UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-Q QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT INVESTMENT COMPANY Investment Company Act File number 811-8215 Name of Fund: BlackRock MuniHoldings Fund II, Inc. Fund Address: P.O. Box 9011 Princeton, NJ 08543-9011 Name and address of agent for service: Robert C. Doll, Jr., Chief Executive Officer, BlackRock MuniHoldings Fund II, Inc., 800 Scudders Mill Road, Plainsboro, NJ, 08536. Mailing address: P.O. Box 9011, Princeton, NJ, 08543-9011 Registrant's telephone number, including area code: (609) 282-2800 Date of fiscal year end: 07/31/2007 Date of reporting period: 08/01/06 - 10/31/06 Item 1 - Schedule of Investments BlackRock MuniHoldings Fund II, Inc. Schedule of Investments as of October 31, 2006 (in Thousands) Face State Amount Municipal Bonds Value Alabama - 2.1% $ 3,450 Jefferson County, Alabama, Limited Obligation School Warrants, Series A, 5% due 1/01/2024 $ 3,615 Arizona - 4.6% 1,000 Arizona Health Facilities Authority Revenue Bonds (Catholic Healthcare West), Series A, 6.625% due 7/01/2020 1,103 1,365 Maricopa County, Arizona, IDA, Education Revenue Bonds (Arizona Charter Schools Project 1), Series A, 6.50% due 7/01/2012 1,385 2,060 Phoenix, Arizona, IDA, Airport Facility, Revenue Refunding Bonds (America West Airlines Inc. Project), AMT, 6.30% due 4/01/2023 2,103 1,000 Pima County, Arizona, IDA, Education Revenue Bonds (Arizona Charter Schools Project), Series C, 6.75% due 7/01/2031 1,061 1,000 Pinal County, Arizona, COP, 5% due 12/01/2029 1,037 1,095 Show Low, Arizona, Improvement District Number 5, Special Assessment Bonds, 6.375% due 1/01/2015 1,126 Arkansas - 0.6% 1,000 University of Arkansas, University Construction Revenue Bonds (UAMS Campus), Series B, 5% due 11/01/2022 (d) 1,064 California - 20.8% 2,000 Benicia, California, Unified School District, GO, Refunding, Series A, 5.615% due 8/01/2020 (b)(m) 1,116 5,200 California State Public Works Board, Lease Revenue Bonds (Department of Corrections), Series C, 5.25% due 6/01/2028 5,535 1,000 East Side Union High School District, California, Santa Clara County, GO (Election of 2002), Series D, 5% due 8/01/2020 (i) 1,076 870 Golden State Tobacco Securitization Corporation of California, Tobacco Settlement Revenue Bonds, Series A-3, 7.875% due 6/01/2042 1,069 8,010 Los Angeles, California, Unified School District, GO, Series A, 5% due 1/01/2028 (d) 8,469 1,750 Poway, California, Unified School District, Special Tax (Community Facilities District Number 6 Area), Series A, 6.125% due 9/01/2033 1,840 1,820 San Marino, California, Unified School District, GO, Series A, 5.50% due 7/01/2017 (d)(m) 1,178 1,945 San Marino, California, Unified School District, GO, Series A, 5.55% due 7/01/2018 (d)(m) 1,199 2,070 San Marino, California, Unified School District, GO, Series A, 5.60% due 7/01/2019 (d)(m) 1,217 5,525 Sequoia, California, Unified High School District, GO, Refunding, Series B, 5.50% due 7/01/2035 (c) 6,193 4,925 Tracy, California, Area Public Facilities Financing Agency, Special Tax Refunding Bonds (Community Facilities District Number 87-1), Series H, 5.875% due 10/01/2019 (d) 5,050 1,250 Tustin, California, Unified School District, Senior Lien Special Tax Bonds (Community Facilities District Number 97-1), Series A, 5% due 9/01/2032 (c) 1,302 Portfolio Abbreviations To simplify the listings of BlackRock MuniHoldings Fund II, Inc.'s portfolio holdings in the Schedule of Investments, we have abbreviated the names of many of