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 811-09191
Name of Fund: BlackRock MuniHoldings Insured Fund II, Inc.
Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809
Name and address of agent for service: Donald C. Burke, Chief Executive
Officer, BlackRock MuniHoldings Insured Fund II, Inc., 800 Scudders
Mill Road, Plainsboro, NJ, 08536. Mailing address: P.O. Box 9011,
Princeton, NJ, 08543-9011
Registrant's telephone number, including area code: (800) 882-0052, Option 4
Date of fiscal year end: 09/30/2007
Date of reporting period: 10/01/2006 - 09/30/2007
Item 1 - Report to Stockholders
EQUITIES FIXED INCOME REAL ESTATE LIQUIDITY ALTERNATIVES
BLACKROCK SOLUTIONS
BlackRock MuniHoldings
Insured Fund II, Inc. (MUE)
ANNUAL REPORT SEPTEMBER 30, 2007
(BLACKROCK logo)
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
BlackRock MuniHoldings Insured Fund II, Inc. seeks to provide shareholders
with current income exempt from federal income taxes by investing primarily in
a portfolio of long-term, investment grade municipal obligations the interest
on which, in the opinion of bond counsel to the issuer, is exempt from federal
income taxes.
This report, including the financial information herein, is transmitted to
shareholders of BlackRock MuniHoldings Insured Fund II, Inc. for their
information. It is not a prospectus. Past performance results shown in this
report should not be considered a representation of future performance. The
Fund has leveraged its Common Stock and intends to remain leveraged by issuing
Preferred Stock to provide the Common Stock shareholders with a potentially
higher rate of return. Leverage creates risks for Common Stock shareholders,
including the likelihood of greater volatility of net asset value and market
price of shares of the Common Stock, and the risk that fluctuations in the
short-term dividend rates of the Preferred Stock may affect the yield to
Common Stock shareholders. Statements and other information herein are as
dated and are subject to change.
A description of the policies and procedures that the Fund uses to determine
how to vote proxies relating to portfolio securities is available (1)
without charge, upon request, by calling toll-free 1-800-441-7762; (2) at
www.blackrock.com; and (3) on the Securities and Exchange Commission's Web
site at http://www.sec.gov. Information about how the Fund voted proxies
relating to securities held in the Fund's portfolio during the most recent
12-month period ended June 30 is available (1) at www.blackrock.com; and (2)
on the Securities and Exchange Commission's Web site at http://www.sec.gov.
BlackRock MuniHoldings Insured Fund II, Inc.
P.O. Box 9011
Princeton, NJ 08543-9011
(GO PAPERLESS... logo)
It's Fast, Convenient, & Timely!
BlackRock MuniHoldings Insured Fund II, Inc.
Table of Contents Page
A Letter to Shareholders 3
Annual Report:
Fund Summary 4
The Benefits and Risks of Leveraging 5
Swap Agreements 5
Financial Statements:
Schedule of Investments 6
Statement of Net Assets 10
Statement of Operations 10
Statements of Changes in Net Assets 11
Financial Highlights 12
Notes to Financial Statements 13
Report of Independent Registered Public Accounting Firm 17
Automatic Dividend Reinvestment Plan 18
Dividend Policy 18
Officers and Directors 19
Proxy Results 21
Fund Certification 21
Important Tax Information 21
BlackRock Privacy Principles 22
Availability of Quarterly Schedule of Investments 23
Electronic Delivery 23
BLACKROCK MUNIHOLDINGS INSURED FUND II, INC. SEPTEMBER 30, 2007
A Letter to Shareholders
Dear Shareholder
The September reporting period took financial markets on a wild ride. While
subprime mortgage woes dominated headlines for much of 2007, troubles
intensified in the final months of the period, spawning a widespread "credit
crunch" that crept into other areas of the market. The U.S. Federal Reserve
Board (the "Fed") and other countries' central banks stepped in to inject
liquidity into the markets and bolster investor confidence. The Fed cut the
discount rate, the rate banks pay to borrow money directly from the Fed, from
6.25% to 5.25% in two moves in August and September. The central bankers also
cut the more widely followed federal funds target rate, which had remained
unchanged at 5.25% for over a year, to 4.75% in September. After a tumultuous
summer, the dust began to settle toward period-end amid speculation that the
worst of the credit crunch had passed.
Although heightened volatility and a weakening U.S. economy have been
recurring themes throughout the past year, equity markets have displayed
surprising resilience. Most recently, the credit turmoil dampened corporate
merger-and-acquisition activity, a key source of strength for equity markets.
However, market fundamentals have held firm, dividend payouts and share
buybacks have continued to grow, and valuations remain attractive. These
tailwinds generally have prevailed over the headwinds created by the slowing
U.S. economy and troubled housing market.
In fixed income markets, mixed economic signals and the credit market debacle
resulted in a flight to quality. At the height of the uncertainty, investors
shunned bonds associated with the housing and credit markets in favor of
higher-quality Treasury issues. The yield on 10-year Treasury issues, which
touched 5.30% in June (its highest level in five years), fell to 4.59% by
period-end, while prices correspondingly rose.
Against this backdrop, financial markets posted generally positive results for
the six-month period, and relatively stronger returns for the full year ended
September 30, 2007:
Total Returns as of September 30, 2007 6-month 12-month
U.S. equities (S&P 500 Index) +8.44% +16.44%
Small cap U.S. equities (Russell 2000 Index) +1.19 +12.34
International equities (MSCI Europe, Australasia, Far East Index) +8.72 +24.86
Fixed income (Lehman Brothers U.S. Aggregate Bond Index) +2.31 + 5.14
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) +1.15 + 3.10
High yield bonds (Lehman Brothers U.S. Corporate High Yield 2% Issuer Cap Index) +0.56 + 7.62
Past performance is no guarantee of future results. Index performance shown
for illustrative purposes only. You cannot invest directly in an index.
As you navigate market volatility, we encourage you to review your investment
goals with your financial professional and to make portfolio changes, as
needed. For more market insight, we invite you to view "What's Ahead in 2007:
Third Quarter Update" and "Are You Prepared for Volatility?" at
www.blackrock.com/funds. We thank you for entrusting BlackRock with your
investment assets, and we look forward to continuing to serve you in the
months and years ahead.
Sincerely,
/s/ Robert C. Doll
------------------
Robert C. Doll, Jr.
Vice Chairman, BlackRock, Inc.
THIS PAGE NOT PART OF YOUR FUND REPORT
Fund Summary as of September 30, 2007
Fund Information
Symbol on New York Stock Exchange MUE
Initial Offering Date February 26, 1999
Yield on Closing Market Price as of September 30, 2007 ($12.39)* 4.84%
Tax Equivalent Yield 7.45%**
Current Monthly Distribution per share of Common Stock*** $.05
Current Annualized Distribution per share of Common Stock*** $.60
Leverage as of September 30, 2007**** 40%
* 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.
** Tax equivalent yield assumes the maximum federal tax rate of 35%.
*** The distribution is not constant and is subject to change. A portion of
the distribution may be deemed a tax return of capital or net realized
gain at fiscal year end.
**** As a percentage of managed assets, which is the total assets of the Fund
(including any assets attributable to Auction Market Preferred Stock
that may be outstanding) minus the sum of accrued liabilities (other than
debt representing financial leverage).
The table below summarizes the changes in the Fund's market price and net
asset value per share:
9/30/07 9/30/06 Change High Low
Market Price $12.39 $12.96 (4.40%) $13.29 $11.82
Net Asset Value $13.72 $14.15 (3.04%) $14.33 $13.26
The following charts show the portfolio composition and credit quality
allocations of the Fund's long-term investments:
Portfolio Composition
Sector 9/30/07 9/30/06
City, County & State 22% 24%
Transportation 13 17
Tax Revenue 12 13
Hospital 10 5
Education 9 12
Housing 9 5
Power 8 2
Industrial & Pollution Control 7 7
Lease Revenue 7 7
Water & Sewer 3 5
Tobacco 0 3
Credit Quality Allocations*
Credit Rating 9/30/07 9/30/06
AAA/Aaa 92% 92%
AA/Aa 2 4
A/A 3 1
BBB/Baa 3 3
Other** --*** --***
* Using the higher of S&P's or Moody's ratings.
** Includes portfolio holdings in variable rate demand notes.
*** Amount is less than 1%
BLACKROCK MUNIHOLDINGS INSURED FUND II, INC. SEPTEMBER 30, 2007
The Benefits and Risks of Leveraging
BlackRock MuniHoldings Insured Fund II, Inc. utilizes leverage to seek to
enhance the yield and net asset value of its Common Stock. However, these
objectives cannot be achieved in all interest rate environments. To leverage,
the Fund issues Preferred Stock, which pays dividends at prevailing short-term
interest rates, and invests the proceeds in long-term municipal bonds. The
interest earned on these investments, net of dividends to Preferred Stock, is
paid to Common Stock shareholders in the form of dividends, and the value of
these portfolio holdings is reflected in the per share net asset value of the
Fund's Common Stock. However, in order to benefit Common Stock shareholders,
the yield curve must be positively sloped; that is, short-term interest rates
must be lower than long-term interest rates. At the same time, a period of
generally declining interest rates will benefit Common Stock shareholders. If
either of these conditions change, then the risks of leveraging will begin to
outweigh the benefits.
To illustrate these concepts, assume a fund's Common Stock capitalization of
$100 million and the issuance of Preferred Stock for an additional $50 million,
creating a total value of $150 million available for investment in long-term
municipal bonds. If prevailing short-term interest rates are approximately 3%
and long-term interest rates are approximately 6%, the yield curve has a
strongly positive slope. The fund pays dividends on the $50 million of
Preferred Stock based on the lower short-term interest rates. At the same
time, the fund's total portfolio of $150 million earns the income based on
long-term interest rates. Of course, increases in short-term interest rates
would reduce (and even eliminate) the dividends on the Common Stock.
In this case, the dividends paid to Preferred Stock shareholders are
significantly lower than the income earned on the fund's long-term
investments, and therefore the Common Stock shareholders are the beneficiaries
of the incremental yield. However, if short-term interest rates rise,
narrowing the differential between short-term and long-term interest rates,
the incremental yield pickup on the Common Stock will be reduced or eliminated
completely. At the same time, the market value of the fund's Common Stock
(that is, its price as listed on the New York Stock Exchange) may, as a
result, decline. Furthermore, if long-term interest rates rise, the Common
Stock's net asset value will reflect the full decline in the price of the
portfolio's investments, since the value of the fund's Preferred Stock does
not fluctuate. In addition to the decline in net asset value, the market value
of the fund's Common Stock may also decline.
As of September 30, 2007, the Fund's leverage amount, due to Auction Market
Preferred Stock, was 40% of total net assets, before the deduction of
Preferred Stock.
As a part of its investment strategy, the Fund may invest in certain
securities whose potential income return is inversely related to changes in a
floating interest rate ("inverse floaters"). In general, income on inverse
floaters will decrease when short-term interest rates increase and increase
when short-term interest rates decrease. Investments in inverse floaters may
be characterized as derivative securities and may subject the Fund to the
risks of reduced or eliminated interest payments and losses of invested
principal. In addition, inverse floaters have the effect of providing
investment leverage and, as a result, the market value of such securities will
generally be more volatile than that of fixed rate, tax-exempt securities. To
the extent the Fund invests in inverse floaters, the market value of the
Fund's portfolio and net asset value of the Fund's shares may also be more
volatile than if the Fund did not invest in these securities. (See Note 1(c)
to Financial Statements for details of municipal bonds held in trust.)
Swap Agreements
The Fund may invest in swap agreements, which are over-the-counter contracts
in which one party agrees to make periodic payments based on the change in
market value of a specified bond, basket of bonds, or index in return for
periodic payments based on a fixed or variable interest rate or the change in
market value of a different bond, basket of bonds or index. Swap agreements
may be used to obtain exposure to a bond or market without owning or taking
physical custody of securities. Swap agreements involve the risk that the
party with whom the Fund has entered into the swap will default on its
obligation to pay the Fund and the risk that the Fund will not be able to meet
its obligations to pay the other party to the agreement.
