UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR/A
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-08349
Name of Fund: BlackRock MuniHoldings Florida Insured Fund
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Robert C. Doll, Jr., Chief Executive
Officer, BlackRock MuniHoldings Florida Insured Fund, 800 Scudders Mill
Road, Plainsboro, NJ 08536. Mailing address: P.O. Box 9011, Princeton,
NJ 08543-9011
Registrant's telephone number, including area code: (609) 282-2800
Date of fiscal year end: 08/31/06
Date of reporting period: 09/01/05 - 08/31/06
Item 1 - Report to Stockholders
ALTERNATIVES BLACKROCK SOLUTIONS EQUITIES
FIXED INCOME LIQUIDITY REAL ESTATE
Annual Reports BLACKROCK
AUGUST 31, 2006
BlackRock MuniHoldings Florida Insured Fund
BlackRock MuniHoldings New York Insured Fund, Inc.
(As Restated)
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
BlackRock MuniHoldings Florida Insured Fund
BlackRock MuniHoldings New York Insured Fund, Inc.
--------------------------------------------------------------------------------
The financial statements and financial highlights in this report have been
restated as described in Note 6 to the financial statements. Other information
in this report affected by the restatement has been revised.
--------------------------------------------------------------------------------
The Benefits and Risks of Leveraging
The Funds utilize leveraging to seek to enhance the yield and net asset value of
their Common Shares or Common Stock. However, these objectives cannot be
achieved in all interest rate environments. To leverage, the Funds issue
Preferred Shares or Stock, which pay dividends at prevailing short-term interest
rates, and invest the proceeds in long-term municipal bonds. The interest earned
on these investments, net of dividends to Preferred Shares or Stock, is paid to
Common Shareholders or 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 Shares or Stock. However, in order to benefit Common
Shareholders or 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 Shareholders or 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 Shares or Stock
capitalization of $100 million and the issuance of Preferred Shares or 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 Shares or 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.
In this case, the dividends paid to Preferred Shareholders or Preferred Stock
shareholders are significantly lower than the income earned on the fund's
long-term investments, and therefore the Common Shareholders or 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 Shares
or Stock will be reduced or eliminated completely. At the same time, the market
value on the fund's Common Shares or 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 Shares' or 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 Shares or Stock does not fluctuate. In addition to the
decline in net asset value, the market value of the fund's Common Shares or
Stock may also decline.
As of July 31, 2006, BlackRock MuniHoldings Florida Insured Fund and BlackRock
MuniHoldings New York Insured Fund, Inc. had leveraged amounts due to Auction
Market Preferred Shares or Stock, of 39.54% and 40.46% of total assets,
respectively, before the deduction of Preferred Shares or Stock.
As a part of their investment strategy, the Funds 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 Funds 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 Funds invest
in inverse floaters, the market value of each Fund's portfolio and the net asset
value of each Fund's shares may also be more volatile than if the Funds did not
invest in these securities.
2 ANNUAL REPORTS AUGUST 31, 2006
A Letter to Shareholders
Dear Shareholder
It is my pleasure to welcome you to BlackRock.
On September 29, 2006, BlackRock, Inc. ("BlackRock") and Merrill Lynch
Investment Managers, L.P. ("MLIM") united to form one of the largest asset
management firms in the world. Now with more than $1 trillion in assets under
management, over 4,000 employees in 18 countries and representation in key
markets worldwide, BlackRock's global presence means greater depth and scale to
serve you.
The new BlackRock unites some of the finest money managers in the industry. Our
ranks include more than 500 investment professionals globally -- portfolio
managers, research analysts, risk management professionals and traders. With
offices strategically located around the world, our investment professionals
have in-depth local knowledge and the ability to leverage our global presence
and robust infrastructure to deliver focused investment solutions. BlackRock's
professional investors are supported by disciplined investment processes and
best-in-class technology, ensuring that our portfolio managers are well equipped
to research, uncover and capitalize on the opportunities the world's markets
have to offer.
The BlackRock culture emphasizes excellence, teamwork and integrity in the
management of a variety of equity, fixed income, cash management, alternative
investment and real estate products. Our firm's core philosophy is grounded in
the belief that experienced investment and risk professionals using disciplined
investment processes and sophisticated analytical tools can consistently add
value to client portfolios.
As you probably are aware, former MLIM investment products now carry the
"BlackRock" name. This is reflected in newspapers and online fund reporting
resources. Your account statements will reflect the BlackRock name beginning
with the October month-end reporting period. Unless otherwise communicated to
you, your funds maintain the same investment objectives that they did prior to
the combination of MLIM and BlackRock. Importantly, this union does not affect
your brokerage account or your relationship with your financial advisor. Clients
of Merrill Lynch remain clients of Merrill Lynch.
We view this combination of asset management leaders as a complementary union
that reinforces our commitment to shareholders. Individually, each firm made
investment performance its single most important mission. Together, we are even
better prepared to capitalize on market opportunities on behalf of our
shareholders. Our focus on investment excellence is accompanied by an unwavering
commitment to service, enabling us to assist clients, in cooperation with their
financial professionals, in working toward their investment goals. We thank you
for allowing us the opportunity, and we look forward to serving your investment
needs in the months and years ahead as the new BlackRock.
Sincerely,
/s/ Robert C. Doll, Jr.
Robert C. Doll, Jr.
Vice Chairman
BlackRock, Inc.
Data, including assets under management, are as of June 30, 2006.
ANNUAL REPORTS AUGUST 31, 2006 3
A Discussion With Your Funds' Portfolio Managers
With the intermediate portion of the municipal yield curve expected to
perform well as monetary tightening ends, we are beginning to shift some focus
to that area of the curve while continuing to emphasize yield generation in the
portfolios.
Describe the recent market environment relative to municipal bonds.
Long-term bond yields rose throughout most of the past year before declining in
August as bond prices correspondingly improved. The shift in direction was
largely a reaction to the Federal Reserve Board's (the Fed's) decision on August
8 to refrain from raising the federal funds target rate. After 17 consecutive
interest rate hikes since mid-2004, a moderation in economic growth and decline
in inflationary expectations were cited as reasons for the Fed's pause. Earlier
in the 12-month period, bond yields rose steadily (and their prices fell) as
investors focused on solid economic growth in the United States and abroad.
Despite a decline in gross domestic product growth between the first and second
quarters of 2006, U.S. economic activity so far this year has outpaced the 3.2%
annual growth rate posted in 2005. Rising commodity prices also stoked
inflationary fears, further weighing on bond prices.
Overall, 30-year U.S. Treasury bond yields rose 62 basis points (.62%) during
the 12-month period to 4.88%, while 10-year U.S. Treasury note yields rose 72
basis points to 4.74%. The yield curve continued to flatten as short-term
interest rates rose more than longer-term interest rates. Municipal bond yields
also rose, although the tax-exempt market's strong technical position provided
significant price support and allowed municipal bond prices to decline less than
those of taxable bonds. As measured by Municipal Market Data, yields on
AAA-rated municipal issues maturing in 30 years rose just four basis points to
4.26%, while yields on AAA-rated issues maturing in 10 years rose 28 basis
points to 3.78%.
The rise in yields prompted a revival in investor demand for municipal bonds.
The increased demand also was triggered by seasonal factors that served to
generate large cash flows into investor accounts. Investors received more than
$40 billion in June and July from coupon income and the proceeds from bond
maturities and early redemptions. Consequently, municipal bond fund flows
continued to be supportive. As reported by the Investment Company Institute,
open-end tax-exempt bond funds received net new cash inflows of over $6.8
billion in the first seven months of 2006, compared to $4.2 billion during the
same period in 2005. Weekly fund flows in August, as reported by AMG Data,
averaged approximately $368 million, above the $284 weekly average seen thus far
in 2006.
Also contributing to the outperformance of the municipal market has been
declines in new issuance. During the past six months, more than $195 billion in
new long-term tax-exempt bonds was underwritten, a 10% decline compared to the
same period a year earlier. Recent declines in issuance largely have been the
result of a 56% drop in refunding activity so far this year. Rising bond yields
have made the refinancing of existing higher-couponed debt issues increasingly
problematic, as the potential economic savings have rapidly diminished. In
addition, the improved fiscal condition of many state and local governments has
resulted in lower borrowing trends, with many new municipal capital projects
financed from existing budget surpluses. The declines in issuance have led many
analysts to lower their annual issuance forecasts. Lower annual issuance would
further solidify the tax-exempt market's already positive technical position.
Looking ahead, municipal market fundamentals are likely to remain favorable,
leading us to expect the tax-exempt market to perform at least as well as
comparable U.S. Treasury issues. Attractive yield ratios have continued to draw
both retail and institutional investors to the municipal market. Based on this,
and the prospect for reduced annual issuance in 2006, we believe the municipal
market should continue to perform well in the coming months.
4 ANNUAL REPORTS AUGUST 31, 2006
BlackRock MuniHoldings Florida Insured Fund
Describe conditions in the State of Florida.
Florida maintains ratings of Aa1, AAA and AA+ from Moody's, Standard & Poor's
and Fitch, respectively. Governor Jeb Bush proposed a $70.8 billion budget for
fiscal year 2006 - 2007, representing an increase of $4.5 billion from the prior
year. The budget reflects spending constraints, tax cuts, bolstered reserves and
increased revenue growth, while keeping spending below anticipated personal
income growth. Because the state's increased revenue sources are not all
permanent, funds will be set aside to finance new programs in the future.
Fiscal discipline has allowed the state to offer tax relief to its residents and
businesses in the form of tax credits, tax-free shopping days and reduced sales
tax on equipment. Three areas of the budget account for 90% of the state's total
expenditures: education at 49%, health and human services at 27% and public
safety at 14%. Florida was projected to end fiscal year 2005 - 2006 with an
operating surplus and increases in both general fund reserves and the budget
stabilization fund. This year represented the last in which the state would
impose the intangible tax on all Floridians. Although the tax is not a major
revenue stream, no new tax has been proposed and it is too early to determine if
the loss of the intangible tax will have a meaningful effect on the state's
finances.
Florida's economy continues to outperform that of both the nation and other
southern states. Job creation among diversified industries has encouraged
migration into the state, promoting diverse demographic trends. Although
national economic trends have put pressure on the state, we believe Florida is
well positioned given its record of proactive management and financial
flexibility.
How did the Fund perform during the fiscal year?
For the 12-month period ended August 31, 2006, the Common Shares of BlackRock
MuniHoldings Florida Insured Fund had net annualized yields of 5.63% and 5.78%,
based on a year-end per share net asset value of $14.75 and a per share market
price of $14.37, respectively, and $.831 per share income dividends. Over the
same period, the total investment return on the Fund's Common Shares was +2.10%,
based on a change in per share net asset value from $15.32 to $14.75, and
assuming reinvestment of all distributions.
The Fund's total return, based on net asset value, lagged the +3.37% average
return of the Lipper Florida Municipal Debt Funds category for the 12-month
period. (Funds in this Lipper category limit their investment to those
securities exempt from taxation in the State of Florida.) The Fund's
underperformance occurred primarily in the first half of the fiscal year when
the yield curve flattened dramatically and short and intermediate maturities
underperformed. We had exposure to these sectors through bonds that had been
prerefunded in prior periods -- thereby transforming several of our longer-dated
issues into intermediate-maturity issues. Despite their underperformance on a
total return basis, these bonds were acquired in a higher interest rate
environment and, as such, contribute meaningfully to the Fund's yield. This
supports our long-term commitment to providing shareholders with an attractive
level of income and allowed the Fund to maintain an above-average yield compared
to its peers. We intend to reduce some of the Fund's concentration in
prerefunded bonds over time; however, their high acquisition yields would be
difficult to replace in the current environment.
To a lesser extent, the Fund's total return performance was affected by its
conservative investment parameters. This prohibited us from investing in
non-investment grade issues, which outperformed the high-grade market as credit
spreads narrowed during the year.
For the six-month period ended August 31, 2006, the total investment return on
the Fund's Common Shares was +1.86%, based on a change in per share net asset
value from $14.90 to $14.75, and assuming reinvestment of all distributions.
For a description of the Fund's total investment return based on a change in the
per share market value of the Fund's Common Shares (as measured by the trading
price of the Fund's shares on the New York Stock Exchange), and assuming
reinvestment of distributions, please refer to the Financial Highlights section
of this report. As a closed-end fund, the Fund's shares may trade in the
secondary market at a premium or discount to the Fund's net asset value. As a
result, total investment returns based on changes in the market value of the
Fund's Common Shares can vary significantly from total investment returns based
on changes in the Fund's net asset value.
ANNUAL REPORTS AUGUST 31, 2006 5
A Discussion With Your Funds' Portfolio Managers (continued)
What changes were made to the portfolio during the period?
For most of the year, we generally focused on premium-coupon bonds in the
20-year - 25-year maturity range whenever they became available. This was
consistent with our goal of increasing the income provided to shareholders and
muting the Fund's net asset value volatility, particularly as the yield curve
flattened. However, as the year progressed, we began to see some opportunity in
the 15-year - 20-year area of the curve. This maturity range had suffered most
under the weight of the Fed's interest rate hikes and, we believe, could be
poised for strong relative performance as the yield curve resteepens.
Issuance of Florida municipal bonds increased approximately 45% during the
period compared to the same 12 months a year ago. However, as has been the case
for some time, few new issues met our desired investment characteristics. Much
of the supply came in the form of refinancings, and the majority of the new
issues offered yields below 5%. In general, the cost of obtaining 5.25% coupons
in the new-issue market remained prohibitive. Importantly, we remained fully
invested throughout the year in order to augment yield.
For the six-month period ended August 31, 2006, the Fund's Auction Market
Preferred Shares had average yields as follows: Series A, 3.32%; Series B,
3.41%; Series C, 3.39%; Series D, 3.23%; and Series E, 3.34%. The Fed raised the
short-term interest rate target 175 basis points during the 12-month reporting
period, and this continued to affect the Fund's borrowing costs. On August 8,
the Fed opted to pause in its interest rate-hiking campaign and is expected to
be "data dependent" in determining monetary policy going forward. As such, we
would expect additional increases in the Fund's cost of funds to be more
limited. Despite the interest rate increases during the period, the tax-exempt
yield curve maintained a positive slope, allowing us to borrow at a lower rate
than where we invest. However, should the spread between short-term and
long-term interest rates narrow, the benefits of leveraging will decline and, as
a result, reduce the yield on the Fund's Common Shares. (For a more complete
explanation of the benefits and risks of leveraging, see page 2 of this report
to shareholders.)
How would you characterize the Fund's position at the close of the period?
We would characterize the Fund's position as fairly neutral in terms of interest
rate risk. We are continuing in our efforts to increase the Fund's exposure to
bonds with maturities in the 10-year - 20-year range. At the same time, to
enhance yield, we are looking to add some 20-year - 30-year bonds with coupons
in the area of 5.25%, without paying a premium to the AAA scale.
Although the Fed paused in its interest rate-hiking campaign on August 8,
leaving the federal funds rate unchanged at 5.25%, the central bank has
indicated that it will continue to look to the economic and inflationary data
for signposts in determining future monetary policy. As such, we would expect
the U.S. equity and bond markets to remain volatile as investors continue to
anticipate and react to economic data and Fed actions. Against this backdrop, we
will continue to maintain a fully invested portfolio and intend to use periods
of volatility to pursue higher-coupon bonds whenever they are attractively
priced.
6 ANNUAL REPORTS AUGUST 31, 2006
BlackRock MuniHoldings New York Insured Fund, Inc.
Describe conditions in the State of New York.
In December, credit-rating agency Moody's upgraded New York's rating to Aa3, the
state's highest rating from Moody's since 1975. Standard and Poor's and Fitch
maintained ratings of AA and AA-, respectively, and all three agencies assign a
stable outlook to the state's ratings. The New York economy continues to improve
and revenue collections are increasing. State tax collections remain largely
dependent on the performance of the financial sector, but tax receipts over the
past few years have been strong.
New York's 2006 fiscal year closed on March 31, and preliminary operating
results indicate a $2 billion surplus and a $945 million rainy day fund. The
2006 budget had closed an estimated $4 billion deficit. The state's 2006 - 2007
enacted budget was finalized on April 26, 2006. The $112.5 billion budget, which
kept most of Governor George Pataki's proposals intact, includes about $850
million in tax cuts and allocates much of the prior year's surplus toward
out-year gaps. The budget also includes $700 million in school operating aid as
part of compliance with a court order on school funding. It is unclear whether
this amount, as well as additional capital grants and bonding authority to New
York City, will be sufficient in meeting the court mandate.
In terms of job growth in the state, July 2006 employment estimates reflect a 1%
increase from July 2005 levels. New York ranks fifth-highest among all states in
per capita income. Economic growth is disproportionately stronger downstate,
while the upstate economy remains lackluster.
How did the Fund perform during the fiscal year?
For the 12-month period ended August 31, 2006, the Common Stock of BlackRock
MuniHoldings New York Insured Fund, Inc. had net annualized yields of 5.52% and
5.65%, based on a year-end per share net asset value of $14.96 and a per share
market price of $14.62, respectively, and $.826 per share income dividends. Over
the same period, the total investment return on the Fund's Common Stock was
+1.98%, based on a change in per share net asset value from $15.54 to $14.96,
and assuming reinvestment of all distributions.
The Fund's total return, based on net asset value, lagged the +2.66% average
return of the Lipper New York Insured Municipal Debt Funds category for the
12-month period. (Funds in this Lipper category invest primarily in securities
exempt from taxation in New York and insured as to timely payment.) However, the
Fund led its Lipper group in terms of yield, providing an above-average
distribution rate. This reflects our focus on enhancing tax-exempt income for
shareholders.
Detracting from the Fund's total return for much of the period was our slightly
long duration profile. We entered the fiscal year with a slightly long duration
in expectation that the Fed would stop raising interest rates sooner than it
actually did. (Duration is a measure of interest rate sensitivity. A shorter
duration means less sensitivity to interest rate moves, and vice versa.)
Although the Fed tightened more than we anticipated, Fund performance improved
since the central bank's pause on August 8. With the economy slowing and,
prospectively, taking the pressure off inflation, we believe the Fed is finished
raising interest rates for the foreseeable future and that the next move is more
likely to be one of easing. This would set the stage for a relatively static
interest rate environment in the months ahead, a scenario in which
higher-yielding bonds are an advantage.
Other factors that detracted from performance were bond calls that occurred
during the period, causing the portfolio to lose some of its high-coupon
holdings prior to maturity. Our exposure to Puerto Rico credits also was a
negative in the first half of the year as the commonwealth was downgraded and
its bonds underperformed. This situation stabilized somewhat with the passing of
Puerto Rico's budget this summer. The majority of our exposure to Puerto Rico is
now in insured credits.
Contributing to Fund performance during the year were our positions in some
out-of-favor credits, including discount bonds. As the public grew more
comfortable with the idea that the Fed had finished its current tightening
cycle, we saw renewed retail interest in the market. The retail buyer tends to
like discount or current coupon bonds and, therefore, we began to see these
types of holdings outperform on both a yield and total return basis.
For the six-month period ended August 31, 2006, the total investment return on
the Fund's Common Stock was +1.65%, based on a change in per share net asset
value from $15.12 to $14.96, and assuming reinvestment of all distributions.
For a description of the Fund's total investment return based on a change in the
per share market value of the Fund's
ANNUAL REPORTS AUGUST 31, 2006 7
A Discussion With Your Funds' Portfolio Managers (concluded)
Common Stock (as measured by the trading price of the Fund's shares on the New
York Stock Exchange), and assuming reinvestment of distributions, please refer
to the Financial Highlights section of this report. As a closed-end fund, the
Fund's shares may trade in the secondary market at a premium or discount to the
Fund's net asset value. As a result, total investment returns based on changes
in the market value of the Fund's Common Stock can vary significantly from total
investment returns based on changes in the Fund's net asset value.
What changes were made to the portfolio during the period?
Portfolio activity reflected our focus on providing an attractive level of
tax-exempt income. At times when interest rates rose, we sought to engage in
yield pickup swaps -- that is, booking bonds at higher yields than those we
swapped out of in order to improve the distribution rate of the portfolio.
Because the new bonds come at lower prices than the book prices on the bonds
being sold, this strategy also allows the portfolio to book losses, which helps
to protect shareholders from potential taxable gains in the future. We also
looked to buy some out-of-favor coupons, primarily discount bonds and slightly
longer-maturity issues, in an effort to pick up yield. We aimed specifically to
increase exposure to housing and alternative minimum tax bonds, both of which
offer enhanced yield. Finally, we extended out on the municipal curve in search
of yield and, as a result, the Fund's average maturity increased approximately
one-half year compared to August 2005. The long end of the curve has been more
attractive for yield pickup and outperformed initially on a price basis when the
Fed paused.
In our efforts to diversify the portfolio, we made significant purchases
recently in Yankees and Mets (Queens Stadium) bonds. Also during the year, we
purchased bonds issued for the Jacob Javitz Convention Center, Long Island Power
Authority, New York State Energy Brooklyn Union Gas and the Puerto Rico
Convention Center. All of these issues are insured. We were able to make these
additions despite a 20% decline in New York new issuance over the past year. In
the Fund's uninsured basket, we have concentrated on housing and education
bonds, to the extent possible, and favored higher-yielding, lower-rated
investment grade credits over AAA-rated bonds. Notably, the portfolio benefited
from credit rating upgrades in New York during the past year. The upgrades of
the city's and state's credit have added to portfolio credit quality while also
translating into bond price appreciation.
On the sell side, we actively sold some bonds as their call protection declined
to within or under three years. As bonds approach their call dates, the
amortization of the premium price accelerates -- that is, the bonds' price
declines at a faster rate and, therefore, they are likely to underperform the
market. In seeking to balance yield and total return, we opted to sell some of
these high book yield bonds at a premium ahead of their call date given that, on
a total return basis, we would expect them to lag.
For the six-month period ended August 31, 2006, the Fund's Auction Market
Preferred Stock had average yields as follows: Series A, 2.96%; Series B, 2.94%;
Series C, 3.09%; Series D, 3.10%; and Series E, 3.08%. The Fed raised the
short-term interest rate target 175 basis points during the 12-month reporting
period, and this continued to affect the Fund's borrowing costs. Given the Fed's
recent pause, we would expect additional increases in the Fund's cost of funds
to be more limited. Despite the interest rate increases during the period, the
tax-exempt yield curve maintained a positive slope, allowing us to borrow at a
lower rate than where we invest. However, should the spread between short-term
and long-term interest rates narrow, the benefits of leveraging will decline
and, as a result, reduce the yield on the Fund's Common Stock. (For a more
complete explanation of the benefits and risks of leveraging, see page 2 of this
report to shareholders.)