the securities according to the list below. AMT Alternative Minimum Tax (subject to) COP Certificates of Participation DRIVERS Derivative Inverse Tax-Exempt Receipts EDA Economic Development Authority EDR Economic Development Revenue Bonds GO General Obligation Bonds HDA Housing Development Authority HFA Housing Finance Agency IDA Industrial Development Authority IDR Industrial Development Revenue Bonds S/F Single-Family PCR Pollution Control Revenue Bonds VRDN Variable Rate Demand Notes BlackRock MuniHoldings Fund II, Inc. Schedule of Investments as of October 31, 2006 (concluded) (in Thousands) Face State Amount Municipal Bonds Value Colorado - 1.6% $ 1,675 Elk Valley, Colorado, Public Improvement Revenue Bonds (Public Improvement Fee), Series A, 7.10% due 9/01/2014 $ 1,802 860 Plaza Metropolitan District Number 1, Colorado, Tax Allocation Revenue Bonds (Public Improvement Fees), 8.125% due 12/01/2025 866 Florida - 7.5% 1,640 Ballantrae, Florida, Community Development District, Capital Improvement Revenue Bonds, 6% due 5/01/2035 1,729 1,765 Miami-Dade County, Florida, Subordinate Special Obligation Revenue Bonds, Series A, 5.24% due 10/01/2037 (d)(m) 372 2,450 Midtown Miami, Florida, Community Development District, Special Assessment Revenue Bonds, Series A, 6.25% due 5/01/2037 2,683 2,400 Orange County, Florida, Health Facilities Authority, Hospital Revenue Bonds (Orlando Regional Healthcare), 6% due 12/01/2012 (h) 2,694 1,515 Orlando, Florida, Greater Orlando Aviation Authority, Airport Facilities Revenue Bonds (JetBlue Airways Corp.), AMT, 6.50% due 11/15/2036 1,586 525 Palm Coast Park Community Development District, Florida, Special Assessment Revenue Bonds, 5.70% due 5/01/2037 536 1,270 Preserve at Wilderness Lake, Florida, Community Development District, Capital Improvement Bonds, Series A, 5.90% due 5/01/2034 1,323 1,700 West Villages Improvement District, Florida, Special Assessment Revenue Refunding Bonds (Unit of Development Number 2), 5.80% due 5/01/2036 1,772 Georgia - 3.7% 1,250 Atlanta, Georgia, Tax Allocation Bonds (Atlantic Station Project), 7.90% due 12/01/2024 1,391 1,535 Brunswick and Glynn County, Georgia, Development Authority, First Mortgage Revenue Bonds (Coastal Community Retirement Corporation Project), Series A, 7.25% due 1/01/2035 1,518 1,945 Fulton County, Georgia, Development Authority, PCR (General Motors Corporation), Refunding, VRDN, 8% due 4/01/2010 (j) 1,945 1,250 Milledgeville-Baldwin County, Georgia, Development Authority Revenue Bonds (Georgia College and State University Foundation), 5.50% due 9/01/2024 1,341 Idaho - 1.3% 2,000 Power County, Idaho, Industrial Development Corporation, Solid Waste Disposal Revenue Bonds (FMC Corporation Project), AMT, 6.45% due 8/01/2032 2,133 Illinois - 2.8% 1,000 Chicago, Illinois, O'Hare International Airport, Special Facility Revenue Refunding Bonds (American Airlines Inc. Project), 8.20% due 12/01/2024 1,031 1,000 Chicago, Illinois, Special Assessment Bonds (Lake Shore East), 6.75% due 12/01/2032 1,084 2,000 Illinois HDA, Homeowner Mortgage Revenue Bonds, AMT, Sub-Series C-2, 5.25% due 8/01/2022 2,061 500 Illinois State Finance Authority Revenue Bonds (Landing At Plymouth Place Project), Series A, 6% due 5/15/2025 529 Louisiana - 2.3% 2,500 Louisiana Public Facilities Authority, Hospital Revenue Bonds (Franciscan Missionaries of Our Lady Health System, Inc.), Series A, 5.25% due 8/15/2036 2,644 1,275 New Orleans, Louisiana, Financing Authority Revenue Bonds (Xavier University