BLACKROCK MUNIHOLDINGS INSURED FUND II, INC. SEPTEMBER 30, 2007
Schedule of Investments as of September 30, 2007 (In Thousands)
Face
Amount Municipal Bonds Value
Alabama--4.4%
$ 4,280 Alabama, HFA, S/F Mortgage Revenue Refunding
Bonds, AMT, Series D, 5.125% due 10/01/2033 (e)(p) $ 4,289
3,580 Jefferson County, Alabama, Limited Obligation School
Warrants, Series A, 5.50% due 1/01/2022 3,819
5,000 Mobile, Alabama, GO, Refunding, 5.25%
due 8/15/2020 (a) 5,327
Alaska--1.3%
Anchorage, Alaska, Water Revenue Refunding Bonds (a):
370 6% due 9/01/2009 (j) 391
1,630 6% due 9/01/2024 1,712
1,700 Matanuska-Susitna Boro, Alaska, GO, Series A, 6%
due 3/01/2010 (i)(j) 1,796
California--26.4%
10,710 California Pollution Control Financing Authority, PCR,
Refunding (Pacific Gas & Electric), AMT, Series A,
5.35% due 12/01/2016 (i) 11,282
2,100 California State, GO, 5.50% due 4/01/2014 (j) 2,335
2,935 California State, Various Purpose, GO, 5.25%
due 12/01/2022 (f) 3,120
9,350 California State, Veterans, GO, Refunding, AMT,
Series BZ, 5.35% due 12/01/2021 (i) 9,393
2,405 Dixon, California, Unified School District, GO
(Election of 2002), 5.20% due 8/01/2044 (f) 2,474
8,460 East Side Union High School District, California, Santa
Clara County, GO (Election of 2002), Series D, 5%
due 8/01/2029 (n) 8,799
4,240 Modesto, California, Schools Infrastructure Financing
Agency, Special Tax Bonds, 5.50% due 9/01/2036 (a) 4,492
5,000 Port of Oakland, California, Revenue Refunding Bonds,
AMT, Series L, 5.375% due 11/01/2027 (c) 5,203
2,985 Roseville, California, Joint Union High School District,
GO (Election of 2004), Series A, 5% due 8/01/2029 (c) 3,091
150 Sacramento, California, City Financing Authority, Capital
Improvement Revenue Bonds, 5% due 12/01/2027 (a) 156
1,480 San Diego, California, Community College District, GO
(Election of 2002), 5% due 5/01/2030 (f) 1,537
1,250 San Francisco, California, City and County Airport
Commission, International Airport, Special Facilities
Lease Revenue Bonds (SFO Fuel Company LLC), AMT,
Series A, 6.10% due 1/01/2020 (f) 1,281
3,800 San Jose, California, GO (Libraries, Parks and Public
Safety Projects), 5% due 9/01/2030 (i) 3,924
5,190 Sequoia, California, Unified High School District, GO,
Refunding, Series B, 5.50% due 7/01/2035 (f) 5,636
Stockton, California, Public Financing Revenue Bonds
(Redevelopment Projects), Series A (k):
4,485 5.25% due 9/01/2031 4,517
2,930 5.25% due 9/01/2034 2,942
Face
Amount Municipal Bonds Value
California (concluded)
Tustin, California, Unified School District, Senior Lien
Special Tax Bonds (Community Facilities District
Number 97-1), Series A (f):
$ 2,915 5% due 9/01/2032 $ 2,978
4,620 5% due 9/01/2038 4,711
3,000 University of California Revenue Bonds (Multiple
Purpose Projects), Series Q, 5% due 9/01/2022 (f) 3,128
Colorado--3.6%
6,285 Aurora, Colorado, COP, 5.75% due 12/01/2010 (a)(j) 6,696
240 Colorado HFA, Revenue Refunding Bonds (S/F Program),
AMT, Senior Series A-2, 7.50% due 4/01/2031 248
4,000 Colorado Health Facilities Authority, Hospital Revenue
Refunding Bonds (Poudre Valley Health Care), Series A,
5.75% due 12/01/2009 (f)(j) 4,222
Connecticut--0.5%
1,520 Connecticut State, GO, Refunding, Series D, 5%
due 12/01/2024 (i) 1,594
District of Columbia--2.7%
2,500 District of Columbia, Deed Tax Revenue Bonds (Housing
Production Trust Fund--New Communities Project),
Series A, 5% due 6/01/2032 (i) 2,577
5,530 Metropolitan Washington Airports Authority, D.C.,
Airport System Revenue Refunding Bonds, AMT,
Series A, 5% due 10/01/2035 (f) 5,586
Florida--19.6%
2,310 Broward County, Florida, HFA, S/F Mortgage Revenue
Refunding Bonds, AMT, Series E, 5.90%
due 10/01/2039 (e)(p) 2,457
3,385 Hillsborough County, Florida, HFA, S/F Mortgage Revenue
Bonds, AMT, Series 1, 5.375% due 10/01/2049 (e)(p) 3,598
7,740 Jacksonville, Florida, Health Facilities Authority,
Hospital Revenue Bonds (Baptist Medical Center Project),
5% due 8/15/2037 (f) 7,879
4,500 Lee County, Florida, HFA, S/F Mortgage Revenue Bonds
(Multi-County Program), AMT, Series A-2, 6%
due 9/01/2040 (e)(p) 4,902
Lee Memorial Health System, Florida, Hospital Revenue
Bonds, Series A:
1,760 5% due 4/01/2032 1,763
5,000 5% due 4/01/2032 (a) 5,106
7,700 Miami-Dade County, Florida, Aviation Revenue Refunding
Bonds (Miami International Airport), AMT, Series A, 5%
due 10/01/2040 (n) 7,704
3,670 Miami-Dade County, Florida, Subordinate Special
Obligation Revenue Bonds, Series A, 5.24%
due 10/01/2037 (i)(g) 780
2,100 Okaloosa County, Florida, Water and Sewer Revenue
Refunding Bonds, 5% due 7/01/2036 (f) 2,152
2,425 Orange County, Florida, School Board, COP, Series A,
5% due 8/01/2032 (c) 2,483
6,300 Pasco County, Florida, Half-Cent Sales Tax Revenue
Bonds, 5.125% due 12/01/2028 (a) 6,510
Portfolio Abbreviations
To simplify the listings of portfolio holdings in the Schedule of Investments,
we have abbreviated the names of many of the securities according to the list
at right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
EDA Economic Development Authority
GO General Obligation Bonds
HDA Housing Development Authority
HFA Housing Finance Agency
M/F Multi-Family
PCR Pollution Control Revenue Bonds
S/F Single-Family
VRDN Variable Rate Demand Notes
BLACKROCK MUNIHOLDINGS INSURED FUND II, INC. SEPTEMBER 30, 2007
Schedule of Investments (continued) (In Thousands)
Face
Amount Municipal Bonds Value
Florida (concluded)
$ 6,500 Saint Petersburg, Florida, Public Utilities Revenue
Refunding Bonds, 5% due 10/01/2035 (i) $ 6,656
3,725 South Florida Water Management District, COP, 5%
due 10/01/2036 (a) 3,798
4,200 University of North Florida Financing Corporation,
Capital Improvement Revenue Bonds (Housing Project),
5% due 11/01/2037 (c) 4,297
Georgia--2.2%
6,290 Augusta, Georgia, Water and Sewer Revenue Bonds,
5.25% due 10/01/2034 (f) 6,618
Idaho--0.1%
440 Idaho Housing and Finance Association, S/F Mortgage
Revenue Bonds, AMT, Series E, 6% due 1/01/2032 448
Illinois--7.2%
Chicago, Illinois, GO (c)(j):
2,185 (Neighborhoods Alive 21 Program), Series A, 6%
due 7/01/2010 2,345
18,130 Series A, 6% due 7/01/2010 19,455
125 Lake, Cook, Kane and McHenry Counties, Illinois,
Community Unit School District Number 220, GO,
6% due 12/01/2020 (c) 133
Indiana--5.8%
8,000 Indiana Municipal Power Agency, Power Supply System
Revenue Bonds, Series A, 5% due 1/01/2042 (i) 8,190
9,280 Shelbyville, Indiana, Elementary School Building
Corporation Revenue Bonds, First Mortgage, 5.75%
due 1/15/2009 (f)(j) 9,634
Kansas--2.1%
3,510 Kansas State Development Finance Authority, Health
Facilities Revenue Bonds (Sisters of Charity
Leavenworth), Series J, 6.125% due 12/01/2020 3,717
2,805 Sedgwick and Shawnee Counties, Kansas, S/F Mortgage
Revenue Bonds, AMT, Series A-2, 6.20%
due 12/01/2033 (e) 2,823
Louisiana--3.7%
11,125 Louisiana State, Gas and Fuels Tax Revenue Bonds,
Series A, 5% due 5/01/2041 (c) 11,398
Massachusetts--6.7%
5,535 Massachusetts Bay Transportation Authority, Sales Tax
Revenue Refunding Bonds, Senior Series A, 5%
due 7/01/2035 5,586
1,000 Massachusetts State Development Finance Agency,
Education Revenue Bonds (Belmont Hill School),
4.50% due 9/01/2036 935
8,750 Massachusetts State Health and Educational Facilities
Authority Revenue Bonds (Lahey Clinic Medical
Center), Series D, 5.25% due 8/15/2037 8,891
5,000 Massachusetts State School Building Authority,
Dedicated Sales Tax Revenue Bonds, Series A, 5%
due 8/15/2030 (f) 5,184
Michigan--0.3%
1,000 Michigan State Hospital Finance Authority, Revenue
Refunding Bonds (Mercy-Mount Clemens), Series A,
6% due 5/15/2009 (i)(j) 1,048
Face
Amount Municipal Bonds Value
Minnesota--4.4%
Prior Lake, Minnesota, Independent School District
Number 719, GO (f):
$ 2,555 5.50% due 2/01/2016 $ 2,659
1,830 5.50% due 2/01/2017 1,905
3,570 5.50% due 2/01/2018 3,716
2,840 5.50% due 2/01/2019 2,956
2,185 Sauk Rapids, Minnesota, Independent School District
Number 47, GO, Series A, 5.625% due 2/01/2018 (i) 2,319
Missouri--1.2%
1,245 Missouri State Housing Development Commission,
S/F Mortgage Revenue Bonds (Homeownership
Loan Program), AMT, Series D-1, 5.05%
due 9/01/2033 (e)(p) 1,236
2,455 Missouri State Housing Development Commission,
S/F Mortgage Revenue Refunding Bonds
(Homeownership Loan Program), AMT, Series D-1,
5.10% due 9/01/2038 (e)(p) 2,436
Nevada--0.0%
105 Nevada Housing Division, S/F Mortgage Revenue
Bonds, AMT, Series A-2, 6.30% due 4/01/2022 (i) 106
New Jersey--10.9%
New Jersey EDA, Cigarette Tax Revenue Bonds:
2,980 5.625% due 6/15/2018 3,017
8,590 5.75% due 6/15/2029 8,988
6,200 5.75% due 6/15/2034 (b) 6,730
11,000 New Jersey EDA, Motor Vehicle Surcharge Revenue
Bonds, Series A, 5.25% due 7/01/2033 (i) 11,554
3,000 New Jersey State Turnpike Authority, Turnpike Revenue
Bonds, Series C, 5% due 1/01/2030 (f) 3,111
New Mexico--3.6%
5,000 Farmington, New Mexico, PCR, Refunding (Public
Service Company of New Mexico--San Juan Project),
Series C, 5.70% due 12/01/2016 (a) 5,108
5,480 New Mexico Finance Authority, Senior Lien State
Transportation Revenue Bonds, Series A, 5.125%
due 6/15/2018 (i) 5,876
New York--8.8%
14,000 Nassau Health Care Corporation, New York, Health
System Revenue Bonds, 5.75% due 8/01/2009 (f)(j) 14,837
3,200 New York State Dormitory Authority, Non-State Supported
Debt Revenue Bonds (New York University), Series A,
5% due 7/01/2032 (a) 3,330
5,755 New York State Dormitory Authority Revenue Bonds
(School Districts Financing Program), Series D, 5.25%
due 10/01/2023 (i) 6,108
2,000 Tobacco Settlement Financing Corporation of New York
Revenue Bonds, Series A-1, 5.25% due 6/01/2021 (a) 2,124
500 Triborough Bridge and Tunnel Authority, New York,
General Purpose Revenue Refunding Bonds, VRDN,
Series C, 3.77% due 1/01/2032 (a)(l) 500
North Carolina--0.4%
1,305 North Carolina HFA, Home Ownership Revenue Bonds,
AMT, Series 14-A, 5.35% due 1/01/2022 (a) 1,323
Ohio--1.0%
1,745 Aurora, Ohio, City School District, COP, 6.10%
due 12/01/2009 (i)(j) 1,856
1,000 Kent State University, Ohio, University Revenue Bonds,
6% due 5/01/2024 (a) 1,063
BLACKROCK MUNIHOLDINGS INSURED FUND II, INC. SEPTEMBER 30, 2007
Schedule of Investments (continued) (In Thousands)
Face
Amount Municipal Bonds Value
Oklahoma--0.8%
$ 2,385 Claremore, Oklahoma, Public Works Authority, Capital
Improvement Revenue Refunding Bonds, Series A,
5.25% due 6/01/2027 (f) $ 2,530
Pennsylvania--6.1%
6,435 Pennsylvania State Higher Educational Facilities
Authority, State System of Higher Education Revenue
Bonds, Series O, 5.125% due 6/15/2024 (a) 6,442
Pittsburgh, Pennsylvania, GO, Series C (f):
4,290 5.25% due 9/01/2017 4,712
6,415 5.25% due 9/01/2018 7,008
595 Washington County, Pennsylvania, Capital Funding
Authority Revenue Bonds (Capital Projects and
Equipment Program), 6.15% due 12/01/2029 (a) 598
Rhode Island--3.5%
5,555 Providence, Rhode Island, Redevelopment Agency
Revenue Refunding Bonds (Public Safety and Municipal
Buildings), Series A, 5.75% due 4/01/2010 (a)(j) 5,898
4,685 Rhode Island State Health and Educational Building
Corporation Revenue Bonds (Rhode Island School of
Design), Series D, 5.50% due 8/15/2031 (n) 4,985
South Carolina--5.6%
1,755 South Carolina Housing Finance and Development
Authority, Mortgage Revenue Refunding Bonds, AMT,
Series A-2, 6.35% due 7/01/2019 (f) 1,811
15,000 South Carolina State Public Service Authority, Revenue
Refunding Bonds, Series A, 5% due 1/01/2042 (a) 15,436
Tennessee--1.6%
3,500 Metropolitan Government of Nashville and Davidson
County, Tennessee, Health and Education Facilities Board
Revenue Refunding Bonds (Ascension Health Credit),
Series A, 5.875% due 11/15/2009 (a)(j) 3,698
1,080 Tennessee HDA, Revenue Bonds (Homeownership
Program), AMT, Series 2C, 6% due 7/01/2011 1,109
Texas--5.1%
1,750 Austin, Texas, Convention Center Revenue Bonds
(Convention Enterprises Inc.), Trust Certificates,
Second Tier, Series B, 6% due 1/01/2011 (j) 1,880
Dallas-Fort Worth, Texas, International Airport Revenue
Refunding and Improvement Bonds, AMT, Series A (c):
1,835 5.875% due 11/01/2017 1,942
2,150 5.875% due 11/01/2018 2,275
2,390 5.875% due 11/01/2019 2,529
El Paso, Texas, Water and Sewer Revenue Refunding
and Improvement Bonds, Series A (f):
115 6% due 3/01/2015 126
170 6% due 3/01/2016 186
180 6% due 3/01/2017 196
4,435 Houston, Texas, Community College System, Participation
Interests, COP (Alief Center Project), 5.75%
due 8/15/2022 (i) 4,586
1,850 Midland, Texas, Certificates of Obligation, GO, 6.10%
due 3/01/2010 (c)(j) 1,959
Face
Amount Municipal Bonds Value
Utah--0.2%
$ 610 Weber County, Utah, Municipal Building Authority,
Lease Revenue Refunding Bonds, 5.75%
due 12/15/2007 (i)(j) $ 619
Washington--7.0%
6,885 Bellevue, Washington, GO, Refunding, 5.50%
due 12/01/2039 (i) 7,445
3,840 Chelan County, Washington, Public Utility District
Number 001, Consolidated Revenue Bonds
(Chelan Hydro System), AMT, Series A, 5.45%
due 7/01/2037 (a) 3,950
Lewis County, Washington, GO, Refunding (a):
1,805 5.75% due 12/01/2009 (j) 1,890
1,640 5.75% due 12/01/2024 1,707
2,500 Seattle, Washington, Municipal Light and Power
Revenue Bonds, 6% due 10/01/2009 (i)(j) 2,645
3,500 Seattle, Washington, Water System Revenue Bonds,
Series B, 6% due 7/01/2009 (c)(j) 3,682
West Virginia--2.1%
6,210 West Virginia State Housing Development Fund,
Housing Finance Revenue Refunding Bonds, Series D,
5.20% due 11/01/2021 (i) 6,354
Wisconsin--1.4%
2,965 Wisconsin State, GO, Refunding, AMT, Series C, 5%
due 5/01/2037 (i) 2,967
1,250 Wisconsin State Health and Educational Facilities
Authority Revenue Bonds (Blood Center of Southeastern
Wisconsin Project), 5.75% due 6/01/2034 1,280
Puerto Rico--2.7%
5,725 Puerto Rico Commonwealth, Public Improvement, GO,
5.125% due 7/01/2030 (f) 5,951
1,010 Puerto Rico Commonwealth, Public Improvement, GO,
Refunding, Series B, 5.25% due 7/01/2032 1,040
1,200 Puerto Rico Electric Power Authority, Power Revenue
Bonds, Series TT, 5% due 7/01/2037 1,216
Total Municipal Bonds
(Cost--$457,821)--153.0% 469,256
Municipal Bonds Held in Trust (m)
Arkansas--4.1%
12,210 Arkansas State Development Finance Authority,
M/F Mortgage Revenue Refunding Bonds, Series C,
5.35% due 12/01/2035 (d)(i) 12,480
California--1.0%
3,000 Port of Oakland, California, Revenue Bonds, AMT,
Series K, 5.75% due 11/01/2021 (c) 3,117
BLACKROCK MUNIHOLDINGS INSURED FUND II, INC. SEPTEMBER 30, 2007
Schedule of Investments (continued) (In Thousands)
Face
Amount Municipal Bonds Held in Trust (m) Value
Florida--2.7%
$ 8,400 Miami-Dade County, Florida, Aviation Revenue
Refunding Bonds (Miami International Airport),
AMT, Series A, 5%, due 10/01/2040 (n) $ 8,404
Illinois--2.6%
7,300 Chicago, Illinois, O'Hare International Airport
Revenue Bonds, Third Lien, AMT, Series B-2,
6% due 1/01/2029 (n) 7,905
Michigan--3.4%
Michigan State Strategic Fund, Limited Obligation
Revenue Refunding Bonds (Detroit Edison Company
Pollution Control Project), AMT (n):
2,000 Series A, 5.50% due 6/01/2030 2,090
5,000 Series C, 5.65% due 9/01/2029 5,201
3,000 Saint Clair County, Michigan, Economic Revenue
Refunding Bonds (Detroit Edison Co. Project),
Series AA, 6.40% due 8/01/2024 (a) 3,124
New York--2.3%
6,750 New York City, New York, Sales Tax Asset Receivable
Corporation Revenue Bonds, Series A, 5.25%
due 10/15/2027 (a) 7,157
Face
Amount Municipal Bonds Held in Trust (m) Value
Texas--5.4%
$ 16,000 Dallas-Fort Worth, Texas, International Airport Revenue
Bonds, AMT, Series A, 5.50% due 11/01/2033 (i) $ 16,619
Total Municipal Bonds Held in Trust
(Cost--$66,523)--21.5% 66,097
Shares
Held Short-Term Securities
320 Merrill Lynch Institutional Tax-Exempt Fund,
3.67% (h)(o) 320
Total Short-Term Securities
(Cost--$320)--0.1% 320
Total Investments (Cost--$524,664*)--174.6% 535,673
Other Assets Less Liabilities--2.6% 7,920
Liability for Trust Certificates, Including Interest
Expense Payable--(10.5%) (32,229)
Preferred Stock, at Redemption Value--(66.7%) (204,595)
----------
Net Assets Applicable to Common Stock--100.0% $ 306,769
==========
* The cost and unrealized appreciation (depreciation) of investments
as of September 30, 2007, as computed for federal income tax purposes,
were as follows:
Aggregate cost $ 493,742
===============
Gross unrealized appreciation $ 11,723
Gross unrealized depreciation (1,622)
---------------
Net unrealized appreciation $ 10,101
===============
(a) AMBAC Insured.