8 ANNUAL REPORTS AUGUST 31, 2006
How would you characterize the portfolio's position at the close of the period?
In terms of duration, the Fund remains neutral to slightly long relative to its
New York insured peers. Although we still prefer the long end of the curve for
its yield enhancement potential, we are concentrating more on the 20-year -
25-year range as opposed to the 25-year - 30-year range.
Historically, when the Fed stops tightening and leans toward easing, the long
end of the curve tends to underperform on a yield basis as the short end
rallies. So, while our emphasis on the long end has benefited the portfolio in
terms of yield and price appreciation thus far, we would expect the area of
outperformance to shift down the curve somewhat. We intend to retain our
longer-dated positions for their attractive yields, but expect the intermediate
maturity range to perform well as the economy slows and inflationary fears ebb.
As such, we believe it is prudent to target the intermediate to long maturity
range. Overall, we continue to look for opportunities to diversify the Fund
while also seeking to balance yield and total return potential in the portfolio.
Robert D. Sneeden
Vice President and Portfolio Manager
BlackRock MuniHoldings Florida Insured Fund
Timothy T. Browse, CFA
Vice President and Portfolio Manager
BlackRock MuniHoldings New York Insured Fund, Inc.
September 7, 2006
Announcement of Annual Stockholders Meeting
The Funds have determined that their annual stockholders meeting originally
scheduled to be held in January 2007 will be postponed and will be held in June
2007. Proposals of stockholders intended to be presented at the meeting must be
received by the Funds by January 15, 2007 for inclusion in each Fund's proxy
statement and form of proxy for that meeting. The persons named as proxies in
the proxy materials for the Funds' 2007 annual meeting of stockholders may
exercise discretionary authority with respect to any stockholder proposal
presented at such meeting if written notice of such proposal has not been
received by the Funds by April 1, 2007. Written proposals and notices should be
sent to the Secretary of the Funds, 800 Scudders Mill Road, Plainsboro, New
Jersey 08536.
ANNUAL REPORTS AUGUST 31, 2006 9
Portfolio Information
Quality Profiles as of August 31, 2006 (As Restated. See Note 6)
BlackRock MuniHoldings
Florida Insured Fund Percent of Total
By S&P/Moody's Rating Investments
--------------------------------------------------------------------------------
AAA/Aaa ..................................................... 93.8%
AA/Aa ....................................................... 0.5
A/A ......................................................... 3.2
BBB/Baa ..................................................... 0.8
Other* ...................................................... 1.7
--------------------------------------------------------------------------------
* Includes portfolio holdings in short-term investments.
BlackRock MuniHoldings
New York Insured Fund, Inc. Percent of Total
By S&P/Moody's Rating Investments
--------------------------------------------------------------------------------
AAA/Aaa ..................................................... 90.3%
AA/Aa ....................................................... 5.7
A/A ......................................................... 2.9
BBB/Baa ..................................................... 0.2
Other* ...................................................... 0.9
--------------------------------------------------------------------------------
* Includes portfolio holdings in short-term investments and variable rate
demand notes.
Swap Agreements
The Funds 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 or reduce exposure to a bond or market without owning or taking
physical custody of securities. Swap agreements involve the risk that the party
with whom each 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.
Dividend Policy
The Funds' dividend policy is to distribute all or a portion of their net
investment income to their shareholders on a monthly basis. In order to provide
shareholders with a more stable level of dividend distributions, the Funds 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 Funds for any particular
month may be more or less than the amount of net investment income earned by the
Funds during such month. The Funds' 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 these reports.
Important Tax Information
All of the net investment income distributions paid by BlackRock MuniHoldings
Florida Insured Fund and BlackRock MuniHoldings New York Insured Fund, Inc.
during the taxable year ended August 31, 2006 qualify as tax-exempt interest
dividends for federal income tax purposes.
10 ANNUAL REPORTS AUGUST 31, 2006
Schedule of Investments as of August 31, 2006 (As Restated. See Note 6)
BlackRock MuniHoldings Florida Insured Fund (in Thousands)
Face
Amount Municipal Bonds Value
================================================================================
District of Columbia -- 0.4%
--------------------------------------------------------------------------------
$ 2,050 Metropolitan Washington Airports Authority, D.C.,
Airport System Revenue Bonds, AMT, Series A, 5.25%
due 10/01/2032 (h) $ 2,141
================================================================================
Florida --145.6%
--------------------------------------------------------------------------------
6,600 Alachua County, Florida, School Board, COP, 5.25%
due 7/01/2029 (b) 7,035
--------------------------------------------------------------------------------
Bay County, Florida, Sales Tax Revenue Bonds (b):
3,490 5% due 9/01/2025 3,719
3,665 5% due 9/01/2026 3,896
--------------------------------------------------------------------------------
4,195 Beacon Tradeport Community Development District,
Florida, Special Assessment Revenue Refunding Bonds
(Commercial Project), Series A, 5.625% due 5/01/2032 (k) 4,545
--------------------------------------------------------------------------------
680 Brevard County, Florida, HFA, S/F Mortgage Revenue
Bonds, AMT, 6.80% due 3/01/2028 (d)(g) 688
--------------------------------------------------------------------------------
8,000 Broward County, Florida, Educational Facilities Authority
Revenue Bonds (Nova Southeastern University), 5%
due 4/01/2031 (n) 8,372
--------------------------------------------------------------------------------
Cape Coral, Florida, Special Obligation Revenue Bonds (a):
3,000 5% due 10/01/2030 3,163
4,190 5% due 10/01/2033 4,407
--------------------------------------------------------------------------------
440 Clay County, Florida, HFA, S/F Mortgage Revenue Bonds,
AMT, 6.55% due 3/01/2028 (d)(i) 450
--------------------------------------------------------------------------------
1,320 Clay County, Florida, School Board, COP (Master Lease
Program), 5.75% due 7/01/2010 (a)(j) 1,432
--------------------------------------------------------------------------------
900 Collier County, Florida, IDA, IDR, Refunding (Southern
States Utilities), AMT, 6.50% due 10/01/2025 919
--------------------------------------------------------------------------------
Dade County, Florida, Water and Sewer System
Revenue Bonds (h):
20,575 5.25% due 10/01/2021 21,114
21,640 5.25% due 10/01/2026 22,151
--------------------------------------------------------------------------------
2,000 Deltona, Florida, Transportation Capital Improvement
Revenue Bonds, 5.125% due 10/01/2026 (a) 2,142
--------------------------------------------------------------------------------
Emerald Coast, Florida, Utilities Authority, System
Revenue Bonds (h):
1,130 5.25% due 1/01/2026 1,223
1,560 5.25% due 1/01/2036 1,673
--------------------------------------------------------------------------------
Escambia County, Florida, HFA, S/F Mortgage Revenue
Refunding Bonds (Multi-County Program), AMT,
Series A (a)(i):
145 6.30% due 10/01/2020 145
535 6.375% due 10/01/2026 536
--------------------------------------------------------------------------------
1,835 Flagler County, Florida, Capital Improvement Revenue
Bonds, 5% due 10/01/2035 (a) 1,921
--------------------------------------------------------------------------------
Florida HFA, Homeowner Mortgage Revenue Refunding
Bonds, AMT, Series 2 (a):
1,615 5.75% due 7/01/2014 1,638
12,965 5.90% due 7/01/2029 13,168
--------------------------------------------------------------------------------
850 Florida Housing Finance Corporation, Homeowner
Mortgage Revenue Refunding Bonds, AMT, Series 4,
6.25% due 7/01/2022 (c) 864
--------------------------------------------------------------------------------
2,055 Florida Housing Finance Corporation, Housing Revenue
Bonds (Waverly Apartments), AMT, Series C-1, 6.30%
due 7/01/2030 (c) 2,192
--------------------------------------------------------------------------------
Florida Municipal Loan Council Revenue Bonds,
Series B (a):
1,285 5.375% due 11/01/2025 1,365
4,150 5.375% due 11/01/2030 4,399
--------------------------------------------------------------------------------
3,750 Florida State Board of Education, Capital Outlay, GO,
Public Education, Refunding, Series D, 5.75%
due 6/01/2022 (c) 4,055
--------------------------------------------------------------------------------
1,000 Florida State Board of Education, Capital Outlay, GO,
Public Education, Series C, 5.75% due 6/01/2010 (h)(j) 1,084
--------------------------------------------------------------------------------
2,200 Florida State Board of Regents, Housing Revenue
Bonds (University of Central Florida), 5.25%
due 10/01/2026 (h) 2,322
--------------------------------------------------------------------------------
7,165 Florida State Board of Regents, University Systems
Improvement Revenue Bonds, 5.25%
due 7/01/2007 (a)(j) 7,335
--------------------------------------------------------------------------------
3,505 Florida State Department of General Services, Division
Facilities Management Revenue Bonds (Florida Facilities
Pool), Series A, 6% due 9/01/2010 (b)(j) 3,848
--------------------------------------------------------------------------------
Florida State Governmental Utility Authority, Utility
Revenue Bonds (b):
2,350 (Citrus Utility System), 5.125% due 10/01/2033 2,469
2,900 (Lehigh Utility System), 5.125% due 10/01/2033 3,046
--------------------------------------------------------------------------------
8,805 Fort Myers, Florida, Utility System Revenue Refunding
Bonds, 5% due 10/01/2031 (a) 9,305
--------------------------------------------------------------------------------
3,750 Halifax Hospital Medical Center, Florida, Hospital
Revenue Refunding and Improvement Bonds, Series A,
5.25% due 6/01/2026 3,933
--------------------------------------------------------------------------------
16,000 Hernando County, Florida, School Board, COP, 5%
due 7/01/2030 (a) 16,802
--------------------------------------------------------------------------------
Highlands County, Florida, Health Facilities Authority,
Hospital Revenue Bonds (Adventist Health System):
7,135 Series A, 6% due 11/15/2011 (j) 7,959
6,285 Series C, 5.25% due 11/15/2036 6,614
--------------------------------------------------------------------------------
Portfolio Abbreviations
To simplify the listings of portfolio holdings in the Schedules 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
DRIVERS Derivative Inverse Tax-Exempt Receipts
GO General Obligation Bonds
HFA Housing Finance Agency
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
PILOT Payment in Lieu of Taxes
S/F Single-Family
VRDN Variable Rate Demand Notes
ANNUAL REPORTS AUGUST 31, 2006 11
Schedule of Investments (continued)
BlackRock MuniHoldings Florida Insured Fund (in Thousands)
Face
Amount Municipal Bonds Value
================================================================================
Florida (continued)
--------------------------------------------------------------------------------
Hillsborough County, Florida, School Board, COP (a)(j):
$ 6,600 5.375% due 7/01/2009 $ 6,916
33,400 6% due 7/01/2009 35,860
--------------------------------------------------------------------------------
1,300 Indian River County, Florida, Water and Sewer Revenue
Refunding Bonds, Series A, 5.25% due 9/01/2018 (h) 1,362
--------------------------------------------------------------------------------
1,800 Jacksonville, Florida, Economic Development
Commission, Health Care Facilities Revenue Bonds
(Mayo Clinic -- Jacksonville), Series A, 5.50%
due 11/15/2036 (a) 1,939
--------------------------------------------------------------------------------
7,305 Jacksonville, Florida, Guaranteed Entitlement Revenue
Refunding and Improvement Bonds, 5.25%
due 10/01/2032 (h) 7,777
--------------------------------------------------------------------------------
1,870 Jacksonville, Florida, Port Authority, Seaport Revenue
Bonds, AMT, 5.625% due 11/01/2026 (a) 1,982
--------------------------------------------------------------------------------
Jacksonville, Florida, Sales Tax Revenue Bonds:
2,000 5.50% due 10/01/2016 (b) 2,163
3,800 5.50% due 10/01/2018 (b) 4,097
11,400 5% due 10/01/2027 (a) 11,897
--------------------------------------------------------------------------------
1,500 Jacksonville, Florida, Water and Sewer Revenue Bonds
(United Water Florida Project), AMT, 6.35%
due 8/01/2025 (b) 1,518
--------------------------------------------------------------------------------
4,225 Lee County, Florida, Capital Revenue Bonds, 5.25%
due 10/01/2023 (b) 4,560
--------------------------------------------------------------------------------
85 Lee County, Florida, HFA, S/F Mortgage Revenue Bonds
(Multi-County Program), AMT, Series A-1, 7.20%
due 3/01/2033 (d)(g) 86
--------------------------------------------------------------------------------
410 Lee County, Florida, HFA, S/F Mortgage Revenue
Refunding Bonds, AMT, Series A-2, 6.30%
due 3/01/2029 (d)(e)(g) 414
--------------------------------------------------------------------------------
7,375 Lee County, Florida, School Board, COP, Series A, 5%
due 8/01/2025 (c) 7,825
--------------------------------------------------------------------------------
Leesburg, Florida, Capital Improvement Revenue
Bonds (h):
1,605 5.25% due 10/01/2027 1,729
3,425 5.25% due 10/01/2034 3,658
--------------------------------------------------------------------------------
505 Manatee County, Florida, HFA, S/F Mortgage Revenue
Refunding Bonds, AMT, Sub-Series 1, 6.25%
due 11/01/2028 (d) 512
--------------------------------------------------------------------------------
3,675 Marco Island, Florida, Utility System Revenue Bonds,
5% due 10/01/2033 (a) 3,831
--------------------------------------------------------------------------------
5,990 Martin County, Florida, Utilities System Revenue Bonds,
5.125% due 10/01/2033 (b) 6,292
--------------------------------------------------------------------------------
Miami Beach, Florida, Stormwater Revenue Bonds (h):
1,630 5.75% due 9/01/2016 1,769
1,000 5.25% due 9/01/2020 1,063
4,400 5.25% due 9/01/2025 4,641
1,910 5.375% due 9/01/2030 2,021
--------------------------------------------------------------------------------
Miami Beach, Florida, Water and Sewer Revenue
Bonds (b):
2,690 5.625% due 9/01/2018 2,901
10,600 5.75% due 9/01/2025 11,435
--------------------------------------------------------------------------------
Miami-Dade County, Florida, Aviation Revenue Bonds,
AMT, Series A:
9,180 5% due 10/01/2033 (c) 9,412
6,230 5.125% due 10/01/2035 (c) 6,431
6,000 (Miami International Airport), 6%
due 10/01/2024 (h) 6,522
10,000 (Miami International Airport), 6%
due 10/01/2029 (h) 10,839
--------------------------------------------------------------------------------
Miami-Dade County, Florida, Educational Facilities
Authority Revenue Bonds (University of Miami),
Series A (b):
1,000 5.50% due 4/01/2019 1,068
19,425 6% due 4/01/2023 21,037
5,000 5.75% due 4/01/2029 5,360
--------------------------------------------------------------------------------
Miami-Dade County, Florida, Expressway Authority, Toll
System Revenue Bonds, Series B (h):
8,995 5.25% due 7/01/2027 9,657
12,640 5% due 7/01/2033 13,205
--------------------------------------------------------------------------------
12,250 Miami-Dade County, Florida, Expressway Authority, Toll
System Revenue Refunding Bonds, 5.125%
due 7/01/2025 (h) 12,978
--------------------------------------------------------------------------------
6,705 Miami-Dade County, Florida, GO (Parks Program), 6%
due 11/01/2024 (h) 7,219
--------------------------------------------------------------------------------
2,185 Miami-Dade County, Florida, HFA, M/F Mortgage
Revenue Bonds (Marbrisa Apartments Project), AMT,
Series 2A, 6% due 8/01/2026 (c) 2,313
--------------------------------------------------------------------------------
Miami-Dade County, Florida, IDA, IDR (b):
5,100 (Airis Miami II LLC Project), AMT, 6%
due 10/15/2019 5,470
3,280 (BAC Funding Corporation Project), Series A,
5.25% due 10/01/2020 3,518
--------------------------------------------------------------------------------
3,750 Miami-Dade County, Florida, School Board, COP,
Series A, 5% due 11/01/2022 (b) 3,990
--------------------------------------------------------------------------------
Miami-Dade County, Florida, Solid Waste System
Revenue Bonds:
2,945 5.50% due 10/01/2015 (c) 3,182
3,105 5.50% due 10/01/2016 (c) 3,352
8,800 5.25% due 10/01/2030 (a) 9,485
--------------------------------------------------------------------------------
Nassau County, Florida, Public Improvement Revenue
Refunding Bonds (a):
1,035 5.75% due 5/01/2016 1,125
1,095 5.75% due 5/01/2017 1,186
1,155 5.75% due 5/01/2018 1,251
1,225 5.75% due 5/01/2019 1,327
--------------------------------------------------------------------------------
5,175 Nassau County, Florida, Water and Sewer System
Revenue Bonds, 5.125% due 9/01/2033 (a) 5,434
--------------------------------------------------------------------------------
1,015 Orange County, Florida, HFA, S/F Mortgage Revenue
Bonds, AMT, 6.85% due 10/01/2027 (d)(g) 1,016
--------------------------------------------------------------------------------
Orange County, Florida, Health Facilities Authority,
Hospital Revenue Bonds:
2,900 (Adventist Health System), 6.25% due 11/15/2024 3,217
9,220 (Orlando Regional Healthcare), 6%
due 12/01/2012 (j) 10,340
5,000 (Orlando Regional Healthcare), Series A, 6.25%
due 10/01/2018 (a) 5,990
--------------------------------------------------------------------------------
12 ANNUAL REPORTS AUGUST 31, 2006
Schedule of Investments (continued)
BlackRock MuniHoldings Florida Insured Fund (in Thousands)
Face
Amount Municipal Bonds Value
================================================================================
Florida (continued)
--------------------------------------------------------------------------------
$ 1,300 Orange County, Florida, School Board COP, 5.50%
due 8/01/2025 (b) $ 1,378
--------------------------------------------------------------------------------
31,745 Orange County, Florida, Tourist Development, Tax
Revenue Bonds, 5.75% due 10/01/2009 (b)(j) 33,728
--------------------------------------------------------------------------------
Orlando and Orange County, Florida, Expressway
Authority Revenue Bonds, Series B (b):
3,250 5% due 7/01/2030 3,385
37,550 5% due 7/01/2035 38,989
--------------------------------------------------------------------------------
Osceola County, Florida, Infrastructure Sales Surplus Tax
Revenue Bonds (b):
3,155 5.375% due 10/01/2018 3,414
7,680 5.25% due 10/01/2025 8,177
--------------------------------------------------------------------------------
Osceola County, Florida, Sales Tax Revenue Bonds (h):
2,065 5.625% due 6/01/2016 2,252
1,605 5.625% due 6/01/2017 1,745
1,075 5.625% due 6/01/2018 1,169
--------------------------------------------------------------------------------
4,240 Osceola County, Florida, School Board, COP, Series A,
5.25% due 6/01/2027 (b) 4,503
--------------------------------------------------------------------------------
5,560 Osceola County, Florida, Tourist Development Tax
Revenue Bonds, Series A, 5.50% due 10/01/2027 (h) 5,994
--------------------------------------------------------------------------------
9,935 Palm Beach County, Florida, GO (Liquidated Acquisition
Program), Series B, 5.75% due 8/01/2009 (a)(j) 10,615
--------------------------------------------------------------------------------
6,115 Palm Beach County, Florida, School Board COP,
Refunding, Series B, 5.375% due 8/01/2017 (b) 6,579
--------------------------------------------------------------------------------
Palm Beach County, Florida, School Board, COP, Series A:
5,070 6% due 8/01/2010 (h)(j) 5,553
13,205 6.25% due 8/01/2010 (h)(j) 14,577
13,500 5% due 8/01/2031 (c) 14,200
--------------------------------------------------------------------------------
4,000 Palm Coast, Florida, Utility System Revenue Bonds, 5%
due 10/01/2027 (a) 4,169
--------------------------------------------------------------------------------
3,000 Panama City, Florida, Water and Sewer Revenue Bonds,
Series B, 5.25% due 10/01/2022 (a) 3,254
--------------------------------------------------------------------------------
2,070 Pembroke Pines, Florida, Public Improvement Revenue
Bonds, Series A, 5% due 10/01/2034 (b) 2,163
--------------------------------------------------------------------------------
Polk County, Florida, Public Facilities Revenue Bonds (a):
3,195 5% due 12/01/2025 3,387
4,940 5% due 12/01/2033 5,186
--------------------------------------------------------------------------------
9,885 Polk County, Florida, School Board COP, Master Lease,
Series A, 5.50% due 1/01/2025 (c) 10,569
--------------------------------------------------------------------------------
Port St. Lucie, Florida, Utility Revenue Bonds (a):
1,280 5.25% due 9/01/2026 1,388
1,345 5.25% due 9/01/2027 1,448
--------------------------------------------------------------------------------
Port St. Lucie, Florida, Utility System Revenue Refunding
Bonds, Series A (a):
5,000 5% due 9/01/2028 5,282
5,335 5% due 9/01/2029 5,636
--------------------------------------------------------------------------------
Saint Johns County, Florida, IDA, IDR, Refunding
(Professional Golf Project) (a):
1,275 5.50% due 9/01/2015 1,387
1,345 5.50% due 9/01/2016 1,462
1,420 5.50% due 9/01/2017 1,534
1,500 5.50% due 9/01/2018 1,621
--------------------------------------------------------------------------------
Saint Johns County, Florida, Ponte Vedra Utility System
Revenue Bonds (c):
2,945 5% due 10/01/2030 3,101
1,680 5% due 10/01/2035 1,761
--------------------------------------------------------------------------------
Saint Johns County, Florida, Sales Tax Revenue Bonds (b):
1,375 Series A, 5.25% due 10/01/2028 1,474
1,355 Series A, 5.25% due 10/01/2031 1,447
2,000 Series A, 5.25% due 10/01/2034 2,131
1,430 Series B, 5.25% due 10/01/2027 1,536
840 Series B, 5.25% due 10/01/2032 896
--------------------------------------------------------------------------------
3,500 Saint Johns County, Florida, Transportation Improvement
Revenue Bonds, 5.125% due 10/01/2032 (b) 3,678
--------------------------------------------------------------------------------
4,055 Saint Lucie County, Florida, School Board, COP, 6.25%
due 7/01/2010 (c)(j) 4,472
--------------------------------------------------------------------------------
Saint Lucie County, Florida, School Board COP,
Refunding (c):
1,495 Series A, 5.50% due 7/01/2018 1,612
1,170 Series C, 5.50% due 7/01/2018 1,262
--------------------------------------------------------------------------------
Saint Lucie, Florida, West Services District, Utility
Revenue Bonds (a):
1,720 5.25% due 10/01/2034 1,849
4,750 5% due 10/01/2038 4,972
--------------------------------------------------------------------------------
3,250 Saint Lucie, Florida, West Services District, Utility
Revenue Refunding Bonds, Senior Lien, 6%
due 10/01/2022 (a) 3,577
--------------------------------------------------------------------------------
1,750 South Lake County, Florida, Hospital District Revenue
Bonds (South Lake Hospital Inc.), 5.80% due 10/01/2034 1,823
--------------------------------------------------------------------------------
2,250 Sunrise, Florida, Utility System Revenue Refunding
Bonds, 5.20% due 10/01/2022 (b) 2,498
--------------------------------------------------------------------------------
2,430 Sunrise Lakes, Florida, Phase 4 Recreation District,
Refunding Bonds, GO, 5.25% due 8/01/2024 (b) 2,483
--------------------------------------------------------------------------------
Tallahassee, Florida, Lease Revenue Bonds (Florida State
University Project), Series A (a):
2,800 5.25% due 8/01/2023 2,936
1,000 5.375% due 8/01/2026 1,057
--------------------------------------------------------------------------------
30,335 Tampa Bay, Florida, Water Utility System Revenue Bonds,
6% due 10/01/2011 (h)(j) 33,644
--------------------------------------------------------------------------------
14,750 Tampa, Florida, Sports Authority Revenue Bonds (Local
Option Sales Tax -- Stadium Project), 5.25%
due 1/01/2007 (a)(j) 14,979
--------------------------------------------------------------------------------
3,835 Taylor County, Florida, Sales Tax Revenue Bonds, 6%
due 10/01/2010 (h)(j) 4,183
--------------------------------------------------------------------------------
8,935 University of Central Florida (UCF) Athletics Association
Inc., COP, Series A, 5.25% due 10/01/2034 (h) 9,468
--------------------------------------------------------------------------------
ANNUAL REPORTS AUGUST 31, 2006 13
Schedule of Investments (concluded)
BlackRock MuniHoldings Florida Insured Fund (in Thousands)
Face
Amount Municipal Bonds Value
================================================================================
Florida (concluded)
--------------------------------------------------------------------------------
Village Center Community Development District, Florida,
Recreational Revenue Bonds, Series A (a):
$10,775 5.375% due 11/01/2034 $ 11,674
1,750 5.125% due 11/01/2036 1,850
--------------------------------------------------------------------------------
3,000 Village Center Community Development District, Florida,
Utility Revenue Bonds, 5.25% due 10/01/2023 (a) 3,242
--------------------------------------------------------------------------------
Volusia County, Florida, IDA, Student Housing Revenue
Bonds (Stetson University Project), Series A (l):
2,075 5% due 6/01/2025 2,197
1,740 5% due 6/01/2035 1,822
================================================================================
Georgia -- 1.8%
--------------------------------------------------------------------------------
9,700 Atlanta, Georgia, Airport Passenger Facility Charge and
Subordinate Lien General Revenue Refunding Bonds,
Series C, 5% due 1/01/2033 (c) 10,062
================================================================================
Michigan -- 1.9%
--------------------------------------------------------------------------------
10,250 Detroit, Michigan, Sewage Disposal System, Second
Lien Revenue Bonds, Series B, 5% due 7/01/2036 (h) 10,728
================================================================================
Puerto Rico -- 1.0%
--------------------------------------------------------------------------------
2,600 Puerto Rico Commonwealth, Public Improvement, GO,
Series A, 5.25% due 7/01/2026 2,770
--------------------------------------------------------------------------------
2,725 Puerto Rico Industrial, Tourist, Educational, Medical and
Environmental Control Facilities Revenue Bonds
(University Plaza Project), Series A, 5.625%
due 7/01/2019 (a) 2,916
--------------------------------------------------------------------------------
Total Municipal Bonds
(Cost -- $796,345) --150.7% 837,086
================================================================================
Face
Amount Municipal Bonds Held in Trust (f) Value
===============================================================================
Florida -- 16.9%
-------------------------------------------------------------------------------
$28,210 Florida State Board of Education, Lottery Revenue
Bonds, Series B, 6.25% due 7/01/2010 (h)(j) $ 31,109
-------------------------------------------------------------------------------
28,650 Florida State Turnpike Authority, Turnpike Revenue
Bonds (Department of Transportation), Series A,
6.25% due 7/01/2010 (h)(j) 31,594
-------------------------------------------------------------------------------
19,925 Lee County, Florida, Airport Revenue Bonds, AMT,
Series A, 6% due 10/01/2029 (c) 21,597
-------------------------------------------------------------------------------
8,790 Santa Rosa County, Florida, School Board, COP,
Revenue Refunding Bonds, Series 2, 5.25%
due 2/01/2031 (h) 9,456
-------------------------------------------------------------------------------
Total Municipal Bonds Held in Trust
(Cost -- $88,266) -- 16.9% 93,756
===============================================================================
Shares
Held Short-Term Securities
===============================================================================
15,670 CMA Florida Municipal Money Fund, 2.92% (m)(o) 15,670
-------------------------------------------------------------------------------
Total Short-Term Securities
(Cost -- $15,670) -- 2.8% 15,670
===============================================================================
Total Investments
(Cost -- $900,281*) --170.4% 946,512
Other Assets Less Liabilities -- 3.1% 17,142
Liability for Trust Certificates, Including
Interest Expense Payable -- (8.1%) (44,782)
Preferred Shares, at Redemption Value -- (65.4%) (363,378)
---------
Net Assets Applicable to Common Shares -- 100.0% $ 555,494
=========
* The cost and unrealized appreciation (depreciation) of investments as of
August 31, 2006, as computed for federal income tax purposes, were as
follows:
Aggregate cost ........................................... $ 859,500
=========
Gross unrealized appreciation ............................ $ 42,697
Gross unrealized depreciation ............................ (136)
---------
Net unrealized appreciation .............................. $ 42,561
=========
(a) MBIA Insured.
