BLACKROCK MUNI INTERMEDIATE DURATION FUND, INC.

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: 811-21348

Name of Fund: BlackRock Muni Intermediate Duration Fund, Inc. (MUI)

Fund Address:  100 Bellevue Parkway, Wilmington, DE 19809

Name and address of agent for service: John M. Perlowski, Chief Executive Officer, BlackRock Muni Intermediate

Duration 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: 04/30/2017

Date of reporting period: 10/31/2016


Item 1 – Report to Stockholders


OCTOBER 31, 2016

 

 

SEMI-ANNUAL REPORT (UNAUDITED)

 

    LOGO

 

BlackRock MuniAssets Fund, Inc. (MUA)

BlackRock MuniEnhanced Fund, Inc. (MEN)

BlackRock MuniHoldings Fund, Inc. (MHD)

BlackRock MuniHoldings Fund II, Inc. (MUH)

BlackRock MuniHoldings Quality Fund, Inc. (MUS)

BlackRock Muni Intermediate Duration Fund, Inc. (MUI)

BlackRock MuniVest Fund II, Inc. (MVT)

 

Not FDIC Insured • May Lose Value • No Bank Guarantee


Table of Contents     

 

     Page  

The Markets in Review

    3   

Semi-Annual Report:

 

Municipal Market Overview

    4   

The Benefits and Risks of Leveraging

    5   

Derivative Financial Instruments

    5   

Fund Summaries

    6   
Financial Statements:  

Schedules of Investments

    20   

Statements of Assets and Liabilities

    69   

Statements of Operations

    71   

Statements of Changes in Net Assets

    73   

Statements of Cash Flows

    75   

Financial Highlights

    77   

Notes to Financial Statements

    84   

Disclosure of Investment Advisory Agreements

    95   

Officers and Directors

    99   

Additional Information

    100   

 

                
2    SEMI-ANNUAL REPORT    OCTOBER 31, 2016   


The Markets in Review

 

Dear Shareholder,

Central bank policy decisions have continued to provide support to financial markets, while changing economic outlooks and geopolitical risks have been major drivers of investor sentiment. After ending its near-zero interest rate policy at the end of 2015, the Federal Reserve (the “Fed”) remained in focus as investors considered the anticipated pace of future rate hikes. With the European Central Bank and the Bank of Japan having moved into stimulus mode, the divergence in global monetary policies drove heightened market volatility at the beginning of 2016 and caused the U.S. dollar to strengthen considerably.

Financial markets had a rough start to the year as the strong dollar challenged U.S. companies that generate revenues overseas and pressured emerging market currencies and commodities prices. Low and volatile oil prices and signs of slowing growth in China were also meaningful factors behind the decline in risk assets early in the year. However, as the first quarter wore on, these pressures abated and a more tempered outlook for U.S. rate hikes helped the markets rebound.

Volatility spiked in late June when the United Kingdom shocked investors with its vote to leave the European Union. Uncertainty around how the British exit might affect the global economy and political landscape drove investors to high-quality assets, pushing already low global yields to even lower levels. However, risk assets recovered swiftly in July as economic data suggested that the consequences had thus far been contained to the United Kingdom.

In a second episode of surprise vote results, equities fell sharply after the news of Donald Trump’s victory in the U.S. presidential election, but quickly recovered, and the yield curve steepened due to expectations for rising inflation. Broadly, a reflation theme has been building amid signs of rising price pressures, central banks signaling a greater tolerance to let inflation run hotter, and policy emphasis shifting from monetary to fiscal stimulus.

At BlackRock, we believe investors need to think globally, extend their scope across a broad array of asset classes and be prepared to adjust accordingly as market conditions change over time. We encourage you to talk with your financial advisor and visit blackrock.com for further insight about investing in today’s markets.

Sincerely,

LOGO

Rob Kapito

President, BlackRock Advisors, LLC

LOGO

Rob Kapito

President, BlackRock Advisors, LLC

 

Total Returns as of October 31, 2016  
    6-month     12-month  

U.S. large cap equities
(S&P 500® Index)

    4.06     4.51

U.S. small cap equities
(Russell 2000® Index)

    6.13        4.11   

International equities
(MSCI Europe, Australasia,
Far East Index)

    (0.16     (3.23

Emerging market equities
(MSCI Emerging Markets Index)

    9.41        9.27   

3-month Treasury bills
(BofA Merrill Lynch 3-Month
U.S. Treasury Bill Index)

    0.17        0.31   

U.S. Treasury securities
(BofA Merrill Lynch
10-Year U.S. Treasury
Index)

    0.46        4.24   

U.S. investment grade bonds
(Bloomberg Barclays U.S.
Aggregate Bond Index)

    1.51        4.37   

Tax-exempt municipal
bonds (S&P Municipal
Bond Index)

    0.98        4.53   

U.S. high yield bonds
(Bloomberg Barclays U.S. Corporate High Yield 2% Issuer
Capped Index)

    7.59        10.16   
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 Reporting Period Ended October 31, 2016      

Municipal Market Conditions

Municipal bonds generated positive performance for the period, due to falling interest rates and a favorable supply-and-demand environment. Interest rates were volatile late in 2015 (bond prices rise as rates fall) leading up to a long-awaited rate hike from the U.S. Federal Reserve (the “Fed”) that ultimately came in December. However, ongoing reassurance from the Fed that rates would be increased gradually and would likely remain low overall resulted in strong demand for fixed income investments. Investors favored the relative yield and stability of municipal bonds amid bouts of volatility resulting from uneven U.S. economic data, volatile oil prices, global growth concerns, geopolitical risks (particularly the United Kingdom’s decision to leave the European Union and the contentious U.S. election), and widening central bank divergence — i.e., policy easing outside the United States while the Fed was posturing to commence policy tightening. During the 12 months ended October 31, 2016, municipal bond funds garnered net inflows of approximately $61 billion (based on data from the Investment Company Institute).

For the same 12-month period, total new issuance remained robust from a historical perspective at $439 billion (significantly above the $420 billion issued in the prior 12-month period). A noteworthy portion of new supply during this period was attributable to refinancing activity (roughly 60%) as issuers continued to take advantage of low interest rates and a flatter yield curve to reduce their borrowing costs.

S&P Municipal Bond Index

Total Returns as of October 31, 2016

  6 months:  0.98%

12 months:  4.53%

A Closer Look at Yields

 

LOGO

 

From October 31, 2015 to October 31, 2016, yields on AAA-rated 30-year municipal bonds decreased by 51 basis points (“bps”) from 3.07% to 2.56%, while 10-year rates fell by 31 bps from 2.04% to 1.73% and 5-year rates decreased 4 bps from 1.17% to 1.13% (as measured by Thomson Municipal Market Data). The municipal yield curve experienced significant flattening over the 12-month period with the

spread between 2- and 30-year maturities flattening by 81 bps and the spread between 2- and 10-year maturities flattening by 61 bps.

During the same time period, on a relative basis, tax-exempt municipal bonds broadly outperformed U.S. Treasuries with the greatest outperformance experienced in longer-term issues. In absolute terms, the positive performance of muni bonds was driven largely by falling interest rates as well as a supply/demand imbalance within the municipal market as investors sought income and incremental yield in an environment where opportunities became increasingly scarce. More broadly, municipal bonds benefited from the greater appeal of tax-exempt investing in light of the higher tax rates implemented in 2014. The asset class is known for its lower relative volatility and preservation of principal with an emphasis on income as tax rates rise.

Financial Conditions of Municipal Issuers

The majority of municipal credits remain strong, despite well-publicized distress among a few issuers. Four of the five states with the largest amount of debt outstanding — California, New York, Texas and Florida — have exhibited markedly improved credit fundamentals during the slow national recovery. However, several states with the largest unfunded pension liabilities have seen their bond prices decline noticeably and remain vulnerable to additional price deterioration. On the local level, Chicago’s credit quality downgrade is an outlier relative to other cities due to its larger pension liability and inadequate funding remedies. BlackRock maintains the view that municipal bond defaults will remain minimal and in the periphery while the overall market is fundamentally sound. We continue to advocate careful credit research and believe that a thoughtful approach to structure and security selection remains imperative amid uncertainty in a modestly improving economic environment.

The opinions expressed are those of BlackRock as of October 31, 2016, and are subject to change at any time due to changes in market or economic conditions. The comments should not be construed as a recommendation of any individual holdings or market sectors. Investing involves risk including loss of principal. Bond values fluctuate in price so the value of your investment can go down depending on market conditions. Fixed income risks include interest-rate and credit risk. Typically, when interest rates rise, there is a corresponding decline in bond values. Credit risk refers to the possibility that the bond issuer will not be able to make principal and interest payments. There may be less information on the financial condition of municipal issuers than for public corporations. The market for municipal bonds may be less liquid than for taxable bonds. Some investors may be subject to Alternative Minimum Tax (AMT). Capital gains distributions, if any, are taxable.

The Standard & Poor’s Municipal Bond Index, a broad, market value-weighted index, seeks to measure the performance of the US municipal bond market. All bonds in the index are exempt from US federal income taxes or subject to the alternative minimum tax. Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. It is not possible to invest directly in an index.

 

                
4    SEMI-ANNUAL REPORT    OCTOBER 31, 2016   


The Benefits and Risks of Leveraging     

 

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

In general, the concept of leveraging is based on the premise that the financing cost of leverage, which is based on short-term interest rates, is normally lower than the income earned by a Fund on its longer-term portfolio investments purchased with the proceeds from leverage. To the extent that the total assets of the Funds (including the assets obtained from leverage) are invested in higher-yielding portfolio investments, the Funds’ shareholders benefit from the incremental net income. The interest earned on securities purchased with the proceeds from leverage is paid to shareholders in the form of dividends, and the value of these portfolio holdings is reflected in the per share NAV.

To illustrate these concepts, assume a Fund’s Common Shares capitalization is $100 million and it utilizes leverage for an additional $30 million, creating a total value of $130 million available for investment in longer-term income securities. If prevailing short-term interest rates are 3% and longer-term interest rates are 6%, the yield curve has a strongly positive slope. In this case, a Fund’s financing costs on the $30 million of proceeds obtained from leverage are based on the lower short-term interest rates. At the same time, the securities purchased by a Fund with the proceeds from leverage earn income based on longer-term interest rates. In this case, a Fund’s financing cost of leverage is significantly lower than the income earned on a Fund’s longer-term investments acquired from leverage proceeds, and therefore the holders of Common Shares (“Common Shareholders”) are the beneficiaries of the incremental net income.

However, in order to benefit Common Shareholders, the return on assets purchased with leverage proceeds must exceed the ongoing costs associated with the leverage. If interest and other costs of leverage exceed the Funds’ return on assets purchased with leverage proceeds, income to shareholders is lower than if the Funds had not used leverage. Furthermore, the value of the Funds’ 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 value of the Funds’ obligations under their respective leverage arrangements generally does not fluctuate in relation to interest rates. As a result, changes in interest rates can influence the Funds’ NAVs positively or negatively. Changes in the future direction of interest rates are very

difficult to predict accurately, and there is no assurance that a Fund’s intended leveraging strategy will be successful.

The use of leverage also generally causes greater changes in each Fund’s NAV, market price and dividend rates than comparable portfolios without leverage. In a declining market, leverage is likely to cause a greater decline in the NAV and market price of a Fund’s Common Shares than if the Fund were not leveraged. In addition, each Fund 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 the Funds to incur losses. The use of leverage may limit a Fund’s ability to invest in certain types of securities or use certain types of hedging strategies. Each Fund incurs expenses in connection with the use of leverage, all of which are borne by Common Shareholders and may reduce income to the Common Shares. Moreover, to the extent the calculation of the Funds’ investment advisory fees includes assets purchased with the proceeds of leverage, the investment advisory fees payable to the Funds’ investment adviser will be higher than if the Funds did not use leverage.

To obtain leverage, each Fund has issued Variable Rate Demand Preferred Shares (“VRDP Shares”) or Variable Rate Muni Term Preferred Shares (“VMTP Shares”) (collectively, “Preferred Shares”) and/or leveraged its assets through the use of tender option bond trusts (“TOB Trusts”) as described in the Notes to Financial Statements.

Under the Investment Company Act of 1940, as amended (the “1940 Act”), each Fund is permitted to issue debt up to 33 1/3% of its total managed assets or equity securities (e.g., Preferred Shares) up to 50% of its total managed assets. A Fund may voluntarily elect to limit its leverage to less than the maximum amount permitted under the 1940 Act. In addition, a Fund may also be subject to certain asset coverage, leverage or portfolio composition requirements imposed by the Preferred Shares’ governing instruments or by agencies rating the Preferred Shares, which may be more stringent than those imposed by the 1940 Act.

If a Fund segregates or designates on its books and records cash or liquid assets having a value not less than the value of a Fund’s obligations under the TOB Trust (including accrued interest), a TOB Trust is not considered a senior security and is not subject to the foregoing limitations and requirements under the 1940 Act.

