UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM N-Q

 

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT INVESTMENT COMPANY

 

 

Investment Company Act file number 811-09191

 

Name of Fund: BlackRock MuniHoldings Quality Fund II, Inc. (MUE)

 

Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809

 

Name and address of agent for service: John M. Perlowski, Chief Executive Officer, BlackRock MuniHoldings Quality Fund II, 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: 07/31/2013

 

Date of reporting period: 10/31/2012

 

Item 1 – Schedule of Investments

  
 
Schedule of Investments October 31, 2012 (Unaudited)

BlackRock MuniHoldings Quality Fund II, Inc. (MUE)

(Percentages shown are based on Net Assets)

           
    Par
(000)		   Value  
Municipal Bonds  
 
Alabama — 2.1%  
Birmingham Special Care Facilities Financing Authority, RB, Children's Hospital (AGC), 6.00%, 6/01/39 $ 5,225 $ 6,213,883  
Selma IDB, RB, International Paper Co. Project, Series A, 5.38%, 12/01/35   940   1,029,723  
 
  7,243,606  
 
Arizona — 2.8%  
Arizona Board of Regents, Refunding COP, University of Arizona, Series C, 5.00%, 6/01/28   4,180   4,841,527  
Arizona Board of Regents, Refunding RB, Arizona State University System, Series A:  
  5.00%, 6/01/42   1,705   1,956,522  
  5.00%, 7/01/42   2,460   2,821,152  
 
  9,619,201  
 
California — 16.1%  
California Educational Facilities Authority, RB, University of Southern California, Series A, 5.25%, 10/01/38   5,050   5,980,513  
California Health Facilities Financing Authority, RB:  
  Stanford Hospital and Clinics, Series A, 5.00%, 8/15/42   2,770   3,114,172  
  Sutter Health, Series B, 6.00%, 8/15/42   2,865   3,442,469  
City of San Jose California, Refunding ARB, Series A-1, AMT, 5.50%, 3/01/30   4,045   4,637,754  
City of Sunnyvale California, Refunding RB, 5.25%, 4/01/40   2,800   3,238,228  
County of Sacramento California, ARB, Senior Series A (AGC), 5.50%, 7/01/41   3,500   3,937,185  
Emery Unified School District, GO, Election of 2010, Series A (AGM), 5.50%, 8/01/35   1,875   2,197,069  
Los Angeles Community College District California, GO:                
  Election of 2001, Series A (NPFGC), 5.00%, 8/01/32   5,000   5,686,900  
  Election of 2008, Series C, 5.25%, 8/01/39   2,000   2,415,660  
Oceanside Unified School District California, GO, Series A (AGC), 5.25%, 8/01/33   1,675   1,880,121  
Redondo Beach Unified School District, GO, Election of 2008, Series E, 5.50%, 8/01/34   2,670   3,184,749  
San Bernardino Community College District, GO, Election of 2002, Series A, 6.25%, 8/01/33   2,165   2,593,367  
           
    Par
(000)		   Value  
Municipal Bonds  
 
California (concluded)  
San Francisco City & County Airports Commission, RB, Specialty Facility Lease, SFO Fuel, Series A, AMT (AGM), 6.10%, 1/01/20 $ 1,250 $ 1,253,950  
State of California, GO, Refunding:                
  Various Purpose, 5.00%, 9/01/41   5,760   6,360,653  
  Veterans, Series BZ AMT (NPFGC), 5.35%, 12/01/21   10   10,018  
University of California, Refunding RB, Limited Project, Series G, 5.00%, 5/15/37   1,500   1,748,595  
Ventura County Community College District, GO, Election of 2002, Series C, 5.50%, 8/01/33   3,175   3,767,741  
 
  55,449,144  
 
Colorado — 1.6%  
City & County of Denver Colorado, Refunding ARB, Series B, 5.00%, 11/15/37   1,505   1,709,710  
Colorado Health Facilities Authority, RB, Hospital, NCMC, Inc. Project, Series B (AGM), 6.00%, 5/15/26   3,300   3,935,646  
 