(b) AMBAC Insured.
(c) FSA Insured.
(d) GNMA Collateralized.
(e) FHLMC Collateralized.
(f) Restated. See Note 6. 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.
(g) FNMA Collateralized.
(h) FGIC Insured.
(i) FHA Insured.
(j) Prerefunded.
(k) Radian Insured.
(l) CIFG Insured.
(m) 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
--------------------------------------------------------------------------
CMA Florida Municipal Money Fund15,670 15,670 $278
Merrill Lynch Institutional Tax-Exempt Fund (2,535) $ 53
--------------------------------------------------------------------------
(n) Assured Guaranty Insured.
(o) Represents the current yield as of August 31, 2006.
See Notes to Financial Statements.
14 ANNUAL REPORTS AUGUST 31, 2006
Schedule of Investments as of August 31, 2006 (As Restated. See Note 6)
BlackRock MuniHoldings New York Insured Fund, Inc. (in Thousands)
Face
Amount Municipal Bonds Value
================================================================================
New York -- 138.8%
--------------------------------------------------------------------------------
Albany County, New York, Airport Authority, Airport
Revenue Bonds, AMT (g):
$ 1,500 5.375% due 12/15/2017 $ 1,554
1,500 5.50% due 12/15/2019 1,558
5,200 6% due 12/15/2023 (o) 5,445
--------------------------------------------------------------------------------
3,375 Albany, New York, IDA, Civic Facility Revenue Bonds
(The University Heights Association -- Albany Law
School), Series A, 6.75% due 12/01/2029 (k) 3,690
--------------------------------------------------------------------------------
1,000 Albany, New York, Municipal Water Finance Authority,
Water and Sewer System Revenue Refunding Bonds,
Series A, 6.375% due 12/01/2009 (e)(j) 1,095
--------------------------------------------------------------------------------
2,000 Buffalo, New York, GO, Series D, 6% due 12/01/2009 (j) 2,168
--------------------------------------------------------------------------------
1,025 Erie County, New York, GO, Public Improvement,
Series A, 5.75% due 10/01/2013 (e) 1,097
--------------------------------------------------------------------------------
Erie County, New York, IDA, School Facility Revenue
Bonds (City of Buffalo Project) (g):
2,500 5.75% due 5/01/2019 2,752
5,150 5.75% due 5/01/2024 5,509
--------------------------------------------------------------------------------
Long Island Power Authority, New York, Electric System
Revenue Bonds:
3,000 Series A, 5% due 9/01/2029 (a) 3,145
5,950 Series A, 5% due 9/01/2034 (a) 6,210
5,000 Series C, 5% due 9/01/2035 5,212
--------------------------------------------------------------------------------
5,750 Long Island Power Authority, New York, Electric System
Revenue Refunding Bonds, Series B, 5% due 12/01/2035 (c) 6,021
--------------------------------------------------------------------------------
3,750 Madison County, New York, IDA, Civic Facility Revenue
Bonds (Colgate University Project), Series A, 5%
due 7/01/2035 (a) 3,933
--------------------------------------------------------------------------------
Metropolitan Transportation Authority, New York,
Dedicated Tax Fund Revenue Bonds, Series A:
5,000 5% due 11/15/2011 (e)(j) 5,333
8,000 5% due 11/15/2035 (i) 8,424
--------------------------------------------------------------------------------
1,500 Metropolitan Transportation Authority, New York,
Dedicated Tax Fund, Revenue Refunding Bonds, VRDN,
Series B, 3.33% due 11/01/2022 (g)(l) 1,500
--------------------------------------------------------------------------------
Metropolitan Transportation Authority, New York,
Revenue Refunding Bonds:
Series A, 5% due 11/15/2030 (g) 15,140
2,500 Series A, 5.25% due 11/15/2031 (e) 2,671
29,000 Series A, 5.75% due 11/15/2032 (g) 31,930
1,500 Series B, 5% due 11/15/2028 (i) 1,568
--------------------------------------------------------------------------------
Metropolitan Transportation Authority, New York,
Service Contract Revenue Refunding Bonds Series A (e):
3,500 5% due 7/01/2021 3,705
2,000 5% due 7/01/2025 2,100
--------------------------------------------------------------------------------
Metropolitan Transportation Authority, New York,
Transit Facilities Revenue Bonds (j):
2,535 Series C, 4.75% due 7/01/2012 (g) 2,687
1,000 Series C-1, 5.50% due 7/01/2008 (i) 1,040
--------------------------------------------------------------------------------
2,500 Metropolitan Transportation Authority, New York,
Transportation Revenue Bonds, Series A, 5%
due 11/15/2032 (e) 2,601
--------------------------------------------------------------------------------
6,300 Metropolitan Transportation Authority, New York,
Transportation Revenue Refunding Bonds, Series F,
5.25% due 11/15/2027 (i) 6,732
--------------------------------------------------------------------------------
1,160 Montgomery County, New York, IDA, Lease Revenue
Bonds (Hamilton Fulton Montgomery Board of
Cooperative Educational Services Project), Series A,
5% due 7/01/2034 (n) 1,204
--------------------------------------------------------------------------------
4,210 Nassau Health Care Corporation, New York, Health
System Revenue Bonds, 5.75% due 8/01/2009 (g)(j) 4,544
--------------------------------------------------------------------------------
2,000 New York City, New York, City Health and Hospital
Corporation, Health System Revenue Refunding Bonds,
Series A, 5.25% due 2/15/2017 (i) 2,091
--------------------------------------------------------------------------------
New York City, New York, City Housing Development
Corporation, M/F Housing Revenue Bonds, AMT:
1,250 Series C, 5% due 11/01/2026 1,279
2,000 Series C, 5.05% due 11/01/2036 2,065
2,340 Series H-2, 5.125% due 11/01/2034 2,380
--------------------------------------------------------------------------------
885 New York City, New York, City IDA, Civic Facility
Revenue Bonds (Anti-Defamation League Foundation),
Series A, 5.50% due 6/01/2022 (i) 915
--------------------------------------------------------------------------------
1,200 New York City, New York, City IDA, Civic Facility
Revenue Refunding Bonds (Nightingale-Bamford
School), 5.25% due 1/15/2017 (a) 1,293
--------------------------------------------------------------------------------
12,700 New York City, New York, City IDA, IDR (Japan Airlines
Company), AMT, 6% due 11/01/2015 (g) 12,871
--------------------------------------------------------------------------------
New York City, New York, City IDA, PILOT Revenue Bonds:
5,250 (Queens Baseball Stadium Project), 5%
due 1/01/2036 (a) 5,531
4,250 (Yankee Stadium Project), 5% due 3/01/2036 (i) 4,472
11,000 (Yankee Stadium Project), 4.50% due 3/01/2039 (e) 10,937
3,250 (Yankee Stadium Project), 5% due 3/01/2046 (e) 3,394
--------------------------------------------------------------------------------
7,965 New York City, New York, City IDA, Parking Facility Revenue
Bonds (Royal Charter -- New York Presbyterian), 5.75%
due 12/15/2029 (g) 8,804
--------------------------------------------------------------------------------
1,500 New York City, New York, City IDA, Special Facility
Revenue Refunding Bonds (Terminal One Group
Association Project), AMT, 5.50% due 1/01/2024 1,613
--------------------------------------------------------------------------------
6,720 New York City, New York, City Municipal Financing
Authority, Water and Sewer Systems Revenue Bonds,
5% due 6/15/2036 (i) 7,059
--------------------------------------------------------------------------------
500 New York City, New York, City Municipal Water Finance
Authority, Water and Sewer System, Crossover Revenue
Refunding Bonds, Series F, 5% due 6/15/2029 (g) 515
--------------------------------------------------------------------------------
New York City, New York, City Municipal Water Finance
Authority, Water and Sewer System Revenue Bonds:
Series A, 5.75% due 6/15/2009 (e)(j) 3,044
8,500 Series B, 5.75% due 6/15/2007 (i)(j) 8,733
1,600 VRDN, Series C, 3.56% due 6/15/2023 (e)(l) 1,600
--------------------------------------------------------------------------------
ANNUAL REPORTS AUGUST 31, 2006 15
Schedule of Investments (continued)
BlackRock MuniHoldings New York Insured Fund, Inc. (in Thousands)
Face
Amount Municipal Bonds Value
================================================================================
New York (continued)
--------------------------------------------------------------------------------
New York City, New York, City Municipal Water Finance
Authority, Water and Sewer System, Revenue
Refunding Bonds:
$ 1,250 Series A, 5.125% due 6/15/2034 (i) $ 1,314
5,500 Series A, 5% due 6/15/2035 (a) 5,705
2,400 Series B, 5% due 6/15/2036 (g) 2,506
1,750 Series C, 5% due 6/15/2035 (i) 1,823
--------------------------------------------------------------------------------
3,900 New York City, New York, City Municipal Water Finance
Authority, Water and Sewer System Revenue Refunding
Bonds, VRDN, Series G, 3.35% due 6/15/2024 (e)(l) 3,900
--------------------------------------------------------------------------------
New York City, New York, City Transitional Finance
Authority, Future Tax Secured Revenue Bonds:
1,145 Series B, 5.50% due 2/01/2012 (i) 1,238
805 Series B, 5.50% due 2/01/2013 (i) 870
6,405 Series B, 6.25% due 11/15/2018 (e) 7,060
1,180 Series C, 5.50% due 5/01/2009 (j) 1,250
16,200 Series C, 5% due 2/01/2033 (e) 16,861
2,500 Series E, 5.25% due 2/01/2022 (i) 2,675
--------------------------------------------------------------------------------
1,000 New York City, New York, City Transitional Finance
Authority, Revenue Refunding Bonds, Series A, 5%
due 11/15/2026 (e) 1,049
--------------------------------------------------------------------------------
New York City, New York, GO:
Series B, 5.75% due 8/01/2013 (i) 4,875
3,750 Series D, 5.25% due 10/15/2023 4,000
1,850 Series I, 6.25% due 4/15/2007 (i)(j) 1,900
8,000 Series J, 5% due 5/15/2023 8,369
1,975 Series J, 5% due 3/01/2030 2,055
8,300 Series M, 5% due 4/01/2035 8,616
1,150 Sub-Series C-1, 5.25% due 8/15/2026 1,228
--------------------------------------------------------------------------------
New York City, New York, GO, Refunding Series A:
880 6.375% due 5/15/2010 (e)(j) 973
3,700 6.25% due 5/15/2026 (g) 4,050
--------------------------------------------------------------------------------
New York City, New York, Sales Tax Asset Receivable
Corporation Revenue Bonds (a):
DRIVERS, Series 1438Z, 6.474%
due 10/15/2012 (m)
11,850 Series A, 5% due 10/15/2032 12,421
--------------------------------------------------------------------------------
3,950 New York City, New York, Trust for Cultural Resources,
Revenue Refunding Bonds (American Museum of Natural
History), Series A, 5% due 7/01/2036 (i) 4,135
--------------------------------------------------------------------------------
3,000 New York Convention Center Development Corporation,
New York, Revenue Bonds (Hotel Unit Fee Secured),
5% due 11/15/2030 (a) 3,151
--------------------------------------------------------------------------------
New York State Dormitory Authority, Hospital Revenue
Refunding Bonds:
1,000 (New York Presbyterian Hospital), 5.50%
due 8/01/2011 (a)(f) 1,078
2,000 (North General Hospital), 5.75% due 2/15/2017 (n) 2,215
--------------------------------------------------------------------------------
New York State Dormitory Authority, Lease
Revenue Bonds:
1,535 (Municipal Health Facilities Improvement Program),
Series l, 5.50% due 1/15/2014 (g) 1,651
645 (Office Facilities Audit and Control), 5.50%
due 4/01/2023 (i) 681
--------------------------------------------------------------------------------
2,500 New York State Dormitory Authority, Non-State Supported
Debt, Revenue Refunding Bonds (Cornell University),
Series A, 5% due 7/01/2035 2,629
--------------------------------------------------------------------------------
New York State Dormitory Authority Revenue Bonds:
1,340 (853 Schools Program), Issue 2, Series E, 5.75%
due 7/01/2019 (a) 1,428
1,200 (Cooper Union of Advance Science), 6.25%
due 7/01/2029 (i) 1,293
2,058 (Gustavus Adolphus Child & Family Services, Inc.),
Series B, 5.50% due 7/01/2018 (a) 2,180
6,750 (Interfaith Medical Center), Series D, 5.40%
due 2/15/2028 (i) 6,999
1,585 (Long Island University), Series B, 5.50%
due 9/01/2020 (k) 1,707
1,250 (Long Island University), Series B, 5.25%
due 9/01/2028 (k) 1,319
1,180 (New York State Rehabilitation Association), Series A,
5.25% due 7/01/2019 (c) 1,271
1,000 (New York State Rehabilitation Association), Series A,
5.125% due 7/01/2023 (c) 1,050
5,345 (Pace University), 6% due 7/01/2010 (j) 5,857
2,150 (Saint Barnabas Hospital), 5.45%
due 8/01/2035 (a)(f) 2,205
1,240 (School Districts Financing Program), Series D, 5%
due 10/01/2030 (i) 1,286
6,900 (School Districts Financing Program), Series E, 5.75%
due 10/01/2030 (i) 7,585
1,405 (Upstate Community Colleges), Series A, 6%
due 7/01/2010 (g)(j) 1,540
--------------------------------------------------------------------------------
New York State Dormitory Authority Revenue
Refunding Bonds:
3,700 (Bronx-Lebanon Hospital Center), Series E, 5.20%
due 2/15/2013 (i) 3,823
1,865 (City University System), Series 1, 5.25%
due 7/01/2014 (e) 1,939
3,400 (Saint Charles Hospital and Rehabilitation Center),
Series A, 5.625% due 7/01/2012 (i) 3,601
1,370 (School District Financing Program), Series I,
5.75% due 10/01/2018 (i) 1,517
4,485 Series B, 5.50% due 8/15/2017 (i) 4,610
--------------------------------------------------------------------------------
16 ANNUAL REPORTS AUGUST 31, 2006
Schedule of Investments (continued)
BlackRock MuniHoldings New York Insured Fund, Inc. (in Thousands)
Face
Amount Municipal Bonds Value
================================================================================
New York (continued)
--------------------------------------------------------------------------------
$ 6,250 New York State Dormitory Authority, State University
Educational Facilities Revenue Refunding Bonds (1989
Resources), 6% due 5/15/2012 (i) $ 6,813
--------------------------------------------------------------------------------
New York State Dormitory Authority, Supported Debt
Revenue Bonds:
1,550 (Mental Health Facilities), Series B, 5.25%
due 2/15/2014 (j) 1,703
285 (Mental Health Facilities), Series B, 5.25%
due 2/15/2023 305
1,060 (Mental Health Facilities), Series D, 5.875%
due 8/15/2010 (g)(j) 1,150
7,000 (State University Dormitory Facilities), Series A, 5%
due 7/01/2031 (i) 7,383
--------------------------------------------------------------------------------
1,000 New York State Dormitory Authority, Supported Debt
Revenue Refunding Bonds (Department of Health),
Series A, 5% due 7/01/2025 (c) 1,052
--------------------------------------------------------------------------------
12,960 New York State Energy Research and Development
Authority, Gas Facilities Revenue Refunding Bonds
(Brooklyn Union Gas Company/Keyspan), AMT, Series A,
4.70% due 2/01/2024 (e) 13,119
--------------------------------------------------------------------------------
6,000 New York State Energy Research and Development
Authority, PCR, Refunding (Central Hudson Gas and
Electric), Series A, 5.45% due 8/01/2027 (a) 6,324
--------------------------------------------------------------------------------
6,000 New York State Environmental Facilities Corporation,
Water Facilities Revenue Bonds (Long Island Water Corp.