 

 

Derivative Financial Instruments     

The Funds may invest in various derivative financial instruments. These instruments are used to obtain exposure to a security, commodity, index, market, and/or other asset without owning or taking physical custody of securities, commodities and/or other referenced assets or to manage market, equity, credit, interest rate, foreign currency exchange rate, commodity and/or other risks. Derivative financial instruments may give rise to a form of economic leverage and involve risks, including the imperfect correlation between the value of a derivative financial instru-

ment and the underlying asset, possible default of the counterparty to the transaction or illiquidity of the instrument. The Funds’ successful use of a derivative financial instrument depends on the investment adviser’s ability to predict pertinent market movements accurately, which cannot be assured. The use of these instruments may result in losses greater than if they had not been used, may limit the amount of appreciation a Fund can realize on an investment and/or may result in lower distributions paid to shareholders. The Funds’ investments in these instruments, if any, are discussed in detail in the Notes to Financial Statements.

 

 

                
   SEMI-ANNUAL REPORT    OCTOBER 31, 2016    5


Fund Summary as of October 31, 2016    BlackRock MuniAssets Fund, Inc.

 

Fund Overview      

BlackRock MuniAssets Fund, Inc.’s (MUA) (the “Fund”) investment objective is to provide high current income exempt from federal income taxes by investing primarily in a portfolio of medium- to lower-grade or unrated municipal obligations, the interest on which, in the opinion of bond counsel to the issuer, is exempt from federal income taxes. The Fund seeks to achieve its investment objective by investing, under normal market conditions, at least 80% of its assets in municipal bonds exempt from federal income taxes (except that the interest may be subject to the federal alternative minimum tax). The Fund invests at least 65% of its assets in municipal bonds that are rated in the medium to lower categories by nationally recognized rating services (for example, Baa or lower by Moody’s Investors Service, Inc. (“Moody’s”) or BBB or lower by Standard & Poor’s Corporation (“S&P”) or securities which are deemed by the investment adviser to be of comparable quality. The Fund may invest directly in such securities or synthetically through the use of derivatives.

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

 

Fund Information      

Symbol on New York Stock Exchange (“NYSE”)

   MUA

Initial Offering Date

   June 25, 1993

Yield on Closing Market Price as of October 31, 2016 ($14.34)1

   4.81%

Tax Equivalent Yield2

   8.50%

Current Monthly Distribution per Common Share3

   $0.0575

Current Annualized Distribution per Common Share3

   $0.6900

Economic Leverage as of October 31, 20164

   11%

 

  1   

Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. The current distribution rate may consist of income, net realized gains and/or a return of capital. See the Additional Information — Section 19(a) Notice for estimated sources and character of distributions. Past performance does not guarantee future results.

 

  2   

Tax equivalent yield assumes the maximum marginal federal tax rate of 43.4%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields.

 

  3   

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

 

  4   

Represents TOB Trusts as a percentage of total managed assets, which is the total assets of the Fund, including any assets attributable to TOB Trusts, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Fund, please see The Benefits and Risks of Leveraging on page 5.

 

Performance      

Returns for the six months ended October 31, 2016 were as follows:

 

    Returns Based On  
     Market Price     NAV  

MUA1,2

    (0.39 )%      2.53

Lipper High Yield Municipal Debt Funds3

    (2.96 )%      1.95

 

1   

All returns reflect reinvestment of dividends and/or distributions.

 

2  

The Fund moved from a premium to NAV to a discount during the period, which accounts for the difference between performance based on price and performance based on NAV.

 

3   

Average return.

 

    Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

The following discussion relates to the Fund’s absolute performance based on NAV:

 

 

The U.S. municipal bond market delivered modest gains in the period, with the bulk of the positive return occurring in May and June. During these two months, bond yields fell sharply (as prices rose) in reaction to the highly accommodative policies of the world’s central banks and the prospect of the Fed maintaining a gradual, data-dependent approach to raising rates. In the latter part of the period, however, the market gave back some ground as accelerating growth indicated an increased likelihood that the Fed would in fact start to raise rates before year end. Despite this headwind, the tax-exempt market closed in positive territory due to the combination of its attractive yields, a favorable supply-and-demand picture, and the continued health of state and local finances.

 

 

The Fund’s positions in lower-rated investment-grade securities generally made the largest contributions to performance, as elevated investor risk appetites led to robust demand for higher-yielding issues. Holdings in bonds with maturities of 20 years in longer also aided performance given that longer-term debt benefited from both stronger price performance and higher income relative to shorter-dated securities. At the sector level, the Fund was helped by its positions in health care, transportation and tobacco issues.

 

 

The Fund’s more-seasoned holdings, while producing generous yields compared to current market rates, detracted from performance. The prices of many of these investments declined due to the premium amortization that occurred as the bonds approached their first call dates. (A call is when an issuer redeems a bond prior to its maturity date; premium is amount by which a bond trades above its $100 par value.)

 

 

The Fund utilized U.S. Treasury futures contracts to manage exposure to a potential rise in interest rates, and its tactical shifts in this area contributed to the Fund’s six-month results.

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.

 

                
6    SEMI-ANNUAL REPORT    OCTOBER 31, 2016   


     BlackRock MuniAssets Fund, Inc.

 

Market Price and Net Asset Value Per Share Summary                              

 

     

10/31/16

     4/30/16      Change      High      Low  

Market Price

   $ 14.34       $ 14.74         (2.71 )%     $ 15.87       $ 13.96   

Net Asset Value

   $ 14.47       $ 14.45         0.14    $ 14.80       $ 14.45   

 

Market Price and Net Asset Value History For the Past Five Years

 

LOGO

 

Overview of the Fund’s Total Investments*
Sector Allocation   10/31/16     4/30/16  

Health

    23     22

Transportation

    18        19   

Tobacco

    15        14   

County/City/Special District/School District

    13        14   

Education

    9        9   

Utilities

    8        8   

Corporate

    7        7   

State

    4        3   

Housing

    3        4   

For Fund compliance purposes, the Fund’s sector classifications refer to one or more of the sector sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.

Credit Quality Allocation1  

10/31/16

    4/30/16  

AA/Aa

    19     19

A

    7        7   

BBB/Baa

    21        24   

BB/Ba

    8        10   

B/B

    13        9   

CCC/Caa

    1        2 

N/R3

    31        31   

 

  1   

For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either S&P or Moody’s if ratings differ. These rating agencies are independent, nationally recognized statistical rating organizations and are widely used. Investment grade ratings are credit ratings of BBB/Baa or higher. Below investment grade ratings are credit ratings of BB/Ba or lower. Investments designated N/R are not rated by either rating agency. Unrated investments do not necessarily indicate low credit quality. Credit quality ratings are subject to change.

 

  2   

Representing less than 1% of the Fund’s total investments.

 

  3   

The investment adviser evaluates the credit quality of unrated investments based upon certain factors including, but not limited to, credit ratings for similar investments and financial analysis of sectors and individual investments. Using this approach, the investment adviser has deemed certain of these unrated securities as investment grade quality. As of October 31, 2016 and April 30, 2016, the market value of unrated securities deemed by the investment adviser to be investment grade each represents 6% and 5%, respectively, of the Fund’s total investments.

 
 
Call/Maturity Schedule4  

Calendar Year Ended December 31,

 

2016

    7

2017

    8   

2018

    5   

2019

    5   

2020

    13   

 

  4   

Scheduled maturity dates and/or bonds that are subject to potential calls by issuers over the next five years.

 

  *   Excludes short-term securities.
 

 

                
   SEMI-ANNUAL REPORT    OCTOBER 31, 2016    7


Fund Summary as of October 31, 2016    BlackRock MuniEnhanced Fund, Inc.

 

Fund Overview      

BlackRock MuniEnhanced Fund, Inc.’s (MEN) (the “Fund”) 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 Fund seeks to achieve its investment objective by investing at least 80% of its assets 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 Fund invests primarily in long-term municipal bonds rated investment grade quality, or are deemed to be of comparable quality by the investment adviser, at the time of investment and invests primarily in long-term municipal bonds with maturities of more than ten years at the time of investment. The Fund may invest directly in such securities or synthetically through the use of derivatives.

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

 

Fund Information      

Symbol on NYSE

   MEN

Initial Offering Date

   March 2, 1989

Yield on Closing Market Price as of October 31, 2016 ($11.86)1

   5.72%

Tax Equivalent Yield2

   10.11%

Current Monthly Distribution per Common Share3

   $0.0565

Current Annualized Distribution per Common Share3

   $0.6780

Economic Leverage as of October 31, 20164

   36%

 

  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 marginal federal tax rate of 43.4%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields.

 

  3   

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

 

  4   

Represents VRDP Shares and TOB Trusts as a percentage of total managed assets, which is the total assets of the Fund, including any assets attributable to VRDP Shares and TOB Trusts, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Fund, please see The Benefits and Risks of Leveraging on page 5.

 

Performance      

Returns for the six months ended October 31, 2016 were as follows:

 

    Returns Based On  
     Market Price     NAV  

MEN1,2

    (2.89 )%      1.20

Lipper General & Insured Municipal Debt Funds (Leveraged)3

    (3.09 )%      1.30

 

  1   

All returns reflect reinvestment of dividends and/or distributions.

 

  2  

The Fund moved from a premium to NAV to a discount during the period, which accounts for the difference between performance based on price and performance based on NAV.

 

  3   

Average return.

 

      Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

The following discussion relates to the Fund’s absolute performance based on NAV:

 

 

The U.S. municipal bond market delivered modest gains in the period, with the bulk of the positive return occurring in May and June. During these two months, bond yields fell sharply (as prices rose) in reaction to the highly accommodative policies of the world’s central banks and the prospect of the Fed maintaining a gradual, data-dependent approach to raising rates. In the latter part of the period, however, the market gave back some ground as accelerating growth indicated an increased likelihood that the Fed would in fact start to raise rates before year end. Despite this headwind, the tax-exempt market closed in positive territory due to the combination of its attractive yields, a favorable supply-and-demand picture, and the continued health of state and local finances.

 

 

The Fund’s exposure to the longer end of the municipal yield curve made a positive contribution to performance. The yield curve flattened during the reporting period, with long-end yields decreasing slightly even as short-term yields rose. The Fund also benefited from high advance-refunding activity in the municipal market. Refunding increased the value of certain holdings when they were paid off with high-quality collateral prior to their original maturity date. The Fund also benefited from its positions in the tax-backed (local) sector. The Fund’s exposure to lower-rated investment-grade credits aided performance, as yield spreads for higher-yielding issues generally tightened.

 

 

Duration positioning detracted from absolute performance given that municipal yields rose slightly. The Fund’s exposure to the front end of the municipal yield curve also detracted from results, as yields on two- to five-year bonds increased more than they did for longer-term issues.

 

 

The Fund’s yield declined during the period. Many older, higher-yielding bonds matured or were called, and the proceeds were reinvested at much lower prevailing rates.

 

 

During the period, the use of leverage helped augment the Fund’s returns. While the Fund can still generate additional income through the use of leverage due to the positively sloped yield curve, the benefit has become less pronounced due to rising short-term borrowing costs.

 

 

The Fund utilized U.S. Treasury futures contracts to manage exposure to a potential rise in interest rates, and its tactical shifts in this area contributed to the Fund’s six-month results.

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.

 

                
8    SEMI-ANNUAL REPORT    OCTOBER 31, 2016   


     BlackRock MuniEnhanced Fund, inc.

 

Market Price and Net Asset Value Per Share Summary                              

 

      10/31/16      4/30/16      Change      High      Low  

Market Price

   $ 11.86       $ 12.55         (5.50 )%     $ 13.21       $ 11.67   

Net Asset Value

   $ 12.33       $ 12.52         (1.52 )%     $ 12.91       $ 12.30   

 

Market Price and Net Asset Value History For the Past Five Years

 

LOGO

 

Overview of the Fund’s Total Investments*
Sector Allocation  

10/31/16

    4/30/16  

Transportation

    23     21

County/City/Special District/School District

    19        21   

Utilities

    18        16   

State

    14        15   

Health

    10        11   

Education

    10        10   

Corporate

    4        4   

Housing

    1        1   

Tobacco

    1        1   

For Fund compliance purposes, the Fund’s sector classifications refer to one or more of the sector sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.

Credit Quality Allocation1  

10/31/16

    4/30/16  

AAA/Aaa

    9     9

AA/Aa

    57        58   

A

    24        25   

BBB/Baa

    8        7   

N/R2

    2        1   

 

  1   

For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either S&P or Moody’s if ratings differ. These rating agencies are independent, nationally recognized statistical rating organizations and are widely used. Investment grade ratings are credit ratings of BBB/Baa or higher. Below investment grade ratings are credit ratings of BB/Ba or lower. Investments designated N/R are not rated by either rating agency. Unrated investments do not necessarily indicate low credit quality. Credit quality ratings are subject to change.

 

  2   

The investment adviser evaluates the credit quality of unrated investments based upon certain factors including but not limited to, credit ratings for similar investments and financial analysis of sectors and individual investments. Using this approach, the investment adviser has deemed certain of these unrated securities as investment grade quality. As of October 31, 2016 and April 30, 2016, the market value of unrated securities deemed by the investment adviser to be investment grade each represents less than 1% of the Fund’s total investments.

 
   
Call/Maturity Schedule3       

Calendar Year Ended December 31,

 

2016

    6

2017

    10   

2018

    10   

2019

    15   

2020

    3   

 

  3   

Scheduled maturity dates and/or bonds that are subject to potential calls by issuers over the next five years.