  5,645,356  
 
Florida — 10.9%  
City of Jacksonville Florida, RB, Series A, 5.25%, 10/01/26   2,000   2,401,260  
City of Jacksonville Florida Sales Tax, Refunding RB, Better Jacksonville, Series A, 5.00%, 10/01/30   1,885   2,179,984  
County of Lee Florida, Refunding ARB, Series A, AMT, 5.38%, 10/01/32   2,500   2,763,200  
County of Miami-Dade Florida, Refunding RB:                
  Special Obligation, Sub-Series B, 5.00%, 10/01/31 (a) 1,315   1,481,387  
  Miami International Airport, Series A AMT (AGM), 5.25%, 10/01/41   4,610   4,966,122  
  Miami International Airport, Series A AMT (AGM), 5.50%, 10/01/41   4,180   4,564,811  
Jacksonville Florida Port Authority, Refunding RB, AMT, 5.00%, 11/01/38   2,215   2,394,194  
Orange County School Board, COP, Series A (AGC), 5.50%, 8/01/34   7,600   8,793,048  
Tohopekaliga Water Authority, Refunding RB, Series A, 5.25%, 10/01/36   6,965   8,088,315  
 
  37,632,321  
 
Idaho — 0.1%  
Idaho Housing & Finance Association, RB, S/F Mortgage, Series E, AMT, 6.00%, 1/01/32   230   230,393  
 
                     
BLACKROCK MUNIHOLDINGS QUALITY FUND II, INC.OCTOBER 31, 2012                    1
 
Schedule of Investments (continued)

BlackRock MuniHoldings Quality Fund II, Inc. (MUE)

(Percentages shown are based on Net Assets)

           
    Par
(000)		   Value  
Municipal Bonds  
 
Illinois — 14.3%  
Chicago Illinois Board of Education, GO, Series A:  
  5.50%, 12/01/39 $ 3,405 $ 3,985,791  
  5.00%, 12/01/42   4,710   5,117,886  
Chicago Illinois Board of Education, GO, Refunding, Chicago School Reform Board, Series A (NPFGC), 5.50%, 12/01/26   895   1,123,789  
Chicago Transit Authority, RB:  
  Federal Transit Administration Section 5309, Series A (AGC), 6.00%, 6/01/26   3,400   3,999,080  
  Sales Tax Receipts, 5.25%, 12/01/36   1,060   1,216,573  
  Sales Tax Receipts, 5.25%, 12/01/40   3,135   3,592,804  
City of Chicago Illinois, ARB, O'Hare International Airport, General, Third Lien:  
  Series A, 5.75%, 1/01/39   2,000   2,360,740  
  Series C, 6.50%, 1/01/41   9,085   11,275,848  
City of Chicago Illinois, Refunding ARB, O'Hare International Airport, General, Third Lien, Series C (AGM), 5.25%, 1/01/35   1,015   1,140,352  
City of Chicago Illinois, Refunding RB, O'Hare International Airport, General, Third Lien, Sales Tax, Series A, 5.25%, 1/01/38   1,310   1,516,194  
Cook County Forest Preserve District, GO, Series C, 5.00%, 12/15/32   965   1,110,435  
Cook County Forest Preserve District, GO, Refunding, Limited Tax Project, Series B, 5.00%, 12/15/32   455   523,573  
Metropolitan Pier & Exposition Authority, Refunding RB, McCormick Place Project, Series B, 5.00%, 12/15/28   3,400   3,992,518  
Railsplitter Tobacco Settlement Authority, RB:  
  5.50%, 6/01/23   2,350   2,744,518  
  6.00%, 6/01/28   670   795,424  
State of Illinois, RB, Build Illinois, Series B, 5.25%, 6/15/28   4,000   4,646,200  
 
  49,141,725  
 
Indiana — 0.8%  
Indianapolis Local Public Improvement Bond Bank, Refunding RB, Waterworks Project, Series A (AGC), 5.50%, 1/01/38   2,370   2,692,628  
 