(b) Assured Guaranty Insured.
(c) FGIC Insured.
(d) FHA Insured.
(e) FNMA/GNMA Collateralized.
(f) FSA Insured.
(g) Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase.
(h) Investments in companies considered to be an affiliate of the Fund,
for purposes of Section 2(a)(3) of the Investment Company Act of 1940,
were as follows:
Net Dividend
Affiliate Activity Income
Merrill Lynch Institutional Tax-Exempt Fund (4,296) $340
(i) MBIA Insured.
(j) Prerefunded.
(k) Radian Insured.
(l) Security may have a maturity of more than one year at time of issuance,
but has variable rate and demand features that qualify it as a short-term
security. The rate disclosed is that currently in effect. This rate changes
periodically based upon prevailing market rates.
(m) Securities represent underlying bonds transferred to a separate
securitization trust established in a tender option bond transaction
in which the Fund may have acquired the residual interest certificates.
These securities serve as collateral in a financing transaction. See Note
1(c) to Financial Statements for details of municipal bonds held in trust.
(n) XL Capital Insured.
(o) Represents the current yield as of September 30, 2007.
(p) FHLMC Collateralized.
See Notes to Financial Statements.
BLACKROCK MUNIHOLDINGS INSURED FUND II, INC. SEPTEMBER 30, 2007
Statement of Net Assets
As of September 30, 2007
Assets
Investments in unaffiliated securities, at value
(identified cost--$524,343,211) $ 535,353,053
Investments in affiliated securities, at value
(identified cost--$320,317) 320,317
Cash 345,383
Interest receivable 7,462,726
Securities sold receivable 1,540,903
Prepaid expenses 3,529
---------------
Total assets 545,025,911
---------------
Liabilities
Trust certificates 31,830,000
Dividends payable to Common Stock shareholders 1,117,622
Interest expense and fees payable 398,678
Investment adviser payable 210,990
Other affiliates payable 2,310
Accrued expenses 102,981
---------------
Total liabilities 33,662,581
---------------
Preferred Stock
Preferred Stock, at redemption value, par value $.10 per share
(2,100 Series A Shares, 2,100 Series B Shares and 3,980
Series C Shares of AMPS*, authorized, issued and outstanding
at $25,000 per share liquidation preference) 204,594,791
---------------
Net Assets Applicable to Common Stock
Net assets applicable to Common Stock $ 306,768,539
===============
Analysis of Net Assets Applicable to Common Stock
Undistributed investment income--net $ 1,649,057
Accumulated realized capital losses--net (15,724,309)
Unrealized appreciation--net 11,009,842
---------------
Total accumulated losses--net (3,065,410)
Common Stock, par value $.10 per share (22,352,426 shares
issued and outstanding) 2,235,243
Paid-in capital in excess of par 307,598,706
---------------
Total--Equivalent to $13.72 net asset value per share of
Common Stock (market price--$12.39) $ 306,768,539
===============
* Auction Market Preferred Stock.
See Notes to Financial Statements.
Statement of Operations
For the Year Ended September 30, 2007
Investment Income
Interest $ 26,030,731
Dividends from affiliates 339,612
---------------
Total income 26,370,343
---------------
Expenses
Investment advisory fees 2,831,673
Interest expense and fees 1,151,782
Commission fees 521,380
Accounting services 158,040
Professional fees 83,760
Transfer agent fees 60,099
Printing and shareholder reports 51,114
Custodian fees 29,588
Directors' fees and expenses 24,731
Pricing fees 20,647
Listing fees 9,436
Other 57,005
---------------
Total expenses before waiver and reimbursement 4,999,255
Waiver and reimbursement of expenses (220,257)
---------------
Total expenses after waiver and reimbursement 4,778,998
---------------
Investment income--net 21,591,345
---------------
Realized and Unrealized Gain (Loss)--Net
Realized gain (loss) on:
Investments--net 2,069,420
Forward interest rate swaps--net (616,000)
---------------
1,453,420
---------------
Change in unrealized appreciation/depreciation on:
Investments--net (11,557,931)
Forward interest rate swaps--net 260,075
---------------
(11,297,856)
---------------
Total realized and unrealized loss--net (9,844,436)
---------------
Dividends to Preferred Stock Shareholders
Investment income--net (7,380,240)
---------------
Net Increase in Net Assets Resulting from Operations $ 4,366,669
===============
See Notes to Financial Statements.
BLACKROCK MUNIHOLDINGS INSURED FUND II, INC. SEPTEMBER 30, 2007
Statements of Changes in Net Assets
For the Year Ended
September 30,
Increase (Decrease) in Net Assets: 2007 2006
Operations
Investment income--net $ 21,591,345 $ 20,844,142
Realized gain--net 1,453,420 1,337,449
Change in unrealized appreciation/depreciation--net (11,297,856) (801,023)
Dividends to Preferred Stock shareholders (7,380,240) (6,534,409)
--------------- ---------------
Net increase in net assets resulting from operations 4,366,669 14,846,159
--------------- ---------------
Dividends to Common Stock Shareholders
Investment income--net (13,813,799) (16,674,910)
--------------- ---------------
Net decrease in net assets resulting from dividends to Common Stock shareholders (13,813,799) (16,674,910)
--------------- ---------------
Net Assets Applicable to Common Stock
Total decrease in net assets applicable to Common Stock (9,447,130) (1,828,751)
Beginning of year 316,215,669 318,044,420
--------------- ---------------
End of year* $ 306,768,539 $ 316,215,669
=============== ===============
* Undistributed investment income--net $ 1,649,057 $ 1,251,751
=============== ===============
See Notes to Financial Statements.
BLACKROCK MUNIHOLDINGS INSURED FUND II, INC. SEPTEMBER 30, 2007
Financial Highlights
The following per share data and ratios have been derived For the Year Ended September 30,
from information provided in the financial statements. 2007 2006 2005 2004 2003
Per Share Operating Performance
Net asset value, beginning of year $ 14.15 $ 14.23 $ 14.41 $ 14.37 $ 14.48
----------- ----------- ----------- ----------- -----------
Investment income--net* .97 .93 .97 1.00 1.02
Realized and unrealized gain (loss)--net (.45) .03 (.09) --++++ (.17)
Dividends to Preferred Stock shareholders from
investment income--net (.33) (.29) (.18) (.09) (.10)
----------- ----------- ----------- ----------- -----------
Total from investment operations .19 .67 .70 .91 .75
----------- ----------- ----------- ----------- -----------
Less dividends to Common Stock shareholders from
investment income--net (.62) (.75) (.88) (.87) (.86)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year $ 13.72 $ 14.15 $ 14.23 $ 14.41 $ 14.37
=========== =========== =========== =========== ===========
Market price per share, end of year $ 12.39 $ 12.96 $ 13.90 $ 13.25 $ 13.13
=========== =========== =========== =========== ===========
Total Investment Return++
Based on net asset value per share 1.73% 5.19% 5.35% 7.12% 5.95%
=========== =========== =========== =========== ===========
Based on market price per share .31% (1.37%) 11.92% 7.80% 3.45%
=========== =========== =========== =========== ===========
Ratios Based on Average Net Assets Applicable to Common Stock
Total expenses, net of waiver and reimbursement and
excluding interest expense and fees** 1.17% 1.16% 1.15% 1.12% 1.14%
=========== =========== =========== =========== ===========
Total expenses, net of waiver and reimbursement** 1.54% 1.57% 1.32% 1.17% 1.21%
=========== =========== =========== =========== ===========
Total expenses** 1.61% 1.64% 1.38% 1.27% 1.30%
=========== =========== =========== =========== ===========
Total investment income--net** 6.94% 6.70% 6.72% 6.93% 7.19%
=========== =========== =========== =========== ===========
Amount of dividends to Preferred Stock shareholders 2.37% 2.10% 1.27% .63% .69%
=========== =========== =========== =========== ===========
Investment income--net, to Common Stock shareholders 4.57% 4.60% 5.45% 6.30% 6.50%
=========== =========== =========== =========== ===========
Ratios Based on Average Net Assets Applicable to Preferred Stock
Dividends to Preferred Stock shareholders 3.62% 3.20% 1.99% .99% 1.08%
=========== =========== =========== =========== ===========
Supplemental Data
Net assets applicable to Common Stock, end of year
(in thousands) $ 306,769 $ 316,216 $ 318,044 $ 322,072 $ 321,270
=========== =========== =========== =========== ===========
Preferred Stock outstanding at liquidation preference,
end of year (in thousands) $ 204,500 $ 204,500 $ 204,500 $ 204,500 $ 204,500
=========== =========== =========== =========== ===========
Portfolio turnover 43% 35% 46% 45% 50%
=========== =========== =========== =========== ===========
Leverage
Asset coverage per $1,000 $ 2,500 $ 2,546 $ 2,555 $ 2,575 $ 2,571
=========== =========== =========== =========== ===========
Dividends Per Share on Preferred Stock Outstanding
Series A--Investment income--net $ 908 $ 797 $ 505 $ 253 $ 268
=========== =========== =========== =========== ===========
Series B--Investment income--net $ 893 $ 792 $ 494 $ 241 $ 267
=========== =========== =========== =========== ===========
Series C--Investment income--net $ 904 $ 804 $ 504 $ 251 $ 271
=========== =========== =========== =========== ===========
* Based on average shares outstanding.
** Do not reflect the effect of dividends to Preferred Stock shareholders.
++ Total investment returns based on market value, which can be significantly greater or lesser than
the net asset value, may result in substantially different returns. Total investment returns exclude
the effects of sales charges.
++++ Amount is less than $.01 per share.
See Notes to Financial Statements.
BLACKROCK MUNIHOLDINGS INSURED FUND II, INC. SEPTEMBER 30, 2007
Notes to Financial Statements
1. Significant Accounting Policies:
BlackRock Muniholdings Insured Fund II, Inc. (the "Fund") is registered under
the Investment Company Act of 1940, as amended, as a non-diversified, closed-
end management investment company. The Fund's financial statements are
prepared in conformity with U.S. generally accepted accounting principles,
which may require the use of management accruals and estimates. Actual results
may differ from these estimates. The Fund determines and makes available for
publication the net asset value of its Common Stock on a daily basis. The
Fund's Common Stock shares are listed on the New York Stock Exchange under the
symbol MUE. The following is a summary of significant accounting policies
followed by the Fund.
(a) Valuation of investments--Municipal bonds are traded primarily in the over-
the-counter ("OTC") markets and are valued at the last available bid price in
the OTC market or on the basis of values as obtained by a pricing service.
Pricing services use valuation matrixes that incorporate both dealer-supplied
valuations and valuation models. The procedures of the pricing service and its
valuations are reviewed by the officers of the Fund under the general
direction of the Board of Directors. Such valuations and procedures are
reviewed periodically by the Board of Directors of the Fund. Financial futures
contracts and options thereon, which are traded on exchanges, are valued at
their closing prices as of the close of such exchanges. Effective September 4,
2007, exchange-traded options are valued at the mean price and previously at
the last sale price. In the case of options traded in the OTC market,
valuation is the last asked price (options written) or the last bid price
(options purchased). Swap agreements are valued by quoted fair values received
daily by the Fund's pricing service. Investments in open-end investment
companies are valued at their net asset value each business day. Securities
and other assets for which market quotations are not readily available are
valued at fair value as determined in good faith by or under the direction of
the Board of Directors of the Fund. Such valuations and procedures are
reviewed periodically by the Board of Directors of the Fund.
(b) Derivative financial instruments--The Fund may engage in various portfolio
investment strategies both to increase the return of the Fund and to hedge, or
protect, its exposure to interest rate movements and movements in the
securities markets. Losses may arise due to changes in the value of the
contract due to an unfavorable change in the price of the underlying security,
or index, or if the counterparty does not perform under the contract. The
counterparty for certain instruments may pledge cash or securities as
collateral.
* Financial futures contracts--The Fund may purchase or sell financial futures
contracts and options on such financial futures contracts. Financial futures
contracts are contracts for delayed delivery of securities at a specific
future date and at a specific price or yield. Upon entering into a contract,
the Fund deposits and maintains as collateral such initial margin as required
by the exchange on which the transaction is effected. Pursuant to the
contract, the Fund agrees to receive from or pay to the broker an amount of
cash equal to the daily fluctuation in value of the contract. Such receipts or
payments are known as variation margin and are recorded by the Fund as
unrealized gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
* Options--The Fund may write covered call options and purchase call and put
options. When the Fund writes an option, an amount equal to the premium
received by the Fund is reflected as an asset and an equivalent liability. The
amount of the liability is subsequently marked-to-market to reflect the
current market value of the option written. When a security is purchased or
sold through the exercise of an option, the related premium paid (or received)
is added to (or deducted from) the basis of the security acquired or deducted
from (or added to) the proceeds of the security sold. When an option expires
(or the Fund enters into a closing transaction), the Fund realizes a gain or
loss on the option to the extent of the premiums received or paid (or gain or
loss to the extent the cost of the closing transaction exceeds the premium
paid or received).