Project), AMT, Series A, 4.90% due 10/01/2034 (i) 6,092
--------------------------------------------------------------------------------
4,400 New York State Environmental Facilities Corporation,
Water Facilities Revenue Refunding Bonds (Spring Valley
Water Company), Series B, 6.15% due 8/01/2024 (a) 4,410
--------------------------------------------------------------------------------
750 New York State Housing Finance Agency, State Personal
Income Tax Revenue Bonds (Economic Development and
Housing), Series A, 5% due 9/15/2023 (i) 790
--------------------------------------------------------------------------------
1,500 New York State Housing Finance Agency, State Personal
Income Tax, Revenue Refunding Bonds (Economic
Development and Housing), Series A, 5%
due 9/15/2034 (e) 1,567
--------------------------------------------------------------------------------
6,800 New York State Medical Care Facilities Finance Agency,
Revenue Bonds (Montefiore Medical Center), Series A,
5.75% due 2/15/2025 (a)(f) 6,800
--------------------------------------------------------------------------------
1,750 New York State Mortgage Agency, Homeowner Mortgage
Revenue Bonds, AMT, Series 130, 4.80% due 10/01/2037 1,753
--------------------------------------------------------------------------------
New York State Mortgage Agency, Homeowner Mortgage
Revenue Refunding Bonds, AMT:
2,140 Series 67, 5.70% due 10/01/2017 (i) 2,192
2,100 Series 83, 5.55% due 10/01/2027 (i) 2,160
1,500 Series 133, 4.95% due 10/01/2021 1,540
--------------------------------------------------------------------------------
1,170 New York State Mortgage Agency Revenue Refunding
Bonds, AMT, Series 82, 5.65% due 4/01/2030 (i) 1,171
--------------------------------------------------------------------------------
New York State Municipal Bond Bank Agency, Special School Purpose
Revenue Bonds, Series C:
2,000 5.25% due 6/01/2019 2,137
3,900 5.25% due 6/01/2020 4,188
--------------------------------------------------------------------------------
5,000 New York State Thruway Authority, General Revenue
Bonds, Series F, 5% due 1/01/2030 (a) 5,243
--------------------------------------------------------------------------------
New York State Thruway Authority, General Revenue
Refunding Bonds, Series G (g):
2,000 4.75% due 1/01/2029 2,052
9,250 4.75% due 1/01/2030 9,484
--------------------------------------------------------------------------------
8,000 New York State Thruway Authority, Highway and Bridge
Trust Fund Revenue Bonds, Series B-1, 5.75%
due 4/01/2010 (e)(j) 8,661
--------------------------------------------------------------------------------
8,700 New York State Thruway Authority, Second General
Highway and Bridge Trust Fund Revenue Bonds, Series A,
5% due 4/01/2026 (a) 9,244
--------------------------------------------------------------------------------
New York State Urban Development Corporation,
Personal Income Tax Revenue Bonds:
3,000 Series C-1, 5% due 3/15/2013 (i)(j) 3,239
2,000 (State Facilities), Series A-1, 5% due 3/15/2029 (e) 2,092
--------------------------------------------------------------------------------
1,000 Niagara Falls, New York, City School District, COP,
Refunding (High School Facility), 5% due 6/15/2028 (g) 1,045
--------------------------------------------------------------------------------
1,700 Oneida County, New York, IDA, Civic Facilities Revenue
Bonds (Mohawk Valley), Series A, 5.20% due 2/01/2013 (g) 1,764
--------------------------------------------------------------------------------
1,800 Oneida-Herkimer, New York, Solid Waste Management
Authority, Solid Waste Revenue Refunding Bonds, 5.50%
due 4/01/2013 (g) 1,968
--------------------------------------------------------------------------------
2,500 Port Authority of New York and New Jersey, Consolidated
Revenue Bonds, AMT, One Hundred Thirty-Seventh Series,
5.125% due 7/15/2030 (g) 2,628
--------------------------------------------------------------------------------
12,000 Port Authority of New York and New Jersey Revenue
Refunding Bonds, AMT, 120th Series, 6%
due 10/15/2032 (i) 12,419
--------------------------------------------------------------------------------
Port Authority of New York and New Jersey, Special
Obligation Revenue Bonds (JFK International Air Terminal
LLC), AMT, Series 6 (i):
6.25% due 12/01/2011 3,325
7,830 6.25% due 12/01/2015 9,097
7,000 5.90% due 12/01/2017 7,319
--------------------------------------------------------------------------------
2,500 Rensselaer, New York, City School District, COP, 5%
due 6/01/2036 (n) 2,622
--------------------------------------------------------------------------------
2,340 Rome, New York, City School District, GO, 5.50%
due 6/15/2009 (g)(j) 2,484
--------------------------------------------------------------------------------
5,000 Schenectady, New York, IDA, Civic Facility Revenue
Bonds (Union College Project), Series A, 5.45%
due 12/01/2029 (a) 5,338
--------------------------------------------------------------------------------
ANNUAL REPORTS AUGUST 31, 2006 17
Schedule of Investments (continued)
BlackRock MuniHoldings New York Insured Fund, Inc. (in Thousands)
Face
Amount Municipal Bonds Value
================================================================================
New York (concluded)
--------------------------------------------------------------------------------
$ 3,000 Schenectady, New York, IDA, Civic Facility Revenue
Refunding Bonds (Union College Project), Series A,
5.625% due 7/01/2031 (a) $ 3,276
--------------------------------------------------------------------------------
1,000 Suffolk County, New York, IDA, Civic Facility Revenue
Refunding Bonds (Dowling College), Series A, 5%
due 6/01/2036 (d) 1,022
--------------------------------------------------------------------------------
4,355 Suffolk County, New York, IDA, IDR (Keyspan -- Port
Jefferson), AMT, 5.25% due 6/01/2027 4,520
--------------------------------------------------------------------------------
Suffolk County, New York, IDA, Solid Waste Disposal
Facility, Revenue Refunding Bonds (Ogden Martin
System Huntington Project), AMT (a):
4,660 6% due 10/01/2010 5,047
5,000 6.15% due 10/01/2011 5,526
3,530 6.25% due 10/01/2012 3,973
--------------------------------------------------------------------------------
1,300 Suffolk County, New York, Public Improvement, GO,
Series B, 4.50% due 11/01/2024 (i) 1,332
--------------------------------------------------------------------------------
Tobacco Settlement Financing Corporation of New York
Revenue Bonds:
5,000 Series A-1, 5.25% due 6/01/2020 (a) 5,375
13,275 Series A-1, 5.25% due 6/01/2021 (a) 14,239
2,000 Series A-1, 5.25% due 6/01/2022 (a) 2,142
3,700 Series C-1, 5.50% due 6/01/2021 4,003
--------------------------------------------------------------------------------
Triborough Bridge and Tunnel Authority, New York,
Revenue Refunding Bonds (i):
12,000 5.25% due 11/15/2023 12,912
8,315 5% due 11/15/2032 8,615
2,095 Series A, 5% due 1/01/2012 (j) 2,236
1,500 Series B, 5% due 11/15/2032 1,554
--------------------------------------------------------------------------------
Triborough Bridge and Tunnel Authority, New York,
Subordinate Revenue Bonds:
2,465 5% due 11/15/2028 (a) 2,577
6,000 Series A, 5.25% due 11/15/2030 (i) 6,384
--------------------------------------------------------------------------------
7,000 Westchester County, New York, IDA, Civic Facility
Revenue Bonds (Purchase College Foundation Housing
Project), Series A, 5.75% due 12/01/2031 (a) 7,734
--------------------------------------------------------------------------------
1,795 Yonkers, New York, GO, Series A, 5.75%
due 10/01/2010 (e)(j) 1,959
================================================================================
Guam -- 1.1%
--------------------------------------------------------------------------------
A.B. Won Guam International Airport Authority, General
Revenue Refunding Bonds, AMT, Series C (i):
3,700 5.25% due 10/01/2021 3,874
1,050 5.25% due 10/01/2022 1,099
================================================================================
Puerto Rico --13.7%
--------------------------------------------------------------------------------
4,800 Puerto Rico Commonwealth Highway and Transportation
Authority, Transportation Revenue Bonds, 5.25%
due 7/01/2017 (e) 5,200
--------------------------------------------------------------------------------
Puerto Rico Commonwealth Highway and Transportation
Authority, Transportation Revenue Refunding Bonds:
10,000 Series D, 5.75% due 7/01/2012 (j) 11,088
2,000 Series K, 5% due 7/01/2035 (b) 2,102
3,750 Series L, 5.25% due 7/01/2041 (c) 4,300
--------------------------------------------------------------------------------
4,500 Puerto Rico Commonwealth Infrastructure Financing
Authority, Special Tax Revenue Bonds, Series B, 5%
due 7/01/2041 (c) 4,695
--------------------------------------------------------------------------------
Puerto Rico Commonwealth Infrastructure Financing
Authority, Special Tax and Capital Appreciation Revenue
Bonds, Series A (q):
10,280 4.62% due 7/01/2031 (e) 3,297
5,500 4.66% due 7/01/2033 (e) 1,605
9,300 4.66% due 7/01/2034 (a) 2,586
2,200 4.67% due 7/01/2037 (a) 529
--------------------------------------------------------------------------------
1,345 Puerto Rico Commonwealth, Public Improvement, GO,
Refunding, Series B, 5.25% due 7/01/2032 1,423
--------------------------------------------------------------------------------
500 Puerto Rico Commonwealth, Public Improvement, GO,
Series A, 5.25% due 7/01/2030 530
--------------------------------------------------------------------------------
3,570 Puerto Rico Convention Center District Authority, Hotel
Occupancy Tax Revenue Bonds, Series A, 5%
due 7/01/2031 (a) 3,786
--------------------------------------------------------------------------------
Puerto Rico Electric Power Authority, Power
Revenue Bonds:
4,750 Series NN, 5.125% due 7/01/2029 4,982
4,850 Series RR, 5% due 7/01/2029 (c) 5,119
4,950 Series RR, 5% due 7/01/2030 (n) 5,217
6,360 Series RR, 5% due 7/01/2035 (e) 6,698
--------------------------------------------------------------------------------
Total Municipal Bonds
(Cost -- $682,773) --153.6% 707,306
================================================================================
18 ANNUAL REPORTS AUGUST 31, 2006
Schedule of Investments (concluded)
BlackRock MuniHoldings New York Insured Fund, Inc. (in Thousands)
Face
Amount Municipal Bonds Held in Trust (r) Value
===============================================================================
New York -- 24.5%
-------------------------------------------------------------------------------
$18,000 Metropolitan Transportation Authority, New York,
Revenue Refunding Bonds, Series A, 5.75%
due 11/15/2032 (g) $ 19,819
-------------------------------------------------------------------------------
23,000 New York City, New York, City Municipal Water Finance
Authority, Water and Sewer System Revenue Bonds,
Series A, 5.75% due 6/15/2011 (i)(j) 25,095
-------------------------------------------------------------------------------
9,500 New York City, New York, GO, Series C, 5.75%
due 3/15/2027 (g) 10,517
-------------------------------------------------------------------------------
7,000 New York City, New York, Sales Tax Asset Receivable
Corporation Revenue Bonds, Series A, 5%
due 10/15/2032 (a) 7,491
-------------------------------------------------------------------------------
21,000 New York Convention Center Development
Corporation, New York, Revenue Bonds (Hotel Unit
Fee Secured), 5% due 11/15/2035 (a) 21,976
-------------------------------------------------------------------------------
26,730 Port Authority of New York and New Jersey, Special
Obligation Revenue Bonds (JFK International Air
Terminal), AMT, Series 6, 5.75% due 12/01/2022 (i) 27,879
===============================================================================
Puerto Rico -- 0.6%
-------------------------------------------------------------------------------
2,500 Puerto Rico Commonwealth Highway and
Transportation Authority, Transportation Revenue
Bonds, Series B, 5.875% due 7/01/2035 (i) 2,724
-------------------------------------------------------------------------------
Total Municipal Bonds Held in Trust
(Cost -- $112,422) -- 25.1% 115,501
===============================================================================
Shares
Held Short-Term Securities
===============================================================================
134 CMA New York Municipal Money Fund,
3.07% (h)(p) 134
-------------------------------------------------------------------------------
Total Short-Term Securities
(Cost -- $134) -- 0.0% 134
===============================================================================
Total Investments (Cost -- $795,329*) --178.7% 822,941
Other Assets Less Liabilities -- 2.7% 12,313
Liability for Trust Certificates, Including
Interest Expense Payable -- (13.4%) (61,533)
Preferred Stock, at Redemption Value -- (68.0%) (313,083)
----------
Net Assets Applicable to Common Stock -- 100.0% $ 460,638
==========
* The cost and unrealized appreciation (depreciation) of investments as of
August 31, 2006, as computed for federal income tax purposes, were as
follows:
Aggregate cost ........................................... $ 734,560
=========
Gross unrealized appreciation ............................ $ 27,560
Gross unrealized depreciation ............................ (256)
---------
Net unrealized appreciation .............................. $ 27,304
=========
(a) AMBAC Insured.
(b) Assured Guaranty Insured.
(c) CIFG Insured.
(d) ACA Insured.
(e) FGIC Insured.
(f) FHA Insured.
(g) FSA Insured.
(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
--------------------------------------------------------------------------
CMA New York Municipal Money Fund91 91 $91
--------------------------------------------------------------------------
(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) The rate disclosed is that currently in effect. This rate changes
periodically and inversely based upon prevailing market rates.
(n) XL Capital Insured.
(o) All or a portion of security held as collateral in connection with open
financial futures contracts.
(p) Represents the current yield as of August 31, 2006.
(q) Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase.
(r) As Restated. See Note 6. 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.
o Financial futures contracts sold as of August 31, 2006 were as follows:
--------------------------------------------------------------------------
Number of Expiration Face Unrealized
Contracts Issue Date Value Depreciation
--------------------------------------------------------------------------
183 30-Year U.S. September
Treasury Bonds 2006 $20,004 ($252)
--------------------------------------------------------------------------
See Notes to Financial Statements.
ANNUAL REPORTS AUGUST 31, 2006 19
Statements of Net Assets (As Restated. See Note 6)
BlackRock BlackRock
MuniHoldings MuniHoldings
Florida New York
Insured Insured
As of August 31, 2006 Fund Fund, Inc.
===============================================================================================================================
Assets
-------------------------------------------------------------------------------------------------------------------------------
Investments in unaffiliated securities, at value* .............................. $ 930,841,466 $ 822,807,404
Investments in affiliated securities, at value** ............................... 15,670,135 133,974
Cash ........................................................................... 84,466 89,429
Interest receivable ............................................................ 14,089,850 9,816,486
Receivable for securities sold ................................................. 3,603,203 3,012,195
Prepaid expenses ............................................................... 7,606 7,294
-------------------------------
Total assets ................................................................... 964,296,726 835,866,782
-------------------------------
===============================================================================================================================
Liabilities
-------------------------------------------------------------------------------------------------------------------------------
Trust certificates ............................................................. 44,451,090 61,077,360
Interest expense payable ....................................................... 331,028 455,823
Payable to investment adviser .................................................. 313,119 263,706
Payable for securities purchased ............................................... 87,835 --
Payable for other affiliates ................................................... 7,475 6,280
Variation margin payable ....................................................... -- 68,625
Dividends payable to Common Shareholders/Common Stock shareholders ............. 93,582 142,291
Accrued expenses ............................................................... 141,013 131,198
-------------------------------
Total liabilities .............................................................. 45,425,142 62,145,283
-------------------------------
===============================================================================================================================
Preferred Shares/Stock
-------------------------------------------------------------------------------------------------------------------------------
Preferred Shares/Stock, at redemption value, par value $.10 per share of
AMPS@ at $25,000 per share liquidation preference*** ......................... 363,377,738 313,083,168
-------------------------------
===============================================================================================================================
Net Assets Applicable to Common Shares/Stock
-------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Shares/Stock ................................... $ 555,493,846 $ 460,638,331
===============================
===============================================================================================================================
Analysis of Net Assets Applicable to Common Shares/Stock
-------------------------------------------------------------------------------------------------------------------------------
Undistributed investment income -- net ......................................... $ 3,015,013 $ 2,292,082
Accumulated realized capital losses -- net ..................................... (68,602,373) (47,155,767)
Unrealized appreciation -- net ................................................. 46,230,502 27,360,147
-------------------------------
Total accumulated losses -- net ................................................ (19,356,858) (17,503,538)
-------------------------------
Common Shares/Stock, par value $.10 per share+ ................................. 3,766,766 3,079,514
Paid-in capital in excess of par ............................................... 571,083,938 475,062,355
-------------------------------
Net Assets ..................................................................... $ 555,493,846 $ 460,638,331
===============================
20 ANNUAL REPORTS AUGUST 31, 2006
Statements of Net Assets (As Restated. See Note 6) (concluded)
BlackRock BlackRock
MuniHoldings MuniHoldings
Florida New York
Insured Insured
As of August 31, 2006 Fund Fund, Inc.
===============================================================================================================================
Net Assets Value
-------------------------------------------------------------------------------------------------------------------------------
Net assets value per share of Common Shares/Stock .............................. $ 14.75 $ 14.96
==============================
Market price ................................................................... $ 14.37 $ 14.62
==============================
*Identified cost for unaffiliated securities .............................. $ 884,610,964 $ 795,195,171
==============================
**Identified cost for affiliated securities ................................ $ 15,670,135 $ 133,974
==============================
***Preferred Shares/Stock authorized, issued and outstanding:
Series A Shares/Stock ................................................ 2,095 1,900
==============================
Series B Shares/Stock ................................................ 3,495 1,900
==============================
Series C Shares/Stock ................................................ 3,440 3,040
==============================
Series D Shares/Stock ................................................ 2,160 3,680
==============================
Series E Shares/Stock ................................................ 3,340 2,000
==============================
+Common Shares/Stock issued and outstanding ............................... 37,667,658 30,795,138
==============================
@ Auction Market Preferred Shares/Stock.
See Notes to Financial Statements.
ANNUAL REPORTS AUGUST 31, 2006 21
Statements of Operations (As Restated. See Note 6)
BlackRock BlackRock
MuniHoldings MuniHoldings
Florida New York
Insured Insured
For the Year Ended August 31, 2006 Fund Fund, Inc.
===============================================================================================================================
Investment Income
-------------------------------------------------------------------------------------------------------------------------------
Interest and amortization of premium and accretion of discount ................. $ 46,704,780 $ 39,291,081
Dividends from affiliates ...................................................... 330,974 90,857
-------------------------------
Total income ................................................................... 47,035,754 39,381,938
-------------------------------
===============================================================================================================================
Expenses
-------------------------------------------------------------------------------------------------------------------------------
Investment advisory fees ....................................................... 5,052,117 4,243,988
Interest expense and fees ...................................................... 1,488,500 2,303,503
Commission fees ................................................................ 924,007 796,282
Accounting services ............................................................ 263,676 237,013
Transfer agent fees ............................................................ 95,327 90,524
Professional fees .............................................................. 58,773 55,849
Custodian fees ................................................................. 46,128 39,749
Printing and shareholder reports ............................................... 39,861 35,527
Trustees'/Directors' fees and expenses ......................................... 32,905 32,802
Pricing fees ................................................................... 27,785 28,281
Listing fees ................................................................... 23,219 18,976
Other* ......................................................................... 41,867 62,658
-------------------------------
Total expenses before waiver and reimbursement ................................. 8,094,165 7,945,152
Waiver and reimbursement of expenses ........................................... (406,450) (375,853)
-------------------------------
Total expenses after waiver and reimbursement .................................. 7,687,715 7,569,299
-------------------------------
Investment income -- net ....................................................... 39,348,039 31,812,639
-------------------------------
===============================================================================================================================
Realized & Unrealized Gain (Loss) -- Net
-------------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) on:
Investments -- net ......................................................... 2,000,866 (9,563)
Futures contracts and/or forward interest rate swaps -- net ................ 572,440 15,804
-------------------------------
Total realized gain -- net ..................................................... 2,573,306 6,241
-------------------------------
Change in unrealized appreciation/depreciation on:
Investments -- net ......................................................... (21,516,745) (14,974,629)
Futures contracts and/or forward interest rate swaps -- net ................ 961,415 44,181
-------------------------------
Total change in unrealized appreciation/depreciation -- net .................... (20,555,330) (14,930,448)
-------------------------------
Total realized and unrealized loss -- net ...................................... (17,982,024) (14,924,207)
-------------------------------
===============================================================================================================================
Dividends to Preferred Shareholders/Preferred Stock Shareholders
-------------------------------------------------------------------------------------------------------------------------------
Investment income -- net ....................................................... (11,116,657) (8,834,136)
-------------------------------
Net Increase in Net Assets Resulting from Operations ........................... $ 10,249,358 $ 8,054,296
===============================
*Recovery of filing fees .................................................. $ 17,239 $ 5,130
===============================
See Notes to Financial Statements.
22 ANNUAL REPORTS AUGUST 31, 2006
Statements of Changes in Net Assets (As Restated. See Note 6)
BlackRock MuniHoldings Florida Insured Fund
For the Year Ended August 31,
Increase (Decrease) in Net Assets: 2006 2005
===============================================================================================================================
Operations
-------------------------------------------------------------------------------------------------------------------------------
Investment income -- net ....................................................... $ 39,348,039 $ 41,066,003
Realized gain (loss) -- net .................................................... 2,573,306 (1,967,513)
Change in unrealized appreciation/depreciation -- net .......................... (20,555,330) 3,354,211
Dividends to Preferred Shareholders ............................................ (11,116,657) (6,626,611)
-------------------------------
Net increase in net assets resulting from operations ........................... 10,249,358 35,826,090
-------------------------------
===============================================================================================================================
Dividends to Common Shareholders
-------------------------------------------------------------------------------------------------------------------------------
Investment income -- net ....................................................... (31,752,842) (37,933,871)
-------------------------------
Net decrease in net assets resulting from dividends to Common Shareholders ..... (31,752,842) (37,933,871)
-------------------------------
===============================================================================================================================
Capital Share Transactions
-------------------------------------------------------------------------------------------------------------------------------
Value of shares issued to Common Shareholders in reinvestment of dividends ..... 66,617 529,463
-------------------------------
Net increase in net assets derived from capital share transactions ............. 66,617 529,463
-------------------------------
===============================================================================================================================
Net Assets Applicable to Common Shares
-------------------------------------------------------------------------------------------------------------------------------
Total decrease in net assets applicable to Common Shares ....................... (21,436,867) (1,578,318)
Beginning of year .............................................................. 576,930,713 578,509,031
-------------------------------
End of year* ................................................................... $ 555,493,846 $ 576,930,713
===============================
* Undistributed investment income -- net ................................... $ 3,015,013 $ 6,553,712
===============================
See Notes to Financial Statements.