Kansas — 1.3%  
Kansas Development Finance Authority, Refunding RB, Series A, 5.00%, 11/15/32   4,000   4,630,560  
           
 
    Par
(000)		   Value  
Municipal Bonds  
 
Massachusetts — 0.4%  
Massachusetts Development Finance Agency, RB, Wellesley College,  Series J, 5.00%, 7/01/42 $ 1,125 $ 1,315,631  
 
Michigan — 4.3%  
City of Detroit Michigan, Refunding RB, Sewage Disposal System, Senior Lien (AGM):  
  Series C-1, 7.00%, 7/01/27   4,180   5,118,159  
  Series B, 7.50%, 7/01/33   1,330   1,668,086  
Hudsonville Public Schools, GO, School Building & Site (Q-SBLF), 5.25%, 5/01/41   3,420   3,878,280  
Royal Oak Hospital Finance Authority Michigan, Refunding RB, William Beaumont Hospital, 8.25%, 9/01/39   3,115   4,016,793  
 
  14,681,318  
 
Minnesota — 0.7%  
City of Minneapolis Minnesota, Refunding RB, Fairview Health Services, Series B (AGC), 6.50%, 11/15/38   1,975   2,439,243  
 
Mississippi — 1.7%  
Mississippi Development Bank, Refunding RB, Water and Sewer System, Series A (AGM), 5.00%, 9/01/30   4,930   5,750,352  
 
Nevada — 2.4%  
County of Clark Nevada, ARB:  
  Las Vegas-McCarran International Airport, Series A (AGM), 5.25%, 7/01/39   6,210   6,998,049  
  Subordinate Lien, Series A-2 (NPFGC), 5.00%, 7/01/36   1,300   1,368,198  
 
  8,366,247  
 
New Jersey — 5.7%  
New Jersey EDA, RB, Motor Vehicle Surcharge, Series A (NPFGC), 5.25%, 7/01/33   6,625   7,054,963  
New Jersey Health Care Facilities Financing Authority, RB, Virtua Health (AGC), 5.50%, 7/01/38   3,400   3,794,604  
New Jersey Transportation Trust Fund Authority, RB, Transportation System:  
  Series A, 5.50%, 6/15/41   3,030   3,543,918  
  Series A (AGC), 5.63%, 12/15/28   2,930   3,527,837  
  Series B, 5.25%, 6/15/36   1,500   1,733,715  
 
  19,655,037  
 
                     
BLACKROCK MUNIHOLDINGS QUALITY FUND II, INC.OCTOBER 31, 2012                    2
 
Schedule of Investments (continued)

BlackRock MuniHoldings Quality Fund II, Inc. (MUE)

(Percentages shown are based on Net Assets)

           
    Par
(000)		   Value  
Municipal Bonds  
 
New York — 10.8%  
Hudson New York Yards Infrastructure Corp., Refunding RB, Series A, 5.75%, 2/15/47 $ 940 $ 1,109,839  
New York City Municipal Water Finance Authority, RB, Fiscal 2009, Series EE, 5.25%, 6/15/40   6,930   8,062,362  
New York City Municipal Water Finance Authority, Refunding RB, Second General Resolution, Series EE, 5.38%, 6/15/43   2,220   2,623,796  
New York City Transitional Finance Authority, RB, Sub-Series S-2A, 5.00%, 7/15/30   4,045   4,779,532  
New York State Dormitory Authority, RB, Series B:  
  5.00%, 3/15/37   5,750   6,637,570  
  5.00%, 3/15/42   4,000   4,592,880  
New York State Thruway Authority, Refunding RB, Series I, 5.00%, 1/01/37   1,740   1,982,608  
Sales Tax Asset Receivable Corp, Refunding RB, Series A (AMBAC), 5.25%, 10/15/27   6,750   7,330,432  
 
  37,119,019  
 
North Carolina — 1.1%  
North Carolina Medical Care Commission, RB, Duke University Health System, Series A, 5.00%, 6/01/32   3,400   3,965,726  
 