Written and purchased options are non-income producing investments.
* Forward interest rate swaps--The Fund may enter into forward interest rate
swaps. In a forward interest rate swap, the Fund and the counterparty agree to
make periodic net payments on a specified notional contract amount, commencing
on a specified future effective date, unless terminated earlier. When the
agreement is closed, the Fund records a realized gain or loss in an amount
equal to the value of the agreement.
* Swaps--The Fund may enter into swap agreements, which are OTC contracts in
which the Fund and a counterparty agree to make periodic net payments on a
specified notional amount. The net payments can be made for a set period of
time or may be triggered by a pre-determined credit event. The net periodic
payments may be based on a fixed or variable interest rate; the change in
market value of a specified security, basket of securities, or index; or the
return generated by a security. These periodic payments received or made by
the Fund are recorded in the accompanying Statement of Operations as realized
gains or losses, respectively. Gains or losses are also realized upon
termination of the swap agreements. Swaps are marked-to-market daily and
changes in value are recorded as unrealized appreciation (depreciation). Risks
include changes in the returns of the underlying instruments, failure of the
counterparties to perform under the contracts' terms and the possible lack of
liquidity with respect to the swap agreements.
BLACKROCK MUNIHOLDINGS INSURED FUND II, INC. SEPTEMBER 30, 2007
Notes to Financial Statements (continued)
(c) Municipal bonds held in trust--The Fund invests in leveraged residual
certificates ("TOB Residuals") issued by tender option bond trusts ("TOBs"). A
TOB is established by a third party sponsor forming a special purpose entity,
into which the Fund, or an agent on behalf of the Fund, transfers municipal
securities. A TOB typically issues two classes of beneficial interests: short-
term floating rate certificates, which are sold to third party investors, and
residual certificates, which are generally issued to the Fund which made the
transfer or to affiliates of the Fund. The transfer of the municipal
securities to a TOB does not qualify for sale treatment under Statement of
Financial Accounting Standards No. 140 "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities," therefore the
municipal securities deposited into a TOB are presented in the Fund's schedule
of investments and the proceeds from the transaction are reported as a
liability for trust certificates of the Fund. Similarly, proceeds from
residual certificates issued to affiliates, if any, from the transaction are
included in the liability for trust certificates. Interest income from the
underlying security is recorded by the Fund on an accrual basis. Interest
expense incurred on the secured borrowing and other expenses related to
remarketing, administration and trustee services to a TOB are reported as
expenses of the Fund. The floating rate certificates have interest rates
that generally reset weekly and their holders have the option to tender
certificates to the TOB for redemption at par at each reset date. The residual
interests held by the Fund include the right of the Fund (1) to cause the
holders of a proportional share of the floating rate certificates to tender
their certificates at par, and (2) to transfer a corresponding share of the
municipal securities from the TOB to the Fund. At September 30, 2007, the
aggregate value of the underlying municipal securities transferred to TOBs was
$66,096,779, the related liability for the trust certificates was $31,830,000
and the range of interest rates was 3.687% to 3.795%.
Financial transactions executed through TOBs generally will underperform the
market for fixed rate municipal bonds in a rising interest rate environment,
but tend to outperform the market for fixed rate bonds when interest rates
decline or remain relatively stable. Should short-term interest rates rise,
the Fund's investment in TOB Residuals likely will adversely affect the Fund's
investment income - net and distributions to shareholders. Fluctuations in the
market value of municipal securities deposited into the TOB may adversely
affect the Fund's net asset value per share. While the Fund's investment
policies and restrictions expressly permit investments in inverse floating
rate securities such as TOB Residuals, they generally do not allow the Fund to
borrow money for purposes of making investments. The Fund's management
believes that the Fund's restrictions on borrowings do not apply to the
secured borrowings deemed to have occurred for accounting purposes.
(d) Income taxes--It is the Fund's policy to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no federal income tax provision is required.
(e) Security transactions and investment income--Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Realized gains and losses on security transactions are determined on the
identified cost basis. Dividend income is recorded on the ex-dividend dates.
Interest income is recognized on the accrual basis. The Fund amortizes all
premiums and discounts on debt securities.
(f) Dividends and distributions--Dividends from net investment income are
declared and paid monthly. Distributions of capital gains are recorded on the
ex-dividend dates.
(g) Recent accounting pronouncements--In July 2006, the Financial Accounting
Standards Board ("FASB") issued Interpretation No. 48 ("FIN 48"), "Accounting
for Uncertainty in Income Taxes - an interpretation of FASB Statement No.
109." FIN 48 prescribes the minimum recognition threshold a tax position must
meet in connection with accounting for uncertainties in income tax positions
taken or expected to be taken by an entity, including mutual funds, before
being measured and recognized in the financial statements. Adoption of FIN 48
is required for the last net asset value calculation in the first required
financial statement reporting period for fiscal years beginning after December
15, 2006. The impact on the Fund's financial statements, if any, is currently
being assessed.
In September 2006, Statement of Financial Accounting Standards No. 157, "Fair
Value Measurements" ("FAS 157"), was issued and is effective for fiscal years
beginning after November 15, 2007. FAS 157 defines fair value, establishes a
framework for measuring fair value and expands disclosures about fair value
measurements. At this time, management is evaluating the implications of FAS
157 and its impact on the Fund's financial statements, if any, has not been
determined.
In addition, in February 2007, Statement of Financial Accounting Standards
No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities"
("FAS 159"), was issued and is effective for fiscal years beginning after
November 15, 2007. Early adoption is permitted as of the beginning of a fiscal
year that begins on or before November 15, 2007, provided the entity also
elects to apply the provisions of FAS 157. FAS 159 permits entities to choose
to measure many financial instruments and certain other items at fair value
that are not currently required to be measured at fair value. FAS 159 also
establishes presentation and disclosure requirements designed to facilitate
comparisons between entities that choose different measurement attributes for
similar types of assets and liabilities. At this time, management is evaluating
the implications of FAS 159 and its impact on the Fund's financial statements,
if any, has not been determined.
(h) Reclassification--U.S. generally accepted accounting principles require
that certain components of net assets be adjusted to reflect permanent
differences between financial and tax reporting. Accordingly, during the
current year, $6,137,252 has been reclassified between paid-in capital in
excess of par and accumulated net realized capital losses as a result of a
permanent difference attributable to the expiration of a capital loss
carryforward. This reclassification has no effect on net assets or net asset
values per share.
BLACKROCK MUNIHOLDINGS INSURED FUND II, INC. SEPTEMBER 30, 2007
Notes to Financial Statements (continued)
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with BlackRock
Advisors, LLC (the "Manager"), an indirect wholly owned subsidiary of
BlackRock, Inc. Merrill Lynch & Co., Inc. and The PNC Financial Services
Group, Inc. are the principal owners of BlackRock, Inc.
The Manager is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain other
services necessary to the operations of the Fund. For such services, the Fund
pays a monthly fee at an annual rate of .55% of the Fund's average daily net
assets, including proceeds from the issuance of Preferred Stock. In addition,
the Manager has entered into a Sub-Advisory Agreement with BlackRock
Investment Management, LLC, an affiliate of the Manager, under which the
Manager pays the Sub-Adviser for services it provides a monthly fee at an
annual rate equal to a percentage of the management fee paid by the Fund to
the Manager.
The Manager has agreed to waive its management fee on the proceeds of
Preferred Stock that exceeds 35% of the Fund's total net assets. For the year
ended September 30, 2007, the Manager earned fees of $2,831,673, of which
$200,897 was waived. In addition, the Manager has agreed to reimburse its
advisory fee by the amount of advisory fees the Fund pays to the Manager
indirectly through its investment in Merrill Lynch Institutional Tax-Exempt
Fund. For the year ended September 30, 2007, the Manager reimbursed the Fund
in the amount of $19,360.
For the year ended September 30, 2007, the Fund reimbursed Fund Asset
Management. L.P. $10,645 for certain accounting services.
Certain officers and/or directors of the Fund are officers and/or directors of
BlackRock, Inc. or its affiliates.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
year ended September 30, 2007 were $245,922,124 and $233,422,505,
respectively.
4. Stock Transactions:
The Fund is authorized to issue 200,000,000 shares of stock, including
Preferred Stock, par value $.10 per share, all of which were initially
classified as Common Stock. The Board of Directors is authorized, however, to
reclassify any unissued shares of stock without approval of the holders of
Common Stock.
Preferred Stock
Auction Market Preferred Stock are shares of Preferred Stock of the Fund, with
a par value of $.10 per share and a liquidation preference of $25,000 per
share, plus accrued and unpaid dividends, that entitle their holders to
receive cash dividends at an annual rate that may vary for the successive
dividend periods. The yields in effect at September 30, 2007 were as follows:
Series A, 4.00%; Series B, 4.00%; and Series C, 4.00%.
The Fund pays commissions to certain broker-dealers at the end of each auction
at an annual rate ranging from .25% to .375%, calculated on the proceeds of
each auction. For the year ended September 30, 2007, Merrill Lynch, Pierce,
Fenner & Smith Incorporated earned $186,241 as commissions.
5. Distributions to Shareholders:
The Fund paid a tax-exempt income dividend to holders of Common Stock in
the amount of $.050000 per share on November 1, 2007 to shareholders of
record on October 15, 2007.
The tax character of distributions paid during the fiscal years ended
September 30, 2007 and September 30, 2006 was as follows:
9/30/2007 9/30/2006
Distributions paid from:
Tax-exempt income $ 21,194,039 $ 23,209,319
------------- -------------
Total distributions $ 21,194,039 $ 23,209,319
============= =============
As of September 30, 2007, the components of accumulated losses on a tax
basis were as follows:
Undistributed tax-exempt income - net $ 641,011
Undistributed long-term capital gains-net --
-------------
Total undistributed earnings - net 641,011
Capital loss carryforward (11,825,789)*
Unrealized gains - net 8,119,368**
-------------
Total accumulated losses - net $ (3,065,410)
=============
* On September 30, 2007, the Fund had a net capital loss carryforward of
$11,825,789, of which, $11,519,686 expires in 2008 and $306,103 expires
in 2012. This amount will be available to offset like amounts of any future
taxable gains.
** The difference between book-basis and tax-basis net unrealized losses is
attributable primarily to the tax deferral of losses on wash sales, the tax
deferral of losses on straddles, the deferral of post-October capital losses
for tax purposes and the difference between the book and tax treatment of
residual interests in tender option bond trusts.
BLACKROCK MUNIHOLDINGS INSURED FUND II, INC. SEPTEMBER 30, 2007
Notes to Financial Statements (concluded)
6. Restatement Information:
Subsequent to the initial issuance of its September 30,2006 financial
statements, the Fund determined that the criteria for sale accounting in FAS
140 had not been met for certain transfers of municipal bonds and that these
transfers should have been accounted for as secured borrowings rather than as
sales. As a result, certain financial highlights for each of the three years
in the period ended September 30, 2005 have been restated to give effect to
recording the transfers of the municipal bonds as secured borrowings,
including recording interest on the bonds as interest income and interest on
the secured borrowings as interest expense.
Financial Highlights
For the Years Ended September 30, 2005, 2004 and 2003
2005 2004 2003
Previously Previously Previously
Reported Restated Reported Restated Reported Restated
Total expenses, net of waiver and reimbursement** 1.15% 1.32% 1.12% 1.17% 1.14% 1.21%
Total expenses** 1.21% 1.38% 1.21% 1.27% 1.23% 1.30%
Portfolio turnover 58.19% 46% 45.89% 45% 52.00% 50%
** Do not reflect the effect of dividends to Preferred Stock shareholders.
BLACKROCK MUNIHOLDINGS INSURED FUND II, INC. SEPTEMBER 30, 2007
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
BlackRock MuniHoldings Insured Fund II, Inc.:
We have audited the accompanying statements of net assets, including the
schedule of investments, of BlackRock MuniHoldings Insured Fund II, Inc. (the
"Fund") as of September 30, 2007, and the related statement of operations for
the year then ended and the statements of changes in net assets and the
financial highlights for each of the two years in the period then ended. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on the
financial statements and financial highlights based on our audits. The
financial highlights for each of the three years in the period ended September
30, 2005 (before the restatement described in Note 6) were audited by other
auditors whose report, dated November 9, 2005, expressed a qualified opinion
on those financial highlights because of the errors described in Note 6.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. The Fund is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Fund's internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. Our procedures
included confirmation of securities owned as of September 30, 2007, by
correspondence with the custodian. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights of BlackRock
MuniHoldings Insured Fund II, Inc. referred to above, present fairly, in all
material respects, its financial position as of September 30, 2007, the
results of its operations for the year then ended and the changes in its net
assets and its financial highlights for each of the two years in the period
then ended, in conformity with accounting principles generally accepted in the
United States of America.
We also have audited the adjustments, applied by management, to restate
certain financial highlights for each of the three years in the period ended
September 30, 2005 to correct the errors described in Note 6. These
adjustments are the responsibility of the Fund's management. The audit
procedures that we performed with respect to the adjustments included such
tests as we considered necessary in the circumstances and were designed to
obtain reasonable assurance about whether the adjustments are appropriate and
have been properly applied, in all material respects, to the restated
financial highlights for each of the three years in the period ended September
30, 2005. We did not perform any audit procedures designed to assess whether
any additional adjustments to such financial highlights might be necessary in
order for such financial highlights to be presented in conformity with
generally accepted accounting principles. In our opinion, the adjustments to
the financial highlights for each of the three years in the period ended
September 30, 2005 described in Note 6 are appropriate and have been properly
applied, in all material respects. However, we were not engaged to audit,
review, or apply any procedures to such financial highlights other than with
respect to the adjustments described in Note 6 and, accordingly, we do not
express an opinion or any other form of assurance on such financial
highlights.
Deloitte & Touche LLP
Princeton, New Jersey
November 28, 2007
BLACKROCK MUNIHOLDINGS INSURED FUND II, INC. SEPTEMBER 30, 2007
Automatic Dividend Reinvestment Plan
How the Plan Works--The Fund offers a Dividend Reinvestment Plan (the "Plan")
under which income and capital gains dividends paid by the Fund are
automatically reinvested in additional shares of Common Stock of the Fund. The
Plan is administered on behalf of the shareholders by Computershare Trust
Company, N.A. (the "Plan Agent"). Under the Plan, whenever the Fund declares a
dividend, participants in the Plan will receive the equivalent in shares of
Common Stock of the Fund. The Plan Agent will acquire the shares for the
participant's account either (i) through receipt of additional unissued but
authorized shares of the Fund ("newly issued shares") or (ii) by purchase of
outstanding shares of Common Stock on the open market on the New York Stock
Exchange or elsewhere. If, on the dividend payment date, the Fund's net asset
value per share is equal to or less than the market price per share plus
estimated brokerage commissions (a condition often referred to as a "market
premium"), the Plan Agent will invest the dividend amount in newly issued
shares. If the Fund's net asset value per share is greater than the market
price per share (a condition often referred to as a "market discount"), the
Plan Agent will invest the dividend amount by purchasing on the open market
additional shares. If the Plan Agent is unable to invest the full dividend
amount in open market purchases, or if the market discount shifts to a market
premium during the purchase period, the Plan Agent will invest any uninvested
portion in newly issued shares. The shares acquired are credited to each
shareholder's account. The amount credited is determined by dividing the
dollar amount of the dividend by either (i) when the shares are newly issued,
the net asset value per share on the date the shares are issued or (ii) when
shares are purchased in the open market, the average purchase price per share.