 

  *   Excludes short-term securities.

 

                
   SEMI-ANNUAL REPORT    OCTOBER 31, 2016    9


Fund Summary as of October 31, 2016    BlackRock MuniHoldings Fund, Inc.

 

Fund Overview

BlackRock MuniHoldings Fund, Inc.’s (MHD) (the “Fund”) investment objective is to provide shareholders with current income exempt from federal income taxes. The Fund seeks to achieve its investment objective by investing at least 80% of its assets in municipal bonds exempt from federal income taxes (except that the interest may be subject to the federal alternative minimum tax). The Fund invests, under normal market conditions, at least 75% of its assets in municipal bonds rated investment grade, or are deemed to be of comparable quality by the investment adviser, at the time of investment and invests primarily in long-term municipal bonds with a maturity of more than ten years at the time of investment. The Fund may invest directly in such securities or synthetically through the use of derivatives.

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

 

Fund Information

Symbol on NYSE

   MHD

Initial Offering Date

   May 2, 1997

Yield on Closing Market Price as of October 31, 2016 ($16.75)1

   5.80%

Tax Equivalent Yield2

   10.25%

Current Monthly Distribution per Common Share3

   $0.0810

Current Annualized Distribution per Common Share3

   $0.9720

Economic Leverage as of October 31, 20164

   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 marginal federal tax rate of 43.4%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields.

 

  3   

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

 

  4   

Represents VMTP Shares and TOB Trusts as a percentage of total managed assets, which is the total assets of the Fund, including any assets attributable to VMTP Shares and TOB Trusts, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Fund, please see The Benefits and Risks of Leveraging on page 5.

 

Performance

Returns for the six months ended October 31, 2016 were as follows:

 

    Returns Based On  
     Market Price     NAV  

MHD1,2

    (5.12 )%      1.26

Lipper General & Insured Municipal Debt Funds (Leveraged)3

    (3.09 )%      1.30

 

  1   

All returns reflect reinvestment of dividends and/or distributions.

 

  2  

The Fund moved from a premium to NAV to a discount during the period, which accounts for the difference between performance based on price and performance based on NAV.

 

  3   

Average return.

 

      Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

The following discussion relates to the Fund’s absolute performance based on NAV:

 

 

The U.S. municipal bond market delivered modest gains in the period, with the bulk of the positive return occurring in May and June. During these two months, bond yields fell sharply (as prices rose) in reaction to the highly accommodative policies of the world’s central banks and the prospect of the Fed maintaining a gradual, data-dependent approach to raising rates. In the latter part of the period, however, the market gave back some ground as accelerating growth indicated an increased likelihood that the Fed would in fact start to raise rates before year end. Despite this headwind, the tax-exempt market closed in positive territory due to the combination of its attractive yields, a favorable supply-and-demand picture, and the continued health of state and local finances.

 

 

The Fund’s positions in lower-rated investment-grade securities generally made the largest contributions to performance, as elevated investor risk appetites led to robust demand for higher-yielding issues. Holdings in bonds with maturities of 20 years in longer also aided performance given that longer-term debt benefited from both stronger price performance and higher income relative to shorter-dated securities. At the sector level, the Fund was helped by its positions in transportation, utilities and local tax-backed issues.

 

 

The Fund’s more-seasoned holdings, while producing generous yields compared to current market rates, detracted from performance. The prices of many of these investments declined due to the premium amortization that occurred as the bonds approached their first call dates. (A call is when an issuer redeems a bond prior to its maturity date; premium is amount by which a bond trades above its $100 par value.)

 

 

The Fund utilized U.S. Treasury futures contracts to manage exposure to a potential rise in interest rates, and its tactical shifts in this area contributed to the Fund’s six-month results.

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.

 

                
10    SEMI-ANNUAL REPORT    OCTOBER 31, 2016   


     BlackRock MuniHoldings Fund, Inc.

 

Market Price and Net Asset Value Per Share Summary                         

 

     

10/31/16

     4/30/16      Change      High      Low  

Market Price

   $ 16.75       $ 18.14         (7.66 )%     $ 19.22       $ 16.70   

Net Asset Value

   $ 17.69       $ 17.96 1        (1.50 )%     $ 18.52       $ 17.65   

 

  1   

The net asset value does not reflect adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles and therefore differs from amount reported in the Financial Highlights.

 

Market Price and Net Asset Value History For the Past Five Years

 

LOGO

 

Overview of the Fund’s Total Investments*
Sector Allocation  

10/31/16

    4/30/16  

Transportation

    22     24

Health

    20        19   

Utilities

    12        12   

County/City/Special District/School District

    12        12   

State

    12        12   

Education

    11        10   

Corporate

    6        6   

Tobacco

    5        5   

For Fund compliance purposes, the Fund’s sector classifications refer to one or more of the sector sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.

Credit Quality Allocation1  

10/31/16

    4/30/16  

AAA/Aaa

    4     5

AA/Aa

    47        48   

A

    21        22   

BBB/Baa

    14        13   

BB/Ba

    3        4   

B

    2        1   

N/R2

    9        7   

 

  1   

For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either S&P or Moody’s if ratings differ. These rating agencies are independent, nationally recognized statistical rating organizations and are widely used. Investment grade ratings are credit ratings of BBB/Baa or higher. Below investment grade ratings are credit ratings of BB/Ba or lower. Investments designated N/R are not rated by either rating agency. Unrated investments do not necessarily indicate low credit quality. Credit quality ratings are subject to change.

 

  2  

The investment adviser evaluates the credit quality of unrated investments based upon certain factors including, but not limited to, credit ratings for similar investments and financial analysis of sectors and individual investments. Using this approach, the investment adviser has deemed certain of these unrated securities as investment grade quality. As of October 31, 2016 and April 30, 2016, the market value of unrated securities deemed by the investment adviser to be investment grade each represents 2% of the Fund’s total investments.

 
   
Call/Maturity Schedule3       

Calendar Year Ended December 31,

 

2016

    4

2017

    5   

2018

    5   

2019

    24   

2020

    12   

 

  3   

Scheduled maturity dates and/or bonds that are subject to potential calls by issuers over the next five years.

 

  *   Excludes short-term securities.
 

 

                
   SEMI-ANNUAL REPORT    OCTOBER 31, 2016    11


Fund Summary as of October 31, 2016    BlackRock MuniHoldings Fund II, Inc.

 

Fund Overview      

BlackRock MuniHoldings Fund II, Inc.’s (MUH) (the “Fund”) investment objective is to provide shareholders with current income exempt from federal income taxes. The Fund seeks to achieve its investment objective by investing, under normal market conditions, at least 80% of its assets in municipal bonds exempt from federal income taxes (except that the interest may be subject to the federal alternative minimum tax). The Fund invests, under normal market conditions, at least 75% of its assets in municipal bonds rated investment grade, or are deemed to be of comparable quality by the investment adviser, at the time of investment and invests primarily in long-term municipal bonds with a maturity of more than ten years at the time of investment. The Fund may invest directly in such securities or synthetically through the use of derivatives.

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

 

Fund Information      

Symbol on NYSE

   MUH

Initial Offering Date

   February 27, 1998

Yield on Closing Market Price as of October 31, 2016 ($15.41)1

   5.80%

Tax Equivalent Yield2

   10.25%

Current Monthly Distribution per Common Share3

   $0.0745

Current Annualized Distribution per Common Share3

   $0.8940

Economic Leverage as of October 31, 20164

   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 marginal federal tax rate of 43.4%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields.

 

  3   

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

 

  4   

Represents VMTP Shares and TOB Trusts as a percentage of total managed assets, which is the total assets of the Fund, including any assets attributable to VMTP Shares and TOB Trusts, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Fund, please see The Benefits and Risks of Leveraging on page 5.

 

Performance      

Returns for the six months ended October 31, 2016 were as follows:

 

    Returns Based On  
     Market Price     NAV  

MUH1,2

    (2.44 )%      1.26

Lipper General & Insured Municipal Debt Funds (Leveraged)3

    (3.09 )%      1.30

 

  1   

All returns reflect reinvestment of dividends and/or distributions.

 

  2  

The Fund’s discount to NAV, which widened during the period, accounts for the difference between performance based on price and performance based on NAV.

 

  3   

Average return.

 

      Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

The following discussion relates to the Fund’s absolute performance based on NAV:

 

 

The U.S. municipal bond market delivered modest gains in the period, with the bulk of the positive return occurring in May and June. During these two months, bond yields fell sharply (as prices rose) in reaction to the highly accommodative policies of the world’s central banks and the prospect of the Fed maintaining a gradual, data-dependent approach to raising rates. In the latter part of the period, however, the market gave back some ground as accelerating growth indicated an increased likelihood that the Fed would in fact start to raise rates before year end. Despite this headwind, the tax-exempt market closed in positive territory due to the combination of its attractive yields, a favorable supply-and-demand picture, and the continued health of state and local finances.

 

 

The Fund’s positions in lower-rated investment-grade securities generally made the largest contributions to performance, as elevated investor risk appetites led to robust demand for higher-yielding issues. Holdings in bonds with maturities of 20 years in longer also aided performance given that longer-term debt benefited from both stronger price performance and higher income relative to shorter-dated securities. At the sector level, the Fund was helped by its positions in transportation, utilities and corporate-related issues.

 

 

The Fund’s more-seasoned holdings, while producing generous yields compared to current market rates, detracted from performance. The prices of many of these investments declined due to the premium amortization that occurred as the bonds approached their first call dates. (A call is when an issuer redeems a bond prior to its maturity date; premium is amount by which a bond trades above its $100 par value.)

 

 

The Fund utilized U.S. Treasury futures contracts to manage exposure to a potential rise in interest rates, and its tactical shifts in this area contributed to the Fund’s six-month results.

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.

 

                
12    SEMI-ANNUAL REPORT    OCTOBER 31, 2016   


     BlackRock MuniHoldings Fund II, Inc.

 

 

Market Price and Net Asset Value Per Share Summary                         

 

     

10/31/16

     4/30/16      Change      High      Low  

Market Price

   $ 15.41       $ 16.23         (5.05 )%     $ 17.28       $ 15.40   

Net Asset Value

   $ 16.27       $ 16.51         (1.45 )%     $ 17.00       $ 16.24   

 

Market Price and Net Asset Value History For the Past Five Years

 

LOGO

 

Overview of the Fund’s Total Investments*
Sector Allocation  

10/31/16

    4/30/16  

Transportation

    22     22

Health

    20        19   

State

    13        14   

Utilities

    12        12   

County/City/Special District/School District

    12        12   

Education

    9        9   

Corporate

    6        6   

Tobacco

    5        5   

Housing

    1        1   

For Fund compliance purposes, the Fund’s sector classifications refer to one or more of the sector sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.

Credit Quality Allocation1  

10/31/16

    4/30/16  

AAA/Aaa

    3     4

AA/Aa

    49        50   

A

    20        23   

BBB/Baa

    13        11   

BB/Ba

    3        4   

B

    2        1   

N/R2

    10        7   

 

  1   

For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either S&P or Moody’s if ratings differ. These rating agencies are independent, nationally recognized statistical rating organizations and are widely used. Investment grade ratings are credit ratings of BBB/Baa or higher. Below investment grade ratings are credit ratings of BB/Ba or lower. Investments designated N/R are not rated by either rating agency. Unrated investments do not necessarily indicate low credit quality. Credit quality ratings are subject to change.

 

  2   

The investment adviser evaluates the credit quality of unrated investments based upon certain factors including, but not limited to, credit ratings for similar investments and financial analysis of sectors and individual investments. Using this approach, the investment adviser has deemed certain of these unrated securities as investment grade quality. As of October 31, 2016 and April 30, 2016, the market value of unrated securities deemed by the investment adviser to be investment grade each represents 3% of the Fund’s total investments.

 
   
Call/Maturity Schedule3       

Calendar Year Ended December 31,

 

2016

    5

2017

    5   

2018

    5   

2019

    25   

2020

    11   

 

  3   

Scheduled maturity dates and/or bonds that are subject to potential calls by issuers over the next five years.

 

  *   Excludes short-term securities.
 

 

                
   SEMI-ANNUAL REPORT    OCTOBER 31, 2016    13


Fund Summary as of October 31, 2016    BlackRock MuniHoldings Quality Fund, Inc.

 

Fund Overview

BlackRock MuniHoldings Quality Fund, Inc.’s (MUS) (the “Fund”) investment objective is to provide shareholders with current income exempt from federal income taxes. The Fund 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 Fund invests at least 80% of its assets in investment grade municipal obligations, and obligations deemed to be of comparable quality by the investment adviser, at the time of investment with remaining maturities of one year or more at the time of investment. The Fund may invest directly in such securities or synthetically through the use of derivatives.

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

 

Fund Information

Symbol on NYSE

   MUS

Initial Offering Date

   May 1, 1998

Yield on Closing Market Price as of October 31, 2016 ($13.56)1

   5.97%

Tax Equivalent Yield2

   10.55%

Current Monthly Distribution per Common Share3

   $0.0675

Current Annualized Distribution per Common Share3

   $0.8100

Economic Leverage as of October 31, 20164

   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 marginal federal tax rate of 43.4%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields.