Pennsylvania — 0.7%  
Philadelphia Hospitals & Higher Education Facilities Authority, Refunding RB, Children's Hospital, Series D, 5.00%, 7/01/32   1,940   2,259,848  
 
Puerto Rico — 1.2%  
Puerto Rico Sales Tax Financing Corp., RB, First Sub-Series A, 6.38%, 8/01/39   3,500   4,045,440  
 
South Carolina — 3.9%  
City of North Charleston South Carolina, RB, 5.00%, 6/01/35   2,265   2,569,122  
South Carolina State Public Service Authority, Refunding RB:  
  Santee Cooper, Series A, 5.50%, 1/01/38   2,500   2,966,975  
  Series A (AMBAC), 5.00%, 1/01/42   7,000   7,898,170  
 
  13,434,267  
 
Texas — 22.1%  
City of Austin Texas, Refunding RB, Electric Utility, Series A (AGM), 5.00%, 11/15/28   1,300   1,540,539  
           
    Par
(000)		   Value  
Municipal Bonds  
 
Texas (concluded)  
City of Houston Texas, Refunding RB, Combined, First Lien, Utility System, Series A (AGC), 6.00%, 11/15/35 $ 6,700 $ 8,251,787  
Dallas Area Rapid Transit, Refunding RB, Senior Lien, 5.25%, 12/01/38   4,555   5,291,680  
Dallas Fort Worth International Airport, Refunding ARB, Series E, AMT, 5.00%, 11/01/35   5,000   5,468,300  
Harris County Health Facilities Development Corp., Refunding RB, Memorial Hermann Healthcare System, Series B, 7.25%, 12/01/35   1,000   1,254,930  
Katy ISD Texas, GO, Refunding, School Building, Series A (PSF-GTD), 5.00%, 2/15/42   1,890   2,212,774  
Lamar Texas Consolidated ISD, GO, Refunding, School House, Series A (PSF-GTD), 5.00%, 2/15/45   2,055   2,389,575  
North Texas Tollway Authority, RB, Special Projects System, Series A, 5.50%, 9/01/41   7,000   8,336,860  
North Texas Tollway Authority, Refunding RB, First Tier System:  
  Series A (NPFGC), 5.63%, 1/01/33   10,975   12,243,710  
  Series A (NPFGC), 5.75%, 1/01/40   11,575   12,993,169  
  Series B (NPFGC), 5.75%, 1/01/40   1,000   1,122,520  
  Series K-2 (AGC), 6.00%, 1/01/38   1,000   1,158,550  
Tarrant County Cultural Education Facilities Finance Corp., Refunding RB, Christus Health, Series A (AGC), 6.50%, 7/01/37   3,000   3,527,880  
Texas State Turnpike Authority, RB, First Tier, Series A (AMBAC), 5.00%, 8/15/42   2,500   2,516,325  
Texas Tech University, Refunding RB, Improvement Financing,  14th Series A, 5.00%, 8/15/29   2,000   2,385,300  
University of Texas System, Refunding RB, Financing System, Series B, 5.00%, 8/15/43   4,575   5,405,591  
 
  76,099,490  
 
Virginia — 2.4%  
Fairfax County IDA, RB, Inova Health System, Series A, 5.00%, 5/15/40   1,740   1,956,108  
Virginia Public School Authority, RB, School Financing, 6.50%, 12/01/35   2,195   2,725,598  
Virginia Resources Authority, RB, Series A, 5.00%, 11/01/42   3,110   3,632,231  
 
  8,313,937  
 
Washington — 1.5%  
City of Seattle Washington, Refunding RB, Light and Power, Series A, 5.25%, 2/01/36   2,400   2,807,232  
                     
BLACKROCK MUNIHOLDINGS QUALITY FUND II, INC.OCTOBER 31, 2012                    3
 
Schedule of Investments (continued)

BlackRock MuniHoldings Quality Fund II, Inc. (MUE)

(Percentages shown are based on Net Assets)

           
    Par
(000)		   Value  
Municipal Bonds  
 
Washington (concluded)  
State of Washington, GO, Various Purpose, Series B, 5.25%, 2/01/36 $ 1,865 $ 2,196,429  
 