of Louisiana Project), 5.30% due 6/01/2026 (d) 1,345 Maine - 2.1% 3,425 Maine State Housing Authority, Mortgage Purchase Revenue Refunding Bonds, Series B, 5.30% due 11/15/2023 3,578 Maryland - 0.6% 1,050 Maryland State Energy Financing Administration, Limited Obligation Revenue Bonds (Cogeneration-AES Warrior Run), AMT, 7.40% due 9/01/2019 1,058 Massachusetts - 4.6% 600 Massachusetts State Development Finance Agency Revenue Bonds (Neville Communities Home), Series A, 5.75% due 6/20/2022 (f) 674 1,500 Massachusetts State Development Finance Agency Revenue Bonds (Neville Communities Home), Series A, 6% due 6/20/2044 (f) 1,683 2,100 Massachusetts State, HFA, Housing Revenue Bonds, AMT, Series A, 5.25% due 12/01/2048 2,168 3,000 Massachusetts State School Building Authority, Dedicated Sales Tax Revenue Bonds, Series A, 5% due 8/15/2030 (c) 3,186 Michigan - 0.7% 1,100 Flint, Michigan, Hospital Building Authority, Revenue Refunding Bonds (Hurley Medical Center), Series A, 6% due 7/01/2020 (k) 1,199 Minnesota - 7.0% 1,680 Minneapolis, Minnesota, Community Development Agency, Supported Development Revenue Refunding Bonds (Common Bond), Series G-3, 5.35% due 12/01/2011 (h) 1,815 4,220 Minnesota State Municipal Power Agency, Electric Revenue Bonds, 5.25% due 10/01/2021 4,566 2,870 Rockford, Minnesota, Independent School District Number 883, GO, 5.60% due 2/01/2019 (c) 3,034 2,390 Rockford, Minnesota, Independent School District Number 883, GO, 5.60% due 2/01/2020 (c) 2,527 Mississippi - 1.5% 2,000 Mississippi Business Finance Corporation, Mississippi, PCR, Refunding (System Energy Resources Inc. Project), 5.875% due 4/01/2022 2,006 500 Mississippi Business Finance Corporation, Mississippi, PCR, Refunding (System Energy Resources Inc. Project), 5.90% due 5/01/2022 502 Missouri - 1.9% 950 Fenton, Missouri, Tax Increment Revenue Refunding and Improvement Bonds (Gravois Bluffs), 7% due 10/01/2011 (h) 1,100 1,000 Kansas City, Missouri, IDA, First Mortgage Health Facilities Revenue Bonds (Bishop Spencer Place), Series A, 6.50% due 1/01/2035 1,058 1,000 Missouri State Development Finance Board, Infrastructure Facilities Revenue Refunding Bonds (Branson), Series A, 5.50% due 12/01/2032 1,048 New Jersey - 11.3% 4,050 New Jersey EDA, Cigarette Tax Revenue Bonds, 5.75% due 6/15/2029 4,406 1,890 New Jersey EDA, Cigarette Tax Revenue Bonds, 5.50% due 6/15/2031 2,013 1,000 New Jersey EDA, Retirement Community Revenue Bonds (Cedar Crest Village Inc. Facility), Series A, 7.25% due 11/15/2031 1,088 2,000 New Jersey EDA, Retirement Community Revenue Bonds (Seabrook Village Inc.), Series A, 8.125% due 11/15/2023 2,242 2,000 New Jersey EDA, Special Facility Revenue Bonds (Continental Airlines Inc. Project), AMT, 6.625% due 9/15/2012 2,142 2,375 New Jersey Health Care Facilities Financing Authority Revenue Bonds (South Jersey Hospital), 6% due 7/01/2012 (h) 2,643 2,500 New Jersey State Turnpike Authority, Turnpike Revenue Bonds, Series C, 5% due 1/01/2030 (c) 2,649 1,725 Tobacco Settlement Financing Corporation of New Jersey, Asset-Backed Revenue Bonds, 7% due 6/01/2041 1,996 New Mexico - 3.9% 3,675 Farmington, New Mexico, PCR, Refunding (Public Service Company of New Mexico - San Juan Project), Series A, 5.80% due 4/01/2022 3,689 2,675 New Mexico Finance Authority, Senior Lien State Transportation Revenue Bonds, Series A, 5.125% due 6/15/2018 (d) 2,904 New York - 11.4% 900 Dutchess County, New York, IDA, Civic Facility Revenue Refunding Bonds (Saint Francis Hospital), Series