UNITEDSTATES
SECURITIESANDEXCHANGECOMMISSION
Washington,D.C.20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES

Investment Company Act file number 811-21053

Name of Fund: BlackRock Virginia Municipal Bond Trust (BHV)

Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809

Name and address of agent for service: Anne F. Ackerley, Chief Executive Officer, BlackRock
Virginia Municipal Bond Trust, 55 East 52^nd Street, New York, NY 10055

Registrant’s telephone number, including area code: (800) 882-0052, Option 4

Date of fiscal year end: 08/31/2010

Date of reporting period: 08/31/2010

Item 1 – Report to Stockholders

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Annual Report

BlackRock Maryland Municipal Bond Trust (BZM)

BlackRock MuniHoldings New York Insured Fund, Inc. (MHN)

BlackRock New Jersey Municipal Bond Trust (BLJ)

BlackRock New York Insured Municipal Income Trust (BSE)

BlackRock New York Municipal Bond Trust (BQH)

BlackRock New York Municipal Income Trust II (BFY)

BlackRock Virginia Municipal Bond Trust (BHV)

The Massachusetts Health & Education Tax-Exempt Trust (MHE)

August 31, 2010

Not FDIC Insured • No Bank Guarantee • May Lose Value

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2 ANNUAL REPORT

AUGUST 31, 2010

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Dear Shareholder

The global economic recovery continues, although global and US economic statistics show that the pace of economic growth has slowed. The sovereign debt

crisis in Europe, slowing growth in China and concerns over the possibility that the United States and other developed markets are heading for a double-dip

recession have all acted to depress investor sentiment. Despite broadening evidence of a slowdown in global economic activity, market volatility has normal-

ized from the extreme levels seen in recent months. In the United States, economic data continues to be mixed, but it is our view that the preponderance of

data suggests that the recovery is continuing. The critical issue for investors remains the question of whether the economy will experience a double-dip

recession. We are on the optimistic side of this debate and would point out that while the recovery has been slow, we have made significant progress.

Global equity markets have moved unevenly higher since bottoming out in early 2009 as investors were enticed by depressed valuations, improved

corporate earnings, and their desire for higher yields. Several significant downturns, however, have occurred — primarily as a result of mixed economic

data and concerns about the possibility of prolonged deflation (especially in Europe). As the period drew to a close, equity markets lost ground on weaker-

than-expected economic data, most notably from the United States. International equities posted negative returns on both a six- and 12-month basis while

US equities posted negative returns over the six months, but were still showing positive returns on a 12-month basis as the domestic economic recovery

had been more pronounced and credit-related issues held European markets down. Within the United States, smaller cap stocks continue to outperform

large caps year-to-date.

In fixed income markets, yields have fluctuated significantly over the past year as economic data has been mixed. Risk aversion and credit issues have kept

interest rates low and US Treasury yields have fallen significantly as investors favored “safe haven” assets. As the period drew to a close, Treasuries modestly

outperformed the spread sectors of the market (those driven by changes in credit risk). Corporate credit spreads benefited from the low rate environment

and high yield fixed income remains attractive due to low default rates and better-than-expected results on European bank stress tests. Meanwhile, tax-

exempt municipal bonds slightly outperformed US investment grade bonds on a 12-month basis, but underperformed year-to-date as investors rotated to

the relative safety of Treasuries.

Regarding cash investments, yields on money market securities remain near all-time lows (producing returns only marginally above zero percent), with

the Federal Open Market Committee reiterating that economic circumstances are likely to necessitate an accommodative interest rate stance for an

“extended period.”

 

Past performance is no guarantee of future results. Index performance shown for illustrative purposes only. You cannot invest directly in an index.

Although conditions have improved over the past couple of years, investors across the globe continue to face uncertainty about the future direction of

economic growth. Through periods of uncertainty, as ever, BlackRock’s full resources are dedicated to the management of our clients’ assets. For additional

market perspective and investment insight, visit www.blackrock.com/shareholdermagazine, where you’ll find the most recent issue of our award-winning

Shareholder® magazine, as well as its quarterly companion newsletter, Shareholder Perspectives. We thank you for entrusting BlackRock with your

investments, and we look forward to your continued partnership in the months and years ahead.