Participation in the Plan--Participation in the Plan is automatic, that is, a
shareholder is automatically enrolled in the Plan when he or she purchases
shares of Common Stock of the Fund unless the shareholder specifically elects
not to participate in the Plan. Shareholders who elect not to participate will
receive all dividend distributions in cash. Shareholders who do not wish to
participate in the Plan must advise the Plan Agent in writing (at the address
set forth below) that they elect not to participate in the Plan. Participation
in the Plan is completely voluntary and may be terminated or resumed at any
time without penalty by writing to the Plan Agent.
Benefits of the Plan--The Plan provides an easy, convenient way for
shareholders to make additional, regular investments in the Fund. The Plan
promotes a long-term strategy of investing at a lower cost. All shares
acquired pursuant to the Plan receive voting rights. In addition, if the
market price plus commissions of the Fund's shares is above the net asset
value, participants in the Plan will receive shares of the Fund for less than
they could otherwise purchase them and with a cash value greater than the
value of any cash distribution they would have received. However, there may
not be enough shares available in the market to make distributions in shares
at prices below the net asset value. Also, since the Fund does not redeem
shares, the price on resale may be more or less than the net asset value.
Plan Fees--There are no enrollment fees or brokerage fees for participating in
the Plan. The Plan Agent's service fees for handling the reinvestment of
distributions are paid for by the Fund. However, brokerage commissions may be
incurred when the Fund purchases shares on the open market and shareholders
will pay a pro rata share of any such commissions.
Tax Implications--The automatic reinvestment of dividends and distributions
will not relieve participants of any federal, state or local income tax that
may be payable (or required to be withheld) on such dividends. Therefore,
income and capital gains may still be realized even though shareholders do not
receive cash. The value of shares acquired pursuant to the Plan will generally
be excluded from gross income to the extent that the cash amount reinvested
would be excluded from gross income. If, when the Fund's shares are trading at
a market premium, the Fund issues shares pursuant to the Plan that have a
greater fair market value than the amount of cash reinvested, it is possible
that all or a portion of the discount from the market value (which may not
exceed 5% of the fair market value of the Fund's shares) could be viewed as a
taxable distribution. If the discount is viewed as a taxable distribution,
it is also possible that the taxable character of this discount would be
allocable to all the shareholders, including shareholders who do not
participate in the Plan. Thus, shareholders who do not participate in the Plan
might be required to report as ordinary income a portion of their distributions
equal to their allocable share of the discount.
Contact Information--All correspondence concerning the Plan, including
any questions about the Plan, should be directed to the Plan Agent at
Computershare Trust Company, N.A., P.O. Box 43010, Providence, RI 02940-3010,
Telephone: 800-426-5523.
Dividend Policy
The Fund's dividend policy is to distribute all or a portion of its net
investment income to its shareholders on a monthly basis. In order to provide
shareholders with a more stable level of dividend distributions, the Fund may
at times pay out less than the entire amount of net investment income earned
in any particular month and may at times in any particular month pay out such
accumulated but undistributed income in addition to net investment income
earned in that month. As a result, the dividends paid by the Fund for any
particular month may be more or less than the amount of net investment income
earned by the Fund during such month. The Fund's current accumulated but
undistributed net investment income, if any, is disclosed in the Statement of
Net Assets, which comprises part of the financial information included in this
report.
BLACKROCK MUNIHOLDINGS INSURED FUND II, INC. SEPTEMBER 30, 2007
Officers and Directors as of September 30, 2007
Number of
Funds and
Portfolios in
Position(s) Length of Fund Complex Other Public
Name, Address Held with Time Overseen by Directorships
and Year of Birth Fund Served Principal Occupation(s) During Past 5 Years Director Held by Director
Interested Director
Robert C. Doll, Jr.* Fund 2005 to Vice Chairman and Director of BlackRock, Inc., 120 Funds None
P.O. Box 9011 President 2007 Global Chief Investment Officer for Equities, 161 Portfolios
Princeton, NJ and Chairman of the BlackRock Retail Operating
08543-9011 Director Committee, and member of the BlackRock Executive
1954 Committee since 2006; President of the funds
advised by Merrill Lynch Investment
Managers, L.P. ("MLIM") and its affiliates
("MLIM/FAM-advised funds") from 2005 to 2006
and Chief Investment Officer thereof from 2001
to 2006; President of MLIM and Fund Asset
Management, L.P. ("FAM") from 2001 to 2006;
Co-Head (Americas Region) thereof from 2000
to 2001 and Senior Vice President from 1999 to
2001; President and Director of Princeton
Services, Inc. ("Princeton Services") and
President of Princeton Administrators, L.P.
("Princeton Administrators") from 2001 to 2006;
Chief Investment Officer of OppenheimerFunds,
Inc. in 1999 and Executive Vice President
thereof from 1991 to 1999.
* Mr. Doll is a director, trustee or member of an advisory board of certain other
investment companies for which BlackRock Advisors, LLC and its affiliates act as
investment adviser. Mr. Doll is an "interested person," as defined in the
Investment Company Act, of the Fund based on his positions with BlackRock, Inc.
and its affiliates. Directors serve until their resignation, removal or death, or
until December 31 of the year in which they turn 72. As Fund President, Mr. Doll
serves at the pleasure of the Board of Directors.
Independent Directors*
James H. Bodurtha** Director 2002 to Director, The China Business Group, Inc. since 37 Funds None
P.O. Box 9095 2007 1996 and Executive Vice President thereof from 57 Portfolios
Princeton, NJ 1996 to 2003; Chairman of the Board, Berkshire
08543-9095 Holding Corporation since 1980; Partner, Squire,
1944 Sanders & Dempsey (a law firm) from 1980 to 1993.
Kenneth A. Froot Director 2005 to Professor, Harvard University since 1992; 37 Funds None
P.O. Box 9095 2007 Professor, Massachusetts Institute of 57 Portfolios
Princeton, NJ Technology from 1986 to 1992.
08543-9095
1957
Joe Grills** Director 1999 to Member of the Committee of Investment of 37 Funds Kimco Realty
P.O. Box 9095 2007 Employee Benefit Assets of the Association of 57 Portfolios Corporation
Princeton, NJ Financial Professionals ("CIEBA") since 1986;
08543-9095 Member of CIEBA's Executive Committee since 1988
1935 and its Chairman from 1991 to 1992; Assistant
Treasurer of International Business Machines
Corporation ("IBM") and Chief Investment Officer
of IBM Retirement Funds from 1986 to 1993;
Member of the Investment Advisory Committee of
the State of New York Common Retirement Fund
from 1989 to 2006; Member of the Investment
Advisory Committee of the Howard Hughes Medical
Institute from 1997 to 2000; Director, Duke
University Management Company from 1992 to 2004,
Vice Chairman thereof from 1998 to 2004, and
Director Emeritus thereof since 2004; Director,
LaSalle Street Fund from 1995 to 2001; Director,
Kimco Realty Corporation since 1997; Member of
the Investment Advisory Committee of the
Virginia Retirement System since 1998, Vice
Chairman thereof from 2002 to 2005, and
Chairman thereof since 2005; Director,
Montpelier Foundation since 1998, its Vice
Chairman from 2000 to 2006, and Chairman,
thereof, since 2006; Member of the Investment
Committee of the Woodberry Forest School since
2000; Member of the Investment Committee of
the National Trust for Historic Preservation
since 2000.
BLACKROCK MUNIHOLDINGS INSURED FUND II, INC. SEPTEMBER 30, 2007
Officers and Directors (concluded)
Number of
Funds and
Portfolios in
Position(s) Length of Fund Complex Other Public
Name, Address Held with Time Overseen by Directorships
and Year of Birth Fund Served Principal Occupation(s) During Past 5 Years Director Held by Director
Independent Directors* (concluded)
Herbert I. London Director 2002 to Professor Emeritus, New York University since 37 Funds AIMS Worldwide,
P.O. Box 9095 2007 2005; John M. Olin Professor of Humanities, 57 Portfolios Inc.
Princeton, NJ New York University from 1993 to 2005; and
08543-9095 Professor thereof from 1980 to 2005; President,
1939 Hudson Institute since 1997 and Trustee thereof
since 1980; Dean, Gallatin Division of New York
University from 1976 to 1993; Distinguished Fellow,
Herman Kahn Chair, Hudson Institute from 1984 to
1985; Chairman of the Board of Directors of Vigilant
Research, Inc. since 2006; Member of the Board
of Directors for Grantham University since 2006;
Director of AIMS Worldwide, Inc. since 2006;
Director of Reflex Security since 2006; Director
of InnoCentive, Inc. since 2006; Director of Cerego,
LLC since 2005; Director, Damon Corp. from 1991 to
1995; Overseer, Center for Naval Analyses from 1983
to 1993.
Roberta Cooper Ramo Director 2002 to Shareholder, Modrall, Sperling, Roehl, Harris 37 Funds None
P.O. Box 9095 2007 & Sisk, P.A. since 1993; President, American 57 Portfolios
Princeton, NJ Bar Association from 1995 to 1996 and Member of
08543-9095 the Board of Governors thereof from 1994 to 1997;
1942 Shareholder, Poole, Kelly and Ramo, Attorneys
at Law P.C. from 1977 to 1993; Director of ECMC
Group (service provider to students, schools and
lenders) since 2001; Director, United New Mexico
Bank (now Wells Fargo) from 1983 to 1988; Director,
First National Bank of New Mexico (now Wells Fargo)
from 1975 to 1976; Vice President, American Law
Institute from 2004 to 2007 and President elect
thereof since 2007.
Robert S. Salomon, Jr. Director 1999 to Principal of STI Management (investment 37 Funds None
P.O. Box 9095 present adviser) from 1994 to 2005; Chairman and CEO 57 Portfolios
Princeton, NJ of Salomon Brothers Asset Management Inc. from
08543-9095 1992 to 1995; Chairman of Salomon Brothers
1936 Equity Mutual Funds from 1992 to 1995; regular
columnist with Forbes Magazine from 1992 to
2002; Director of Stock Research and U.S.
Equity Strategist at Salomon Brothers Inc. from
1975 to 1991; Trustee, Commonfund from 1980 to 2001.
* Directors serve until their resignation, removal or death, or until December 31
of the year in which they turn 72.
** Co-Chairman of the Board of Directors and the Audit Committee.
Fund Officers*
Donald C. Burke Vice 1993 to Managing Director of BlackRock, Inc. since 2006; Managing Director of Merrill
P.O. Box 9011 President present Lynch Investment Managers, L.P.("MLIM") and Fund Asset Management, L.P. ("FAM")
Princeton, NJ and and in 2006; First Vice President of MLIM and FAM from 1997 to 2005 and Treasurer
08543-9011 Treasurer 1999 to thereof from 1999 to 2006); Vice President of MLIM and FAM from 1990 to 1997.
1960 2007
Karen Clark Chief 2007 Managing Director of BlackRock, Inc. and Chief Compliance Officer of certain
P.O. Box 9011 Compliance BlackRock-advised funds since 2007; Director of BlackRock, Inc. from 2005 to
Princeton, NJ Officer 2007; Principal and Senior Compliance Officer, State Street Global Advisors,
08543-9011 from 2001 to 2005; Principal Consultant, PricewaterhouseCoopers, LLP from 1998
1965 to 2001; and Branch Chief, Division of Investment Management and Office of
Compliance Inspections and Examinations, U.S. Securities and Exchange
Commission, from 1993 to 1998.
Howard Surloff Secretary 2007 to Managing Director, of BlackRock Inc., and General Counsel of U.S. Funds at
P.O. Box 9011 present BlackRock, Inc since 2006. General Counsel (U.S.) of Goldman Sachs Asset
Princeton, NJ Management from 1993 to 2006.
08543-9011
1965
* Officers of the Fund serve at the pleasure of the Board of Directors.
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agent
Common Stock:
Computershare Trust Company, N.A.
P.O. Box 43010
Providence, RI 02940-3010
Preferred Stock:
The Bank of New York
101 Barclay Street--7 West
New York, NY 10286
BLACKROCK MUNIHOLDINGS INSURED FUND II, INC. SEPTEMBER 30, 2007
Proxy Results
During the six-month period ended September 30, 2007, the Common Stock and
Auction Market Preferred Stock (Series A-C) shareholders of BlackRock
MuniHoldings Insured Fund II, Inc. voted on the following proposal, which was
approved at an annual shareholders' meeting on August 16, 2007. This proposal
was part of the reorganization of the Fund's Board of Directors to take effect
on or about November 1, 2007. A description of the proposal and number of
shares voted are as follows:
Shares Voted Shares Withheld
For From Voting
To elect the Fund's Directors: G. Nicholas Beckwith, III 20,036,766 987,315
Richard E. Cavanagh 20,041,099 982,982
Richard S. Davis 20,037,099 986,982
Kent Dixon 20,041,099 982,982
Kathleen F. Feldstein 20,039,992 984,088
James T. Flynn 20,043,299 980,782
Henry Gabbay 20,422,548 601,533
Jerrold B. Harris 20,041,099 982,982
R. Glenn Hubbard 20,040,898 983,183
Karen P. Robards 20,042,724 981,356
Robert S. Salomon, Jr. 20,043,299 980,782
During the six-month period ended September 30, 2007, the Auction Market
Preferred Stock shareholders (Series A-C) of BlackRock MuniHoldings Insured
Fund II, Inc. voted on the following proposal, which was approved at an annual
shareholders' meeting on August 16, 2007. This proposal was part of the
reorganization of the Fund's Board of Directors to take effect on or about
November 1, 2007. A description of the proposal and number of shares voted are
as follows:
Shares Voted Shares Withheld
For From Voting
To elect the Fund's Directors: Frank J. Fabozzi 7,410 126
W. Carl Kester 7,411 125
Fund Certification
In May 2007, the Fund filed its Chief Executive Officer Certification for the
prior year with the New York Stock Exchange pursuant to Section 303A.12(a) of
the New York Stock Exchange Corporate Governance Listing Standards.
The Fund's Chief Executive Officer and Chief Financial Officer Certifications
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 were filed with the
Fund's Form N-CSR and are available on the Securities and Exchange Commission's
Web site at http://www.sec.gov.
Important Tax Information
All of the net investment income distributions paid by BlackRock MuniHoldings
Insured Fund II, Inc. during the taxable year ended September 30, 2007 qualify
as tax-exempt interest dividends for federal income tax purposes.
BLACKROCK MUNIHOLDINGS INSURED FUND II, INC. SEPTEMBER 30, 2007
BlackRock Privacy Principles
BlackRock is committed to maintaining the privacy of its current and former
fund investors and individual clients (collectively, "Clients") and to
safeguarding their non-public personal information. The following information
is provided to help you understand what personal information BlackRock
collects, how we protect that information and why in certain cases we share
such information with select parties.