 

  3   

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

 

  4   

Represents VMTP Shares and TOB Trusts as a percentage of total managed assets, which is the total assets of the Fund, including any assets attributable to VMTP Shares and TOB Trusts, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Fund, please see The Benefits and Risks of Leveraging on page 5.

 

Performance      

Returns for the six months ended October 31, 2016 were as follows:

 

    Returns Based On  
     Market Price     NAV  

MUS1,2

    (2.58 )%      0.87

Lipper General & Insured Municipal Debt Funds (Leveraged)3

    (3.09 )%      1.30

 

  1   

All returns reflect reinvestment of dividends and/or distributions.

 

  2  

The Fund’s discount to NAV, which widened during the period, accounts for the difference between performance based on price and performance based on NAV.

 

  3   

Average return.

 

      Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

The following discussion relates to the Fund’s absolute performance based on NAV:

 

 

The U.S. municipal bond market delivered modest gains in the period, with the bulk of the positive return occurring in May and June. During these two months, bond yields fell sharply (as prices rose) in reaction to the highly accommodative policies of the world’s central banks and the prospect of the Fed maintaining a gradual, data-dependent approach to raising rates. In the latter part of the period, however, the market gave back some ground as accelerating growth indicated an increased likelihood that the Fed would in fact start to raise rates before year end. Despite this headwind, the tax-exempt market closed in positive territory due to the combination of its attractive yields, a favorable supply-and-demand picture, and the continued health of state and local finances.

 

 

The Fund’s position in longer-dated bonds aided performance given the stronger relative returns in this area. Conversely, its positions in short- and intermediate-term issues—where yields generally rose—dampened its overall results.

 

 

The Fund’s exposure to lower-rated credits aided performance as yield spreads for higher-yielding issues generally tightened over the period. At the sector level, positions in transportation, tax-backed and utilities issues made the largest positive contributions.

 

 

During the period, the use of leverage helped augment the Fund’s returns. The Trust utilized U.S. Treasury futures contracts to manage exposure to a potential rise in interest rates, which had a slightly positive impact on results.

 

 

The Fund’s more-seasoned holdings, while producing generous yields compared to current market rates, detracted from performance. The prices of many of these investments declined due to the premium amortization that occurred as the bonds approached their first call dates. (A call is when an issuer redeems a bond prior to its maturity date; premium is amount by which a bond trades above its $100 par value).

 

 

Reinvestment was an additional drag on performance, as the proceeds of mature or called bonds were reinvested at much lower prevailing rates.

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.

 

                
14    SEMI-ANNUAL REPORT    OCTOBER 31, 2016   


     BlackRock MuniHoldings Quality Fund, Inc.

 

Market Price and Net Asset Value Per Share Summary      

 

      10/31/16      4/30/16      Change      High      Low  

Market Price

   $ 13.56       $ 14.31         (5.24 )%     $ 15.59       $ 13.54   

Net Asset Value

   $ 14.56       $ 14.85 1        (1.95 )%     $ 15.17       $ 14.54   

 

  1   

The net asset value does not reflect adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles and therefore differs from amount reported in the Financial Highlights.

 

Market Price and Net Asset Value History For the Past Five Years

 

LOGO

 

Overview of the Fund’s Total Investments*
Sector Allocation  

10/31/16

    4/30/16  

Transportation

    38     40

County/City/Special District/School District

    25        25   

Utilities

    13        14   

Health

    12        10   

State

    5        5   

Education

    3        3   

Housing

    2        1   

Tobacco

    1        1   

Corporate

    1        1   

For Fund compliance purposes, the Fund’s sector classifications refer to one or more of the sector sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.

Credit Quality Allocation1  

10/31/16

    4/30/16  

AAA/Aaa

    4     6

AA/Aa

    55        56   

A

    32        32   

BBB/Baa

    6        3   

N/R

    3        3   

 

  1   

For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either S&P or Moody’s if ratings differ. These rating agencies are independent, nationally recognized statistical rating organizations and are widely used. Investment grade ratings are credit ratings of BBB/Baa or higher. Below investment grade ratings are credit ratings of BB/Ba or lower. Investments designated N/R are not rated by either rating agency. Unrated investments do not necessarily indicate low credit quality. Credit quality ratings are subject to change.

 
   
Call/Maturity Schedule2       

Calendar Year Ended December 31,

 

2016

    2

2017

    3 

2018

    25   

2019

    12   

2020

    4   

 

  2   

Scheduled maturity dates and/or bonds that are subject to potential calls by issuers over the next five years.

 

  3   

Representing less than 1% of the Fund’s total investments.

 

  *   Excludes short-term securities.
 

 

                
   SEMI-ANNUAL REPORT    OCTOBER 31, 2016    15


Fund Summary as of October 31, 2016    BlackRock Muni Intermediate Duration Fund, Inc.

 

Fund Overview      

BlackRock Muni Intermediate Duration Fund, Inc.’s (MUI) (the “Fund”) investment objective is to provide common shareholders with high current income exempt from federal income taxes. The Fund seeks to achieve its investment objective by investing at least 80% of its assets 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 Fund invests at least 75% of its assets in municipal bonds rated investment grade, or are deemed to be of comparable quality by the investment adviser, at the time of investment and invests at least 80% of its assets in municipal bonds with a duration of three to ten years at the time of investment. The Fund may invest directly in such securities or synthetically through the use of derivatives.

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

 

Fund Information      

Symbol on NYSE

   MUI

Initial Offering Date

   August 1, 2003

Yield on Closing Market Price as of October 31, 2016 ($14.48)1

   4.60%

Tax Equivalent Yield2

   8.13%

Current Monthly Distribution per Common Share3

   $0.0555

Current Annualized Distribution per Common Share3

   $0.6660

Economic Leverage as of October 31, 20164

   36%

 

  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 marginal federal tax rate of 43.4%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields.

 

  3   

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

 

  4   

Represents VMTP Shares and TOB Trusts as a percentage of total managed assets, which is the total assets of the Fund, including any assets attributable to VMTP Shares and TOB Trusts, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Fund, please see The Benefits and Risks of Leveraging on page 5.

 

Performance      

Returns for the six months ended October 31, 2016 were as follows:

 

    Returns Based On  
     Market Price     NAV  

MUI1,2

    (2.53 )%      1.05

Lipper Intermediate Municipal Debt Funds3

    (1.81 )%      0.78

 

  1   

All returns reflect reinvestment of dividends and/or distributions.

 

  2  

The Fund’s discount to NAV, which widened during the period, accounts for the difference between performance based on price and performance based on NAV.

 

  3   

Average return.

 

      Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

The following discussion relates to the Fund’s absolute performance based on NAV:

 

 

The U.S. municipal bond market delivered modest gains in the period, with the bulk of the positive return occurring in May and June. During these two months, bond yields fell sharply (as prices rose) in reaction to the highly accommodative policies of the world’s central banks and the prospect of the Fed maintaining a gradual, data-dependent approach to raising rates. In the latter part of the period, however, the market gave back some ground as accelerating growth indicated an increased likelihood that the Fed would in fact start to raise rates before year end. Despite this headwind, the tax-exempt market closed in positive territory due to the combination of its attractive yields, a favorable supply-and-demand picture, and the continued health of state and local finances.

 

 

The tax-exempt yield curve flattened, with short-term yields rising and longer-term yields moving lower. In this environment, the Fund’s longer-dated and longer-duration bonds provided the largest positive returns. (Duration is a measure of interest-rate sensitivity.)

 

 

At a time in which investors continued to search for yield, many of the largest contributors to Fund performance were its investments in lower-rated, higher-yielding sectors and securities. At the sector level, positions in tax-backed (school districts), transportation, education and health care sectors made positive contributions to performance.

 

 

The Fund’s exposure to lower-coupon issues and bonds with longer call dates also benefited returns, as both segments outpaced the broader market.

 

 

During the period, the use of leverage helped augment the Fund’s returns. However, its use of U.S. Treasury futures contracts to manage exposure to a potential interest rates had a slightly negative impact on performance given that Treasury yields fell during the period.

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.

 

                
16    SEMI-ANNUAL REPORT    OCTOBER 31, 2016   


     BlackRock Muni Intermediate Duration Fund, Inc.

 

Market Price and Net Asset Value Per Share Summary      

 

       

10/31/16

       4/30/16        Change      High        Low  

Market Price

     $ 14.48         $ 15.19           (4.67 )%     $ 15.62         $ 14.41   

Net Asset Value

     $ 15.97         $ 16.17 1          (1.24 )%     $ 16.59         $ 15.93   

 

  1   

The net asset value does not reflect adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles and therefore differs from amount reported in the Financial Highlights.

 

Market Price and Net Asset Value History For the Past Five Years

 

LOGO

 

Overview of the Fund’s Total Investments*
Sector Allocation  

10/31/16

    4/30/16  

Transportation

    26     24

County/City/Special District/School District

    18        18   

State

    13        14   

Education

    13        13   

Health

    11        11   

Utilities

    11        11   

Corporate

    4        5   

Housing

    2        2   

Tobacco

    2        2   

For Fund compliance purposes, the Fund’s sector classifications refer to one or more of the sector sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.

Credit Quality Allocation1  

10/31/16

    4/30/16  

AAA/Aaa

    3     3

AA/Aa

    44        47   

A

    38        40   

BBB/Baa

    7        5   

BB/Ba

    1        1   

B

    1        1   

N/R2

    6        3   

 

  1   

For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either S&P’s or Moody’s if ratings differ. These rating agencies are independent, nationally recognized statistical rating organizations and are widely used. Investment grade ratings are credit ratings of BBB/Baa or higher. Below investment grade ratings are credit ratings of BB/Ba or lower. Investments designated N/R are not rated by either rating agency. Unrated investments do not necessarily indicate low credit quality. Credit quality ratings are subject to change.

 

  2   

The investment adviser evaluates the credit quality of unrated Investments based upon certain factors including, but not limited to, credit ratings for similar investments and financial analysis of sectors and individual investments. Using this approach, the investment adviser has deemed certain of these unrated securities as investment grade quality. As of October 31, 2016 and April 30, 2016, the market value of unrated securities deemed by the investment adviser to be investment grade represents 2% and 1%, respectively, of the Fund’s total investments.

 
   
Call/Maturity Schedule3       

Calendar Year Ended December 31,

 

2016

    3

2017

    3   

2018

    5   

2019

    7   

2020

    7   

 

  3  

Scheduled maturity dates and/or bonds that are subject to potential calls by issuers over the next five years.

 

  *   Excludes short-term securities.

 

                
   SEMI-ANNUAL REPORT    OCTOBER 31, 2016    17


Fund Summary as of October 31, 2016    BlackRock MuniVest Fund II, Inc.

 

Fund Overview

BlackRock MuniVest Fund II, Inc.’s (MVT) (the “Fund”) 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 Fund seeks to achieve its investment objective by investing at least 80% of its assets in municipal bonds exempt from federal income taxes (except that the interest may be subject to the federal alternative minimum tax). The Fund invests, under normal market conditions, at least 75% of its assets in municipal bonds rated investment grade, or are deemed to be of comparable quality by the investment adviser, at the time of investment and invests primarily in long-term municipal bonds with a maturity of more than ten years at the time of investment. The Fund may invest directly in such securities or synthetically through the use of derivatives.

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

 

Fund Information

Symbol on NYSE

   MVT

Initial Offering Date

   March 29, 1993

Yield on Closing Market Price as of October 31, 2016 ($16.13)1

   5.88%

Tax Equivalent Yield2

   10.39%

Current Monthly Distribution per Common Share3

   $0.0790

Current Annualized Distribution per Common Share3

   $0.9480

Economic Leverage as of October 31, 20164

   39%

 

  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 marginal federal tax rate of 43.4%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields.

 

  3   

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

 

  4   

Represents VMTP Shares and TOB Trusts as a percentage of total managed assets, which is the total assets of the Fund, including any assets attributable to VMTP Shares and TOB Trusts, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Fund, please see The Benefits and Risks of Leveraging on page 5.

 

Performance

Returns for the six months ended October 31, 2016 were as follows:

 

    Returns Based On  
     Market Price     NAV  

MVT1,2

    (4.48 )%      1.14

Lipper General & Insured Municipal Debt Funds (Leveraged)3

    (3.09 )%      1.30

 

  1   

All returns reflect reinvestment of dividends and/or distributions.

 

  2  

The Fund’s premium to NAV, which narrowed during the period, accounts for the difference between performance based on price and performance based on NAV.

 

  3   

Average return.

 

      Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

The following discussion relates to the Fund’s absolute performance based on NAV:

 

 

The U.S. municipal bond market delivered modest gains in the period, with the bulk of the positive return occurring in May and June. During these two months, bond yields fell sharply (as prices rose) in reaction to the highly accommodative policies of the world’s central banks and the prospect of the Fed maintaining a gradual, data-dependent approach to raising rates. In the latter part of the period, however, the market gave back some ground as accelerating growth indicated an increased likelihood that the Fed would in fact start to raise rates before year end. Despite this headwind, the tax-exempt market closed in positive territory due to the combination of its attractive yields, a favorable supply-and-demand picture, and the continued health of state and local finances.