A, 7.50% due 3/01/2029 992 415 New York City, New York, City IDA, Civic Facility Revenue Bonds, Series C, 6.80% due 6/01/2028 458 525 New York City, New York, City IDA, Special Facility Revenue Bonds (Continental Airlines Inc. Project), AMT, 8% due 11/01/2012 580 525 New York City, New York, City IDA, Special Facility Revenue Bonds (Continental Airlines Inc. Project), AMT, 8.375% due 11/01/2016 584 3,855 New York City, New York, Sales Tax Asset Receivable Corporation Revenue Bonds, Series A, 5% due 10/15/2020 (d) 4,153 2,725 New York State Dormitory Authority Revenue Bonds (School Districts Financing Program), Series D, 5.25% due 10/01/2023 (d) 2,943 20 Suffolk County, New York, IDA, Civic Facility Revenue Bonds (Special Needs Facilities Pooled Program), Series D-1, 5.50% due 7/01/2007 20 1,100 Tobacco Settlement Financing Corporation of New York Revenue Bonds, Series A-1, 5.50% due 6/01/2015 1,163 2,400 Tobacco Settlement Financing Corporation of New York Revenue Bonds, Series A-1, 5.50% due 6/01/2018 2,603 2,750 Tobacco Settlement Financing Corporation of New York Revenue Bonds, Series C-1, 5.50% due 6/01/2020 (b) 3,003 1,100 Tobacco Settlement Financing Corporation of New York Revenue Bonds, Series C-1, 5.50% due 6/01/2022 1,201 1,575 Westchester County, New York, IDA, Continuing Care Retirement, Mortgage Revenue Bonds (Kendal on Hudson Project), Series A, 6.50% due 1/01/2034 1,685 North 2,000 North Carolina Eastern Municipal Power Agency, Power System Revenue Bonds, Series Carolina - 1.3% D, 6.75% due 1/01/2026 2,175 Oklahoma - 1.0% 645 Oklahoma State Housing Finance Agency, S/F Mortgage Revenue Bonds (Homeownership Loan Program), Series D-2, AMT, 6.25% due 9/01/2029 (f)(g) 651 1,075 Tulsa, Oklahoma, Municipal Airport Trust, Revenue Refunding Bonds (AMR Corporation), AMT, Series A, 5.375% due 12/01/2035 1,075 Pennsylvania - 3.9% 2,750 Pennsylvania Economic Development Financing Authority, Exempt Facilities Revenue Bonds (National Gypsum Company), AMT, Series A, 6.25% due 11/01/2027 2,900 540 Philadelphia, Pennsylvania, Authority for IDR, Commercial Development, 7.75% due 12/01/2017 541 2,630 Sayre, Pennsylvania, Health Care Facilities Authority, Revenue Bonds (Guthrie Healthcare System), Series B, 7.125% due 12/01/2031 3,152 Rhode Island - 1.5% 2,190 Rhode Island State Health and Educational Building Corporation, Hospital Financing Revenue Bonds (Lifespan Obligation Group), 6.50% due 8/15/2012 (h) 2,508 South 2,080 Medical University Hospital Authority, South Carolina, Hospital Facilities Revenue Carolina - 2.8% Refunding Bonds, Series A, 6.375% due 8/15/2012 (h) 2,378 2,000 South Carolina Jobs, EDA, EDR (Westminster Presbyterian Center), 7.75% due 11/15/2010 (h) 2,340 Tennessee - 6.9% 300 Blount County, Tennessee, Public Building Authority, Local Government Public Improvement Revenue Bonds, VRDN, Series A3A, 3.61% due 6/01/2026 (a)(j) 300 2,200 Hardeman County, Tennessee, Correctional Facilities Corporation Revenue Bonds, Series B, 7.375% due 8/01/2017 2,262 3,450 Shelby County, Tennessee, Health, Educational and Housing Facility Board, Hospital Revenue Refunding Bonds (Methodist Healthcare), 6.50% due 9/01/2012 (h) 3,970 4,500 Tennessee Energy Acquisition Corporation, Gas Revenue Bonds, Series A, 5.25% due 9/01/2026 5,099 Texas - 8.8% 1,000 Alliance Airport Authority, Inc., Texas, Special Facilities Revenue Bonds (American Airlines Inc. Project), AMT, 7.50% due 12/01/2029 1,020 2,665 Austin, Texas, Convention Center Revenue Bonds (Convention