If you are located in a jurisdiction where specific laws, rules or regulations
require BlackRock to provide you with additional or different privacy-related
rights beyond what is set forth below, then BlackRock will comply with those
specific laws, rules or regulations.
BlackRock obtains or verifies personal non-public information from and about
you from different sources, including the following: (i) information we
receive from you or, if applicable, your financial intermediary, on
applications, forms or other documents; (ii) information about your
transactions with us, our affiliates, or others; (iii) information we receive
from a consumer reporting agency; and (iv) from visits to our Web sites.
BlackRock does not sell or disclose to non-affiliated third parties any non-
public personal information about its Clients, except as permitted by law or
as is necessary to respond to regulatory requests or to service Client
accounts. These nonaffiliated third parties are required to protect the
confidentiality and security of this information and to use it only for its
intended purpose.
We may share information with our affiliates to service your account or to
provide you with information about other BlackRock products or services that
may be of interest to you. In addition, BlackRock restricts access to non-
public personal information about its Clients to those BlackRock employees
with a legitimate business need for the information. BlackRock maintains
physical, electronic and procedural safeguards that are designed to protect
the non-public personal information of its Clients, including procedures
relating to the proper storage and disposal of such information.
BLACKROCK MUNIHOLDINGS INSURED FUND II, INC. SEPTEMBER 30, 2007
Availability of Quarterly Schedule of Investments
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission ("SEC") for the first and third quarters of each fiscal
year on Form N-Q. The Fund's Forms N-Q are available on the SEC's Web site at
http://www.sec.gov. The Fund's Forms
N-Q may also be reviewed and copied at the SEC's Public Reference Room in
Washington, DC. Information on the operation of the Public Reference Room may
be obtained by calling 1-800-SEC-0330.
Electronic Delivery
Electronic copies of most financial reports and prospectuses are available on
the Fund's Web site. Shareholders can sign up for e-mail notifications of
quarterly statements, annual and semi-annual reports and prospectuses by
enrolling in the Fund's electronic delivery program.
Shareholders Who Hold Accounts with Investment Advisers, Banks or Brokerages:
Please contact your financial advisor to enroll. Please note that not all
investment advisers, banks or brokerages may offer this service.
BLACKROCK MUNIHOLDINGS INSURED FUND II, INC. SEPTEMBER 30, 2007
Item 2 - Code of Ethics - The registrant (or the "Fund") has adopted a code
of ethics, as of the end of the period covered by this report,
applicable to the registrant's principal executive officer,
principal financial officer and principal accounting officer, or
persons performing similar functions. During the period covered by
this report, there have been no amendments to or waivers granted
under the code of ethics. A copy of the code of ethics is available
without charge at www.blackrock.com.
Item 3 - Audit Committee Financial Expert - The registrant's board of
directors or trustees, as applicable (the "board of directors") has
determined that (i) the registrant has the following audit committee
financial experts serving on its audit committee and (ii) each audit
committee financial expert is independent:
Joe Grills (term ended effective November 1, 2007)
Robert S. Salomon, Jr.
Kent Dixon (term began effective November 1, 2007)
Frank J. Fabozzi (term began effective November 1, 2007)
W. Carl Kester (term began effective November 1, 2007)
James T. Flynn (term began effective November 1, 2007)
Karen P. Robards (term began effective November 1, 2007)
The registrant's board of directors has determined that W. Carl
Kester and Karen P. Robards qualify as financial experts pursuant to
Item 3(c)(4) of Form N-CSR.
Prof. Kester has a thorough understanding of generally accepted
accounting principles, financial statements and internal control
over financial reporting as well as audit committee functions.
Prof. Kester has been involved in providing valuation and other
financial consulting services to corporate clients since 1978.
Prof. Kester's financial consulting services present a breadth and
level of complexity of accounting issues that are generally
comparable to the breadth and complexity of issues that can
reasonably be expected to be raised by the Registrant's financial
statements.
Ms. Robards has a thorough understanding of generally accepted
accounting principles, financial statements and internal control
over financial reporting as well as audit committee functions.
Ms. Robards has been President of Robards & Company, a financial
advisory firm, since 1987. Ms. Robards was formerly an investment
banker for more than 10 years where she was responsible for
evaluating and assessing the performance of companies based on their
financial results. Ms. Robards has over 30 years of experience
analyzing financial statements. She also is the member of the Audit
Committees of one publicly held company and a non-profit
organization.
Under applicable securities laws, a person determined to be an audit
committee financial expert will not be deemed an "expert" for any
purpose, including without limitation for the purposes of Section 11
of the Securities Act of 1933, as a result of being designated or
identified as an audit committee financial expert. The designation
or identification as an audit committee financial expert does not
impose on such person any duties, obligations, or liabilities
greater than the duties, obligations, and liabilities imposed on
such person as a member of the audit committee and board of
directors in the absence of such designation or identification.
Item 4 - Principal Accountant Fees and Services
(a) Audit Fees (b) Audit-Related Fees (1) (c) Tax Fees (2) (d) All Other Fees (3)
Current Previous Current Previous Current Previous Current Previous
Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year
Entity Name End End End End End End End End
BlackRock
MuniHoldings $53,350 $32,000 $3,500 $3,500 $6,100 $6,000 $1,042 $0
Insured Fund II,
Inc.
(1) The nature of the services include assurance and related services reasonably
related to the performance of the audit of financial statements notincluded
in Audit Fees.
(2) The nature of the services include tax compliance, tax advice and tax planning.
(3) The nature of the services include a review of compliance procedures and
attestation thereto.
(e)(1) Audit Committee Pre-Approval Policies and Procedures:
The registrant's audit committee (the "Committee") has adopted
policies and procedures with regard to the pre-approval of services.
Audit, audit-related and tax compliance services provided to the
registrant on an annual basis require specific pre-approval by the
Committee. The Committee also must approve other non-audit services
provided to the registrant and those non-audit services provided to
the registrant's affiliated service providers that relate directly
to the operations and the financial reporting of the registrant.
Certain of these non-audit services that the Committee believes are
a) consistent with the SEC's auditor independence rules and b)
routine and recurring services that will not impair the independence
of the independent accountants may be approved by the Committee
without consideration on a specific case-by-case basis ("general pre-
approval"). However, such services will only be deemed pre-approved
provided that any individual project does not exceed $5,000
attributable to the registrant or $50,000 for all of the registrants
the Committee oversees. Any proposed services exceeding the pre-
approved cost levels will require specific pre-approval by the
Committee, as will any other services not subject to general pre-
approval (e.g., unanticipated but permissible services). The
Committee is informed of each service approved subject to general
pre-approval at the next regularly scheduled in-person board
meeting.
(e)(2) None of the services described in each of Items 4(b)
through (d) were approved by the audit committee pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not Applicable
(g) Affiliates' Aggregate Non-Audit Fees:
Current Previous
Fiscal Year Fiscal Year
Entity Name End End
BlackRock MuniHoldings
Insured Fund II, Inc. $295,142 $3,059,750
(h) The registrant's audit committee has considered and determined
that the provision of non-audit services that were rendered to the
registrant's investment adviser (not including any non-affiliated
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by the registrant's investment
adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services
to the registrant that were not pre-approved pursuant to
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible
with maintaining the principal accountant's independence.
Regulation S-X Rule 2-01(c)(7)(ii) - $284,500, 0%
Item 5 - Audit Committee of Listed Registrants - The following individuals
are members of the registrant's separately-designated standing audit
committee established in accordance with Section 3(a)(58)(A) of the
Exchange Act (15 U.S.C. 78c(a)(58)(A)):
James H. Bodurtha (term ended effective November 1, 2007)
Kenneth A. Froot (term ended effective November 1, 2007)
Joe Grills (term ended effective November 1, 2007)
Herbert I. London (term ended effective November 1, 2007)
Roberta Cooper Ramo (term ended effective November 1, 2007)
Robert S. Salomon, Jr.
Kent Dixon (term began effective November 1, 2007)
Frank J. Fabozzi (term began effective November 1, 2007)
W. Carl Kester (term began effective November 1, 2007)
James T. Flynn (term began effective November 1, 2007)
Karen P. Robards (term began effective November 1, 2007)
The registrant's board of directors has determined that W. Carl
Kester and Karen P. Robards qualify as financial experts pursuant to
Item 3(c)(4) of Form N-CSR.
Prof. Kester has a thorough understanding of generally accepted
accounting principles, financial statements and internal control
over financial reporting as well as audit committee functions.
Prof. Kester has been involved in providing valuation and other
financial consulting services to corporate clients since 1978.
Prof. Kester's financial consulting services present a breadth and
level of complexity of accounting issues that are generally
comparable to the breadth and complexity of issues that can
reasonably be expected to be raised by the Registrant's financial
statements.
Ms. Robards has a thorough understanding of generally accepted
accounting principles, financial statements and internal control
over financial reporting as well as audit committee functions.
Ms. Robards has been President of Robards & Company, a financial
advisory firm, since 1987. Ms. Robards was formerly an investment
banker for more than 10 years where she was responsible for
evaluating and assessing the performance of companies based on their
financial results. Ms. Robards has over 30 years of experience
analyzing financial statements. She also is the member of the Audit
Committees of one publicly held company and a non-profit
organization.
Item 6 - Schedule of Investments - The registrant's Schedule of Investments
is included as part of the Report to Stockholders filed under Item 1
of this form.
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - The registrant has delegated the
voting of proxies relating to Fund portfolio securities to its
investment adviser, BlackRock Advisors, LLC and its sub-adviser, as
applicable. The Proxy Voting Policies and Procedures of the adviser
and sub-adviser are attached hereto as Exhibit 99.PROXYPOL.
Proxy Voting Policies and Procedures
For BlackRock Advisors, LLC
And Its Affiliated SEC Registered Investment Advisers
September 30, 2006
Table of Contents Page
Introduction
Scope of Committee Responsibilities
Special Circumstances
Voting Guidelines
Boards of Directors
Auditors
Compensation and Benefits
Capital Structure
Corporate Charter and By-Laws
Corporate Meetings
Investment Companies
Environmental and Social Issues
Notice to Clients
Proxy Voting Policies and Procedures
These Proxy Voting Policies and Procedures ("Policy") for BlackRock
Advisors, LLC and its affiliated U.S. registered investment advisers (1)
("BlackRock") reflect our duty as a fiduciary under the Investment Advisers
Act of 1940 (the "Advisers Act") to vote proxies in the best interests of our
clients. BlackRock serves as the investment manager for investment companies,
other commingled investment vehicles and/or separate accounts of institutional
and other clients. The right to vote proxies for securities held in such
accounts belongs to BlackRock's clients. Certain clients of BlackRock
have retained the right to vote such proxies in general or in specific
circumstances. (2) Other clients, however, have delegated to BlackRock the
right to vote proxies for securities held in their accounts as part of
BlackRock's authority to manage, acquire and dispose of account assets.
When BlackRock votes proxies for a client that has delegated to
BlackRock proxy voting authority, BlackRock acts as the client's agent.
Under the Advisers Act, an investment adviser is a fiduciary that owes each
of its clients a duty of care and loyalty with respect to all services the
adviser undertakes on the client's behalf, including proxy voting. BlackRock
is therefore subject to a fiduciary duty to vote proxies in a manner BlackRock
believes is consistent with the client's best interests, (3) whether or not
the client's proxy voting is subject to the fiduciary standards of the Employee
Retirement Income Security Act of 1974 ("ERISA"). (4) When voting proxies for
client accounts (including investment companies), BlackRock's primary objective
is to make voting decisions solely in the best interests of clients and ERISA
clients' plan beneficiaries and participants. In fulfilling its obligations to
clients, BlackRock will seek to act in a manner that it believes is most likely
to enhance the economic value of the underlying securities held in client
accounts. (5) It is imperative that BlackRock considers the interests of its
clients, and not the interests of BlackRock, when voting proxies and that real
(or perceived) material conflicts that may arise between BlackRock's interest
and those of BlackRock's clients are properly addressed and resolved.
(1) The Policy does not apply to BlackRock Asset Management U.K. Limited and
BlackRock Investment Managers International Limited, which are U.S.
registered investment advisers based in the United Kingdom.
(2) In certain situations, a client may direct BlackRock to vote in accordance
with the client's proxy voting policies. In these situations, BlackRock
will seek to comply with such policies to the extent it would not be
inconsistent with other BlackRock legal responsibilities.
(3) Letter from Harvey L. Pitt, Chairman, SEC, to John P.M. Higgins, President,
Ram Trust Services (February 12, 2002) (Section 206 of the Investment
Advisers Act imposes a fiduciary responsibility to vote proxies fairly and
in the best interests of clients); SEC Release No. IA-2106 (February 3,
2003).
(4) DOL Interpretative Bulletin of Sections 402, 403 and 404 of ERISA at
29 C.F.R. 2509.94-2
(5) Other considerations, such as social, labor, environmental or other
policies, may be of interest to particular clients. While BlackRock is
cognizant of the importance of such considerations, when voting proxies it
will generally take such matters into account only to the extent that they
have a direct bearing on the economic value of the underlying securities.
To the extent that a BlackRock client desires to pursue a particular
social, labor, environmental or other agenda through the proxy votes made
for its securities held through BlackRock as investment adviser, BlackRock
encourages the client to consider retaining direct proxy voting authority
or to appoint independently a special proxy voting fiduciary other than
BlackRock.
Advisers Act Rule 206(4)-6 was adopted by the SEC in 2003 and requires,
among other things, that an investment adviser that exercises voting authority
over clients' proxy voting adopt policies and procedures reasonably designed to
ensure that the adviser votes proxies in the best interests of clients,
discloses to its clients information about those policies and procedures and
also discloses to clients how they may obtain information on how the adviser
has voted their proxies.
In light of such fiduciary duties, the requirements of Rule 206(4)-6,
and given the complexity of the issues that may be raised in connection with
proxy votes, BlackRock has adopted these policies and procedures. BlackRock's
Equity Investment Policy Oversight Committee, or a sub-committee thereof (the
"Committee"), addresses proxy voting issues on behalf of BlackRock and its
clients. (6) The Committee is comprised of senior members of BlackRock's
Portfolio Management Group and advised by BlackRock's Legal and Compliance
Department.
(6) Subject to the Proxy Voting Policies of Merrill Lynch Bank & Trust
Company FSB, the Committee may also function jointly as the Proxy Voting
Committee for Merrill Lynch Bank & Trust Company FSB trust accounts
managed by personnel dually-employed by BlackRock.
I. Scope of Committee Responsibilities
The Committee shall have the responsibility for determining how to
address proxy votes made on behalf of all BlackRock clients, except for clients
who have retained the right to vote their own proxies, either generally or on
any specific matter. In so doing, the Committee shall seek to ensure that proxy
votes are made in the best interests of clients, and that proxy votes are
determined in a manner free from unwarranted or inappropriate influences. The
Committee shall also oversee the overall administration of proxy voting for
BlackRock accounts. (7)
The Committee shall establish BlackRock's proxy voting guidelines, with
such advice, participation and research as the Committee deems appropriate from
portfolio managers, proxy voting services or other knowledgeable interested
parties. As it is anticipated that there will not necessarily be a "right" way
to vote proxies on any given issue applicable to all facts and circumstances,
the Committee shall also be responsible for determining how the proxy voting
guidelines will be applied to specific proxy votes, in light of each issuer's
unique structure, management, strategic options and, in certain circumstances,
probable economic and other anticipated consequences of alternative actions. In
so doing, the Committee may determine to vote a particular proxy in a manner
contrary to its generally stated guidelines.