 

 

The Fund’s positions in lower-rated investment-grade securities generally made the largest contributions to performance, as elevated investor risk appetites led to robust demand for higher-yielding issues. Holdings in bonds with maturities of 20 years in longer also aided performance given that longer-term debt benefited from both stronger price performance and higher income relative to shorter-dated securities. At the sector level, the Fund was helped by its positions in utilities, pre-refunded and corporate-related issues.

 

 

The Fund’s more-seasoned holdings, while producing generous yields compared to current market rates, detracted from performance. The prices of many of these investments declined due to the premium amortization that occurred as the bonds approached their first call dates. (A call is when an issuer redeems a bond prior to its maturity date; premium is amount by which a bond trades above its $100 par value.)

 

 

The Fund utilized U.S. Treasury futures contracts to manage exposure to a potential rise in interest rates, and its tactical shifts in this area contributed to the Fund’s six-month results.

 

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.

 

                
18    SEMI-ANNUAL REPORT    OCTOBER 31, 2016   


     BlackRock MuniVest Fund II, Inc.

 

Market Price and Net Asset Value Per Share Summary                         

 

     

10/31/16

     4/30/16      Change      High      Low  

Market Price

   $ 16.13       $ 17.38         (7.19 )%     $ 18.64       $ 15.85   

Net Asset Value

   $ 15.89       $ 16.17         (1.73 )%     $ 16.55       $ 15.87   

 

Market Price and Net Asset Value History For the Past Five Years

 

LOGO

 

Overview of the Fund’s Total Investments*
Sector Allocation  

10/31/16

    4/30/16  

Transportation

    26     24

Health

    17        18   

State

    14        13   

County/City/Special District/School District

    11        11   

Utilities

    10        13   

Education

    8        7   

Corporate

    7        7   

Tobacco

    5        5   

Housing

    2        2   

For Fund compliance purposes, the Fund’s sector classifications refer to one or more of the sector sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.

Credit Quality Allocation1  

10/31/16

    4/30/16  

AAA/Aaa

    6     6

AA/Aa

    49        49   

A

    17        21   

BBB/Baa

    12        10   

BB/Ba

    3        4   

B

    2        2   

N/R2

    11        8   

 

  1   

For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either S&P or Moody’s if ratings differ. These rating agencies are independent, nationally recognized statistical rating organizations and are widely used. Investment grade ratings are credit ratings of BBB/Baa or higher. Below investment grade ratings are credit ratings of BB/Ba or lower. Investments designated N/R are not rated by either rating agency. Unrated investments do not necessarily indicate low credit quality. Credit quality ratings are subject to change.

 

  2  

The investment adviser evaluates the credit quality of unrated investments based upon certain factors including, but not limited to, credit ratings for similar investments and financial analysis of sectors and individual investments. Using this approach, the investment adviser has deemed certain of these unrated securities as investment grade quality. As of October 31, 2016 and April 30, 2016 the market value of unrated securities deemed by the investment adviser to be investment grade represents less than 2% and 3%, respectively, of the Fund’s total investments.

 
   
Call/Maturity Schedule3       

Calendar Year Ended December 31,

 

2016

    4

2017

    8   

2018

    11   

2019

    22   

2020

    12   

 

  3  

Scheduled maturity dates and/or bonds that are subject to potential calls by issuers over the next five years.

 

  *   Excludes short-term securities.
 

 

                
   SEMI-ANNUAL REPORT    OCTOBER 31, 2016    19


Schedule of Investments October 31, 2016 (Unaudited)

  

BlackRock MuniAssets Fund, Inc. (MUA)

(Percentages shown are based on Net Assets)

 

Municipal Bonds   

Par  

(000)

    Value  

Alabama — 2.1%

    

County of Jefferson Alabama, RB, Limited Obligation School, Series A:

    

5.25%, 1/01/17

   $ 895      $ 899,922   

5.25%, 1/01/19

     2,000        2,011,020   

5.50%, 1/01/21

     1,215        1,221,695   

County of Jefferson Alabama Sewer, Refunding RB, Sub-Lien, Series D, 6.00%, 10/01/42

     3,745        4,451,307   

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

     2,165        2,528,590   
    

 

 

 
               11,112,534   

Alaska — 0.5%

    

Northern Tobacco Securitization Corp., Refunding RB, Tobacco Settlement, Asset-Backed, Series A:

    

4.63%, 6/01/23

     1,080        1,096,945   

5.00%, 6/01/32

     1,500        1,464,255   
    

 

 

 
               2,561,200   

Arizona — 1.5%

    

City of Phoenix Arizona IDA, RB:

    

Great Hearts Academies — Veritas Project, 6.30%, 7/01/42

     500        550,760   

Great Hearts Academies — Veritas Project, 6.40%, 7/01/47

     425        469,162   

Legacy Traditional Schools Project, Series A, 6.50%, 7/01/34 (a)

     570        655,135   

Legacy Traditional Schools Project, Series A, 6.75%, 7/01/44 (a)

     1,000        1,162,040   

City of Phoenix Arizona IDA, Refunding RB (a):

    

Basis Schools, Inc. Projects, 5.00%, 7/01/35

     305        325,984   

Basis Schools, Inc. Projects, 5.00%, 7/01/45

     855        904,214   

Basis Schools, Inc. Projects, Series A, 5.00%, 7/01/35

     260        277,888   

Basis Schools, Inc. Projects, Series A, 5.00%, 7/01/46

     290        306,692   

Legacy Traditional School Projects, 5.00%, 7/01/35

     320        330,429   

Legacy Traditional School Projects, 5.00%, 7/01/45

     255        260,562   

Salt Verde Financial Corp., RB, Senior, 5.00%, 12/01/37

     1,650        1,978,284   

University Medical Center Corp., RB, 6.50%, 7/01/19 (b)

     500        570,895   
    

 

 

 
               7,792,045   

California — 7.8%

    

California Municipal Finance Authority, RB, Urban Discovery Academy Project (a):

    

5.50%, 8/01/34

     315        332,861   

6.00%, 8/01/44

     665        708,990   

6.13%, 8/01/49

     580        618,982   
Municipal Bonds   

Par  

(000)

    Value  

California (continued)

  

California School Finance Authority, RB:

    

Alliance for College Ready Public School — 2023 Union LLC Project, Series A, 6.40%, 7/01/48

   $ 1,570      $ 1,870,419   

Value Schools, 6.65%, 7/01/33

     435        499,458   

Value Schools, 6.90%, 7/01/43

     975        1,131,410   

California Statewide Communities Development Authority, RB, Loma Linda University Medical Center, Series A (a):

    

5.00%, 12/01/46

     920        1,014,171   

5.25%, 12/01/56

     2,500        2,789,025   

California Statewide Communities Development Authority, Refunding RB, American Baptist Homes of the West, 6.25%, 10/01/39

     2,175        2,444,809   

California Statewide Financing Authority, RB, Asset-Backed, Tobacco Settlement, Series B, 6.00%, 5/01/43

     1,650        1,662,375   

City of San Jose California Hotel Tax, RB, Convention Center Expansion & Renovation Project:

    

6.50%, 5/01/36

     900        1,079,334   

6.50%, 5/01/42

     2,220        2,657,051   

City of Stockton California Public Financing Authority, RB, Delta Water Supply Project, Series A, 6.25%, 10/01/40

     375        466,024   

County of Los Angeles California Tobacco Securitization Agency, RB, Asset-Backed, Los Angeles County Securitization Corp.:

    

5.70%, 6/01/46

     3,600        3,693,204   

5.60%, 6/01/36

     1,285        1,318,256   

County of Riverside California Transportation Commission, RB, Senior Lien, Series A, 5.75%, 6/01/48

     2,885        3,338,897   

County of San Francisco California City & Redevelopment Agency, Tax Allocation Bonds, Mission Bay South Redevelopment Project (a)(c):

    

0.00%, 8/01/26

     1,250        767,563   

0.00%, 8/01/43

     1,500        356,355   

Golden State Tobacco Securitization Corp., Refunding RB, Asset-Backed, Series A-1:

    

Senior, 5.75%, 6/01/47

     3,980        3,918,390   

5.13%, 6/01/47

     3,850        3,703,892   

Tobacco Securitization Authority of Southern California, Refunding RB, Tobacco Settlement, Asset-Backed, Senior Series A-1:

    

4.75%, 6/01/25

     1,375        1,407,312   

5.00%, 6/01/37

     4,580        4,525,864   
    

 

 

 
               40,304,642   

Colorado — 1.5%

    

Castle Oaks Metropolitan District No. 3, GO, 6.25%, 12/01/44

     500        532,050   

Colorado Health Facilities Authority, Refunding RB, Series A (a):

    

6.13%, 12/01/45

     335        364,778   
 

 

Portfolio Abbreviations

 

AGC    Assured Guarantee Corp.      DFA    Development Finance Agency    IDA    Industrial Development Authority
AGM    Assured Guaranty Municipal Corp.      EDA    Economic Development Authority    IDB    Industrial Development Board
AMBAC    American Municipal Bond Assurance Corp.      EDC    Economic Development Corp.    ISD    Independent School District
AMT    Alternative Minimum Tax (subject to)      ERB    Education Revenue Bonds    LRB    Lease Revenue Bonds
ARB    Airport Revenue Bonds      GARB    General Airport Revenue Bonds    M/F    Multi-Family
BAM    Build America Mutual Assurance Co.      GO    General Obligation Bonds    MRB    Mortgage Revenue Bonds
BARB    Building Aid Revenue Bonds      GTD    Guaranteed    NPFGC    National Public Finance Guarantee Corp.
BHAC    Berkshire Hathaway Assurance Corp.      HDA    Housing Development Authority    PSF    Permanent School Fund
CAB    Capital Appreciation Bonds      HFA    Housing Finance Agency    RB    Revenue Bonds
COP    Certificates of Participation      HRB    Housing Revenue Bonds    S/F    Single-Family

 

See Notes to Financial Statements.

 

                
20    SEMI-ANNUAL REPORT    OCTOBER 31, 2016   


Schedule of Investments (continued)

  

BlackRock MuniAssets Fund, Inc. (MUA)

 

Municipal Bonds   

Par  

(000)

    Value  

Colorado (continued)

    

Colorado Health Facilities Authority, Refunding RB, Series A (a) (continued):

    

6.25%, 12/01/50

   $ 1,115      $ 1,215,361   

Copperleaf Metropolitan District No. 2, GO, Refunding, 5.75%, 12/01/45

     720        759,125   

Foothills Metropolitan District, Special Assessment Bonds, 6.00%, 12/01/38

     3,000        3,266,790   

Regional Transportation District, RB, Denver Transit Partners Eagle P3 Project, 6.00%, 1/15/34

     1,500        1,707,450   
    

 

 

 
               7,845,554   

Connecticut — 0.9%

    

Mohegan Tribal Finance Authority, RB, 7.00%, 2/01/45 (a)

     1,430        1,501,157   

Mohegan Tribe of Indians of Connecticut, RB, Series A, 6.75%, 2/01/45 (a)

     1,420        1,472,782   

Mohegan Tribe of Indians of Connecticut, Refunding RB, Public Improvement, Priority Distribution, Series C, 6.25%, 2/01/30 (a)

     1,835        1,896,197   
    

 

 

 
               4,870,136   

Delaware — 0.7%

    

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

     1,000        1,103,830   

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

     2,280        2,458,592   
    

 

 

 
               3,562,422   

Florida — 8.2%

    

Boggy Creek Improvement District, Refunding RB, Special Assessment Bonds, 5.13%, 5/01/43

     1,535        1,606,777   

Capital Trust Agency, Inc., RB, Silver Creek St. Augustine Project, Series A:

    

1st Mortgage, 8.25%, 1/01/44

     515        444,991   

1st Mortgage, 8.25%, 1/01/49

     1,105        954,864   

5.75%, 1/01/50

     655        651,286   

County of Collier Florida IDA, Refunding RB, Arlington of Naples Project, Series A, 8.13%, 5/15/44 (a)

     2,510        2,976,082   

County of Palm Beach Florida Health Facilities Authority, RB, Acts Retirement Life Community, 5.50%, 11/15/20 (b)

     3,500        4,097,275   

Florida Development Finance Corp., RB, Renaissance Charter School, Series A:

    

5.75%, 6/15/29

     690        714,902   

6.00%, 6/15/34

     835        866,964   

6.13%, 6/15/44

     3,220        3,329,512   

Greeneway Improvement District, RB, Special Assessment Bonds, 5.13%, 5/01/43

     1,940        2,030,714   

Harbor Bay Community Development District Florida, Special Assessment Bonds, Series A, 7.00%, 5/01/33

     410        410,455   

Jacksonville Economic Development Commission, Refunding RB, Florida Proton Therapy Institute, Series A, 6.00%, 9/01/17 (a)

     295        306,057   

Lakewood Ranch Stewardship District, Refunding, Special Assessment Bonds, Lakewood Center & New Sector Projects, 8.00%, 5/01/40

     1,485        1,802,849   

Lakewood Ranch Stewardship District, Special Assessment Bonds, Village of Lakewood Ranch Sector Projects:

    