Statements of Changes in Net Assets (As Restated. See Note 6)
BlackRock MuniHoldings New York Insured Fund, Inc.
For the Year Ended August 31,
Increase (Decrease) in Net Assets: 2006 2005
===============================================================================================================================
Operations
-------------------------------------------------------------------------------------------------------------------------------
Investment income -- net ....................................................... $ 31,812,639 $ 31,975,240
Realized gain (loss) -- net .................................................... 6,241 (2,423,525)
Change in unrealized appreciation/depreciation -- net .......................... (14,930,448) 8,886,852
Dividends to Preferred Stock shareholders ...................................... (8,834,136) (5,197,939)
-------------------------------
Net increase in net assets resulting from operations ........................... 8,054,296 33,240,628
-------------------------------
===============================================================================================================================
Dividends to Common Stock Shareholders
-------------------------------------------------------------------------------------------------------------------------------
Investment income -- net ....................................................... (25,985,593) (29,183,815)
-------------------------------
Net decrease in net assets resulting from dividends to Common Stock shareholders (25,985,593) (29,183,815)
-------------------------------
===============================================================================================================================
Capital Stock Transactions
-------------------------------------------------------------------------------------------------------------------------------
Value of shares issued to Common Stock shareholders in reinvestment of dividends 156,161 --
-------------------------------
Net increase in net assets derived from capital stock transactions ............. 156,161 --
-------------------------------
===============================================================================================================================
Net Assets Applicable to Common Stock
-------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets applicable to Common Stock ............. (17,775,136) 4,056,813
Beginning of year .............................................................. 478,413,467 474,356,654
-------------------------------
End of year* ................................................................... $ 460,638,331 $ 478,413,467
===============================
* Undistributed investment income -- net ................................... $ 2,292,082 $ 5,288,059
===============================
See Notes to Financial Statements.
ANNUAL REPORTS AUGUST 31, 2006 23
Financial Highlights (As Restated. See Note 6)
BlackRock MuniHoldings Florida Insured Fund
For the Year Ended August 31,
The following per share data and ratios have been derived --------------------------------------------------------
from information provided in the financial statements. 2006 2005 2004 2003 2002
=================================================================================================================================
Per Share Operating Performance
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ........................ $ 15.32 $ 15.37 $ 15.04 $ 15.41 $ 15.29
--------------------------------------------------------
Investment income -- net .................................. 1.04+ 1.09+ 1.11+ 1.15+ 1.14
Realized and unrealized gain (loss) -- net ................ (.47) .05 .31 (.46) .06
Less dividends and distributions to Preferred Shareholders:
Investment income -- net .............................. (.30) (.18) (.09) (.10) (.13)
Realized gain -- net .................................. -- -- -- -- --++
--------------------------------------------------------
Total from investment operations .......................... .27 .96 1.33 .59 1.07
Less dividends and distributions to Common Shareholders:
Investment income -- net .............................. (.84) (1.01) (1.00) (.96) (.95)
Realized gain -- net .................................. -- -- -- -- --++
--------------------------------------------------------
Total dividends and distributions to Common Shareholders .. (.84) (1.01) (1.00) (.96) (.95)
--------------------------------------------------------
Net asset value, end of year .............................. $ 14.75 $ 15.32 $ 15.37 $ 15.04 $ 15.41
========================================================
Market price per share, end of year ....................... $ 14.37 $ 15.75 $ 14.84 $ 14.08 $ 14.66
========================================================
=================================================================================================================================
Total Investment Return*
---------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ........................ 2.10% 6.49% 9.43% 4.17% 7.75%
========================================================
Based on market price per share ........................... (3.24%) 13.39% 12.86% 2.51% 11.63%
========================================================
=================================================================================================================================
Ratios Based on Average Net Assets Applicable to Common Shares
---------------------------------------------------------------------------------------------------------------------------------
Total expenses, net of waiver and reimbursement and
excluding reorganization and interest expense and fees** 1.12% 1.11% 1.10% 1.10% 1.13%
========================================================
Total expenses, net of waiver and reimbursement and
excluding reorganization expenses** ..................... 1.38% 1.35% 1.24% 1.26% 1.34%
========================================================
Total expenses, excluding reorganization expenses** ....... 1.46% 1.41% 1.31% 1.33% 1.41%
========================================================
Total expenses** .......................................... 1.46% 1.41% 1.31% 1.33% 1.42%
========================================================
Total investment income -- net** .......................... 7.08% 7.11% 7.23% 7.40% 7.71%
========================================================
Amount of dividends to Preferred Shareholders ............. 2.00% 1.15% .60% .65% .96%
========================================================
Investment income -- net, to Common Shareholders .......... 5.08% 5.96% 6.63% 6.75% 6.75%
========================================================
=================================================================================================================================
Ratios Based on Average Net Assets Applicable to Preferred Shares
---------------------------------------------------------------------------------------------------------------------------------
Dividends to Preferred Shareholders ....................... 3.06% 1.82% .95% 1.06% 1.49%
========================================================
=================================================================================================================================
Supplemental Data
---------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Shares, end of year
(in thousands) .......................................... $555,494 $576,931 $578,509 $565,993 $580,003
========================================================
Preferred Shares outstanding at liquidation preference,
end of year (in thousands) .............................. $363,250 $363,250 $363,250 $363,250 $363,250
========================================================
Portfolio turnover ........................................ 43% 26% 20% 23% 13%
========================================================
=================================================================================================================================
Leverage
---------------------------------------------------------------------------------------------------------------------------------
Asset coverage per $1,000 ................................. $ 2,529 $ 2,588 $ 2,593 $ 2,558 $ 2,597
========================================================
=================================================================================================================================
Dividends Per Share on Preferred Shares Outstanding
---------------------------------------------------------------------------------------------------------------------------------
Series A -- Investment income -- net ...................... $ 755 $ 441 $ 233 $ 252 $ 362
========================================================
Series B -- Investment income -- net ...................... $ 778 $ 451 $ 237 $ 267 $ 375
========================================================
Series C -- Investment income -- net ...................... $ 780 $ 461 $ 237 $ 252 $ 369
========================================================
Series D -- Investment income -- net ...................... $ 743 $ 462 $ 243 $ 273 $ 368
========================================================
Series E -- Investment income -- net ...................... $ 757 $ 463 $ 241 $ 276 $ 381
========================================================
* 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.
** Do not reflect the effect of dividends to Preferred Shareholders.
+ Based on average shares outstanding.
++ Amount is less than $(.01) per share.
See Notes to Financial Statements.
24 ANNUAL REPORTS AUGUST 31, 2006
Financial Highlights (As Restated. See Note 6)
BlackRock MuniHoldings New York Insured Fund, Inc.
For the Year Ended August 31,
The following per share data and ratios have been derived --------------------------------------------------------
from information provided in the financial statements. 2006 2005 2004 2003 2002
=================================================================================================================================
Per Share Operating Performance
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ........................ $ 15.54 $ 15.41 $ 15.19 $ 15.66 $ 15.78
--------------------------------------------------------
Investment income -- net** ................................ 1.03 1.04 1.05 1.09 1.07
Realized and unrealized gain (loss) -- net ................ (.48) .21 .18 (.58) (.19)
Less dividends to Preferred Stock shareholders from
investment income -- net ................................ (.29) (.17) (.08) (.08) (.12)
--------------------------------------------------------
Total from investment operations .......................... .26 1.08 1.15 .43 .76
--------------------------------------------------------
Less dividends to Common Stock shareholders from
investment income -- net ................................ (.84) (.95) (.93) (.90) (.88)
--------------------------------------------------------
Net asset value, end of year .............................. $ 14.96 $ 15.54 $ 15.41 $ 15.19 $ 15.66
========================================================
Market price per share, end of year ....................... $ 14.62 $ 15.28 $ 14.10 $ 13.79 $ 14.37
========================================================
=================================================================================================================================
Total Investment Return*
---------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ........................ 1.98% 7.63% 8.36% 3.32% 5.68%
========================================================
Based on market price per share ........................... 1.36% 15.66% 9.21% 2.22% 6.49%
========================================================
=================================================================================================================================
Ratios Based on Average Net Assets Applicable to Common Stock
---------------------------------------------------------------------------------------------------------------------------------
Total expenses, net of waiver and reimbursement and
excluding reorganization and interest expense and fees*** 1.15% 1.14% 1.14% 1.13% 1.16%
========================================================
Total expenses, net of waiver and reimbursement excluding
reorganization expenses*** .............................. 1.65% 1.52% 1.43% 1.43% 1.37%
========================================================
Total expenses, excluding reorganization expenses*** ...... 1.73% 1.59% 1.50% 1.51% 1.44%
========================================================
Total expenses*** ......................................... 1.73% 1.59% 1.50% 1.51% 1.47%
========================================================
Total investment income -- net*** ......................... 6.94% 6.71% 6.80% 6.96% 7.01%
========================================================
Amount of dividends to Preferred Stock shareholders ....... 1.93% 1.09% .55% .68% .98%
========================================================
Investment income -- net, to Common Stock shareholders .... 5.01% 5.62% 6.25% 6.28% 6.03%
========================================================
=================================================================================================================================
Ratios Based on Average Net Assets Applicable to Preferred Stock
---------------------------------------------------------------------------------------------------------------------------------
Dividends to Preferred Stock shareholders ................. 2.82% 1.66% .83% 1.05% 1.47%
========================================================
=================================================================================================================================
Supplemental Data
---------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Stock, end of year
(in thousands) .......................................... $460,638 $478,413 $474,357 $467,512 $482,184
========================================================
Preferred Stock outstanding at liquidation preference,
end of year (in thousands) .............................. $313,000 $313,000 $313,000 $313,000 $313,000
========================================================
Portfolio turnover ........................................ 47% 33% 31% 50% 79%
========================================================
=================================================================================================================================
Leverage
---------------------------------------------------------------------------------------------------------------------------------
Asset coverage per $1,000 ................................. $ 2,472 $ 2,528 $ 2,516 $ 2,494 $ 2,541
========================================================
=================================================================================================================================
Dividends Per Share on Preferred Stock Outstanding
---------------------------------------------------------------------------------------------------------------------------------
Series A -- Investment income -- net ...................... $ 689 $ 409 $ 197 $ 247 $ 347
========================================================
Series B -- Investment income -- net ...................... $ 678 $ 385 $ 182 $ 236 $ 348
========================================================
Series C -- Investment income -- net ...................... $ 715 $ 432 $ 201 $ 258 $ 377
========================================================
Series D -- Investment income -- net ...................... $ 728 $ 434 $ 238 $ 287 $ 391
========================================================
Series E -- Investment income -- net ...................... $ 692 $ 389 $ 198 $ 256 $ 347
========================================================
* 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.
** Based on average shares outstanding.
*** Do not reflect the effect of dividends to Preferred Stock Shareholders.
See Notes to Financial Statements.
ANNUAL REPORTS AUGUST 31, 2006 25
Notes to Financial Statements
1. Significant Accounting Policies:
On September 29, 2006, MuniHoldings Florida Insured Fund and MuniHoldings New
York Insured Fund, Inc. were renamed BlackRock MuniHoldings Florida Insured Fund
and BlackRock MuniHoldings New York Insured Fund, Inc. (the "Funds" or
individually as the "Fund"). The Funds are registered under the Investment
Company Act of 1940, as amended, as non-diversified, closed-end management
investment companies. The Funds' 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 Funds determine and make available for publication the net asset
value of their Common Stock/Shares on a daily basis. The Funds' Common
Stock/Shares are listed on the New York Stock Exchange under the symbols MFL and
MHN, respectively. The following is a summary of significant accounting policies
followed by the Funds.
(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 Funds under the general direction
of the Board of Directors/Trustees. Such valuations and procedures are reviewed
periodically by the Board of Directors/Trustees of the Funds. Financial futures
contracts and options thereon, which are traded on exchanges, are valued at
their closing prices as of the close of such exchanges. Options written or
purchased are valued at the last sale price in the case of exchange-traded
options. 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 based upon quoted fair valuations received daily by the
Funds from a pricing service. Short-term investments with a remaining maturity
of 60 days or less are valued at amortized cost, which approximates market
value, under which method the investment is valued at cost and any premium or
discount is amortized on a straight line basis to maturity. 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/Trustees of the Funds.
(b) Derivative financial instruments -- Each 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
or if the counterparty does not perform under the contract.
o Financial futures contracts -- Each 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 Funds 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.
o Options -- Each 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 an 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.
o Forward interest rate swaps -- Each 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,
26 ANNUAL REPORTS AUGUST 31, 2006
Notes to Financial Statements (continued)
the Fund records a realized gain or loss in an amount equal to the value of the
agreement.
o Swaps -- Each 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 predetermined 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.
(c) Municipal bonds held in trust -- The Funds invest 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. Each Fund's 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 Funds' schedules of
investments and the proceeds from the transaction are reported as a liability
for trust certificates of the Funds. 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 Funds 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
Funds. 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 Funds
include the right of the Funds (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 Funds. At August 31, 2006, the aggregate value of the underlying municipal
securities transferred to TOBs and the related liability for trust certificates
were:
--------------------------------------------------------------------------------
Range of
Interest Underlying
Liability Rates on the Municipal
for Liability Bonds
Trust for Trust Transferred
Certificates Certificates to TOBs
--------------------------------------------------------------------------------
BlackRock MuniHoldings .......... 3.45% -
Florida Insured Fund .......... $ 44,451,090 3.48% $ 93,755,581
BlackRock MuniHoldings
New York Insured .............. 3.43% -
Fund, Inc. .................... $ 61,077,360 3.48% $115,501,403
--------------------------------------------------------------------------------
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 Funds'
investments 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
Funds' net asset value per share. While the Funds' investment policies and
restrictions expressly permit investments in inverse floating rate securities
such as TOB Residuals, they generally do not allow the Funds to borrow money for
purposes of making investments. The Funds' management believes that the Funds'
restrictions on borrowings do not apply to the secured borrowings deemed to have
occurred for accounting purposes.
(d) Income taxes -- It is each 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) Recent accounting pronouncement -- In July 2006, the Financial Accounting
Standards Board ("FASB") issued Interpretation No. 48 ("FIN 48") entitled
"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
ANNUAL REPORTS AUGUST 31, 2006 27
Notes to Financial Statements (continued)
statements. Adoption of FIN 48 is required for fiscal years beginning after
December 15, 2006. The impact on the Funds' financial statements, if any, is
currently being assessed.
(f) 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 Funds amortize all
premiums and discounts on debt securities.
(g) Dividends and distributions -- Dividends from net investment income are
declared and paid monthly. Distributions of capital gains are recorded on the
ex-dividend dates.
(h) Reclassifications:
BlackRock MuniHoldings Florida Insured Fund
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, $17,239 has been
reclassified between undistributed net investment income and paid-in capital in
excess of par as a result of a permanent difference attributable to
non-deductible expenses. This reclassification has no effect on net assets or
net asset values per share.
BlackRock MuniHoldings New York Insured Fund, Inc.
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, $16,244 has been
reclassified between accumulated net realized capital losses and undistributed
net investment income and $5,131 has been reclassified between undistributed net
investment income and paid-in capital in excess of par as a result of permanent
differences attributable to amortization methods on fixed income securities and
nondeductible expenses. These reclassifications have no effect on net assets or
net asset values per share.
2. Investment Advisory Agreement and Transactions with Affiliates:
Each Fund has entered into an Investment Advisory Agreement with Fund Asset
Management, L.P. ("FAM"). The general partner of FAM is Princeton Services, Inc.
("PSI"), an indirect, wholly owned subsidiary of Merrill Lynch & Co., Inc. ("ML
& Co."), which is the limited partner.
FAM is responsible for the management of each Fund's portfolio and provides the
necessary personnel, facilities, equipment and certain other services necessary
to the operations of the Fund. For such services, each Fund pays a monthly fee
at an annual rate of .55% of the Fund's average weekly net assets, including
proceeds from the issuance of Preferred Shares/Stock. The Investment Adviser has
agreed to reimburse its management fee by the amount of management fees each
Fund pays to FAM indirectly through its investments described below:
--------------------------------------------------------------------------------
Investment Reimbursement
--------------------------------------------------------------------------------
BlackRock MuniHoldings CMA Florida Municipal
Florida Insured Fund Money Fund/Merrill
Lynch Institutional
Tax-Exempt Fund ................ $53,167
BlackRock MuniHoldings CMA New York Municipal
New York Insured Fund, Inc. Money Fund ..................... $12,616
--------------------------------------------------------------------------------
In addition, the Investment Adviser has agreed to reimburse its management fee
on the proceeds of Preferred Shares/Stock that exceeds 35% of each Fund's total
net assets. For the year ended August 31, 2006, FAM earned and waived the
following:
--------------------------------------------------------------------------------
Fees Earned Waived
--------------------------------------------------------------------------------
BlackRock MuniHoldings
Florida Insured Fund ........................... $5,052,117 $ 353,283
BlackRock MuniHoldings
New York Insured Fund, Inc. .................... $4,243,988 $ 363,237
--------------------------------------------------------------------------------
For the year ended August 31, 2006, the Funds reimbursed FAM for certain
accounting services. The reimbursements were as follows:
--------------------------------------------------------------------------------
Reimbursement
--------------------------------------------------------------------------------
BlackRock MuniHoldings
Florida Insured Fund ........................................... $20,092
BlackRock MuniHoldings
New York Insured Fund, Inc. .................................... $16,879
--------------------------------------------------------------------------------
In February 2006, ML & Co. and BlackRock, Inc. entered into an agreement to
contribute ML & Co.'s investment management business, including FAM, to the
investment management business of BlackRock, Inc. The transaction will close on
September 29, 2006.
On July 31, 2006 and August 15, 2006, shareholders of the BlackRock MuniHoldings
Florida Insured Fund and the BlackRock New York Insured Fund, Inc.,
respectively, approved a new Investment Advisory Agreement with BlackRock
Advisors, Inc. (the "Manager"), a wholly owned subsidiary of BlackRock, Inc.
BlackRock Advisors, Inc. was reorganized into BlackRock Advisors, LLC. The new
advisory agreement became effective on September 29, 2006 and the investment
advisory fees are unchanged. In addition, the Manager has
28 ANNUAL REPORTS AUGUST 31, 2006
Notes to Financial Statements (continued)
entered into a sub-advisory agreement with BlackRock Investment Management, LLC,
an affiliate, under which the Manager pays the Sub-Adviser for services it
provides a fee equal to 59% of the management fees paid to the Manager.
Certain officers and/or directors/trustees of the Funds are officers and/or
directors of FAM, PSI, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
year ended August 31, 2006 were as follows:
--------------------------------------------------------------------------------
BlackRock BlackRock
MuniHoldings MuniHoldings
Florida Insured New York Insured
Fund Fund, Inc.
--------------------------------------------------------------------------------
Total Purchases ..................... $407,583,290 $382,063,585
Total Sales ......................... $422,171,551 $380,146,752
--------------------------------------------------------------------------------
4. Share/Stock Transactions:
BlackRock MuniHoldings Florida Insured Fund is authorized to issue an unlimited
number of shares of beneficial interest, including Preferred Shares, par value
$.10 per share, all of which were initially classified as Common Shares. The
Board of Trustees is authorized, however, to reclassify any unissued shares of
beneficial interest without the approval of holders of Common Shares.
BlackRock MuniHoldings New York Insured Fund, Inc. 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 holders of Common Stock.
Common Shares/Stock
BlackRock MuniHoldings Florida Insured Fund
Shares issued and outstanding during the years ended August 31, 2006 and August
31, 2005 increased by 4,505 and 34,561, respectively, as a result of dividend
reinvestments.
BlackRock MuniHoldings New York Insured Fund, Inc.
Shares issued and outstanding during the year ended August 31, 2006 increased by
10,523 as a result of dividend reinvestment and remained constant during the
year ended August 31, 2005.
Preferred Shares/Stock
Auction Market Preferred Shares/Stock are redeemable shares of Preferred
Shares/Stock of the Funds, with 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 August 31, 2006 were as follows:
--------------------------------------------------------------------------------
BlackRock BlackRock
MuniHoldings MuniHoldings
Florida Insured New York Insured
Fund Fund, Inc.
--------------------------------------------------------------------------------
Series A .............................. 3.45% 3.05%
Series B .............................. 3.45% 2.40%
Series C .............................. 3.45% 3.02%
Series D .............................. 3.50% 3.00%
Series E .............................. 3.45% 3.00%
--------------------------------------------------------------------------------
Each 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 August 31, 2006, Merrill Lynch, Pierce, Fenner &
Smith Incorporated, an affiliate of FAM, earned commissions as follows:
--------------------------------------------------------------------------------
Commissions
--------------------------------------------------------------------------------
BlackRock MuniHoldings
Florida Insured Fund ........................................... $433,525
BlackRock MuniHoldings
New York Insured Fund, Inc. .................................... $290,107
--------------------------------------------------------------------------------
5. Distributions to Shareholders:
Each Fund paid a tax-exempt income dividend to holders of Common Stock/Shares in
the amounts of $.065000 per share and $.061000 per share relating to BlackRock
MuniHoldings Florida Insured Fund and BlackRock MuniHoldings New York Insured
Fund, Inc. respectively, on September 28, 2006 to shareholders of record on
September 15, 2006.