The Committee may determine that the subject matter of certain proxy
issues are not suitable for general voting guidelines and requires a case-by-
case determination, in which case the Committee may elect not to adopt a
specific voting guideline applicable to such issues. BlackRock believes that
certain proxy voting issues - such as approval of mergers and other significant
corporate transactions - require investment analysis akin to investment
decisions, and are therefore not suitable for general guidelines. The Committee
may elect to adopt a common BlackRock position on certain proxy votes that are
akin to investment decisions, or determine to permit portfolio managers to make
individual decisions on how best to maximize economic value for the accounts
for which they are responsible (similar to normal buy/sell investment decisions
made by such portfolio managers). (8)
While it is expected that BlackRock, as a fiduciary, will generally seek
to vote proxies over which BlackRock exercises voting authority in a uniform
manner for all BlackRock clients, the Committee, in conjunction with the
portfolio manager of an account, may determine that the specific circumstances
of such account require that such account's proxies be voted differently due to
such account's investment objective or other factors that differentiate it from
other accounts. In addition, on proxy votes that are akin to investment
decisions, BlackRock believes portfolio managers may from time to time
legitimately reach differing but equally valid views, as fiduciaries for
BlackRock's clients, on how best to maximize economic value in respect of a
particular investment.
(7) The Committee may delegate day-to-day administrative responsibilities to
other BlackRock personnel and/or outside service providers, as appropriate.
(8) The Committee will normally defer to portfolio managers on proxy votes that
are akin to investment decisions except for proxy votes that involve a
material conflict of interest, in which case it will determine, in its
discretion, the appropriate voting process so as to address such conflict.
The Committee will also be responsible for ensuring the maintenance of
records of each proxy vote, as required by Advisers Act Rule 204-2. (9) All
records will be maintained in accordance with applicable law. Except as may be
required by applicable legal requirements, or as otherwise set forth herein,
the Committee's determinations and records shall be treated as proprietary,
nonpublic and confidential.
The Committee shall be assisted by other BlackRock personnel, as may be
appropriate. In particular, the Committee has delegated to the BlackRock
Operations Department responsibility for monitoring corporate actions and
ensuring that proxy votes are submitted in a timely fashion. The Operations
Department shall ensure that proxy voting issues are promptly brought to the
Committee's attention and that the Committee's proxy voting decisions are
appropriately disseminated and implemented.
To assist BlackRock in voting proxies, the Committee may retain the
services of a firm providing such services. BlackRock has currently retained
Institutional Shareholder Services ("ISS") in that role. ISS is an independent
adviser that specializes in providing a variety of fiduciary-level proxy-
related services to institutional investment managers, plan sponsors,
custodians, consultants, and other institutional investors. The services
provided to BlackRock may include, but are not limited to, in-depth research,
voting recommendations (which the Committee is not obligated to follow), vote
execution, and recordkeeping.
(9) The Committee may delegate the actual maintenance of such records to an
outside service provider. Currently, the Committee has delegated the
maintenance of such records to Institutional Shareholder Services.
II Special Circumstances
Routine Consents. BlackRock may be asked from time to time to consent
to an amendment to, or grant a waiver under, a loan agreement, partnership
agreement, indenture or other governing document of a specific financial
instrument held by BlackRock clients. BlackRock will generally treat such
requests for consents not as "proxies" subject to these Proxy Voting Policies
and Procedures but as investment matters to be dealt with by the responsible
BlackRock investment professionals would, provided that such consents (i) do
not relate to the election of a board of directors or appointment of auditors
of a public company, and (ii) either (A) would not otherwise materially affect
the structure, management or control of a public company, or (B) relate to a
company in which BlackRock clients hold only interests in bank loans or debt
securities and are consistent with customary standards and practices for such
instruments.
Securities on Loan. Registered investment companies that are advised by
BlackRock as well as certain of our advisory clients may participate in
securities lending programs. Under most securities lending arrangements,
securities on loan may not be voted by the lender (unless the loan is
recalled). BlackRock believes that each client has the right to determine
whether participating in a securities lending program enhances returns, to
contract with the securities lending agent of its choice and to structure a
securities lending program, through its lending agent, that balances any
tension between loaning and voting securities in a matter that satisfies such
client. If client has decided to participate in a securities lending program,
BlackRock will therefore defer to the client's determination and not attempt to
seek recalls solely for the purpose of voting routine proxies as this could
impact the returns received from securities lending and make the client a less
desirable lender in a marketplace. Where a client retains a lending agent that
is unaffiliated with BlackRock, BlackRock will generally not seek to vote
proxies relating to securities on loan because BlackRock does not have a
contractual right to recall such loaned securities for the purpose of voting
proxies. Where BlackRock or an affiliate acts as the lending agent, BlackRock
will also generally not seek to recall loaned securities for proxy voting
purposes, unless the portfolio manager responsible for the account or the
Committee determines that voting the proxy is in the client's best interest and
requests that the security be recalled.
Voting Proxies for Non-US Companies. While the proxy voting process is
well established in the United States, voting proxies of non-US companies
frequently involves logistical issues which can affect BlackRock's ability to
vote such proxies, as well as the desirability of voting such proxies. These
issues include (but are not limited to): (i) untimely notice of shareholder
meetings, (ii) restrictions on a foreigner's ability to exercise votes, (iii)
requirements to vote proxies in person, (iv) "shareblocking" (requirements that
investors who exercise their voting rights surrender the right to dispose of
their holdings for some specified period in proximity to the shareholder
meeting), (v) potential difficulties in translating the proxy, and (vi)
requirements to provide local agents with unrestricted powers of attorney to
facilitate voting instructions.
As a consequence, BlackRock votes proxies of non-US companies only on a
"best-efforts" basis. In addition, the Committee may determine that it is
generally in the best interests of BlackRock clients not to vote proxies of
companies in certain countries if the Committee determines that the costs
(including but not limited to opportunity costs associated with shareblocking
constraints) associated with exercising a vote generally are expected to
outweigh the benefit the client will derive by voting on the issuer's proposal.
If the Committee so determines in the case of a particular country, the
Committee (upon advice from BlackRock portfolio managers) may override such
determination with respect to a particular issuer's shareholder meeting if the
Committee believes the benefits of seeking to exercise a vote at such meeting
outweighs the costs, in which case BlackRock will seek to vote on a best-
efforts basis.
Securities Sold After Record Date. With respect to votes in connection
with securities held on a particular record date but sold from a client account
prior to the holding of the related meeting, BlackRock may take no action on
proposals to be voted on in such meeting.
Conflicts of Interest. From time to time, BlackRock may be required to
vote proxies in respect of an issuer that is an affiliate of BlackRock (a
"BlackRock Affiliate"), or a money management or other client of BlackRock (a
"BlackRock Client").(10) In such event, provided that the Committee is aware of
the real or potential conflict, the following procedures apply:
* The Committee intends to adhere to the voting guidelines set forth
herein for all proxy issues including matters involving BlackRock
Affiliates and BlackRock Clients. The Committee may, in its discretion
for the purposes of ensuring that an independent determination is
reached, retain an independent fiduciary to advise the Committee on
how to vote or to cast votes on behalf of BlackRock's clients; and
* if the Committee determines not to retain an independent fiduciary, or
does not desire to follow the advice of such independent fiduciary,
the Committee shall determine how to vote the proxy after consulting
with the BlackRock Legal and Compliance Department and concluding that
the vote cast is in the client's best interest notwithstanding the
conflict.
(10) Such issuers may include investment companies for which BlackRock
provides investment advisory, administrative and/or other services.
III. Voting Guidelines
The Committee has determined that it is appropriate and in the best
interests of BlackRock's clients to adopt the following voting guidelines,
which represent the Committee's usual voting position on certain recurring
proxy issues that are not expected to involve unusual circumstances. With
respect to any particular proxy issue, however, the Committee may elect to vote
differently than a voting guideline if the Committee determines that doing so
is, in the Committee's judgment, in the best interest of its clients. The
guidelines may be reviewed at any time upon the request of any Committee member
and may be amended or deleted upon the vote of a majority of voting Committee
members present at a Committee meeting for which there is a quorum.
A. Boards of Directors
These proposals concern those issues submitted to shareholders relating
to the composition of the Board of Directors of companies other than investment
companies. As a general matter, the Committee believes that a company's Board
of Directors (rather than shareholders) is most likely to have access to
important, nonpublic information regarding a company's business and prospects,
and is therefore best-positioned to set corporate policy and oversee
management. The Committee therefore believes that the foundation of good
corporate governance is the election of qualified, independent corporate
directors who are likely to diligently represent the interests of shareholders
and oversee management of the corporation in a manner that will seek to
maximize shareholder value over time. In individual cases, the Committee may
look at a Director nominee's history of representing shareholder interests as a
director of other companies, or other factors to the extent the Committee deems
relevant.
The Committee's general policy is to vote:
# VOTE and DESCRIPTION
A.1 FOR nominees for director of United States companies in uncontested
elections, except for nominees who
* have missed at least two meetings and, as a result, attended less
than 75% of meetings of the Board of Directors and its committees the
previous year, unless the nominee missed the meeting(s) due to
illness or company business
* voted to implement or renew a "dead-hand" poison pill
* ignored a shareholder proposal that was approved by either a majority
of the shares outstanding in any year or by the majority of votes
cast for two consecutive years
* failed to act on takeover offers where the majority of the
shareholders have tendered their shares
* are corporate insiders who serve on the audit, compensation or
nominating committees or on a full Board that does not have such
committees composed exclusively of independent directors
* on a case-by-case basis, have served as directors of other companies
with allegedly poor corporate governance
* sit on more than six boards of public companies
A.2 FOR nominees for directors of non-U.S. companies in uncontested
elections, except for nominees from whom the Committee determines to
withhold votes due to the nominees' poor records of representing
shareholder interests, on a case-by-case basis
A.3 FOR proposals to declassify Boards of Directors, except where there
exists a legitimate purpose for classifying boards
A.4 AGAINST proposals to classify Boards of Directors, except where there
exists a legitimate purpose for classifying boards
A.5 AGAINST proposals supporting cumulative voting
A.6 FOR proposals eliminating cumulative voting
A.7 FOR proposals supporting confidential voting
A.8 FOR proposals seeking election of supervisory board members
A.9 AGAINST shareholder proposals seeking additional representation of women
and/or minorities generally (i.e., not specific individuals) to a Board
of Directors
A.10 AGAINST shareholder proposals for term limits for directors
A.11 FOR shareholder proposals to establish a mandatory retirement age for
directors who attain the age of 72 or older
A.12 AGAINST shareholder proposals requiring directors to own a minimum
amount of company stock
A.13 FOR proposals requiring a majority of independent directors on a Board
of Directors
A.14 FOR proposals to allow a Board of Directors to delegate powers to a
committee or committees
A.15 FOR proposals to require audit, compensation and/or nominating
committees of a Board of Directors to consist exclusively of independent
directors
A.16 AGAINST shareholder proposals seeking to prohibit a single person from
occupying the roles of chairman and chief executive officer
A.17 FOR proposals to elect account inspectors
A.18 FOR proposals to fix the membership of a Board of Directors at a
specified size
A.19 FOR proposals permitting shareholder ability to nominate directors
directly
A.20 AGAINST proposals to eliminate shareholder ability to nominate directors
directly
A.21 FOR proposals permitting shareholder ability to remove directors
directly
A.22 AGAINST proposals to eliminate shareholder ability to remove directors
directly
B. Auditors
These proposals concern those issues submitted to shareholders related
to the selection of auditors. As a general matter, the Committee believes that
corporate auditors have a responsibility to represent the interests of
shareholders and provide an independent view on the propriety of financial
reporting decisions of corporate management. While the Committee will generally
defer to a corporation's choice of auditor, in individual cases, the Committee
may look at an auditors' history of representing shareholder interests as
auditor of other companies, to the extent the Committee deems relevant.
The Committee's general policy is to vote:
B.1 FOR approval of independent auditors, except for
* auditors that have a financial interest in, or material association
with, the company they are auditing, and are therefore believed by
the Committee not to be independent
* auditors who have rendered an opinion to any company which in the
Committee's opinion is either not consistent with best accounting
practices or not indicative of the company's financial situation
* on a case-by-case basis, auditors who in the Committee's opinion
provide a significant amount of non-audit services to the company
B.2 FOR proposals seeking authorization to fix the remuneration of auditors
B.3 FOR approving internal statutory auditors
B.4 FOR proposals for audit firm rotation, except for proposals that would
require rotation after a period of less than 5 years
C. Compensation and Benefits
These proposals concern those issues submitted to shareholders related
to management compensation and employee benefits. As a general matter, the
Committee favors disclosure of a company's compensation and benefit policies
and opposes excessive compensation, but believes that compensation matters are
normally best determined by a corporation's board of directors, rather than
shareholders. Proposals to "micro-manage" a company's compensation practices or
to set arbitrary restrictions on compensation or benefits will therefore
generally not be supported.
The Committee's general policy is to vote:
C.1 IN ACCORDANCE WITH THE RECOMMENDATION OF ISS on compensation plans if
the ISS recommendation is based solely on whether or not the company's
plan satisfies the allowable cap as calculated by ISS. If the
recommendation of ISS is based on factors other than whether the plan
satisfies the allowable cap the Committee will analyze the particular
proposed plan. This policy applies to amendments of plans as well as to
initial approvals.
C.2 FOR proposals to eliminate retirement benefits for outside directors
C.3 AGAINST proposals to establish retirement benefits for outside directors
C.4 FOR proposals approving the remuneration of directors or of supervisory
board members
C.5 AGAINST proposals to reprice stock options
C.6 FOR proposals to approve employee stock purchase plans that apply to all
employees. This policy applies to proposals to amend ESPPs if the plan
as amended applies to all employees.
C.7 FOR proposals to pay retirement bonuses to directors of Japanese
companies unless the directors have served less than three years
C.8 AGAINST proposals seeking to pay outside directors only in stock
C.9 FOR proposals seeking further disclosure of executive pay or requiring
companies to report on their supplemental executive retirement benefits
C.10 AGAINST proposals to ban all future stock or stock option grants to
executives
C.11 AGAINST option plans or grants that apply to directors or employees of
"related companies" without adequate disclosure of the corporate
relationship and justification of the option policy
C.12 FOR proposals to exclude pension plan income in the calculation of
earnings used in determining executive bonuses/compensation
D. Capital Structure
These proposals relate to various requests, principally from management,
for approval of amendments that would alter the capital structure of a company,
such as an increase in authorized shares. As a general matter, the Committee
will support requests that it believes enhance the rights of common
shareholders and oppose requests that appear to be unreasonably dilutive.
The Committee's general policy is to vote:
D.1 AGAINST proposals seeking authorization to issue shares without
preemptive rights except for issuances up to 10% of a non-US company's
total outstanding capital
D.2 FOR management proposals seeking preemptive rights or seeking
authorization to issue shares with preemptive rights
D.3 FOR management proposals approving share repurchase programs
D.4 FOR management proposals to split a company's stock
D.5 FOR management proposals to denominate or authorize denomination of
securities or other obligations or assets in Euros
D.6 FOR proposals requiring a company to expense stock options (unless the
company has already publicly committed to do so by a certain date).