  5,003,661  
 
Wisconsin — 1.3%  
Wisconsin Health & Educational Facilities Authority, RB, Ascension Health, Series D, 5.00%, 11/15/41   3,125   3,488,063  
Wisconsin Health & Educational Facilities Authority, Refunding RB, Froedtert Health, Inc. Obligated Group, Series A, 5.00%, 4/01/42   790   881,529  
 
  4,369,592  
 
Total Municipal Bonds – 110.2%   379,103,742  
       
 
  
Municipal Bonds Transferred to Tender Option Bond (TOB) Trusts (b)  
 
Alabama — 1.2%  
Mobile Board of Water & Sewer Commissioners, RB (NPFGC), 5.00%, 1/01/31   3,750   3,977,137  
 
California — 1.7%  
Sequoia Union High School District California, GO, Refunding, Election of 2004, Series B (AGM), 5.50%, 7/01/35   5,189   5,862,366  
 
Colorado — 2.9%  
Colorado Health Facilities Authority, RB, Catholic Health, Series C-3 (AGM), 5.10%, 10/01/41   9,410   10,078,863  
 
District of Columbia — 0.6%  
District of Columbia Water & Sewer Authority, Refunding RB, Series A, 6.00%, 10/01/35 (c)   1,700   2,074,193  
 
Florida — 7.4%  
City of St. Petersburg Florida, Refunding RB (NPFGC), 5.00%, 10/01/35   6,493   7,070,744  
County of Miami-Dade Florida, GO, Building Better Communities Program, Series B-1, 6.00%, 7/01/38   12,500   14,834,125  
County of Miami-Dade Florida, Refunding RB, Transit System Sales Surtax, 5.00%, 7/01/42   1,650   1,861,530  
Lee County Housing Finance Authority, RB, Multi-County Program, Series A-2, AMT (Ginnie Mae), 6.00%, 9/01/40   1,575   1,674,241  
 
  25,440,640  
   
    Par
(000)		   Value  
Municipal Bonds Transferred to Tender Option Bond (TOB) Trusts (b)  
 
Georgia — 2.0%  
Augusta-Richmond County Georgia, RB, Water & Sewer (AGM), 5.25%, 10/01/34 $ 6,290 $ 6,748,164  
 
Illinois — 6.9%  
City of Chicago Illinois, ARB, O'Hare International Airport, Series A (AGM), 5.00%, 1/01/38   15,000   16,253,400  
City of Chicago Illinois, Refunding RB, Water System:  
  5.00%, 11/01/42   2,439   2,771,873  
  Second Lien (AGM), 5.25%, 11/01/33   3,969       4,603,094  
 
  23,628,367  
 
Kentucky — 0.8%  
Kentucky State Property & Building Commission, Refunding RB, Project No. 93 (AGC), 5.25%, 2/01/27   2,304   2,673,839  
 
Massachusetts — 3.3%  
Massachusetts School Building Authority, RB:  
  Dedicated Sales Tax, Senior Series B, 5.00%, 10/15/41   5,080   5,902,960  
  Series A, 5.00%, 8/15/15 (d)   644   711,407  
  Series A, 5.00%, 8/15/30   4,350       4,809,092  
 
  11,423,459  
 
Nevada — 6.5%  
Clark County Water Reclamation District, GO:  
  Limited Tax, 6.00%, 7/01/38   10,000   12,276,900  
  Series B, 5.50%, 7/01/29   8,247       10,174,266  
 
  22,451,166  
 
New Jersey — 1.2%  
New Jersey State Housing & Mortgage Finance Agency, RB, S/F Housing, Series CC, 5.25%, 10/01/29   3,861   4,276,575  
 