BlackRock MuniHoldings Florida Insured Fund
The tax character of distributions paid during the fiscal years ended August 31,
2006 and August 31, 2005 was as follows:
--------------------------------------------------------------------------------
8/31/2006 8/31/2005
--------------------------------------------------------------------------------
Distributions paid from:
Tax-exempt income .......................... $42,869,499 $44,560,482
----------------------------
Total distributions .......................... $42,869,499 $44,560,482
============================
ANNUAL REPORTS AUGUST 31, 2006 29
Notes to Financial Statements (continued)
As of August 31, 2006, the components of accumulated losses on a tax basis were
as follows:
-----------------------------------------------------------------------------
Undistributed tax-exempt income -- net .................... $ 2,882,873
Undistributed long-term capital gains -- net .............. --
------------
Total undistributed earnings -- net ....................... 2,882,873
Capital loss carryforward ................................. (63,219,214)*
Unrealized gains -- net ................................... 40,979,483**
------------
Total accumulated losses -- net ........................... $(19,356,858)
============
* On August 31, 2006, the Fund had a net capital loss carryforward of
$63,219,214, of which $24,716,150 expires in 2007, $9,949,433 expires in
2008, $18,709,220 expires in 2009, $1,836,991 expires in 2012 and
$8,007,420 expires in 2013. This amount will be available to offset like
amounts of any future taxable gains.
** The difference between book-basis and tax-basis net unrealized gains is
attributable primarily to the tax deferral of losses on wash sales, the
tax deferral of losses on straddles and the difference between book and
tax amortization methods for premiums and discounts on fixed income
securities and the difference between the book and tax treatment of
residual interests in tender option bond trusts.
BlackRock MuniHoldings New York Insured Fund, Inc.
The tax character of distributions paid during the fiscal years ended August 31,
2006 and August 31, 2005 was as follows:
--------------------------------------------------------------------------------
8/31/2006 8/31/2005
--------------------------------------------------------------------------------
Distributions paid from:
Tax-exempt income .......................... $34,819,729 $34,381,754
----------------------------
Total distributions .......................... $34,819,729 $34,381,754
============================
As of August 31, 2006, the components of accumulated losses on a tax basis were
as follows:
-----------------------------------------------------------------------------
Undistributed tax-exempt income -- net .................... $ 2,141,695
Undistributed long-term capital gains -- net .............. --
------------
Total undistributed earnings -- net ....................... 2,141,695
Capital loss carryforward ................................. (37,884,795)*
Unrealized gains -- net ................................... 18,239,562**
============
Total accumulated losses -- net ........................... $(17,503,538)
============
* On August 31, 2006, the Fund had a net capital loss carryforward of
$37,884,795, of which $966,000 expires in 2007, $3,509,287 expires in
2008, $17,297,478 expires in 2009, $15,054,033 expires in 2013 and
$1,057,997 expires in 2014. This amount will be available to offset like
amounts of any future taxable gains.
** The difference between book-basis and tax-basis net unrealized gains is
attributable primarily to the tax deferral of losses on wash sales, the
tax deferral of losses on straddles, the difference between book and tax
amortization methods for premiums and discounts on fixed income
securities, the realization for tax purposes of unrealized gains (losses)
on certain futures contracts, 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.
6. Restatement Information:
Subsequent to the issuance of their August 31, 2006 financial statements, the
Funds determined that the criteria for sale accounting in Statement of Financial
Accounting Standards No. 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. Accordingly, the Funds have restated the
Statements of Net Assets, including the Schedules of Investments, as of August
31, 2006, the Statements of Operations for the year then ended, the Statements
of Changes in Net Assets for each of the two years in the period then ended, and
certain financial highlights for each of the five years in the period then
ended. The effects of the restatement were to record the transfers of the
municipal bonds as secured borrowings, to give effect to offsetting changes in
realized gain (loss) -- net and in the change in unrealized
appreciation/depreciation -- net on the transferred municipal securities and to
give effect to interest on the bonds as interest income and interest on the
secured borrowings as interest expense.
--------------------------------------------------------------------------------
BlackRock MuniHoldings Florida Insured Fund
--------------------------------------------------------------------------------
Statement of Net Assets
As of August 31, 2006
-------------------------------------------------------------------------------
Previously
Reported Restated
-------------------------------------------------------------------------------
Investments in unaffiliated
securities, at value ................. $ 886,390,376 $ 930,841,466
Investments in unaffiliated
securities, identified cost .......... $ 846,040,974 $ 884,610,964
Interest receivable .................... $ 13,758,822 $ 14,089,850
Total assets ........................... $ 919,514,608 $ 964,296,726
Trust certificates ..................... -- $ 44,451,090
Interest expense payable ............... -- $ 331,028
Total liabilities ...................... $ 643,024 $ 45,425,142
Accumulated realized capital
losses -- net ........................ $ (62,721,273) $ (68,602,373)
Unrealized appreciation -- net ......... $ 40,349,402 $ 46,230,502
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Statement of Operations
For the Year Ended August 31, 2006
-------------------------------------------------------------------------------
Previously
Reported Restated
-------------------------------------------------------------------------------
Interest ................................. $ 45,216,280 $ 46,704,780
Total income ............................. $ 45,547,254 $ 47,035,754
Interest expense and fees ................ -- $ 1,488,500
Total expenses before waiver
and reimbursement ...................... $ 6,605,665 $ 8,094,165
Total expenses after waiver
and reimbursement ...................... $ 6,199,215 $ 7,687,715
Realized gain (loss) on
investments -- net ..................... $ 1,924,039 $ 2,000,866
Total realized gain -- net ............... $ 2,496,479 $ 2,573,306
Change in unrealized appreciation
on investments -- net .................. $(21,439,918) $(21,516,745)
Total change in unrealized appreciation/
depreciation -- net .................... $(20,478,503) $(20,555,330)
-------------------------------------------------------------------------------
30 ANNUAL REPORTS AUGUST 31, 2006
Notes to Financial Statements (continued)
-------------------------------------------------------------------------------
BlackRock MuniHoldings Florida Insured Fund
-------------------------------------------------------------------------------
Statement of Changes in Net Assets
For the Year Ended August 31, 2006
-------------------------------------------------------------------------------
Previously
Reported Restated
-------------------------------------------------------------------------------
Realized gain -- net ..................... $ 2,496,479 $ 2,573,306
Change in unrealized appreciation/
depreciation -- net .................... $(20,478,503) $(20,555,330)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Statement of Changes in Net Assets
For the Year Ended August 31, 2005
-------------------------------------------------------------------------------
Previously
Reported Restated
-------------------------------------------------------------------------------
Realized gain -- net ....................... $(1,924,948) $(1,967,513)
Change in unrealized
appreciation -- net ...................... $ 3,311,646 $ 3,354,211
-------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Financial Highlights
For the Years Ended August 31, 2006, 2005, 2004, 2003 and 2002
--------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
2006 2005 2004 2003 2002
------------------- ------------------- ------------------- ------------------- -------------------
Previously Previously Previously Previously Previously
Reported Restated Reported Restated Reported Restated Reported Restated Reported Restated
------------------------------------------------------------------------------------------------------------------------------------
Total expenses, net
of waiver and
reimbursement and
excluding
reorganization
expenses* ...... 1.12% 1.38% 1.11% 1.35% 1.10% 1.24% 1.10% 1.26% 1.13% 1.34%
Total expenses,
excluding
reorganization
expenses* ...... 1.19% 1.46% 1.16% 1.41% 1.17% 1.31% 1.17% 1.33% 1.20% 1.41%
Total expenses* .. 1.19% 1.46% 1.16% 1.41% 1.17% 1.31% 1.17% 1.33% 1.21% 1.42%
Portfolio turnover 45.72% 43% 26.50% 26% 21.20% 20% 27.40% 23% 13.89% 13%
------------------------------------------------------------------------------------------------------------------------------------
* Do not reflect the effect of dividends to Preferred Stock shareholders.
-------------------------------------------------------------------------------
BlackRock MuniHoldings New York Insured Fund, Inc.
-------------------------------------------------------------------------------
Statement of Net Assets
As of August 31, 2006
-------------------------------------------------------------------------------
Previously
Reported Restated
-------------------------------------------------------------------------------
Investments in unaffiliated
securities, at value ................. $ 761,730,044 $ 822,807,404
Investments in unaffiliated
securities, identified cost .......... $ 735,075,149 $ 795,195,171
Interest receivable .................... $ 9,360,663 $ 9,816,486
Total assets ........................... $ 774,333,599 $ 835,866,782
Trust certificates ..................... $ -- $ 61,077,360
Interest expense payable ............... $ -- $ 455,823
Total liabilities ...................... $ 612,100 $ 62,145,283
Accumulated realized capital
losses -- net ........................ $ (46,198,429) $ (47,155,767)
Unrealized appreciation -- net ......... $ 26,402,809 $ 27,360,147
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Statement of Operations
For the Year Ended August 31, 2006
-------------------------------------------------------------------------------
Previously
Reported Restated
-------------------------------------------------------------------------------
Interest and amortization of
premium and accretion
of discount ............................ $ 36,987,578 $ 39,291,081
Total income ............................. $ 37,078,435 $ 39,381,938
Interest expense and fees ................ -- $ 2,303,503
Total expenses before waiver
and reimbursement ...................... $ 5,641,649 $ 7,945,152
Total expenses after waiver
and reimbursement ...................... $ 5,265,796 $ 7,569,299
Realized gain (loss) on
investments -- net ..................... $ (322,184) $ (9,563)
Total realized gain (loss) -- net ........ $ (306,380) $ 6,241
Change in unrealized appreciation
on investments -- net .................. $(14,662,008) $(14,974,629)
Total change in unrealized appreciation/
depreciation -- net .................... $(14,617,827) $(14,930,448)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Statement of Changes in Net Assets
For the Year Ended August 31, 2006
-------------------------------------------------------------------------------
Previously
Reported Restated
-------------------------------------------------------------------------------
Realized gain (loss) -- net .............. $ (306,380) $ 6,241
Change in unrealized appreciation/
depreciation -- net .................... $(14,617,827) $(14,930,448)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Statement of Changes in Net Assets
For the Year Ended August 31, 2005
-------------------------------------------------------------------------------
Previously
Reported Restated
-------------------------------------------------------------------------------
Realized loss -- net ....................... $(2,377,019) $(2,423,525)
Change in unrealized appreciation/
depreciation -- net ...................... $ 8,840,346 $ 8,886,852
-------------------------------------------------------------------------------
ANNUAL REPORTS AUGUST 31, 2006 31
Notes to Financial Statements (concluded)
--------------------------------------------------------------------------------
BlackRock MuniHoldings New York Insured Fund, Inc.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Financial Highlights
For the Years Ended August 31, 2006, 2005, 2004, 2003 and 2002
--------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
2006 2005 2004 2003 2002
------------------- ------------------- ------------------- ------------------- -------------------
Previously Previously Previously Previously Previously
Reported Restated Reported Restated Reported Restated Reported Restated Reported Restated
------------------------------------------------------------------------------------------------------------------------------------
Total expenses, net of
waiver and
reimbursement and
excluding
reorganization
expenses* ...... 1.15% 1.65% 1.14% 1.52% 1.14% 1.43% 1.13% 1.43% 1.16% 1.37%
Total expenses,
excluding
reorganization
expenses* ...... 1.23% 1.73% 1.21% 1.59% 1.21% 1.50% 1.20% 1.51% 1.23% 1.44%
Total expenses* .. 1.23% 1.73% 1.21% 1.59% 1.21% 1.50% 1.20% 1.51% 1.26% 1.47%
Portfolio turnover 52.83% 47% 35.63% 33% 32.04% 31% 59.02% 50% 86.39% 79%
------------------------------------------------------------------------------------------------------------------------------------
* Do not reflect the effect of dividends to Preferred Stock shareholders.
While the Statements of Net Assets for the Funds as of August 31, 2005, 2004,
2003 and 2002, not presented herein, have not been reissued to give effect to
the restatement, the principal effects of the restatement would be to increase
investments and payable for floating rate certificates by corresponding amounts
at each year, with no effect on previously reported net assets.
The Statements of Operations for the Funds for the years ended August 31, 2005,
2004, 2003 and 2002, not presented herein, have not been reissued to give effect
to the restatement. However, the principal effects of the restatement would be
to increase interest income and interest expense and fees by corresponding
amounts each year, and where applicable, to revise realized gain (loss) on
investments -- net, and the change in unrealized appreciation/ depreciation on
investments -- net, by corresponding and offsetting amounts.
The Statements of Changes in Net Assets of the Funds for the years ended August
31, 2004, 2003 and 2002, not presented herein, have not been reissued to give
effect to the restatement, but the principal effects of a restatement, where
applicable, would be to revise previously reported realized gain (loss) on
investments -- net, and change in unrealized appreciation/depreciation -- net,
by corresponding and offsetting amounts.
32 ANNUAL REPORTS AUGUST 31, 2006
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Trustees/ Directors of BlackRock MuniHoldings
Florida Insured Fund and BlackRock MuniHoldings New York Insured Fund, Inc.:
We have audited the accompanying statements of net assets, including the
schedules of investments, of BlackRock MuniHoldings Florida Insured Fund
(formerly MuniHoldings Florida Insured Fund) and BlackRock MuniHoldings New York
Insured Fund, Inc. (formerly MuniHoldings New York Insured Fund, Inc. ) (the
"Funds"), as of August 31, 2006, and the related statements of operations for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Funds' management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement.The Funds
are not required to have, nor were we engaged to perform, audits of their
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Funds' 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 August 31, 2006 by correspondence with the custodian and
brokers; where replies were not received from brokers, we performed other
auditing procedures. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
BlackRock MuniHoldings Florida Insured Fund and BlackRock MuniHoldings New York
Insured Fund, Inc. as of August 31, 2006, the results of their operations for
the year then ended, the changes in their net assets for each of the two years
in the period then ended, and the financial highlights for each of the five
years in the period then ended, in conformity with accounting principles
generally accepted in the United States of America.
As discussed in Note 6, the statements of net assets, including the schedules of
investments, of the Funds, as of August 31, 2006, and the related statements of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended and certain financial highlights
for each of the five years in the period then ended have been restated.
Deloitte & Touche LLP
Princeton, New Jersey
October 20, 2006
(May 18, 2007 as to the effects of the restatements disclosed in Note 6)
Fund Certification (unaudited)
In February 2006, BlackRock MuniHoldings Florida Insured Fund and BlackRock
MuniHoldings New York Insured Fund, Inc. filed their 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 Funds' Chief Executive Officer and Chief Financial Officer Certifications
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 were filed with the
Funds' Form N-CSR and are available on the Securities and Exchange Commission's
Web site at http://www.sec.gov.
ANNUAL REPORTS AUGUST 31, 2006 33
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 The Bank of New York (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 The Bank of
New York, Church Street Station, P.O. Box 11258, New York, NY 10286-1258,
Telephone: 800-432-8224.
34 ANNUAL REPORTS AUGUST 31, 2006
Disclosure of New Investment Advisory Agreement
New BlackRock Investment Advisory Agreements -- Matters Considered by the Boards
In connection with the combination of Merrill Lynch's investment advisory
business, including Fund Asset Management, L.P. (the "Previous Investment
Adviser"), with that of BlackRock, Inc. ("BlackRock") to create a new
independent company ("New BlackRock") (the "Transaction"), each Fund's Board of
Trustees/Directors ("directors") considered and approved a new investment
advisory agreement (each a "BlackRock Investment Advisory Agreement") between
the Fund and BlackRock Advisors, LLC ("BlackRock Advisors"). Each Fund's
shareholders subsequently approved the Fund's BlackRock Investment Advisory
Agreement and it became effective on September 29, 2006, replacing the Fund's
investment advisory agreement with the Previous Investment Adviser (each a
"Previous Investment Advisory Agreement").
Each Board discussed the BlackRock Investment Advisory Agreement at telephonic
and in-person meetings held during April and May 2006. Each Fund's Board,
including the independent directors, approved the Fund's BlackRock Investment
Advisory Agreement at an in-person meeting held on May 12, 2006.
To assist each Fund's Board in its consideration of the Fund's BlackRock
Investment Advisory Agreement, BlackRock provided materials and information
about BlackRock, including its financial condition and asset management
capabilities and organization, and Merrill Lynch provided materials and
information about the Transaction. Each Fund's independent directors, through
their independent legal counsel, also requested and received additional
information from Merrill Lynch and BlackRock in connection with their
consideration of the Fund's BlackRock Investment Advisory Agreement. The
additional information was provided in advance of the May 12, 2006 meetings. In
addition, each Fund's independent directors consulted with their counsel and
Fund counsel on numerous occasions, discussing, among other things, the legal
standards and certain other considerations relevant to the directors'
deliberations.
At each Fund's Board meetings, the directors discussed with Merrill Lynch
management and certain BlackRock representatives the Transaction, its strategic
rationale and BlackRock's general plans and intentions regarding the Fund. At
these Board meetings, representatives of Merrill Lynch and BlackRock made
presentations to and responded to questions from the Boards. The directors also
inquired about the plans for and anticipated roles and responsibilities of
certain employees and officers of the Previous Investment Adviser, and of its
affiliates, to be transferred to BlackRock in connection with the Transaction.
The independent directors also conferred separately and with their counsel about
the Transaction and other matters related to the Transaction on a number of
occasions, including in connection with the April and May 2006 meetings. After
the presentations and after reviewing the written materials provided, each
Fund's independent directors met in executive sessions with their counsel to
consider the Fund's BlackRock Investment Advisory Agreement.
In connection with the directors' review of each Fund's BlackRock Investment
Advisory Agreement, Merrill Lynch and/or BlackRock advised the directors about a
variety of matters. The advice included the following, among other matters:
o that there was not expected to be any diminution in the nature, quality
and extent of services provided to either Fund or its shareholders by
BlackRock Advisors, including compliance services;
o that operation of New BlackRock as an independent investment management
firm would enhance its ability to attract and retain talented
professionals;
o that each Fund was expected to benefit from having access to BlackRock's
state of the art technology and risk management analytic tools, including
investment tools, provided under the BlackRock Solutions(R) brand name;
o that BlackRock had no present intention to alter any applicable expense
waivers or reimbursements that were currently in effect and, while it
reserved the right to do so in the future, it would seek Board approval
before making any changes;
ANNUAL REPORTS AUGUST 31, 2006 35
Disclosure of New Investment Advisory Agreement (continued)
o that in connection with the Transaction, Merrill Lynch and BlackRock had
agreed to conduct, and use reasonable best efforts to cause their
respective affiliates to conduct, their respective businesses in
compliance with the conditions of Section 15(f) of the Investment Company
Act of 1940 (the "1940 Act") in relation to any public funds advised by
BlackRock or the Previous Investment Adviser (or affiliates),
respectively; and
o that Merrill Lynch and BlackRock would derive benefits from the
Transaction and that, as a result, they had a financial interest in the
matters being considered that was different from that of Fund
shareholders.
The directors considered the information provided by Merrill Lynch and BlackRock
above, and, among other factors, the following:
o the potential benefits to each Fund's shareholders from being part of a
combined fund family with BlackRock-sponsored funds, including possible
economies of scale and access to investment opportunities;
o the reputation, financial strength and resources of BlackRock and its
investment advisory subsidiaries and the anticipated financial strength
and resources of New BlackRock;
o the compliance policies and procedures of BlackRock Advisors;
o the terms and conditions of each Fund's BlackRock Investment Advisory
Agreement, including the fact that neither Fund's schedule of total
advisory fees would increase under the BlackRock Investment Advisory
Agreement, but would remain the same;
o that in February 2006, each Fund's Board had performed a full annual
review of the Previous Investment Advisory Agreement, as required by the
1940 Act, and had determined that the Previous Investment Adviser had the
capabilities, resources and personnel necessary to provide the advisory
and administrative services that were then being provided to the Fund; and
that the advisory and/or management fees paid by the Fund, taking into
account any applicable agreed-upon fee waivers and breakpoints, had
represented reasonable compensation to the Previous Investment Adviser in
light of the services provided, the costs to the Previous Investment
Adviser of providing those services, economies of scale, the fees and
other expenses paid by similar funds (including information provided by
Lipper Inc. ("Lipper")), and such other matters as the directors had
considered relevant in the exercise of their reasonable judgment; and
o that Merrill Lynch had agreed to pay all expenses of each Fund in
connection with the consideration by the Fund's Board of the Fund's
BlackRock Investment Advisory Agreement and related agreements and all
costs of shareholder approval of the BlackRock Investment Advisory
Agreement, and as a result the Fund would bear no costs in obtaining
shareholder approval of the BlackRock Investment Advisory Agreement.
Certain of these considerations are discussed in more detail below.
In its review of each Fund's BlackRock Investment Advisory Agreement, the Fund's
Board assessed the nature, quality and scope of the services to be provided to
the Fund by the personnel of BlackRock Advisors and its affiliates, including
administrative services, shareholder services, oversight of fund accounting and
assistance in meeting legal and regulatory requirements. In its review of each
Fund's BlackRock Investment Advisory Agreement, the Fund's Board also considered
a range of information in connection with its oversight of the services to be
provided by BlackRock Advisors and its affiliates. Among the matters considered
for each Fund were: (a) fees (in addition to management fees) to be paid to
BlackRock Advisors and its affiliates by the Fund; (b) Fund operating expenses
paid to third parties; (c) the resources devoted to and compliance reports
relating to the Fund's investment objective, policies and restrictions, and its
compliance with its Code of Ethics and BlackRock Advisors' compliance policies
and procedures; and (d) the nature, cost and character of non-investment
management services to be provided by BlackRock Advisors and its affiliates.
36 ANNUAL REPORTS AUGUST 31, 2006
In the period prior to each Fund's Board meeting to consider renewal of the
Fund's Previous Investment Advisory Agreement, the Board had requested and
received materials specifically relating to the Previous Investment Advisory
Agreement. For each Fund, these materials included (a) information compiled by
Lipper on the fees and expenses and the investment performance of the Fund as
compared to a comparable group of funds as classified by Lipper; (b) information
comparing the Fund's market price with its net asset value per share; (c) a
discussion by the Fund's portfolio management team on investment strategies used
by the Fund during its most recent fiscal year; (d) information on the
profitability to the Previous Investment Adviser of the Fund's Previous
Investment Advisory Agreement and other payments received by the Previous
Investment Adviser and its affiliates from the Fund; and (e) information
provided by the Previous Investment Adviser concerning services related to the
valuation and pricing of Fund portfolio holdings, the Fund's portfolio turnover
statistics, and direct and indirect benefits to the Previous Investment Adviser
and its affiliates from their relationship with the Fund.
In their deliberations, each Fund's directors considered information received in
connection with their most recent approval of the continuance of the Fund's
Previous Investment Advisory Agreement, in addition to information provided by
BlackRock and BlackRock Advisors in connection with their evaluation of the
terms and conditions of the Fund's BlackRock Investment Advisory Agreement.