E. Corporate Charter and By-Laws
These proposals relate to various requests for approval of amendments to
a corporation's charter or by-laws, principally for the purpose of adopting or
redeeming "poison pills". As a general matter, the Committee opposes poison
pill provisions.
The Committee's general policy is to vote:
E.1 AGAINST proposals seeking to adopt a poison pill
E.2 FOR proposals seeking to redeem a poison pill
E.3 FOR proposals seeking to have poison pills submitted to shareholders for
ratification
E.4 FOR management proposals to change the company's name
F. Corporate Meetings
These are routine proposals relating to various requests regarding the
formalities of corporate meetings.
The Committee's general policy is to vote:
F.1 AGAINST proposals that seek authority to act on "any other business that
may arise"
F.2 FOR proposals designating two shareholders to keep minutes of the
meeting
F.3 FOR proposals concerning accepting or approving financial statements and
statutory reports
F.4 FOR proposals approving the discharge of management and the supervisory
board
F.5 FOR proposals approving the allocation of income and the dividend
F.6 FOR proposals seeking authorization to file required documents/other
formalities
F.7 FOR proposals to authorize the corporate board to ratify and execute
approved resolutions
F.8 FOR proposals appointing inspectors of elections
F.9 FOR proposals electing a chair of the meeting
F.10 FOR proposals to permit "virtual" shareholder meetings over the Internet
F.11 AGAINST proposals to require rotating sites for shareholder meetings
G. Investment Companies
These proposals relate to proxy issues that are associated solely with
holdings of shares of investment companies, including, but not limited to,
investment companies for which BlackRock provides investment advisory,
administrative and/or other services. As with other types of companies, the
Committee believes that a fund's Board of Directors (rather than its
shareholders) is best-positioned to set fund policy and oversee management.
However, the Committee opposes granting Boards of Directors authority over
certain matters, such as changes to a fund's investment objective, that the
Investment Company Act of 1940 envisions will be approved directly by
shareholders.
The Committee's general policy is to vote:
G.1 FOR nominees for director of mutual funds in uncontested elections,
except for nominees who
* have missed at least two meetings and, as a result, attended less
than 75% of meetings of the Board of Directors and its committees
the previous year, unless the nominee missed the meeting due to
illness or fund business
* ignore a shareholder proposal that was approved by either a majority
of the shares outstanding in any year or by the majority of votes
cast for two consecutive years
* are interested directors who serve on the audit or nominating
committees or on a full Board that does not have such committees
composed exclusively of independent directors
* on a case-by-case basis, have served as directors of companies with
allegedly poor corporate governance
G.2 FOR the establishment of new series or classes of shares
G.3 AGAINST proposals to change a fund's investment objective to
nonfundamental
G.4 FOR proposals to establish a master-feeder structure or authorizing the
Board to approve a master-feeder structure without a further shareholder
vote
G.5 AGAINST a shareholder proposal for the establishment of a director
ownership requirement
G.6 FOR classified boards of closed-end investment companies
H. Environmental and Social Issues
These are shareholder proposals to limit corporate conduct in some
manner that relates to the shareholder's environmental or social concerns. The
Committee generally believes that annual shareholder meetings are inappropriate
forums for the discussion of larger social issues, and opposes shareholder
resolutions "micromanaging" corporate conduct or requesting release of
information that would not help a shareholder evaluate an investment in the
corporation as an economic matter. While the Committee is generally supportive
of proposals to require corporate disclosure of matters that seem relevant and
material to the economic interests of shareholders, the Committee is generally
not supportive of proposals to require disclosure of corporate matters for
other purposes.
The Committee's general policy is to vote:
H.1 AGAINST proposals seeking to have companies adopt international codes
of conduct
H.2 AGAINST proposals seeking to have companies provide non-required
reports on:
* environmental liabilities;
* bank lending policies;
* corporate political contributions or activities;
* alcohol advertising and efforts to discourage drinking by minors;
* costs and risk of doing business in any individual country;
* involvement in nuclear defense systems
H.3 AGAINST proposals requesting reports on Maquiladora operations or
on CERES principles
H.4 AGAINST proposals seeking implementation of the CERES principles
Notice to Clients
BlackRock will make records of any proxy vote it has made on behalf of a
client available to such client upon request.(11) BlackRock will use its best
efforts to treat proxy votes of clients as confidential, except as it may
decide to best serve its clients' interests or as may be necessary to effect
such votes or as may be required by law.
BlackRock encourage clients with an interest in particular proxy voting
issues to make their views known to BlackRock, provided that, in the absence of
specific written direction from a client on how to vote that client's proxies,
BlackRock reserves the right to vote any proxy in a manner it deems in the best
interests of its clients, as it determines in its sole discretion.
These policies are as of the date indicated on the cover hereof. The
Committee may subsequently amend these policies at any time, without notice.
(11) Such request may be made to the client's portfolio or relationship
manager or addressed in writing to Secretary, BlackRock Equity
Investment Policy Oversight Committee, Legal and Compliance Department,
BlackRock Inc., 40 East 52nd Street, New York, New York 10022.
Information about how the Fund voted proxies relating to securities held in the
Fund's portfolio during the most recent 12 month period ended June 30 is
available without charge (1) at www.blackrock.com and (2) on the Commission's
web site at http://www.sec.gov.
Item 8 - Portfolio Managers of Closed-End Management Investment Companies -
as of September 30, 2007.
(a)(1) BlackRock MuniHoldings Insured Fund II, Inc. is managed by a
team of investment professionals comprised of Robert D. Sneeden,
Director at BlackRock, Theodore R. Jaeckel, Jr., CFA, Managing
Director at BlackRock, and Walter O'Connor, Managing Director at
BlackRock. Each is a member of BlackRock's municipal tax-exempt
management group. Mr. Jaeckel and Mr. O'Connor are responsible for
setting the Fund's overall investment strategy and overseeing the
management of the Fund. Mr. Sneeden is the Fund's lead portfolio
manager and is responsible for the day-to-day management of the
Fund's portfolio and the selection of its investments. Messrs.
Jaeckel and O'Connor have been members of the Fund's management team
since 2006 and Mr. Sneeden has been the Fund's portfolio manager
since 2006.
Mr. Jaeckel joined BlackRock in 2006. Prior to joining BlackRock, he
was a Managing Director (Municipal Tax-Exempt Fund Management) of
Merrill Lynch Investment Managers, L.P. ("MLIM") from 2005 to 2006
and a Director of MLIM from 1997 to 2005. He has been a portfolio
manager with BlackRock or MLIM since 1991.
Mr. O'Connor joined BlackRock in 2006. Prior to joining BlackRock,
he was a Managing Director (Municipal Tax-Exempt Fund Management) of
MLIM from 2003 to 2006 and was a Director of MLIM from 1997 to 2002.
He has been a portfolio manager with BlackRock or MLIM since 1991.
Mr. Sneeden joined BlackRock in 2006. Prior to joining BlackRock, he
was a Director (Municipal Tax-Exempt Fund Management) of MLIM since
2006 and was a Vice President of MLIM from 1998 to 2006. Mr. Sneeden
has been a portfolio manager with BlackRock or MLIM since 1994.
(a)(2) As of September 30, 2007:
(iii) Number of Other Accounts and
(ii) Number of Other Accounts Managed Assets for Which Advisory Fee is
and Assets by Account Type Performance-Based
Other Other
(i) Name of Registered Other Pooled Registered Other Pooled
Portfolio Investment Investment Other Investment Investment Other
Manager Companies Vehicles Accounts Companies Vehicles Accounts
Robert D.
Sneeden 12 0 0 0 0 0
$ 2,602,135,900 $ 0 $0 $0 $ 0 $0
Walter
O'Connor 80 0 0 0 0 0
$28,425,901,286 $ 0 $0 $0 $ 0 $0
Theodore R.
Jaeckel, Jr. 80 1 0 0 1 0
$28,425,901,286 $27,215,989 $0 $0 $27,215,989 $0
(iv) Potential Material Conflicts of Interest
BlackRock has built a professional working environment, firm-wide
compliance culture and compliance procedures and systems designed to
protect against potential incentives that may favor one account over
another. BlackRock has adopted policies and procedures that address
the allocation of investment opportunities, execution of portfolio
transactions, personal trading by employees and other potential
conflicts of interest that are designed to ensure that all client
accounts are treated equitably over time. Nevertheless, BlackRock
furnishes investment management and advisory services to numerous
clients in addition to the Fund, and BlackRock may, consistent with
applicable law, make investment recommendations to other clients or
accounts (including accounts which are hedge funds or have
performance or higher fees paid to BlackRock, or in which portfolio
managers have a personal interest in the receipt of such fees),
which may be the same as or different from those made to the Fund.
In addition, BlackRock, its affiliates and any officer, director,
stockholder or employee may or may not have an interest in the
securities whose purchase and sale BlackRock recommends to the Fund.
BlackRock, or any of its affiliates, or any officer, director,
stockholder, employee or any member of their families may take
different actions than those recommended to the Fund by BlackRock
with respect to the same securities. Moreover, BlackRock may refrain
from rendering any advice or services concerning securities of
companies of which any of BlackRock's (or its affiliates') officers,
directors or employees are directors or officers, or companies as to
which BlackRock or any of its affiliates or the officers, directors
and employees of any of them has any substantial economic interest
or possesses material non-public information. Each portfolio manager
also may manage accounts whose investment strategies may at times be
opposed to the strategy utilized for the Fund. In this connection,
it should be noted that certain portfolio managers currently manage
certain accounts that are subject to performance fees. In addition,
certain portfolio managers assist in managing certain hedge funds
and may be entitled to receive a portion of any incentive fees
earned on such funds and a portion of such incentive fees may be
voluntarily or involuntarily deferred. Additional portfolio managers
may in the future manage other such accounts or funds and may be
entitled to receive incentive fees.
As a fiduciary, BlackRock owes a duty of loyalty to its clients and
must treat each client fairly. When BlackRock purchases or sells
securities for more than one account, the trades must be allocated
in a manner consistent with its fiduciary duties. BlackRock attempts
to allocate investments in a fair and equitable manner among client
accounts, with no account receiving preferential treatment. To this
end, BlackRock has adopted a policy that is intended to ensure that
investment opportunities are allocated fairly and equitably among
client accounts over time. This policy also seeks to achieve
reasonable efficiency in client transactions and provide
BlackRock with sufficient flexibility to allocate investments in a
manner that is consistent with the particular investment discipline
and client base.
(a)(3) As of September 30, 2007:
The portfolio manager compensation program of BlackRock, Inc.
and its affiliates (collectively, herein "BlackRock") is critical to
BlackRock's ability to attract and retain the most talented asset
management professionals. This program ensures that compensation is
aligned with maximizing investment returns and it provides a
competitive pay opportunity for competitive performance.
Performance-Based Compensation
BlackRock believes that the best interests of investors are
served by recruiting and retaining exceptional asset management
talent and managing their compensation within a consistent and
disciplined framework that emphasizes pay for performance in the
context of an intensely competitive market for talent. To that end,
the portfolio manager incentive compensation is based on a formulaic
compensation program.
BlackRock's formulaic portfolio manager compensation program
includes: pre-tax investment performance relative to the appropriate
competitors or benchmarks over 1-, 3- and 5-year performance periods
and a measure of operational efficiency. If a portfolio manager's
tenure is less than 5 years, performance periods will reflect time
in position. Portfolio managers are compensated based on products
they manage. For these purposes, the performance of the Fund is
compared to the Lipper Closed-end Insured Leveraged Municipal Debt
Funds classification. A smaller discretionary element of portfolio
manager compensation may include consideration of: financial
results, expense control, profit margins, strategic planning and
implementation, quality of client service, market share, corporate
reputation, capital allocation, compliance and risk control,
leadership, workforce diversity, supervision, technology and
innovation. All factors are considered collectively by BlackRock
management.
Cash Bonus
Performance-based compensation is distributed to portfolio
managers in a combination of cash and stock. Typically, the cash
bonus, when combined with base salary, represents more than 60% of
total compensation for the portfolio managers.
Stock Bonus
A portion of the dollar value of the total annual performance-
based bonus is paid in restricted shares of stock of BlackRock, Inc.
(the "Company"). Paying a portion of annual bonuses in stock puts
compensation earned by a portfolio manager for a given year "at
risk" based on the Company's ability to sustain and improve its
performance over future periods. The ultimate value of stock bonuses
is dependent on future Company stock price performance. As such, the
stock bonus aligns each portfolio manager's financial interests with
those of the Company's shareholders and encourages a balance between
short-term goals and long-term strategic objectives. Management
strongly believes that providing a significant portion of
competitive performance-based compensation in stock is in the best
interests of investors and shareholders. This approach ensures that
portfolio managers participate as shareholders in both the "downside
risk" and "upside opportunity" of the Company's performance.
Portfolio managers, therefore, have a direct incentive to protect
the Company's reputation for integrity.
Other Benefits
Portfolio managers are also eligible to participate in broad-
based plans offered generally to BlackRock employees, including
broad-based retirement, 401(k), health, and other employee benefit
plans.
(a)(4) Beneficial Ownership of Securities. As of September 30,
2007, none of Messrs. Sneeden, Jaeckel or O'Connor
beneficially owned any stock issued by the Fund.
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable due to no such
purchases during the period covered by this report.
Item 10 - Submission of Matters to a Vote of Security Holders - The
registrant's Nominating Committee will consider nominees to the
Board recommended by shareholders when a vacancy becomes available.
Shareholders who wish to recommend a nominee should send nominations
which include biographical information and set forth the
qualifications of the proposed nominee to the registrant's
Secretary. There have been no material changes to these procedures.
Item 11 - Controls and Procedures
11(a) - The registrant's principal executive and principal financial
officers or persons performing similar functions have concluded that
the registrant's disclosure controls and procedures (as defined in
Rule 30a-3(c) under the Investment Company Act of 1940, as amended
(the "1940 Act")) are effective as of a date within 90 days of the
filing of this report based on the evaluation of these controls and
procedures required by Rule 30a-3(b) under the 1940 Act and Rule
13a-15(b) under the Securities and Exchange Act of 1934, as amended.
11(b) - There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act)
that occurred during the second fiscal quarter of the period covered
by this report that have materially affected, or are reasonably
likely to materially affect, the registrant's internal control over
financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - See Item 2
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
12(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
BlackRock MuniHoldings Insured Fund II, Inc.
By: /s/ Donald C. Burke
-------------------
Donald C. Burke,
Chief Executive Officer (principal executive officer) of
BlackRock MuniHoldings Insured Fund II, Inc.
Date: November 20, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on
the dates indicated.
By: /s/ Donald C. Burke
-------------------
Donald C. Burke,
Chief Executive Officer (principal executive officer) of
BlackRock MuniHoldings Insured Fund II, Inc.
Date: November 20, 2007
By: /s/ Neal J. Andrews
-------------------
Neal J. Andrews,
Chief Financial Officer (principal financial officer) of
BlackRock MuniHoldings Insured Fund II, Inc.
Date: November 20, 2007