Enterprises Inc.), First Tier, Series A, 6.70% due 1/01/2028 2,841 600 Bell County, Texas, Health Facilities Development Corporation, Hospital Revenue Bonds (Scott & White Memorial Hospital), VRDN, Series B-2, 3.63% due 8/15/2029 (d)(j) 600 1,000 Brazos River Authority, Texas, PCR, Refunding (TXU Energy Company LLC Project), Series B, 4.75% due 5/01/2029 1,000 2,500 Brazos River, Texas, Harbor Navigation District, Brazoria County Environmental Revenue Refunding Bonds (Dow Chemical Company Project), AMT, Series A-7, 6.625% due 5/15/2033 2,804 843 Harris County, Texas, Revenue Refunding Bonds, DRIVERS, Series 1111, 6.611% due 8/15/2009 (c)(e) 928 1,300 Houston, Texas, Health Facilities Development Corporation, Retirement Facility Revenue Bonds (Buckingham Senior Living Community), Series A, 7.125% due 2/15/2034 1,447 2,965 Matagorda County, Texas, Navigation District Number 1, Revenue Refunding Bonds (Reliant Energy Inc.), Series C, 8% due 5/01/2029 3,153 1,100 Port Corpus Christi, Texas, Individual Development Corporation, Environmental Facilities Revenue Bonds (Citgo Petroleum Corporation Project), AMT, 8.25% due 11/01/2031 1,138 Vermont - 0.6% 1,000 Vermont Educational and Health Buildings Financing Agency, Revenue Bonds (Developmental and Mental Health), Series A, 6.50% due 6/15/2032 1,066 Virginia - 13.2% 425 Chesterfield County, Virginia, IDA, PCR (Virginia Electric and Power Company), Series A, 5.875% due 6/01/2017 460 575 Chesterfield County, Virginia, IDA, PCR, Refunding (Virginia Electric and Power Company), Series B, 5.875% due 6/01/2017 626 5,000 Fairfax County, Virginia, EDA, Resource Recovery Revenue Refunding Bonds, AMT, Series A, 6.10% due 2/01/2011 (a) 5,451 3,885 Pocahontas Parkway Association, Virginia, Toll Road Revenue Bonds, Senior-Series A, 5.50% due 8/15/2008 (h) 4,090 18,400 Pocahontas Parkway Association, Virginia, Toll Road Revenue Bonds, Senior-Series B, 7.35% due 8/15/2008 (h)(m) 4,894 2,185 Tobacco Settlement Financing Corporation of Virginia, Asset Backed Revenue Bonds, 5.625% due 6/01/2037 2,331 1,095 Virginia State HDA, Rental Housing Revenue Bonds, AMT, Series B, 5.625% due 8/01/2011 1,146 3,200 Virginia State HDA, Revenue Bonds, AMT, Series D, 6% due 4/01/2024 3,343 Washington - 0.6% 1,015 Seattle, Washington, Housing Authority Revenue Bonds (Replacement Housing Project), 6.125% due 12/01/2032 1,043 Wisconsin - 0.9% 1,360 Wisconsin State Health and Educational Facilities Authority Revenue Bonds (Synergyhealth Inc.), 6% due 11/15/2032 1,486 Puerto Rico - 1.3% 510 Puerto Rico Commonwealth, Public Improvement, GO, Refunding, Series B, 5.25% due 7/01/2032 551 1,550 Puerto Rico Industrial, Medical and Environmental Pollution Control Facilities Financing Authority, Special Facilities Revenue Bonds (American Airlines Inc.), Series A, 6.45% due 12/01/2025 1,572 U.S. Virgin 2,680 Virgin Islands Government Refinery Facilities, Revenue Refunding Bonds (Hovensa Islands - 1.8% Coker Project), AMT, 6.50% due 7/01/2021 3,023 Total Municipal Bonds (Cost - $214,148) - 136.9% 231,846 Municipal Bonds Held in Trust (o) California - 3.3% 5,130 California Pollution Control Financing Authority, PCR, Refunding (Pacific Gas and Electric), AMT, Series A, 5.35% due 12/01/2016 (d) 5,519 Maryland - 5.0% 7,765 Baltimore, Maryland, Convention Center Hotel Revenue Bonds, Senior Series A, 5.25% due 9/01/2039 (i) 8,442 Michigan - 3.1% 5,000 Michigan State Strategic Fund, Limited Obligation Revenue Refunding Bonds (Detroit Edison Company Pollution