Neither Fund's directors identified any particular information that was
all-important or controlling, and each director attributed different weights to
the various factors. Each Fund's directors, including a majority of the
independent directors, concluded that the terms of the Fund's BlackRock
Investment Advisory Agreement are appropriate, that the fees to be paid are
reasonable in light of the services to be provided to the Fund, and that the
BlackRock Investment Advisory Agreement should be approved and recommended to
Fund shareholders.
Nature, Quality and Extent of Services Provided -- Each Fund's Board reviewed
the nature, quality and extent of services provided by the Previous Investment
Adviser, including the investment advisory services and the resulting
performance of the Fund, as well as the nature, quality and extent of services
expected to be provided by BlackRock Advisors. Each Fund's Board focused
primarily on the Previous Investment Adviser's investment advisory services and
the Fund's investment performance, but also considered certain areas in which
both the Previous Investment Adviser and the Fund received services as part of
the Merrill Lynch complex. Each Fund's Board compared the Fund's performance --
both including and excluding the effects of fees and expenses -- to the
performance of a comparable group of funds, and the performance of a relevant
index or combination of indexes. While each Board reviews performance data at
least quarterly, consistent with the Previous Investment Adviser's investment
goals, the Board attaches more importance to performance over relatively long
periods of time, typically three to five years.
In evaluating the nature, quality and extent of the services to be provided by
BlackRock Advisors under each Fund's BlackRock Investment Advisory Agreement,
the directors considered, among other things, the expected impact of the
Transaction on the operations, facilities, organization and personnel of New
BlackRock and how it would affect the Fund; the ability of BlackRock Advisors to
perform its duties after the Transaction; and any anticipated changes to the
current investment and other practices of the Fund.
Each Fund's directors were given information with respect to the potential
benefits to the Fund and its shareholders from having access to BlackRock's
state of the art technology and risk management analytic tools, including the
investment tools provided under the BlackRock Solutions brand name.
Each Fund's directors were advised that, as a result of Merrill Lynch's equity
interest in BlackRock after the Transaction, the Fund would continue to be
subject to restrictions concerning certain transactions involving Merrill Lynch
affiliates (for example, transactions with a Merrill Lynch broker-dealer acting
as principal) absent revised or new regulatory relief. Each Fund's directors
were advised that a revision of existing regulatory relief with respect to these
restrictions was being sought from the Securities and Exchange Commission and
were advised of the possibility of the receipt of such revised regulatory
relief.
ANNUAL REPORTS AUGUST 31, 2006 37
Disclosure of New Investment Advisory Agreement (continued)
Based on their review of the materials provided and the assurances they had
received from the management of Merrill Lynch and of BlackRock, each Fund's
directors determined that the nature and quality of services to be provided to
the Fund under the Fund's BlackRock Investment Advisory Agreement were expected
to be as good as or better than that provided under the Fund's Previous
Investment Advisory Agreement. The directors were advised that BlackRock
Advisors did not plan to change either Fund's portfolio management team upon the
closing of the transaction. It was noted, however, that other changes in
personnel were expected to follow the Transaction and the combination of the
operations of the Previous Investment Adviser and its affiliates with those of
BlackRock. Each Fund's directors noted that if current portfolio managers or
other personnel were to cease to be available prior to the closing of the
Transaction, the Board would consider all available options, including seeking
the investment advisory or other services of BlackRock affiliates. Accordingly,
each Fund's directors concluded that, overall, they were satisfied at the
present time with assurances from BlackRock and BlackRock Advisors as to the
expected nature, quality and extent of the services to be provided to the Fund
under the Fund's BlackRock Investment Advisory Agreement.
Costs of Services Provided and Profitability -- It was noted that, in
conjunction with their recent review of each Fund's Previous Investment Advisory
Agreement, the Fund's directors had received, among other things, a report from
Lipper comparing the Fund's fees and expenses to those of a peer group selected
by Lipper, and information as to the fees charged by the Previous Investment
Adviser or its affiliates to other registered investment company clients for
investment management services. Each Fund's Board reviewed the Fund's
contractual management fee rate and actual management fee rate as a percentage
of total assets at common asset levels -- the actual rate includes advisory fees
and the effects of any fee waivers -- compared to the other funds in its Lipper
category. Each Fund's Board also compared the Fund's total expenses to those of
other comparable funds. The information showed that each Fund had fees and
expenses within the range of fees and expenses of comparable funds. Each Fund's
Board considered the services to be provided by and the fees to be charged by
BlackRock Advisors to other funds with similar investment mandates and noted
that the fees charged by BlackRock Advisors in those cases, including fee
waivers and expense reimbursements, were generally comparable to those being
charged to the Fund. Each Fund's Board concluded that the Fund's management fee
and fee rate and overall expense ratio are reasonable compared to those of other
comparable funds.
In evaluating the costs of the services to be provided by BlackRock Advisors
under each Fund's BlackRock Investment Advisory Agreement, the Fund's directors
considered, among other things, whether advisory fees or other expenses would
change as a result of the Transaction. Based on their review of the materials
provided and the fact that each Fund's BlackRock Investment Advisory Agreement
is substantially similar to the Fund's Previous Investment Advisory Agreement in
all material respects, including the rate of compensation, the Fund's directors
determined that the Transaction should not increase the total fees payable,
including any fee waivers and expense reimbursements, for advisory and
administrative services. Each Fund's directors noted that it was not possible to
predict how the Transaction would affect BlackRock Advisors' profitability from
its relationship with the Fund.
Each Fund's directors discussed with BlackRock Advisors its general methodology
to be used in determining its profitability with respect to its relationship
with the Fund. Each Fund's directors noted that they expect to receive
profitability information from BlackRock Advisors on at least an annual basis
and thus be in a position to evaluate whether any adjustments in Fund fees
and/or fee breakpoints would be appropriate.
Fees and Economies of Scale -- Each Fund's Board considered the extent to which
economies of scale might be realized as the assets of the Fund increase and
whether there should be changes in the management fee rate or structure in order
to enable the Fund to participate in these economies of scale. Each Board
determined that changes were not currently necessary.
38 ANNUAL REPORTS AUGUST 31, 2006
In reviewing the Transaction, the directors considered, among other things,
whether advisory fees or other expenses would change as a result of the
Transaction. Based on the fact that each Fund's BlackRock Investment Advisory
Agreement is substantially similar to the Fund's Previous Investment Advisory
Agreement in all material respects, including the rate of compensation, the
Fund's directors determined that as a result of the Transaction, the Fund's
total advisory fees would be no higher than the fees under the Fund's Previous
Investment Advisory Agreement. Each Fund's directors noted that in conjunction
with their most recent deliberations concerning the Fund's Previous Investment
Advisory Agreement, they had determined that the total fees for advisory and
administrative services for the Fund were reasonable in light of the services
provided. It was noted that in conjunction with the recent review of each Fund's
Previous Investment Advisory Agreement, the Fund's directors had received, among
other things, a report from Lipper comparing the Fund's fees, expenses and
performance to those of a peer group selected by Lipper, and information as to
the fees charged by the Previous Investment Adviser or its affiliates to other
registered investment company clients for investment management services. Each
Fund's directors concluded that because the rates for advisory fees for the Fund
would be no higher than the fee rates in effect at the time, the proposed
management fee structure, including any fee waivers, was reasonable and that no
additional changes were currently necessary.
Fall-Out Benefits -- In evaluating the fall-out benefits to be received by
BlackRock Advisors under each Fund's BlackRock Investment Advisory Agreement,
the Fund's directors considered whether BlackRock Advisors would experience such
benefits to the same extent that the Previous Investment Adviser was
experiencing such benefits under the Fund's Previous Investment Advisory
Agreement. Based on their review of the materials provided, including materials
received in connection with their most recent approval of the continuance of
each Fund's Previous Investment Advisory Agreement, and their discussions with
management of the Previous Investment Adviser and BlackRock, the Fund's
directors determined that BlackRock Advisors' fall-out benefits could include
increased ability for BlackRock to distribute shares of its funds and other
investment products. The directors noted that any fall-out benefits were
difficult to quantify with certainty at this time, and indicated that they would
continue to evaluate them going forward.
Investment Performance -- Each Fund's directors considered investment
performance for the Fund. Each Fund's directors compared the Fund's performance
-- both including and excluding the effects of fees and expenses -- to the
performance of a comparable group of funds, and the performance of a relevant
index or combination of indexes. The comparative information received from
Lipper showed each Fund's performance at various levels within the range of
performance of comparable funds over different time periods. While each Board
reviews performance data at least quarterly, consistent with the Previous
Investment Adviser's investment goals, the Board attaches more importance over
relatively long periods of time, typically three to five years. Each Fund's
directors believed the Fund's performance was satisfactory. Also, the directors
took into account the investment performance of funds advised by BlackRock
Advisors. Each Board considered comparative information from Lipper which showed
that the performance of the funds advised by BlackRock Advisors was within the
range of performance of comparable funds over different time periods. Each
Fund's Board noted BlackRock's considerable investment management experience and
capabilities, but was unable to predict what effect, if any, consummation of the
Transaction would have on the future performance of the Fund.
Conclusion -- After the independent directors of each Fund deliberated in
executive session, the Fund's entire Board, including the independent directors,
approved the Fund's BlackRock Investment Advisory Agreement, concluding that the
advisory fee rate was reasonable in relation to the services provided and that
the BlackRock Investment Advisory Agreement was in the best interests of the
shareholders. In approving each Fund's BlackRock Investment Advisory Agreement,
the Fund's Board noted that it anticipated reviewing the continuance of the
agreement in advance of the expiration of the initial two-year period.
ANNUAL REPORTS AUGUST 31, 2006 39
Disclosure of New Investment Advisory Agreement (concluded)
New BlackRock Sub-Advisory Agreements -- Matters Considered by the Boards
At an in-person meeting held on August 14-16, 2006, each Fund's Board of
Directors, including the independent directors, discussed and approved the
Fund's sub-advisory agreement (each a "BlackRock Sub-Advisory Agreement")
between BlackRock Advisors and its affiliate, BlackRock Investment Management,
LLC (the "Sub-Adviser"). Each Fund's BlackRock Sub-Advisory Agreement became
effective on September 29, 2006, at the same time the Fund's BlackRock
Investment Advisory Agreement became effective.
Pursuant to each Fund's BlackRock Sub-Advisory Agreement, the Sub-Adviser
receives a monthly fee from BlackRock Advisors equal to 59% of the advisory fee
received by BlackRock Advisors from the Fund. BlackRock Advisors pays the
Sub-Adviser out of its own resources, and there is no increase in either Fund's
expenses as a result of the Fund's BlackRock Sub-Advisory Agreement.
In approving each Fund's BlackRock Sub-Advisory Agreement at the August
in-person meeting, the Fund's Board reviewed its considerations in connection
with its approval of the Fund's BlackRock Investment Advisory Agreement in May
2006. Each Fund's Board relied on the same information and considered the same
factors as those discussed above in connection with the approval of the Fund's
BlackRock Investment Advisory Agreement, and came to the same conclusions. In
reviewing the sub-advisory fee rate provided in each Fund's BlackRock
Sub-Advisory Agreement, the Fund's Board noted the fact that both BlackRock
Advisors and the Sub-Adviser have significant responsibilities under their
respective advisory agreements. BlackRock Advisors remains responsible for
oversight of each Fund's operations and administration, and the Sub-Adviser
provides advisory services to the Fund and is responsible for the day-to-day
management of the Fund's portfolio under the Fund's BlackRock Sub-Advisory
Agreement. Each Fund's Board also took into account the fact that there is no
increase in total advisory fees paid by the Fund as a result of the Fund's
BlackRock Sub-Advisory Agreement. Under all of the circumstances, each Fund's
Board concluded that it was a reasonable allocation of fees for the Sub-Adviser
to receive 59% of the advisory fee paid by the Fund to BlackRock Advisors.
After each Fund's independent directors deliberated in executive session, the
Fund's entire Board, including the independent directors, approved the Fund's
BlackRock Sub-Advisory Agreement, concluding that the sub-advisory fee was
reasonable in relation to the services provided and that the BlackRock
Sub-Advisory Agreement was in the best interests of the shareholders.
40 ANNUAL REPORTS AUGUST 31, 2006
Officers and Trustees or Directors
Number of
Portfolios in Other Public
Fund Complex Directorships
Position(s) Length of Overseen by Held by
Held with Time Trustee or Trustee or
Name Address & Age Funds Served Principal Occupation(s) During Past 5 Years Director Director
====================================================================================================================================
Interested Trustee or Director
------------------------------------------------------------------------------------------------------------------------------------
Robert C. P.O. Box 9011 President 2005 to Vice Chairman and Director of BlackRock, and 129 Funds None
Doll, Jr.* Princeton, NJ and Trustee present Global Chief Investment Officer for Equities, 174 Portfolios
08543-9011 or Director Chairman of the BlackRock Private Client Operating
Age: 52 Committee, and member of the BlackRock Executive
Committee since 2006; President of the Funds
advised by Merrill Lynch Investment Managers
("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") since 2001;
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 trustee, director or member of an advisory board of certain other investment companies for which
BlackRock acts as investment adviser. Mr. Doll is an "interested person," as defined in the Investment Company
Act, of the Fund based on his current and former positions with BlackRock, Inc. and its affiliates. Trustees or
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 Boards of Trustees or Directors.
ANNUAL REPORTS AUGUST 31, 2006 41
Officers and Trustees or Directors (continued)
Number of
Portfolios in Other Public
Fund Complex Directorships
Position(s) Length of Overseen by Held by
Held with Time Trustee or Trustee or
Name Address & Age Funds Served Principal Occupation(s) During Past 5 Years Director Director
====================================================================================================================================
Independent Trustees or Directors*
------------------------------------------------------------------------------------------------------------------------------------
Ronald W. P.O. Box 9095 Trustee 1997 to Professor Emeritus of Finance, School of Business, 49 Funds None
Forbes** Princeton, NJ or Director present State University of New York at Albany since 2000 51 Portfolios
08543-9095 and Professor thereof from 1989 to 2000;
Age: 65 International Consultant, Urban Institute,
Washington, D.C. from 1995 to 1999.
------------------------------------------------------------------------------------------------------------------------------------
Cynthia A. P.O. Box 9095 Trustee 1997 to Professor, Harvard Business School since 1989; 49 Funds Newell
Montgomery Princeton, NJ or Director present Associate Professor, J.L. Kellogg Graduate School 51 Portfolios Rubbermaid,
08543-9095 of Management, Northwestern University from 1985 Inc.
Age: 54 to 1989; Associate Professor, Graduate School of (manufacturing)
Business Administration, University of Michigan
from 1979 to 1985; Director, Harvard Business
School Publishing since 2005; Director, McLean
Hospital since 2005.
------------------------------------------------------------------------------------------------------------------------------------
Jean Margo P.O. Box 9095 Trustee 2004 to Self-employed consultant since 2001; Counsel of 49 Funds None
Reid Princeton, NJ or Director present Alliance Capital Management (investment adviser) 51 Portfolios
08543-9095 in 2000; General Counsel, Director and Secretary
Age: 61 of Sanford C. Bernstein & Co., Inc. (investment
adviser/ broker-dealer) from 1997 to 2000;
Secretary, Sanford C. Bernstein Fund, Inc. from
1994 to 2000; Director and Secretary of SCB, Inc.
since 1998; Director and Secretary of SCB
Partners, Inc. since 2000; and Director of
Covenant House from 2001 to 2004.
------------------------------------------------------------------------------------------------------------------------------------
Roscoe S. P.O. Box 9095 Trustee 2000 to President, Middle East Institute from 1995 to 49 Funds None
Suddarth Princeton, NJ or Director present 2001; Foreign Service Officer, United States 51 Portfolios
08543-9095 Foreign Service, from 1961 to 1995 and Career
Age: 71 Minister from 1989 to 1995; Deputy Inspector
General, U.S. Department of State, from 1991 to
1994; U.S. Ambassador to the Hashemite Kingdom of
Jordan from 1987 to 1990.
------------------------------------------------------------------------------------------------------------------------------------
Richard R. P.O. Box 9095 Trustee 1997 to Professor of Finance from 1984 to 1995, Dean from 49 Funds Bowne & Co.,
West Princeton, NJ or Director present 1984 to 1993 and since 1995 Dean Emeritus of 51 Portfolios Inc. (financial
08543-9095 New York University's Leonard N. Stern School of printers);
Age: 68 Business Administration. Vornado Realty
Trust (real
estate
company);
Alexander's,
Inc. (real
estate company)
------------------------------------------------------------------------------------------------------------------------------------
Edward D. P.O. Box 9095 Trustee 2000 to Self-employed financial consultant since 1994; 49 Funds None
Zinbarg Princeton, NJ or Director present Executive Vice President of the Prudential 51 Portfolios
08543-9095 Insurance Company of America from 1988 to 1994;
Age: 71 Former Director of Prudential Reinsurance Company
and former Trustee of the Prudential Foundation.
------------------------------------------------------------------------------------------------------------------------
* Trustees or Directors serve until their resignation, removal or death, or until December 31 of the year in which
they turn 72.
** Chairman of the Boards of Trustees/Directors and the Audit Committee.
------------------------------------------------------------------------------------------------------------------------------------
42 ANNUAL REPORTS AUGUST 31, 2006
Officers and Trustees or Directors (concluded)
Position(s) Length of
Held with Time
Name Address & Age Funds Served Principal Occupation(s) During Past 5 Years
====================================================================================================================================
Fund Officers*
------------------------------------------------------------------------------------------------------------------------------------
Donald C. P.O. Box 9011 Vice 1997 to Managing Director of BlackRock since 2006; Managing Director of MLIM and FAM
Burke Princeton, NJ President present from 2005 to 2006 and Treasurer thereof from 1999 to 2006; First Vice President
08543-9011 and and of MLIM and FAM from 1997 to 2005; Senior Vice President and Treasurer of
Age: 46 Treasurer 1999 to Princeton Services from 1999 to 2006 and Director from 2004 to 2006; Vice
present President of FAM Distributors, Inc. ("FAMD") from 1999 to 2006 and Director from
2004 to 2006; Vice President of MLIM and FAM from 1990 to 1997; Director of
Taxation of MLIM from 1990 to 2001; Vice President, Treasurer and Secretary of
the IQ Funds from 2004 to 2006.
------------------------------------------------------------------------------------------------------------------------------------
Kenneth A. P.O. Box 9011 Senior 2002 to Managing Director of BlackRock since 2006; Managing Director (Tax-Exempt Fund
Jacob Princeton, NJ Vice present Management) of MLIM from 2000 to 2006; Director of MLIM from 1997 to 2000.
08543-9011 President
Age: 55
------------------------------------------------------------------------------------------------------------------------------------
John M. P.O. Box 9011 Senior 2002 to Managing Director of BlackRock since 2006; Managing Director (Tax-Exempt Fund
Loffredo Princeton, NJ Vice present Management) of MLIM from 2000 to 2006; Director of MLIM from 1997 to 2000.
08543-9011 President
Age: 42
------------------------------------------------------------------------------------------------------------------------------------
Timothy T. P.O. Box 9011 Vice 2004 to Vice President of BlackRock since 2006; Vice President (Tax-Exempt Fund
Browse Princeton, NJ President present Management) of MLIM from 2004 to 2006; Vice President, portfolio manager and
08543-9011 team leader of the Municipal Investments Team with Lord Abbett & Co. from 2000
Age: 47 to 2003; Vice President and portfolio manager in the municipal fund management
group of Eaton Vance Management, Inc. from 1992 to 2000.
------------------------------------------------------------------------------------------------------------------------------------
Robert D. P.O. Box 9011 Vice 1999 to Director of BlackRock since 2006; Director of MLIM from 2005 to 2006; Vice
Sneeden Princeton, NJ President present President of MLIM from 1998 to 2005; Assistant Vice President of MLIM from 1994
08543-9011 to 1998.
Age: 52
------------------------------------------------------------------------------------------------------------------------------------
Jeffrey P.O. Box 9011 Fund Chief 2004 to Managing Director of BlackRock and Fund Chief Compliance Officer since 2006;
Hiller Princeton, NJ Compliance present Chief Compliance Officer of the MLIM/FAM-advised funds and First Vice President
08543-9011 Officer and Chief Compliance Officer of MLIM (Americas Region) from 2004 to 2006; Chief
Age: 54 Compliance Officer of the IQ Funds since 2004; Global Director of Compliance at
Morgan Stanley Investment Management from 2002 to 2004; Managing Director and
Global Director of Compliance at Citigroup Asset Management from 2000 to 2002;
Chief Compliance Officer at Soros Fund Management in 2000; Chief Compliance
Officer at Prudential Financial from 1995 to 2000; Senior Counsel in the
Securities and Exchange Commission's Division of Enforcement in Washington, D.C.
from 1990 to 1995.
------------------------------------------------------------------------------------------------------------------------------------
Alice A. P.O. Box 9011 Secretary 2004 to Director of BlackRock since 2006; Director (Legal Advisory) of MLIM from 2002 to
Pellegrino Princeton, NJ present 2006; Vice President of MLIM from 1999 to 2002; Attorney associated with MLIM
08543-9011 from 1997 to 2006; Secretary of MLIM, FAM, FAMD and Princeton Services from 2004
Age: 46 to 2006.
------------------------------------------------------------------------------------------------------------------------
* Officers of the Funds serve at the pleasure of the Boards of Trustees or Directors.
------------------------------------------------------------------------------------------------------------------------------------
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agents
Common Shares or Stock:
The Bank of New York
101 Barclay Street -- 11 East
New York, NY 10286
Preferred Shares or Stock:
The Bank of New York
101 Barclay Street -- 7 West
New York, NY 10286
--------------------------------------------------------------------------------
Effective January 1, 2007, Edward D. Zinbarg retired as a Trustee/Director of
BlackRock MuniHoldings Florida Insured Fund and BlackRock MuniHoldings New York
Insured Fund, Inc. The Funds' Boards of Trustees/Directors wish Mr. Zinbarg well
in his retirement.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Effective April 13, 2007, Jeffrey Hiller resigned his position as Chief
Compliance Officer of the Funds. Also effective April 13, 2007, Karen Clark was
appointed Chief Compliance Officer of the Funds. Ms. Clark has been a Managing
Director of BlackRock, Inc. since 2007. She was a Director thereof from 2005 to
2007. Prior to that, Ms. Clark was a principal and senior compliance officer at
State Street Global Advisors from 2001 to 2005. Ms. Clark was a principal
consultant with PricewaterhouseCoopers, LLP from 1998 to 2001. From 1993 to
1998, Ms. Clark was Branch Chief, Division of Investment Management and Office
of Compliance Inspections and Examinations, with the U.S. Securities and
Exchange Commission.
