 to 2008.

Theodore R. Jaeckel, Jr.

Managing Director at BlackRock since 2006; Managing Director of Merrill Lynch Investment Managers, L.P. (“MLIM”) from 2005 to 2006; Director of MLIM from 1997 to 2005.

Walter O’Connor

Managing Director of BlackRock since 2006; Managing Director of MLIM from 2003 to 2006; Director of MLIM from 1998 to 2003.

 


 

(a)(2)

As of August 31, 2011:

 

 

(ii) Number of Other Accounts Managed

and Assets by Account Type

(iii) Number of Other Accounts and

Assets for Which Advisory Fee is

Performance-Based

(i) Name of

Portfolio Manager

Other

Registered

Investment

Companies

Other Pooled

Investment

Vehicles

Other

Accounts

Other

Registered

Investment

Companies

Other Pooled

Investment

Vehicles

Other

Accounts

Phillip Soccio

5

0

0

0

0

0

 

$731 Million

$0

$0

$0

$0

$0

Theodore R. Jaeckel, Jr.

65

0

0

0

0

0

 

$20.35 Billion

$0

$0

$0

$0

$0

Walter O’Connor

65

0

0

0

0

0

 

$19.15 Billion

$0

$0

$0

$0

$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 significant shareholders and any officer, director, shareholder 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 significant shareholders, or any officer, director, shareholder, 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’ or significant shareholders’) officers, directors or employees are directors or officers, or companies as to which BlackRock or any of its affiliates or significant shareholders or the officers, directors and employees of any of them has any substantial economic interest or possesses material non-public information.  Certain portfolio managers also may manage accounts whose investment strategies may at times be opposed to the strategy utilized for a fund.  It should also be noted that a portfolio manager may be managing certain hedge fund and/or long only accounts, or may be part of a team managing certain hedge fund and/or long only accounts, subject to incentive fees. A portfolio manager may therefore be entitled to receive a portion of any incentive fees earned on such accounts. 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 policies that are intended to ensure 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, as appropriate.

 

 

(a)(3)

As of August 31, 2011:

 

 

Portfolio Manager Compensation Overview

 

 

 

BlackRock’s financial arrangements with its portfolio managers, its competitive compensation and its career path emphasis at all levels reflect the value senior management places on key resources. Compensation may include a variety of components and may vary from year to year based on a number of factors. The principal components of compensation include a base salary, a performance-based discretionary bonus, participation in various benefits programs and one or more of the incentive compensation programs established by BlackRock.

 

 

 

Base compensation. Generally, portfolio managers receive base compensation based on their position with BlackRock.

 

 

 

Discretionary Incentive Compensation. Discretionary incentive compensation is a function of several components: the performance of BlackRock, Inc., the performance of the portfolio manager’s group within BlackRock, the investment performance, including risk-adjusted returns, of the firm’s assets under management or supervision by that portfolio manager relative to predetermined benchmarks, and the individual’s performance and contribution to the overall performance of these portfolios and BlackRock.  In most cases, these benchmarks are the same as the benchmark or benchmarks against which the performance of the Fund or other accounts managed by the portfolio managers are measured.  BlackRock’s Chief Investment Officers determine the benchmarks against which the performance of funds and other accounts managed by each portfolio manager is compared and the period of time over which performance is evaluated.  With respect to the portfolio managers, such benchmarks include a combination of market-based indices (e.g., Barclays Capital Municipal Bond Index), certain customized indices and certain fund industry peer groups.

 

 

 

Among other things, BlackRock’s Chief Investment Officers make a subjective determination with respect to each portfolio manager’s compensation based on the performance of the Funds and other accounts managed by each portfolio manager relative to the various benchmarks. 

 

 

 

Performance of fixed income funds is measured on both a pre-tax and after-tax basis over various time periods including 1-, 3- and 5-year periods, as applicable. With respect to the performance of the other listed Index and Multi-Asset Funds, performance is measured on, among other things, a pre-tax basis over various time periods including 1-, 3- and 5-year periods, as applicable.