New York — 7.7%  
New York City Municipal Water Finance Authority, Refunding RB, Series FF, 5.00%, 6/15/45   5,958   6,813,544  
New York City Transitional Finance Authority, RB:  
  Building Aid Revenue, Fiscal 2009, Series S-3, 5.25%, 1/15/39   2,300   2,595,952  
  Future Tax Secured, Sub-Series E-1, 5.00%, 2/01/42   2,919   3,364,915  
New York Liberty Development Corp., RB, 1 World Trade Center Port Authority Construction, 5.25%, 12/15/43   7,515   8,641,606  
                     
BLACKROCK MUNIHOLDINGS QUALITY FUND II, INC.OCTOBER 31, 2012                    4
 
Schedule of Investments (continued)

BlackRock MuniHoldings Quality Fund II, Inc. (MUE)

(Percentages shown are based on Net Assets)

           
    Par
(000)		   Value  
Municipal Bonds Transferred to Tender Option Bond (TOB) Trusts (b)  
 
New York (concluded)  
New York Liberty Development Corp., Refunding RB, 4 World Trade Center Project, 5.75%, 11/15/51 $ 4,400  $ 5,187,556   
 
  26,603,573   
 
Puerto Rico — 1.0%  
Puerto Rico Sales Tax Financing Corp., Refunding RB, Sales Tax, Series C, 5.25%, 8/01/40   3,020    3,314,963   
 
Texas — 1.7%  
Waco Educational Finance Corp., Refunding RB, Baylor University, 5.00%, 3/01/43   4,995    5,732,662   
 
Utah — 0.8%  
City of Riverton Utah Hospital, RB, IHC Health Services, Inc., 5.00%, 8/15/41   2,504    2,745,355   
 
Washington — 3.8%  
City of Bellevue Washington, GO, Refunding (NPFGC), 5.50%, 12/01/14 (d)   6,883    7,617,464   
University of Washington, Refunding RB, Series A, 5.00%, 7/01/41   4,694    5,485,184   
 
  13,102,648   
 
Total Municipal Bonds Transferred to Tender Option Bond (TOB) Trusts – 49.5%   170,133,970   
 
Total Long-Term Investments
(Cost – $497,500,566) – 159.7%		   549,237,712   
       
 
  
   
Shares		      
Short-Term Securities  
 
FFI Institutional Tax-Exempt Fund, 0.04% (e)(f)   7,289,473   7,289,473   
 
Total Short-Term Securities
(Cost – $7,289,473) – 2.1%		   7,289,473   
 
Total Investments (Cost - $504,790,039*) – 161.8% 556,527,185   
Other Assets Less Liabilities – 1.1%   3,684,357   
Liability for TOB Trust Certificates, Including Interest Expense and Fees Payable – (24.8)%   (85,225,164)  
VMTP Shares, at Liquidation Value – (38.1)%   (131,000,000)  
 
Net Assets Applicable to Common Shares – 100.0% $ 343,986,378   
             

 

*As of October 31, 2012, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:
  Tax cost $ 420,005,290   
  Gross unrealized appreciation $ 51,788,442   
  Gross unrealized depreciation   (491,596)  
 
  Net unrealized appreciation $ 51,296,846   

 

(a)When-issued security. Unsettled when-issued transactions were as follows:

 

 
Counterparty Value  Unrealized Appreciation 
Citigroup, Inc. $1,481,387  $4,984 
       

 

  (b) Securities represent bonds transferred to a TOB in exchange for which the Fund acquired residual interest certificates. These securities serve as collateral in a financing transaction.
  (c) All or a portion of security is subject to a recourse agreement which may require the Fund to pay the Liquidity Provider in the event there is a shortfall between the TOB Trust Certificates and proceeds received from the sale of the security contributed to the TOB trust. In the case of a shortfall, the aggregate maximum potential amount the Fund could ultimately be required to pay under the agreements is $850,278.
  (d) US government securities, held in escrow, are used to pay interest on this security, as well as to retire the bond in full at the date indicated, typically at a premium to par.
  (e) Investments in issuers considered to be an affiliate of the Fund during the period ended October 31, 2012, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

  Affiliate   Shares
Held at
July 31, 2012		 Net
Activity		   Shares
Held at
October 31, 2012		 Income  
 
  FFI Institutional Tax-Exempt Fund   — 7,289,473   7,289,473 $ 331  
 
                               
(f)Represents the current yield as of report date.