--------------------------------------------------------------------------------
ANNUAL REPORTS AUGUST 31, 2006 43
Proxy Results
BlackRock MuniHoldings Florida Insured Fund
During the six-month period ended August 31, 2006, BlackRock MuniHoldings
Florida Insured Fund`s shareholders voted on the following proposals. The
proposals were approved at a shareholders' meeting on July 31, 2006. A
description of the proposals and number of shares voted were as follows:
------------------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Voted Shares Voted
For Against Abstain
------------------------------------------------------------------------------------------------------------------------------------
To approve a new investment advisory agreement. 18,463,336 447,107 688,012
------------------------------------------------------------------------------------------------------------------------------------
To approve a contingent subadvisory agreement. 18,489,920 452,012 656,523
------------------------------------------------------------------------------------------------------------------------------------
BlackRock MuniHoldings New York Insured Fund, Inc.
During the six-month period ended August 31, 2006, BlackRock MuniHoldings New
York Insured Fund, Inc.`s shareholders voted on the following proposals. The
proposals were approved at a shareholders' meeting on August 15, 2006. A
description of the proposals and number of shares voted were as follows:
------------------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Voted Shares Voted
For Against Abstain
------------------------------------------------------------------------------------------------------------------------------------
To approve a new investment advisory agreement. 14,410,787 681,913 956,525
------------------------------------------------------------------------------------------------------------------------------------
To approve a contingent subadvisory agreement. 14,411,905 649,891 987,429
------------------------------------------------------------------------------------------------------------------------------------
Investment Objectives
NYSE Symbol BlackRock MuniHoldings Florida Insured Fund seeks to provide
MFL shareholders with current income exempt from federal income
tax. The Fund also seeks to offer shareholders the opportunity
to own shares, the value of which is exempt from Florida
intangible personal property tax. The Fund seeks to achieve
its investment objective 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 and which enables
shares of the Fund to be exempt from Florida intangible
personal property tax.
NYSE Symbol BlackRock MuniHoldings New York Insured Fund, Inc. seeks to
MHN provide shareholders with current income exempt from federal
income taxes and New York State and New York City personal
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 and New York State
and New York City personal income taxes.
44 ANNUAL REPORTS AUGUST 31, 2006
Availability of Quarterly Schedules of Investments
The Funds file their complete schedules 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 Funds' Forms N-Q are available on the SEC's
Web site at http://www.sec.gov. The Funds' 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.
ANNUAL REPORTS AUGUST 31, 2006 45
Electronic Delivery
Electronic copies of most financial reports and prospectuses are available on
the Funds' Web site. Shareholders can sign up for e-mail notifications of
quarterly statements, annual and semi-annual reports and prospectuses by
enrolling in the Funds' electronic delivery program.
To enroll:
Shareholders Who Hold Accounts with Investment Advisers, Banks or Brokerages:
Please contact your financial advisor. Please note that not all investment
advisers, banks or brokerages may offer this service.
46 ANNUAL REPORTS AUGUST 31, 2006
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 nonpublic 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 nonpublic 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 nonaffiliated third parties any nonpublic
personal information about its Clients, except as permitted by law or as is
necessary 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 nonpublic
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 nonpublic
personal information of its Clients, including procedures relating to the proper
storage and disposal of such information.
ANNUAL REPORTS AUGUST 31, 2006 47
These reports, including the financial information herein, are transmitted to
shareholders of BlackRock MuniHoldings Florida Insured Fund and BlackRock
MuniHoldings New York Insured Fund, Inc. for their information. This is not a
prospectus. Past performance results shown in this report should not be
considered a representation of future performance. The Funds have leveraged
their Common Shares or Stock and intend to remain leveraged by issuing Preferred
Shares or Stock to provide the Common Shareholders or Common Stock shareholders
with a potentially higher rate of return. Leverage creates risks for Common
Shareholders or Common Stock shareholders, including the likelihood of greater
volatility of net asset value and market price of shares of the Common Shares or
Stock, and the risk that fluctuations in the short-term dividend rates of the
Preferred Shares or Stock may affect the yield to Common Shareholders or 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 Funds use 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 Funds vote proxies relating to
securities held in the Funds' portfolios 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 Florida Insured Fund
BlackRock MuniHoldings New York Insured Fund, Inc.
P.O. Box 9011
Princeton, NJ 08543-9011
BLACKROCK
#MHFLNYR-8/06
Item 2 - Code of Ethics - The registrant has adopted a code of ethics, as
of the end of the period covered by this report, that applies to the
registrant's principal executive officer, principal financial officer
and principal accounting officer, or persons performing similar
functions. 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 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: (1) Ronald
W. Forbes, (2) Richard R. West, and (3) Edward D. Zinbarg (retired as
of December 31, 2006).
Item 4 - Principal Accountant Fees and Services
(a) Audit Fees - Fiscal Year Ending August 31, 2006 - $32,600
Fiscal Year Ending August 31, 2005 - $32,000
(b) Audit-Related Fees - Fiscal Year Ending August 31, 2006 - $3,500
Fiscal Year Ending August 31, 2005 - $3,500
The nature of the services include assurance and related services
reasonably related to the performance of the audit of financial
statements not included in Audit Fees.
(c) Tax Fees - Fiscal Year Ending August 31, 2006 - $6,000
Fiscal Year Ending August 31, 2005 - $7,000
The nature of the services include tax compliance, tax advice and tax
planning.
(d) All Other Fees - Fiscal Year Ending August 31, 2006 - $0
Fiscal Year Ending August 31, 2005 - $0
(e)(1) 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) 0%
(f) Not Applicable
(g) Fiscal Year Ending August 31, 2006 - $3,098,500
Fiscal Year Ending August 31, 2005 - $7,377,027
(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 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) - $1,739,500, 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)):
Ronald W. Forbes
Cynthia A. Montgomery
Jean Margo Reid
Roscoe S. Suddarth
Richard R. West
Edward D. Zinbarg (retired as of December 31, 2006)
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies -
Proxy Voting Policies and Procedures
Each Fund's Board of Directors/Trustees has delegated to Merrill Lynch
Investment Managers, L.P. and/or Fund Asset Management, L.P. (the
"Investment Adviser") authority to vote all proxies relating to the
Fund's portfolio securities. The Investment Adviser has adopted
policies and procedures ("Proxy Voting Procedures") with respect to
the voting of proxies related to the portfolio securities held in the
account of one or more of its clients, including a Fund. Pursuant to
these Proxy Voting Procedures, the Investment Adviser's primary
objective when voting proxies is to make proxy voting decisions solely
in the best interests of each Fund and its shareholders, and to act in
a manner that the Investment Adviser believes is most likely to
enhance the economic value of the securities held by the Fund. The
Proxy Voting Procedures are designed to ensure that the Investment
Adviser considers the interests of its clients, including the Funds,
and not the interests of the Investment Adviser, when voting proxies
and that real (or perceived) material conflicts that may arise between
the Investment Adviser's interest and those of the Investment
Adviser's clients are properly addressed and resolved.
In order to implement the Proxy Voting Procedures, the Investment
Adviser has formed a Proxy Voting Committee (the "Committee"). The
Committee is comprised of the Investment Adviser's Chief Investment
Officer (the "CIO"), one or more other senior investment professionals
appointed by the CIO, portfolio managers and investment analysts
appointed by the CIO and any other personnel the CIO deems
appropriate. The Committee will also include two non-voting
representatives from the Investment Adviser's Legal department
appointed by the Investment Adviser's General Counsel. The Committee's
membership shall be limited to full-time employees of the Investment
Adviser. No person with any investment banking, trading, retail
brokerage or research responsibilities for the Investment Adviser's
affiliates may serve as a member of the Committee or participate in
its decision making (except to the extent such person is asked by the
Committee to present information to the Committee, on the same basis
as other interested knowledgeable parties not affiliated with the
Investment Adviser might be asked to do so). The Committee determines
how to vote the proxies of all clients, including a Fund, that have
delegated proxy voting authority to the Investment Adviser and seeks
to ensure that all votes are consistent with the best interests of
those clients and are free from unwarranted and inappropriate
influences. The Committee establishes general proxy voting policies
for the Investment Adviser and is responsible for determining how
those policies are 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 alternate actions. In so doing, the Committee may
determine to vote a particular proxy in a manner contrary to its
generally stated policies. In addition, the Committee will be
responsible for ensuring that all reporting and recordkeeping
requirements related to proxy voting are fulfilled.
The Committee may determine that the subject matter of a recurring
proxy issue is not suitable for general voting policies and requires a
case-by-case determination. In such cases, the Committee may elect not
to adopt a specific voting policy applicable to that issue. The
Investment Adviser believes that certain proxy voting issues require
investment analysis - such as approval of mergers and other
significant corporate transactions - akin to investment decisions, and
are, therefore, not suitable for general guidelines. The Committee may
elect to adopt a common position for the Investment Adviser on certain
proxy votes that are akin to investment decisions, or determine to
permit the portfolio manager to make individual decisions on how best
to maximize economic value for a Fund (similar to normal buy/sell
investment decisions made by such portfolio managers). While it is
expected that the Investment Adviser will generally seek to vote
proxies over which the Investment Adviser exercises voting authority
in a uniform manner for all the Investment Adviser's clients, the
Committee, in conjunction with a Fund's portfolio manager, may
determine that the Fund's specific circumstances require that its
proxies be voted differently.
To assist the Investment Adviser in voting proxies, the Committee has
retained Institutional Shareholder Services ("ISS"). 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 the Investment
Adviser by ISS include in-depth research, voting recommendations
(although the Investment Adviser is not obligated to follow such
recommendations), vote execution, and recordkeeping. ISS will also
assist the Fund in fulfilling its reporting and recordkeeping
obligations under the Investment Company Act.
The Investment Adviser's Proxy Voting Procedures also address special
circumstances that can arise in connection with proxy voting. For
instance, under the Proxy Voting Procedures, the Investment Adviser
generally will not seek to vote proxies related to portfolio
securities that are on loan, although it may do so under certain
circumstances. In addition, the Investment Adviser will vote proxies
related to securities of foreign issuers only on a best efforts basis
and may elect not to vote at all in certain countries where the
Committee determines that the costs associated with voting generally
outweigh the benefits. The Committee may at any time override these
general policies if it determines that such action is in the best
interests of a Fund.
From time to time, the Investment Adviser may be required to vote proxies in
respect of an issuer where an affiliate of the Investment Adviser (each, an
"Affiliate"), or a money management or other client of the Investment Adviser
(each, a "Client") is involved. The Proxy Voting Procedures and the Investment
Adviser's adherence to those procedures are designed to address such conflicts
of interest. The Committee intends to strictly adhere to the Proxy Voting
Procedures in all proxy matters, including matters involving Affiliates and
Clients. If, however, an issue representing a non-routine matter that is
material to an Affiliate or a widely known Client is involved such that the
Committee does not reasonably believe it is able to follow its guidelines (or if
the particular proxy matter is not addressed by the guidelines) and vote
impartially, 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 the Investment
Adviser's clients.
In the event that the Committee determines not to retain an
independent fiduciary, or it does not follow the advice of such an
independent fiduciary, the powers of the Committee shall pass to a
subcommittee, appointed by the CIO (with advice from the Secretary of
the Committee), consisting solely of Committee members selected by the
CIO. The CIO shall appoint to the subcommittee, where appropriate,
only persons whose job responsibilities do not include contact with
the Client and whose job evaluations would not be affected by the
Investment Adviser's relationship with the Client (or failure to
retain such relationship). The subcommittee shall determine whether
and how to vote all proxies on behalf of the Investment Adviser's
clients or, if the proxy matter is, in their judgment, akin to an
investment decision, to defer to the applicable portfolio managers,
provided that, if the subcommittee determines to alter the Investment
Adviser's normal voting guidelines or, on matters where the Investment
Adviser's policy is case-by-case, does not follow the voting
recommendation of any proxy voting service or other independent
fiduciary that may be retained to provide research or advice to the
Investment Adviser on that matter, no proxies relating to the Client
may be voted unless the Secretary, or in the Secretary's absence, the
Assistant Secretary of the Committee concurs that the subcommittee's
determination is consistent with the Investment Adviser's fiduciary
duties
In addition to the general principles outlined above, the Investment
Adviser has adopted voting guidelines with respect to certain
recurring proxy issues that are not expected to involve unusual
circumstances. These policies are guidelines only, and the Investment
Adviser may elect to vote differently from the recommendation set
forth in a voting guideline if the Committee determines that it is in
a Fund's best interest to do so. In addition, the guidelines may be
reviewed at any time upon the request of a Committee member and may be
amended or deleted upon the vote of a majority of Committee members
present at a Committee meeting at which there is a quorum.
The Investment Adviser has adopted specific voting guidelines with
respect to the following proxy issues:
o Proposals related to the composition of the Board of Directors of issuers
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 nominee's history
of representing shareholder interests as a director of other companies or
other factors, to the extent the Committee deems relevant.
o Proposals related to the selection of an issuer's independent 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.
o Proposals related to management compensation and employee benefits. As a
general matter, the Committee favors disclosure of an issuer's
compensation and benefit policies and opposes excessive compensation, but
believes that compensation matters are normally best determined by an
issuer's board of directors, rather than shareholders. Proposals to
"micro-manage" an issuer's compensation practices or to set arbitrary
restrictions on compensation or benefits will, therefore, generally not be
supported.
o Proposals related to requests, principally from management, for approval
of amendments that would alter an issuer's capital structure. As a general
matter, the Committee will support requests that enhance the rights of
common shareholders and oppose requests that appear to be unreasonably
dilutive.
o Proposals related to requests for approval of amendments to an issuer's
charter or by-laws. As a general matter, the Committee opposes poison pill
provisions.
o Routine proposals related to requests regarding the formalities of
corporate meetings.
o Proposals related to proxy issues associated solely with holdings of
investment company shares. 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 envisions will be approved directly by
shareholders.
o Proposals related to limiting 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 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.
Item 8 - Portfolio Managers of Closed-End Management Investment Companies - as
of October 2, 2006.
(a)(1) BlackRock MuniHoldings Florida Insured Fund 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 1998.
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 October 2, 2006:
(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
Registered Other Pooled Registered Other Pooled
(i) Name of Investment Investment Other Investment Investment Other
Portfolio Manager Companies Vehicles Accounts Companies Vehicles Accounts
--------------- ------------
Robert Sneeden 12 0 0 0 0 0
$ 1,710,051,481 $ 0 $ 0 $ 0 $ 0 $ 0
Theodore R.
Jaeckel, Jr. 83 0 0 0 0 0
$23,310,648,196 $ 0 $ 0 $ 0 $ 0 $ 0
Walter
O'Connor 83 0 0 0 0 0
$23,310,648,196 $ 0 $ 0 $ 0 $ 0 $ 0
(iv) Potential Material Conflicts of Interest
BlackRock has built a professional working environment, firm-wide
compliance culture and compliance procedures and systems designed to
protect against potential incentives that may favor one account over
another. BlackRock has adopted policies and procedures that address
the allocation of investment opportunities, execution of portfolio
transactions, personal trading by employees and other potential
conflicts of interest that are designed to ensure that all client
accounts are treated equitably over time. Nevertheless, BlackRock
furnishes investment management and advisory services to numerous
clients in addition to the Fund, and BlackRock may, consistent with
applicable law, make investment recommendations to other clients or
accounts (including accounts which are hedge funds or have performance
or higher fees paid to BlackRock, or in which portfolio managers have
a personal interest in the receipt of such fees), which may be the
same as or different from those made to the Fund. In addition,
BlackRock, its affiliates and 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 October 2, 2006:
BlackRock has adopted the compensation program utilized by MLIM for the
remainder of 2006 with respect to portfolio managers of the Fund.
Portfolio Manager Compensation
The Portfolio Manager Compensation Program of BlackRock and its
affiliates, including the Investment Adviser, 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.
Compensation Program
The elements of total compensation for certain BlackRock and its
affiliates portfolio managers are a fixed base salary, annual performance-based
cash and stock compensation (cash and stock bonus) and other benefits. BlackRock
has balanced these components of pay to provide portfolio managers with a
powerful incentive to achieve consistently superior investment performance. By
design, portfolio manager compensation levels fluctuate--both up and down--with
the relative investment performance of the portfolios that they manage.
Base Salary
Under the BlackRock approach, like that of many asset management firms,
base salaries represent a relatively small portion of a portfolio manager's
total compensation. This approach serves to enhance the motivational value of
the performance-based (and therefore variable) compensation elements of the
compensation program.
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, certain BlackRock and its affiliates portfolio manager incentive
compensation is based on a formulaic compensation program. BlackRock's formulaic
portfolio manager compensation program includes: investment performance relative
to a subset of Florida municipal debt funds over 1-, 3- and 5-year performance
periods and a measure of operational efficiency. Portfolio managers are
compensated based on the pre-tax performance of the products they manage. 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. A 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 portfolio
managers.
Stock Bonus
A portion of the dollar value of the total annual performance-based bonus
is paid in restricted shares of BlackRock stock. 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 BlackRock stock price performance. As such, the stock bonus
aligns each portfolio manager's financial interests with those of the BlackRock
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 BlackRock's reputation for integrity.
Other Compensation Programs
Portfolio managers who meet relative investment performance and financial
management objectives during a performance year are eligible to participate in a
deferred cash program. Awards under this program are in the form of deferred
cash that may be benchmarked to a menu of certain BlackRock mutual funds
(including their own fund) during a five-year vesting period. The deferred cash
program aligns the interests of participating portfolio managers with the
investment results of BlackRock products and promotes continuity of successful
portfolio management teams.
Other Benefits
Portfolio managers are also eligible to participate in broad-based plans
offered generally to employees of BlackRock and its affiliates, including
broad-based retirement, 401(k), health, and other employee benefit plans.
(a)(4) Beneficial Ownership of Securities. As of October 2, 2006, none of
Messrs. Sneeden, Jaeckel or O'Connor beneficially owns any stock
issued by the Fund.
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable
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 sets 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 have evaluated the Registrant's disclosure controls and
procedures, including internal control over financial reporting,
within 90 days of this filing. Such principal officers have concluded
that as of May 18, 2007, the Registrant's disclosure controls and
procedures were effective in design and operation to reasonably ensure
that information required to be disclosed by the Registrant in this
Form N-CSR/A was recorded, processed, summarized, and reported within
the required time periods, and were sufficient to form the basis of
the certifications required by Rule 30a-(2) of the Investment Company
Act of 1940, as amended. Prior to reaching that conclusion, such
principal officers had become aware of matters relating to the
Registrant's participation in certain inverse floater structures that
necessitated restatement of financial information included in Item 1
of this filing. As a result, management of the Registrant had
reevaluated certain disclosure controls and procedures determined not
to be effective, as discussed more fully below.
Management of the Registrant is responsible for establishing and
maintaining effective internal control over financial reporting. In
fulfilling this responsibility, estimates and judgments by management
are required to assess the expected benefits and related costs of
controls. The Registrant's internal control over financial reporting
is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with U.S. generally
accepted accounting principles. Such internal control includes
policies and procedures that provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or
disposition of a registrant's assets that could have a material effect
on the financial statements.
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
A control deficiency exists when the design or operation of a control
does not allow management or employees, in the normal course of
performing their assigned functions, to prevent or detect
misstatements on a timely basis. A significant deficiency is a control
deficiency, or combination of control deficiencies, that adversely
affects the Registrant's ability to initiate, authorize, record,
process or report financial data reliably in accordance with generally
accepted accounting principles such that there is more than a remote
likelihood that a misstatement of the Registrant's annual or interim
financial statements that is more than inconsequential will not be
prevented or detected. A material weakness is a significant
deficiency, or combination of significant deficiencies, that results
in more than a remote likelihood that a material misstatement of the
annual or interim financial statements will not be prevented or
detected.
Subsequent to the initial filing of the Registrant's Form N-CSR, the
Registrant identified the following control deficiency, that was
determined to be a material weakness, as defined above, in the
Registrant's internal control over financial reporting at August 31,
2006. The Registrant's controls related to the review and analysis of
relevant terms and conditions of transfers of certain assets
pertaining to inverse floater structures were not operating
effectively to appropriately determine whether the transfers of assets
qualified for sale accounting under the provisions of Statement of
Financial Accounting Standards No. 140, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities"
("SFAS 140"). As a result, these controls did not detect that certain
transfers were not appropriately recorded as borrowings. Accordingly,
the Registrant's financial statements as of and for the period ended
August 31, 2006, including prior periods where applicable, were
restated to appropriately reflect transfers of such securities as
secured borrowings and to report the related income and expense. The
restatement had no impact on net assets, net asset value per share or
total return.
Subsequent to August 31, 2006, but prior to the evaluation of the
design and operation of the Registrant's disclosure controls and
procedures at May 18, 2007, the Registrant's disclosure controls and
procedures were modified to enhance the review and analysis of the
relevant terms and conditions of transfers of securities in connection
with inverse floater structures in light of SFAS 140.
11(b) - There have been no changes in the Registrant's internal
control over financial reporting (as defined in Rule 30a-3(d) under
the Investment Company Act of 1940, as amended) that occurred during
the second half of the Registrant's fiscal year that have materially
affected, or are reasonably likely to materially affect, the
Registrant's internal control over financial reporting. However, as
discussed above, subsequent to August 31, 2006, the Registrant has
enhanced controls related to the application of SFAS 140.
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 Florida Insured Fund
By: /s/ Robert C. Doll, Jr.
-------------------------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
BlackRock MuniHoldings Florida Insured Fund
Date: June 7, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Robert C. Doll, Jr.
-------------------------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
BlackRock MuniHoldings Florida Insured Fund
Date: June 7, 2007
By: /s/ Donald C. Burke
-------------------------------------------
Donald C. Burke,
Chief Financial Officer of
BlackRock MuniHoldings Florida Insured Fund
Date: June 7, 2007