 


 

Distribution of Discretionary Incentive Compensation

 

 

 

Discretionary incentive compensation is distributed to portfolio managers in a combination of cash and BlackRock, Inc. restricted stock units which vest ratably over a number of years. For some portfolio managers, discretionary incentive compensation is also distributed in deferred cash awards that notionally track the returns of select BlackRock investment products they manage and that vest ratably over a number of years. The BlackRock, Inc. restricted stock units, upon vesting, will be settled in BlackRock, Inc. common stock. Typically, the cash bonus, when combined with base salary, represents more than 60% of total compensation for the portfolio managers. Paying a portion of annual bonuses in stock puts compensation earned by a portfolio manager for a given year “at risk” based on BlackRock’s ability to sustain and improve its performance over future periods. Providing a portion of annual bonuses in deferred cash awards that notionally track the BlackRock investment products they manage provides direct alignment with investment product results.

 

 

 

Long-Term Incentive Plan Awards — From time to time long-term incentive equity awards are granted to certain key employees to aid in retention, align their interests with long-term shareholder interests and motivate performance.  Equity awards are generally granted in the form of BlackRock, Inc. restricted stock units that, once vested, settle in BlackRock, Inc. common stock. Messrs. Jaeckel and O’Connor have each received long-term incentive awards.

 

 

 

Deferred Compensation Program — A portion of the compensation paid to eligible BlackRock employees may be voluntarily deferred into an account that tracks the performance of certain of the firm’s investment products. Each participant in the deferred compensation program is permitted to allocate his deferred amounts among various BlackRock investment options. Messrs. Messrs. Jaeckel, O’Connor and Soccio have each participated in the deferred compensation program.

 

 

 

Other compensation benefits. In addition to base compensation and discretionary incentive compensation, portfolio managers may be eligible to receive or participate in one or more of the following incentive savings plans. BlackRock, Inc. has created a variety of incentive savings plans in which BlackRock, Inc. employees are eligible to participate, including a 401(k) plan, the BlackRock Retirement Savings Plan (RSP), and the BlackRock Employee Stock Purchase Plan (ESPP). The employer contribution components of the RSP include a company match equal to 50% of the first 8% of eligible pay contributed to the plan capped at $5,000 per year, and a company retirement contribution equal to 3-5% of eligible compensation.  The RSP offers a range of investment options, including registered investment companies and collective investment funds managed by the firm. BlackRock contributions follow the investment direction set by participants for their own contributions or, absent participant investment direction, are invested into an index target date fund that corresponds to, or is closest to, the year in which the participant attains age 65.  The ESPP allows for investment in BlackRock, Inc. common stock at a 5% discount on the fair market value of the stock on the purchase date.  Annual participation in the ESPP is limited to the purchase of 1,000 shares or a dollar value of $25,000.  Each portfolio manager is eligible to participate in these plans.

 

 

(a)(4)

Beneficial Ownership of Securities – As of August 31, 2011.

 

Portfolio Manager

Dollar Range of Equity Securities
of the Fund Beneficially Owned

Walter O’Connor

None

Theodore R. Jaeckel, Jr.

$10,001 - $50,000

Phillip Soccio

None

 

 

(b) Not Applicable

 


Item 9 –

Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers – Not Applicable due to no such purchases during the period covered by this report.

 

 

Item 10 –

Submission of Matters to a Vote of Security Holders – There have been no material changes to these procedures.

 

 

Item 11 –

Controls and Procedures

 

 

 

(a) – The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing of this report based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended.

 

 

 

(b) – There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

 

Item 12 –

Exhibits attached hereto

 

 

 

(a)(1) – Code of Ethics – See Item 2

 

 

 

(a)(2) – Certifications – Attached hereto

 

 

 

(a)(3) – Not Applicable

 

 

 

(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 MuniVest Fund, Inc.

 

 

  By: /s/ John M. Perlowski  
    John M. Perlowski
    Chief Executive Officer (principal executive officer) of
    BlackRock MuniVest Fund, Inc.
   
  Date: November 4, 2011
   
  Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
   
  By: /s/ John M. Perlowski  
    John M. Perlowski
    Chief Executive Officer (principal executive officer) of
    BlackRock MuniVest Fund, Inc.
   
  Date: November 4, 2011
   
  By: /s/ Neal J. Andrews  
    Neal J. Andrews
    Chief Financial Officer (principal financial officer) of
    BlackRock MuniVest Fund, Inc.
     
  Date: November 4, 2011