Control Project), AMT, Series C, 5.65% due 9/01/2029 (i) 5,327 New York - 2.0% 3,200 New York City, New York, Sales Tax Asset Receivable Corporation Revenue Bonds, Series A, 5.25% due 10/15/2027 (a) 3,477 South 8,400 South Carolina State Ports Authority, Ports Revenue Bonds, AMT, 5.30% due Carolina - 5.1% 7/01/2026 (c) 8,642 Texas - 4.4% 7,045 Harris County, Texas, Toll Road Revenue Refunding Bonds, Senior Lien, Series A, 5.25% due 8/15/2035 (c) 7,395 Total Municipal Bonds Held in Trust (Cost - $38,367) - 22.9% 38,802 Shares Held Short-Term Securities 12 Merrill Lynch Institutional Tax-Exempt Fund, 3.38% (l)(n) 12 Total Short-Term Securities (Cost - $12) - 0.0% 12 Total Investments (Cost - $252,527*) - 159.8% 270,660 Other Assets Less Liabilities - 2.5% 4,202 Liabilities for Trust Certificates, Including Interest Expense Payable - (10.9%) (18,428) Preferred Stock, at Redemption Value - (51.4%) (87,037) ----------- Net Assets Applicable to Common Stock - 100.0% $ 169,397 =========== * The cost and unrealized appreciation (depreciation) of investments as of October 31, 2006, as computed for federal income tax purposes, were as follows: Aggregate cost $ 234,465 =============== Gross unrealized appreciation $ 17,975 Gross unrealized depreciation (50) --------------- Net unrealized appreciation $ 17,925 =============== (a) AMBAC Insured. (b) FGIC Insured. (c) FSA Insured. (d) MBIA Insured. (e) The rate disclosed is that currently in effect. This rate changes periodically and inversely based upon prevailing market rates. (f) GNMA Collateralized. (g) FNMA Collateralized. (h) Prerefunded. (i) XL Capital Insured. (j) Security may have a maturity of more than one year at time of issuance, but has variable rate and demand features that qualify it as a short-term security. The rate disclosed is that currently in effect. This rate changes periodically based upon prevailing market rates. (k) ACA Insured. (l) Investments in companies considered to be an affiliate of the Fund, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, were as follows: Net Interest Affiliate Activity Income Merrill Lynch Institutional Tax-Exempt Fund - -* * Amount is less than $1,000. (m) Represents a zero coupon bond; the interest rate shown reflects the effective yield at the time of purchase. (n) Represents the current yield as of October 31, 2006. (o) Securities represent underlying bonds transferred to a separate securitization trust established in a tender option bond transaction in which the Fund may have acquired the residual interest certificates. These securities serve as collateral in a financing transaction. Item 2 - Controls and Procedures 2(a) - The Registrant's principal executive and principal financial officers have evaluated the Registrant's disclosure controls and procedures, including internal control over financial reporting, within 90 days of this filing. Such principal officers have concluded that as of January 23, 2007 the Registrant's disclosure controls and procedures were effective in design and operation to reasonably ensure that information required to be disclosed by the Registrant in this Form N-Q was recorded, processed, summarized, and reported within the required time periods, and were sufficient to form the basis of the certifications required by Rule 30a-2 of the Investment Company Act of 1940, as amended. Prior to reaching that conclusion, such principal officers had become aware of matters relating to the Registrant's participation in certain inverse floater structures that necessitated adjustments to financial information included in the Registrant's annual report to shareholders on Form N-CSR. As a result, management of the Registrant had reevaluated certain disclosure controls and procedures determined not to be effective, as discussed more fully below. Management of the Registrant is responsible for establishing and maintaining effective internal control over financial reporting. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of controls. The Registrant's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Such internal control includes policies and procedures that provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of a registrant's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the Registrant's ability to initiate, authorize, record, process or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Registrant's annual or interim financial statements that is more than inconsequential will not be prevented or detected. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. The Registrant identified the following control deficiency, that was determined to be a material weakness, as defined above, in the Registrant's internal control over financial reporting at October 31, 2006. The Registrant's controls related to the review and analysis of relevant terms and conditions of transfers of certain assets pertaining to inverse floater structures were not operating effectively to appropriately determine whether the transfers of assets qualified for sale accounting under the provisions of Statement of Financial Accounting Standards No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" ("SFAS 140"). As a result, these controls did not detect that certain transfers were not appropriately recorded as borrowings. Accordingly, the Registrant's schedule of investments as of and for the period ended October 31, 2006, were restated to appropriately reflect transfers of such securities as secured borrowings. These adjustments had no impact on net assets, net asset value per share or total return. Subsequent to October 31, 2006, but prior to the evaluation of the design and operation of the Registrant's disclosure controls and procedures at January 23, 2007, the Registrant's disclosure controls and procedures were modified to enhance the review and analysis of the relevant terms and conditions of transfers of securities in connection with inverse floater structures in light of SFAS 140. 2(b) - There have been no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR 270.30a-3(d)) that occurred during the last fiscal quarter of the period covered by this report that has materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. However, as discussed above, subsequent to October 31, 2006, the Registrant has enhanced controls related to the application of SFAS 140. Item 3 - Exhibits Certifications - Attached hereto Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BlackRock MuniHoldings Fund II, Inc. By: /s/ Robert C. Doll, Jr. ----------------------- Robert C. Doll, Jr. Chief Executive Officer BlackRock MuniHoldings Fund II, Inc. Date: February 20, 2007 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Robert C. Doll, Jr. ----------------------- Robert C. Doll, Jr. Chief Executive Officer BlackRock MuniHoldings Fund II, Inc. Date: February 20, 2007 By: /s/ Donald C. Burke ------------------- Donald C. Burke Chief Financial Officer BlackRock MuniHoldings Fund II, Inc. Date: February 20, 2007