4.00%, 5/01/21

     200        203,972   

4.25%, 5/01/26

     160        163,250   

5.00%, 5/01/36

     460        474,320   

5.13%, 5/01/46

     915        948,004   

Mid-Bay Bridge Authority, RB, Springing Lien, Series A, 7.25%, 10/01/21 (b)

     4,550        5,836,512   
Municipal Bonds   

Par  

(000)

    Value  

Florida (continued)

    

Midtown Miami Community Development District, Refunding, Special Assessment Bonds:

    

Series A, 5.00%, 5/01/37

   $ 845      $ 897,314   

Series B, 5.00%, 5/01/37

     495        525,645   

Palm Beach County Health Facilities Authority, Refunding RB, Series A, 7.25%, 6/01/34

     500        603,305   

Santa Rosa Bay Bridge Authority, RB, 6.25%, 7/01/28 (d)(e)

     4,264        2,823,451   

Tampa Palms Open Space and Transportation Community Development District, RB, Capital Improvement, Richmond Place Project, 7.50%, 5/01/18

     575        575,834   

Tolomato Community Development District, Refunding, Special Assessment Bonds:

    

Convertible CAB, Series A2, 0.00%, 5/01/39 (f)

     250        202,045   

Convertible CAB, Series A3, 0.00%, 5/01/40 (f)

     585        353,662   

Convertible CAB, Series A4, 0.00%, 5/01/40 (f)

     305        136,759   

Series 2, 0.00%, 5/01/40 (f)

     805        426,392   

Series A1, 6.65%, 5/01/40

     875        878,290   

Tolomato Community Development District:

    

Series 1, 0.00%, 5/01/40 (f)

     1,305        815,847   

Series 1, 6.65%, 5/01/40 (d)(e)

     50        50,739   

Series 3, 6.61%, 5/01/40 (d)(e)

     875        9   

Series 3, 6.65%, 5/01/40 (d)(e)

     710        7   

Village Community Development District No. 9, Special Assessment Bonds:

    

6.75%, 5/01/31

     1,575        1,881,038   

7.00%, 5/01/41

     2,575        3,087,734   

5.50%, 5/01/42

     1,210        1,378,444   
    

 

 

 
               42,455,301   

Georgia — 1.6%

    

County of Clayton Georgia, Tax Allocation Bonds, Ellenwood Project, 7.50%, 7/01/33

     2,575        2,645,349   

County of Clayton Georgia Development Authority, Refunding RB, Delta Air Lines, Inc. Project, Series A, 8.75%, 6/01/29

     3,365        4,068,823   

County of Gainesville & Hall Georgia Development Authority, Refunding RB, Acts Retirement Life Community, Series A-2 (b):

    

6.38%, 11/15/19

     700        810,852   

6.63%, 11/15/19

     880        1,025,922   
    

 

 

 
               8,550,946   

Guam — 0.4%

    

Territory of Guam, GO, Series A:

    

6.00%, 11/15/19

     505        550,601   

7.00%, 11/15/19 (b)

     1,115        1,312,723   
    

 

 

 
               1,863,324   

Illinois — 4.7%

    

City of Chicago Illinois, GO, Series A, 5.50%, 1/01/39

     3,600        3,793,212   

Illinois Finance Authority, Refunding RB:

    

Friendship Village of Schaumburg, 7.25%, 2/15/45

     4,000        4,274,400   

Lutheran Home & Services Obligated Group, 5.63%, 5/15/42

     2,395        2,563,895   

Presence Health Network, Series C, 4.00%, 2/15/41

     1,525        1,456,375   

Primary Health Care Centers Program, 6.60%, 7/01/24

     990        992,525   

Rogers Park Montessori School Project, Series 2014, 6.00%, 2/01/34

     365        390,597   

Rogers Park Montessori School Project, Series 2014, 6.13%, 2/01/45

     860        918,695   

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

     4,170        4,519,863   
 

 

See Notes to Financial Statements.

 

                
   SEMI-ANNUAL REPORT    OCTOBER 31, 2016    21


Schedule of Investments (continued)

  

BlackRock MuniAssets Fund, Inc. (MUA)

 

Municipal Bonds   

Par  

(000)

    Value  

Illinois (continued)

    

Metropolitan Pier & Exposition Authority, RB, McCormick Place Expansion Project, Series A, 5.50%, 6/15/53

   $ 2,370      $ 2,691,514   

Railsplitter Tobacco Settlement Authority, RB:

    

5.50%, 6/01/23

     180        208,678   

6.00%, 6/01/28

     710        833,718   

Village of Lincolnshire Illinois, Special Tax Bonds, Sedgebrook Project, 6.25%, 3/01/34

     1,730        1,720,225   
    

 

 

 
               24,363,697   

Indiana — 1.6%

    

City of Valparaiso Indiana, RB, Exempt Facilities, Pratt Paper LLC Project, AMT:

    

6.75%, 1/01/34

     825        1,012,976   

7.00%, 1/01/44

     2,000        2,480,280   

City of Vincennes Indiana, Refunding RB, Southwest Indiana Regional Youth Village Project, 6.25%, 1/01/29 (a)

     2,510        2,496,220   

Indiana Finance Authority, RB, Private Activity Bond, Ohio River Bridges East End Crossing Project, Series A, AMT:

    

5.00%, 7/01/44

     470        516,854   

5.00%, 7/01/48

     1,555        1,700,284   
    

 

 

 
               8,206,614   

Iowa — 2.7%

    

Iowa Finance Authority, Refunding RB:

    

Midwestern Disaster Area, Iowa Fertilizer Co. Project, 5.50%, 12/01/22

     2,090        2,118,758   

Midwestern Disaster Area, Iowa Fertilizer Co. Project, 5.25%, 12/01/25

     2,190        2,284,148   

Sunrise Retirement Community Project, 5.50%, 9/01/37

     1,355        1,397,615   

Sunrise Retirement Community Project, 5.75%, 9/01/43

     2,115        2,195,286   

Iowa Tobacco Settlement Authority, Refunding RB:

    

Asset-Backed, CAB, Series B, 5.60%, 6/01/34

     1,200        1,205,556   

Series C, 5.38%, 6/01/38

     4,900        4,879,910   
    

 

 

 
               14,081,273   

Kentucky — 1.1%

    

Kentucky Economic Development Finance Authority, Refunding RB, Baptist Life Communities Project, Series S:

    

6.25%, 11/15/46

     635        644,334   

6.38%, 11/15/51

     620        629,759   

Kentucky Public Transportation Infrastructure Authority, RB, Downtown Crossing, First Tier, Series A, 5.75%, 7/01/49

     4,000        4,631,200   
    

 

 

 
               5,905,293   

Louisiana — 2.8%

    

Juban Crossing Economic Development District, Refunding RB, General Infrastructure Project, Series C, 7.00%, 9/15/44 (a)

     1,055        1,117,498   

Louisiana Local Government Environmental Facilities & Community Development Authority, RB, Westlake Chemical Corp. Project, 6.75%, 11/01/32

     5,000        5,252,650   

Louisiana Public Facilities Authority, RB, Belle Chasse Educational Foundation Project, 6.75%, 5/01/41

     1,855        2,134,827   

Tobacco Settlement Financing Corp., Refunding RB, Asset-Backed, Series A, 5.25%, 5/15/35

     5,570        6,277,334   
    

 

 

 
               14,782,309   

Maine — 0.6%

    

Maine Health & Higher Educational Facilities Authority, RB, Maine General Medical Center, 6.75%, 7/01/41

     2,955        3,301,740   
Municipal Bonds   

Par  

(000)

    Value  

Maryland — 2.0%

    

County of Frederick Maryland, RB, Jefferson Technology Park Project, Series B, 7.13%, 7/01/43

   $ 2,840      $ 3,205,423   

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

     3,615        3,981,272   

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

     3,085        3,130,318   
    

 

 

 
               10,317,013   

Massachusetts — 1.4%

    

Massachusetts Development Finance Agency, RB:

    

Boston Medical Center, Series D, 5.00%, 7/01/44

     1,905        2,103,444   

Foxborough Regional Charter School, Series A, 7.00%, 7/01/42

     1,025        1,156,036   

North Hill Communities Issue, Series A, 6.50%, 11/15/43 (a)

     2,020        2,196,892   

Massachusetts Development Finance Agency, Refunding RB, Tufts Medical Center, Series I, 6.75%, 1/01/36

     1,490        1,741,601   
    

 

 

 
               7,197,973   

Michigan — 0.9%

    

City of Detroit Michigan Sewage Disposal System, Refunding RB, Senior Lien, Series A, 5.25%, 7/01/39

     2,785        3,110,733   

Michigan Finance Authority, RB, Detroit Water & Sewage Disposal System, Senior Lien, Series 2014 C-2, AMT, 5.00%, 7/01/44

     415        446,287   

Michigan Finance Authority, Refunding RB, Detroit Water & Sewage Department Project, Senior Lien, Series C-1, 5.00%, 7/01/44

     920        1,010,666   
    

 

 

 
               4,567,686   

Minnesota — 0.3%

    

City of Rochester Minnesota, RB, Health Care And Facility Homestead Rochester Incorporate, 5.00%, 12/01/49

     1,335        1,409,787   

Missouri — 1.0%

    

Kirkwood IDA Missouri, RB, Aberdeen Heights, Series A, 8.25%, 5/15/39

     2,315        2,637,665   

Lees Summit IDA, RB, John Knox Obligated Group, 5.25%, 8/15/39

     2,235        2,421,801   
    

 

 

 
               5,059,466   

New Jersey — 5.5%

    

Casino Reinvestment Development Authority, Refunding RB:

    

5.25%, 11/01/39

     1,065        1,097,238   

5.25%, 11/01/44

     770        790,220   

County of Essex New Jersey Improvement Authority, RB, AMT, 5.25%, 7/01/45 (a)

     1,150        1,188,007   

New Jersey EDA, RB:

    

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

     2,250        2,692,057   

Private Activity Bond, Goethals Bridge Replacement Project, AMT, 5.38%, 1/01/43

     2,155        2,448,533   

Team Academy Charter School Project, 6.00%, 10/01/43

     1,530        1,748,882   

New Jersey EDA, Refunding RB:

    

Bancroft Neurohealth Project, 5.00%, 6/01/41

     365        371,946   

Bancroft Neurohealth Project, Series A, 5.00%, 6/01/36

     850        870,120   

Greater Brunswick Charter School, Inc. Project, Series A, 6.00%, 8/01/49 (a)

     500        525,390   

New Jersey Health Care Facilities Financing Authority, Refunding RB (b):

    

St. Barnabas Health Care System, Series A, 5.63%, 7/01/21

     2,650        3,184,584   

St. Joseph’s Healthcare System, 6.63%, 7/01/18

     4,090        4,481,454   
 

 

See Notes to Financial Statements.

 

                
22    SEMI-ANNUAL REPORT    OCTOBER 31, 2016   


Schedule of Investments (continued)

  

BlackRock MuniAssets Fund, Inc. (MUA)

 

Municipal Bonds   

Par  

(000)

    Value  

New Jersey (continued)

    

New Jersey Transportation Trust Fund Authority, RB, Transportation Program, Series AA, 5.25%, 6/15/41

   $ 1,140      $ 1,270,268   

Tobacco Settlement Financing Corp. New Jersey, Refunding RB, Series 1A:

    

5.00%, 6/01/29

     3,735        3,725,513   

5.00%, 6/01/41

     4,550        4,256,752   
    

 

 

 
               28,650,964   

New Mexico — 0.6%

    

New Mexico Hospital Equipment Loan Council, Refunding RB, Gerald Champion Regional Medical Center Project, 5.50%, 7/01/42

     2,970        3,250,398   

New York — 8.2%

    

Counties of New York Tobacco Trust IV, Refunding RB, Settlement Pass-Through:

    

5.00%, 6/01/51

     445        483,257   

Turbo, Series A, 6.25%, 6/01/41 (a)

     5,300        5,562,085   

Turbo, Series A, 5.00%, 6/01/42

     3,155        3,060,949   

Turbo, Series A, 5.00%, 6/01/45

     1,185        1,152,626   

County of Dutchess New York IDA, Refunding RB, Bard College Civic Facility, Series A-1, 5.00%, 8/01/46

     3,315        3,059,712   

County of Nassau New York Tobacco Settlement Corp., Refunding RB, Asset-Backed, Series A-3, 5.13%, 6/01/46

     750        719,348   

County of Westchester New York Healthcare Corp., RB, Senior Lien, Series A, 5.00%, 11/01/44

     1,333        1,487,836   

Erie Tobacco Asset Securitization Corp., Refunding RB, Asset-Backed, Series A, 5.00%, 6/01/45

     2,890        2,887,688   

Metropolitan Transportation Authority, RB, Series C:

    

6.50%, 11/15/18 (b)

     1,490        1,659,964   

6.50%, 11/15/28

     510        567,074   

New York Liberty Development Corp., Refunding RB:

    

2nd Priority, Bank of America Tower at One Bryant Park Project, Class 3, 6.38%, 7/15/49