 

BLACKROCK MUNIHOLDINGS QUALITY FUND II, INC.OCTOBER 31, 2012                    5
 
Schedule of Investments (concluded)

BlackRock MuniHoldings Quality Fund II, Inc. (MUE)

 

   

Portfolio Abbreviations

To simplify the listings of portfolio holdings in the Schedule of Investments, the names and descriptions of many of the securities have been abbreviated according to the following list:   
   
AGC Assured Guaranty Corp.  
AGM Assured Guaranty Municipal Corp.  
AMBAC American Municipal Bond Assurance Corp.  
AMT Alternative Minimum Tax (subject to)  
ARB Airport Revenue Bonds  
COP Certificates of Participation  
EDA Economic Development Authority  
Ginnie Mae Government National Mortgage-Association  
GO General Obligation Bonds  
IDA Industrial Development Authority  
IDB Industrial Development Board  
ISD Independent School District  
NPFGC National Public Finance Guarantee Corp.  
PSF-GTD Permanent School Fund Guarantee  
Q-SBLF Qualified School Bond Loan Fund  
RB Revenue Bonds  
S/F Single-Family  
   
• Fair Value Measurements - Various inputs are used in determining the fair value of investments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial reporting purposes as follows:  
   
  • Level 1 — unadjusted price quotations in active markets/exchanges for identical assets and liabilities that the Fund has the ability to access  
   
  • Level 2 — other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)  
   
  • Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Fund's own assumptions used in determining the fair value of investments)
   
The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
 
Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Fund's policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments is based on the pricing transparency of the investment and is not necessarily an indication of the risks associated with investing in those securities. For information about the Fund's policy regarding valuation of investments and other significant accounting policies, please refer to the Fund's most recent financial statements as contained in its annual report.
   
The following table summarizes the Fund's investments categorized in the disclosure hierarchy as of October 31, 2012:
           

 

  Level 1 Level 2 Level 3 Total
Assets:
Investments:
 

Long-Term

Investments1

   — $ 549,237,712   — $ 549,237,712
 

Short-Term

Securities

 $ 7,289,473   —   —   7,289,473
Total $ 7,289,473 $ 549,237,712   — $ 556,527,185
                                 

 

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

 

Certain of the Fund’s liabilities are held at carrying amount, which approximates fair value for financial reporting purposes. As of October 31, 2012, such liabilities are categorized within the disclosure hierarchy as follows:

 

  Level 1   Level 2 Level 3 Total
Liabilities:
  Bank overdraft   — $ (235,988) — $ (235,988)
  TOB trust certificates   —   (85,225,049) —   (85,225,049)
  VMTP Shares   —   (131,000,000) —   (131,000,000)
Total   — $ (216,461,037) — $ (216,461,037)
                           

 

There were no transfers between levels during the period ended October 31, 2012.

BLACKROCK MUNIHOLDINGS QUALITY FUND II, INC.OCTOBER 31, 2012                    6
 

Item 2 –  Controls and Procedures

2(a) –     The registrant's principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the ″1940 Act″)) are effective as of a date within 90 days of the filing of this report based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended.

2(b) –     There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant's last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.

Item 3 – Exhibits

Certifications – Attached hereto

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

BlackRock MuniHoldings Quality Fund II, Inc.

 

By: /s/ John M. Perlowski
  John M. Perlowski
  Chief Executive Officer (principal executive officer) of
  BlackRock MuniHoldings Quality Fund II, Inc.

 

Date: December 21, 2012

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By: /s/ John M. Perlowski
  John M. Perlowski
  Chief Executive Officer (principal executive officer) of
  BlackRock MuniHoldings Quality Fund II, Inc.

 

Date: December 21, 2012

 

By: /s/ Neal J. Andrews
  Neal J. Andrews
  Chief Financial Officer (principal financial officer) of
  BlackRock MuniHoldings Quality Fund II, Inc.

 

Date: December 21, 2012