     1,270        1,418,552   

3 World Trade Center Project, Class 1, 5.00%, 11/15/44 (a)

     4,705        5,292,560   

3 World Trade Center Project, Class 2, 5.15%, 11/15/34 (a)

     455        517,271   

3 World Trade Center Project, Class 2, 5.38%, 11/15/40 (a)

     1,080        1,247,562   

3 World Trade Center Project, Class 3, 7.25%, 11/15/44 (a)

     1,565        2,021,917   

New York Transportation Development Corp., Refunding RB, American Airlines, Inc., AMT, 5.00%, 8/01/31

     1,195        1,275,615   

Niagara Area Development Corp., Refunding RB, Solid Waste Disposal Facility, Covanta Energy Project, Series A, AMT, 5.25%, 11/01/42 (a)

     1,335        1,355,586   

Port Authority of New York & New Jersey, ARB, Special Project, JFK International Air Terminal LLC Project, Series 8, 6.00%, 12/01/36

     1,340        1,556,450   

TSASC, Inc., Refunding RB, Series 1, 5.00%, 6/01/34

     2,305        2,284,693   

Westchester Tobacco Asset Securitization, Refunding RB, 5.13%, 6/01/45

     4,800        4,800,000   
    

 

 

 
               42,410,745   

North Carolina — 1.5%

    

North Carolina Medical Care Commission, Refunding RB, 1st Mortgage, Series A:

    

Deerfield Project, 6.13%, 11/01/18 (b)

     4,565        5,037,341   

Retirement Facilities Whitestone Project, 7.75%, 3/01/31

     1,000        1,140,290   

Retirement Facilities Whitestone Project, 7.75%, 3/01/41

     1,420        1,617,408   
    

 

 

 
               7,795,039   
Municipal Bonds   

Par  

(000)

    Value  

Ohio — 3.2%

    

Buckeye Tobacco Settlement Financing Authority, RB, Asset-Backed, Series A-2:

    

Senior Turbo Term, 5.88%, 6/01/47

   $ 6,390      $ 6,006,792   

5.75%, 6/01/34

     6,745        6,288,498   

6.00%, 6/01/42

     3,040        2,898,002   

County of Hamilton Ohio, Refunding RB, Improvement-Life Enriching Communities:

    

5.00%, 1/01/46

     525        570,386   

5.00%, 1/01/51

     875        948,535   
    

 

 

 
               16,712,213   

Oklahoma — 0.3%

    

Oklahoma Development Finance Authority, Refunding RB, Inverness Village Community, 6.00%, 1/01/32

     1,305        1,396,115   

Oregon — 0.8%

    

Hospital Facilities Authority of Multnomah County Oregon, Refunding RB, Mirabella at South Waterfront, 5.50%, 10/01/49

     1,765        1,937,052   

Polk County Hospital Facility Authority, RB, Dallas Retirement Village Project, Series A:

    

5.13%, 7/01/35

     620        640,101   

5.38%, 7/01/45

     1,435        1,491,295   
    

 

 

 
               4,068,448   

Pennsylvania — 3.8%

    

Allentown Neighborhood Improvement Zone Development Authority, Refunding RB, Series A, 5.00%, 5/01/42

     2,140        2,281,689   

City of Philadelphia Pennsylvania Hospitals & Higher Education Facilities Authority, RB, Temple University Health System, Series A, 5.63%, 7/01/36

     2,000        2,216,740   

County of Cumberland Pennsylvania Municipal Authority, Refunding RB, Diakon Lutheran:

    

6.38%, 1/01/19 (b)

     5,550        6,185,198   

6.38%, 1/01/39

     615        680,473   

County of Lancaster Pennsylvania Hospital Authority, Refunding RB, Brethren Village Project, Series A, 6.25%, 7/01/26

     1,160        1,181,541   

County of Lehigh Pennsylvania General Purpose Authority, Refunding RB, Bible Fellowship Church Homes, 5.13%, 7/01/32

     1,800        1,940,922   

County of Northampton Pennsylvania IDA, Route 33 Project, Tax Allocation Bonds, 7.00%, 7/01/32

     2,110        2,308,804   

Pennsylvania Economic Development Financing Authority, Refunding RB, National Gypsum Co., AMT, 5.50%, 11/01/44

     2,710        2,978,182   
    

 

 

 
               19,773,549   

Puerto Rico — 1.0%

    

Children’s Trust Fund, Refunding RB, Tobacco Settlement, Asset-Backed Bonds:

    

5.50%, 5/15/39

     635        638,048   

Series A, 0.00%, 5/15/50 (c)

     3,450        299,633   

Commonwealth of Puerto Rico, GO, Refunding, Series A, 8.00%, 7/01/35 (d)(e)

     1,765        1,202,406   

Commonwealth of Puerto Rico, GO (d)(e):

    

Series A, 6.00%, 7/01/38

     750        480,938   

Refunding Public Improvement, Series A, 5.50%, 7/01/39

     665        428,094   

Commonwealth of Puerto Rico Aqueduct & Sewer Authority, RB, Senior Lien, Series A, 6.00%, 7/01/44

     1,060        817,578   

Commonwealth of Puerto Rico Aqueduct & Sewer Authority, Refunding RB, Senior Lien, Series A:

    

6.13%, 7/01/24

     365        291,927   

6.00%, 7/01/38

     1,150        893,009   
    

 

 

 
               5,051,633   
 

 

See Notes to Financial Statements.

 

                
   SEMI-ANNUAL REPORT    OCTOBER 31, 2016    23


Schedule of Investments (continued)

  

BlackRock MuniAssets Fund, Inc. (MUA)

 

Municipal Bonds   

Par  

(000)

    Value  

Rhode Island — 2.3%

    

Central Falls Detention Facility Corp., Refunding RB, 7.25%, 7/15/35 (d)(e)

   $ 4,190      $ 1,039,581   

Tobacco Settlement Financing Corp., Refunding RB:

    

Series A, 5.00%, 6/01/35

     1,000        1,083,350   

Series A, 5.00%, 6/01/40

     980        1,055,744   

Series B, 4.50%, 6/01/45

     5,055        5,236,929   

Series B, 5.00%, 6/01/50

     3,330        3,456,940   
    

 

 

 
               11,872,544   

Texas — 10.6%

    

Central Texas Regional Mobility Authority, Refunding RB:

    

CAB, 0.00%, 1/01/28 (c)

     1,000        676,550   

CAB, 0.00%, 1/01/29 (c)

     2,000        1,291,060   

CAB, 0.00%, 1/01/30 (c)

     1,170        722,943   

CAB, 0.00%, 1/01/33 (c)

     3,690        1,994,445   

CAB, 0.00%, 1/01/34 (c)

     4,000        2,039,680   

Senior Lien, 6.25%, 1/01/21 (b)

     2,210        2,657,216   

City of Houston Texas Airport System, Refunding ARB, AMT:

    

Special Facilities, Continental Airlines, Inc., Series A, 6.63%, 7/15/38

     2,890        3,323,818   

United Airlines, Inc. Terminal E Project, 5.00%, 7/01/29

     910        1,016,934   

Clifton Higher Education Finance Corp., ERB, Idea Public Schools:

    

5.50%, 8/15/31

     955        1,071,128   

5.75%, 8/15/41

     720        804,953   

County of Bexar Texas Health Facilities Development Corp., RB, Army Retirement Residence Project, 6.20%, 7/01/20 (b)

     5,040        5,953,147   

County of Harris Texas Cultural Education Facilities Finance Corp., RB, 1st Mortgage, Brazos Presbyterian Homes, Inc. Project, Series B, 7.00%, 1/01/48

     475        623,471   

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

     2,090        2,336,641   

County of Tarrant Texas Cultural Education Facilities Finance Corp., RB, Series A:

    

CC Young Memorial Home, 8.00%, 2/15/38

     1,745        1,937,090   

Senior Living Center Project, 8.25%, 11/15/44

     4,200        4,508,112   

County of Tarrant Texas Cultural Education Facilities Finance Corp., Refunding RB, Trinity Terrace Project, 5.00%, 10/01/49

     865        958,481   

County of Travis Texas Health Facilities Development Corp., Refunding RB, 7.13%, 1/01/46

     3,080        3,462,782   

Mesquite Health Facility Development Corp., Refunding RB, 5.13%, 2/15/42

     810        874,516   

Mission Economic Development Corp., RB, Senior Lien, Natgasoline Project, Series B, AMT, 5.75%, 10/01/31 (a)

     1,325        1,399,703   

New Hope Cultural Education Facilities Corp., RB, Stephenville LLC Tarleton State University Project:

    

5.88%, 4/01/36

     1,210        1,395,614   

6.00%, 4/01/45

     1,845        2,137,838   

Newark Higher Education Finance Corp., RB, Series A (a):

    

5.50%, 8/15/35

     290        303,125   

5.75%, 8/15/45

     580        612,271   

North Texas Education Finance Corp., ERB, Uplift Education, Series A, 5.25%, 12/01/47

     1,600        1,751,024   

Red River Health Facilities Development Corp., First MRB, Project:

    

Eden Home, Inc., 7.25%, 12/15/42

     2,895        2,566,331   

Wichita Falls Retirement Foundation, 5.13%, 1/01/41

     900        956,502   
Municipal Bonds   

Par  

(000)

    Value  

Texas (continued)

    

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

    

LBJ Infrastructure Group LLC, 7.00%, 6/30/40

   $ 3,775      $ 4,453,632   

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

     3,000        3,485,640   
    

 

 

 
               55,314,647   

Utah — 0.6%

    

State of Utah Charter School Finance Authority, Refunding RB, 6.75%, 10/15/43

     2,950        3,088,326   

Vermont — 0.2%

    

Vermont EDA, Refunding, MRB, Wake Robin Corp. Project, 5.40%, 5/01/33

     770        829,683   

Virginia — 3.0%

    

County of Fairfax Virginia EDA, Refunding RB, Goodwin House, Inc., 5.13%, 10/01/17 (b)

     1,500        1,560,105   

Lower Magnolia Green Community Development Authority, Special Assessment Bonds (a):

    

5.00%, 3/01/35

     510        535,046   

5.00%, 3/01/45

     520        541,060   

Mosaic District Community Development Authority, Special Assessment, Series A:

    

6.63%, 3/01/26

     1,485        1,690,747   

6.88%, 3/01/36

     1,300        1,476,592   

Tobacco Settlement Financing Corp., Refunding RB, Senior Series B-1, 5.00%, 6/01/47

     2,280        2,127,035   

Virginia College Building Authority, RB, Marymount University Project, Series B, 5.00%, 7/01/45 (a)

     535        579,127   

Virginia College Building Authority, Refunding RB, Marymount University Project, Series A (a):

    

5.00%, 7/01/35

     130        141,722   

5.00%, 7/01/45

     375        405,930   

Virginia Small Business Financing Authority, RB, Senior Lien, Elizabeth River Crossings OpCo LLC Project, AMT, 6.00%, 1/01/37

     5,410        6,298,159   
    

 

 

 
               15,355,523   

Washington — 0.8%

  

County of King Washington Public Hospital District No. 4, GO, Refunding, Snoqualmie Valley Hospital, 7.00%, 12/01/40

     1,455        1,603,308   

Greater Wenatchee Regional Events Center Public Facilities District, Refunding RB, Series A, 5.50%, 9/01/42

     1,495        1,571,634   

Washington State Housing Finance Commission, Refunding RB (a):

    

5.75%, 1/01/35

     315        322,595   

6.00%, 1/01/45

     850        870,289   
    

 

 

 
               4,367,826   

Wisconsin — 1.0%

  

Public Finance Authority, RB, Series A:

    

4.75%, 12/01/35

     775        808,077   

5.00%, 12/01/45

     1,605        1,689,920   

5.15%, 12/01/50

     1,170        1,232,923   

Wisconsin Health & Educational Facilities Authority, Refunding RB, St. Johns Communities, Inc., Series A (b):

    

7.25%, 9/15/19

     425        499,243   

7.63%, 9/15/19

     855        1,013,406   
    

 

 

 
               5,243,569   
Total Municipal Bonds — 87.7%              455,292,177   
 

 

See Notes to Financial Statements.

 

                
24    SEMI-ANNUAL REPORT    OCTOBER 31, 2016   


Schedule of Investments (continued)

  

BlackRock MuniAssets Fund, Inc. (MUA)

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (g)
  

Par  

(000)

    Value  

Colorado — 2.4%

    

Colorado Health Facilities Authority, Refunding RB, Sisters of Leavenworth Health System, Series A, 5.00%, 1/01/40

   $ 11,468      $ 12,529,637   

Florida — 3.1%

  

County of Miami-Dade Florida Aviation Revenue, RB, Miami International, Series A, AGC:

    

5.25%, 10/01/18 (b)

     3,345        3,580,756   

5.25%, 10/01/33

     11,655        12,476,444   
    

 

 

 
               16,057,200   

Illinois — 2.7%

  

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

     7,180        8,416,970   

State of Illinois Toll Highway Authority, RB, Senior Priority, Series A, 5.00%, 1/01/40

     5,056        5,838,962   
    

 

 

 
               14,255,932   

New York — 13.5%

  

City of New York New York Housing Development Corp., RB, M/F Housing, Series D-1, Class B, 4.25%, 11/01/45

     8,996        9,376,800   

City of New York New York Municipal Water Finance Authority, Refunding RB, Water & Sewer System, 2nd General Resolution:

    

Fiscal 2013, Series CC, 5.00%, 6/15/47

     14,181        16,425,797   

Series HH, 5.00%, 6/15/31 (b)(h)

     8,610        10,043,737   

Hudson Yards Infrastructure Corp., RB, Fiscal 2012, Series A, 5.75%, 2/15/47 (h)

     4,520        5,280,657   

New York Liberty Development Corp., RB, 1 World Trade Center Port Authority Consolidated Bonds, 5.25%, 12/15/43

     18,104        21,128,088   
Municipal Bonds Transferred to
Tender Option Bond Trusts (g)
  

Par  

(000)

    Value  

New York (continued)

  

New York Liberty Development Corp., Refunding RB, 4 World Trade Center Project, 5.75%, 11/15/51 (h)

   $ 6,600      $ 7,743,051   
    

 

 

 
               69,998,130   

Washington — 1.8%

    

City of Bellingham Washington, RB, Water & Sewer, 5.00%, 8/01/40

     7,966        9,124,327   
Total Municipal Bonds Transferred to
Tender Option Bond Trusts — 23.5%
             121,965,226   
Total Long-Term Investments
(Cost — $527,633,426) — 111.2%
             577,257,403   
    
                  
Short-Term Securities    Shares         

BlackRock Liquidity Funds, MuniCash, Institutional Class, 0.44% (i)(j)

     165,095        165,111   
Total Short-Term Securities
(Cost $165,101) — 0.0%
             165,111   
Total Investments (Cost — $527,798,527) — 111.2%        577,422,514   
Other Assets Less Liabilities — 1.6%        8,160,454   

Liability for TOB Trust Certificates, Including Interest
Expense and Fees Payable — (12.8)%

   

    (66,220,961
    

 

 

 

Net Assets Applicable to Common Shares — 100.0%

  

  $ 519,362,007   
    

 

 

 
 
Notes to Schedule of Investments      

 

(a)   Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

 

(b)   U.S. 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)   Zero-coupon bond.

 

(d)   Non-income producing security.

 

(e)   Issuer filed for bankruptcy and/or is in default.

 

(f)   Step-up bond that pays an initial coupon rate for the first period and then a higher coupon rate for the following periods. Rate as of period end.

 

(g)   Represent bonds transferred to a TOB Trust in exchange of cash and residual certificates received by the Fund. These bonds serve as collateral in a secured borrowing. See Note 4 of the Notes to Financial Statements for details.

 

(h)   All or a portion of security is subject to a recourse agreement. The aggregate maximum potential amount the Fund could ultimately be required to pay under the agreements, which expire between February 15, 2019 to November 15, 2019, is $11,849,809. See Note 4 of the Notes to Financial Statements for details.

 

(i)   During the six months ended October 31, 2016, investments in issuers considered to be an affiliate of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliate   

Shares Held
at April 30,

2016

     Net
Activity
     Shares Held
at October 31,
2016
     Value at
October 31,
2016
     Income      Realized
Gain/Capital
Gain
 

BlackRock Liquidity Funds, MuniCash, Institutional Class

     4,296,151         (4,131,056      165,095       $ 165,111       $ 2,151       $ 1,192   

 

(j)   Current yield as of period end.

 

See Notes to Financial Statements.

 

                
   SEMI-ANNUAL REPORT    OCTOBER 31, 2016    25


Schedule of Investments (continued)

  

BlackRock MuniAssets Fund, Inc. (MUA)

 

 

Derivative Financial Instruments Outstanding as of Period End

 

Futures Contracts              
Contracts
Short
       Issue   Expiration   Notional
Value
    Unrealized
Appreciation
        
  (3      5-Year U.S. Treasury Note   December 2016   $ 362,391      $ 2,716     
  (27      10-Year U.S. Treasury Note   December 2016   $ 3,499,875        49,681     
  (22      Long U.S. Treasury Bond   December 2016   $ 3,579,813        136,011     
  (5      Ultra U.S. Treasury Bond   December 2016   $ 879,687        44,337           

 

Total

  

  $ 232,745     
          

 

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of period end, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

Assets — Derivative Financial Instruments   Commodity
Contracts
  Credit
Contracts
  Equity
Contracts
  Foreign
Currency
Exchange
Contracts
  Interest
Rate
Contracts
    Other
Contracts
  Total         

Futures contracts

   Net unrealized appreciation1           $ 232,745        $ 232,745           

1    Includes cumulative appreciation (depreciation) on futures contracts, if any, as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statements of Assets and Liabilities.

        

 
                  
For the six months ended October 31, 2016, the effect of derivative financial instruments in the Statements of Operations was as follows:   
                  
Net Realized Gain (Loss) from:   Commodity
Contracts
  Credit
Contracts
  Equity
Contracts
  Foreign
Currency
Exchange
Contracts
 

Interest

Rate
Contracts

    Other
Contracts
  Total         

Futures contracts

          $ 306,265        $ 306,265           

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

          $ 65,535        $ 65,535           

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:  

Average notional value of contracts — short

  $ 10,474,445   

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

 

Fair Value Hierarchy as of Period End

 

Various inputs are used in determining the fair value of investments and derivative financial instruments. For information about the Fund’s policy regarding valuation of investments and derivative financial instruments, refer to the Notes to Financial Statements.

The following tables summarize the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy:

 

     Level 1        Level 2        Level 3        Total  

Assets:

                
Investments:                 

Long-Term Investments1

            $ 577,257,403                   $ 577,257,403   

Short-Term Securities

  $ 165,111                               165,111   
 

 

 

 

Total

  $ 165,111         $ 577,257,403                   $ 577,422,514   
 

 

 

 
                
Derivative Financial Instruments2                                         

Assets:

                

Interest rate contracts

  $ 232,745                             $ 232,745   

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

       

2    Derivative financial instruments are futures contracts which are valued at the unrealized appreciation (depreciation) on the instrument.

       

 

See Notes to Financial Statements.

 

                
26    SEMI-ANNUAL REPORT    OCTOBER 31, 2016   


Schedule of Investments (concluded)

  

BlackRock MuniAssets Fund, Inc. (MUA)

 

The Fund may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of period end, such assets and/or liabilities are categorized within the disclosure hierarchy as follows:

 

     Level 1        Level 2        Level 3        Total  

Assets:

                

Cash pledged for futures contracts

  $ 144,950                             $ 144,950   

Liabilities:

                

TOB Trust Certificates

            $ (66,086,523                  (66,086,523
 

 

 

 

Total

  $ 144,950         $ (66,086,523                $ (65,941,573
 

 

 

 

During the six months ended October 31, 2016, there were no transfers between levels.

 

See Notes to Financial Statements.

 

                
   SEMI-ANNUAL REPORT    OCTOBER 31, 2016    27


Schedule of Investments October 31, 2016 (Unaudited)

  

BlackRock MuniEnhanced Fund, Inc. (MEN)

(Percentages shown are based on Net Assets)

 

Municipal Bonds   

Par  

(000)

    Value  

Alabama — 1.4%

    

County of Jefferson Alabama, RB, Limited Obligation School, Series A:

    

5.50%, 1/01/22

   $ 2,750      $ 2,765,153   

4.75%, 1/01/25

     2,200        2,212,122   
    

 

 

 
               4,977,275   

Alaska — 0.7%

    

Alaska Industrial Development & Export Authority, RB, Providence Health Services, Series A, 5.50%, 10/01/41

     990        1,127,075   

Borough of Matanuska-Susitna Alaska, RB, Goose Creek Correctional Center (AGC) (a):

    

6.00%, 9/01/19

     765        870,272   

6.00%, 9/01/19

     435        494,860   
    

 

 

 
               2,492,207   

Arizona — 1.8%

    

County of Maricopa Arizona IDA, Refunding RB, Banner Health Obligation Group (b):

    

3.25%, 1/01/37

     920        877,974   

5.00%, 1/01/38

     725        845,923   

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

     1,500        1,567,785   

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

    

5.00%, 10/01/27

     2,700        2,978,235   

5.00%, 10/01/29

     400        440,736   
    

 

 

 
               6,710,653   

California — 19.1%

    

Alameda Corridor Transportation Authority, Refunding RB, CAB, Subordinate Lien, Series A (AMBAC) (a)(c):

    

5.40%, 10/01/17

     10,185        10,618,677   

5.45%, 10/01/17

     3,700        3,859,248   

Anaheim Public Financing Authority California, RB, Senior, Public Improvements Project, Series A (AGM), 6.00%, 9/01/24

     5,000        6,204,750   

Cabrillo Community College District, GO, CAB, Election of 2004, Series B (NPFGC), 0.00%, 8/01/37 (d)

     2,400        907,584   

California Health Facilities Financing Authority, RB:

    

St. Joseph Health System, Series A, 5.75%, 7/01/39

     550        611,479   

Sutter Health, Series B, 5.88%, 8/15/31

     1,200        1,400,364   

California Health Facilities Financing Authority, Refunding RB, St. Joseph Health System, Series A, 5.00%, 7/01/37

     1,090        1,252,737   

California State University, Refunding RB:

    

(AGM), 5.00%, 5/01/17 (a)

     550        561,869   

(AGM), 5.00%, 11/01/37

     600        612,204   

Series A, 5.00%, 5/01/17 (a)

     850        868,301   

California Statewide Communities Development Authority, RB, Kaiser Permanente, Series A, 5.00%, 4/01/42

     1,480        1,683,204   

City of Redding California, COP, Refunding, Series A (AGM), 5.00%, 6/01/30

     1,420        1,500,542   

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

     850        990,633   

County of Orange California Sanitation District, COP, Series B (AGM), 5.00%, 2/01/17 (a)

     1,500        1,516,260   

County of San Joaquin California Transportation Authority, Refunding RB, Limited Tax, Measure K, Series A, 6.00%, 3/01/36

     2,175        2,608,760   

County of San Mateo California Community College District, GO, CAB, Election of 2001, Series C (NPFGC), 0.00%, 9/01/30 (d)

     12,740        8,719,511   
Municipal Bonds   

Par  

(000)

    Value  

California (continued)

    

Los Angeles Community College District California, GO, Election of 2001, Series A (AGM), 5.00%, 8/01/17 (a)

   $ 1,300      $ 1,342,133   

Mount San Antonio Community College District, GO, Refunding, CAB, Election of 2008, Series A, 6.25%, 8/01/43 (c)

     2,500        2,062,875   

Poway Unified School District, GO, Refunding, CAB, School Facilities Improvement, Election of 2008, Series B, 0.00%, 8/01/36 (d)

     3,750        1,867,950   

Rio Hondo Community College District California, GO, CAB, Election of 2004, Series C, 0.00%, 8/01/38 (d)

     5,000        2,355,850   

San Diego California Unified School District, GO, CAB, Election of 2008 (d):

    

Series C, 0.00%, 7/01/38

     1,600        744,864   

Series G, 0.00%, 7/01/34

     650        300,723   

Series G, 0.00%, 7/01/35

     690        300,426   

Series G, 0.00%, 7/01/36

     1,035        424,122   

Series G, 0.00%, 7/01/37

     690        265,070   

San Diego California Unified School District, GO, Refunding, Series R-1 (d):

    

0.00%, 7/01/30

     5,000        3,279,450   

0.00%, 7/01/31

     1,280        803,520   

San Diego Community College District California, GO, CAB, Election of 2006 (d):

    

0.00%, 8/01/31

     2,145        1,145,216   

0.00%, 8/01/32

     2,680        1,341,956   

San Marcos Unified School District, GO, Election of 2010, Series A:

    

5.00%, 8/01/34

     700        807,275   

5.00%, 8/01/38

     600        690,762   

Walnut Valley Unified School District, GO, CAB, Election of 2007, Series B, 0.00%, 8/01/36 (d)

     5,500        2,756,160   

West Basin Municipal Water District California, COP, Refunding, Series B (AGC), 5.00%, 8/01/18 (a)

     5,035        5,397,721   
    

 

 

 
               69,802,196   

Colorado — 0.6%

    

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

     2,000        2,251,400   

District of Columbia — 1.5%

    

District of Columbia Ballpark Revenue, RB, Series B-1, 5.00%, 2/01/31

     5,360        5,378,760   

Florida — 14.9%

    

City of Tallahassee Florida Energy System Revenue, RB, (NPFGC):

    

5.00%, 10/01/32

     4,000        4,145,880   

5.00%, 10/01/37

     7,500        7,765,800   

County of Brevard Florida Health Facilities Authority, Refunding RB, Health First, Inc. Project, 5.00%, 4/01/39

     1,600        1,810,192   

County of Broward Florida Water & Sewer Utility, Refunding RB, Series A, 5.25%, 10/01/18 (a)

     850        920,099   

County of Duval Florida School Board, COP, Master Lease Program (AGM), 5.00%, 7/01/17 (a)

     2,625        2,700,101   

County of Highlands Florida Health Facilities Authority, RB, Adventist Health System/Sunbelt, Series B, 6.00%, 11/15/37

     1,450        1,639,428   

County of Hillsborough Florida Aviation Authority, RB, Series A, AMT (AGC), 5.38%, 10/01/33

     4,050        4,329,855   

County of Lee Florida, Refunding ARB, Series A, AMT:

    

5.63%, 10/01/26

     960