THIS PAGE NOT PART OF YOUR FUND REPORT

3

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Trust Summary as of August 31, 2010

BlackRock Maryland Municipal Bond Trust

Trust Overview

BlackRock Maryland Municipal Bond Trust’s (BZM) (the “Trust”) investment objective is to provide current income exempt from regular federal income
taxes and Maryland personal income taxes. The Trust seeks to achieve its investment objectives by investing primarily in municipal bonds exempt from
federal income taxes (except that the interest may be subject to the federal alternative minimum tax) and Maryland personal income taxes. The Trust
invests, under normal market conditions, at least 80% of its assets in municipal bonds that are investment grade quality at the time of investment.
The Trust may invest directly in such securities or synthetically through the use of derivatives.

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

Performance

For the 12 months ended August 31, 2010, the Trust returned 9.77% based on market price and 16.80% based on net asset value (“NAV”). For the same
period, the closed-end Lipper Other States Municipal Debt Funds category posted an average return of 17.13% based on market price and 14.69% based
on NAV. All returns reflect reinvestment of dividends. The Trust's premium to NAV, which narrowed during the period, accounts for the difference between
performance based on price and performance based on NAV. The following discussion relates to performance based on NAV. The Trust benefited from its
overall high duration (sensitivity to interest rates) as bond prices appreciated as yields declined. The Trust’s bias toward the longer end of the yield curve
contributed to performance as falling interest rates had a greater positive effect on longer dated issues. In addition, exposure to lower quality underlying
credits aided performance as credit spreads generally tightened over the period. Conversely, the Trust’s exposure to bonds structured with premium
coupons, short calls and/or short maturities detracted from performance as the shorter end of the yield curve underperformed longer dated issues.

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These
views are not intended to be a forecast of future events and are no guarantee of future results.

 

¹ Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.
² Tax equivalent yield assumes the maximum federal tax rate of 35%.
³ The distribution is not constant and is subject to change.
⁴ Represents Auction Market Preferred Shares (“Preferred Shares”) and tender option bond trusts (“TOBs”) as a percentage of total managed assets, which is the total assets of the
Trust, including any assets attributable to Preferred Shares and TOBs, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Trust, please see
The Benefits and Risks of Leveraging on page 12.

The table below summarizes the changes in the Trust’s market price and NAV per share:

 

The following charts show the sector and credit quality allocations of the Trust’s long-term investments:

 

 

4 ANNUAL REPORT

AUGUST 31, 2010

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Trust Summary as of August 31, 2010

BlackRock MuniHoldings New York Insured Fund, Inc.

Trust Overview

BlackRock MuniHoldings New York Insured Fund, Inc.’s (MHN) (the “Trust”) investment objective is to provide shareholders with current income exempt
from federal income tax and New York State and New York City personal income taxes. The Trust seeks to achieve its investment objective by investing, under
normal market conditions, at least 80% of its assets in investment grade New York municipal obligations exempt from federal income taxes (except that the
interest may be subject to the federal alternative minimum tax) and New York State and New York City personal income taxes ("New York Municipal Bonds"),
except at times when, in the judgment of its investment adviser, New York Municipal Bonds of sufficient quality and quantity are unavailable for investment
by the Trust. At all times, however, except during temporary defensive periods, the Trust invests at least 65% of its assets in New York Municipal Bonds. The
Trust invests, under normal market conditions, at least 80% of its assets in municipal obligations that are investment grade quality at the time of investment
and at least 80% of its assets in municipal obligations that are covered by insurance guaranteeing the timely payment of principal at maturity and interest
when due. The Trust invests primarily in long-term municipal obligations with a maturity of more than ten years at the time of investment. The Trust may invest
directly in such securities or synthetically through the use of derivatives.
No assurance can be given that the Trust’s investment objective will be achieved.

Performance

For the 12 months ended August 31, 2010, the Trust returned 25.24% based on market price and 16.87% based on NAV. For the same period, the closed-
end Lipper Single-State Insured Municipal Debt Funds category posted an average return of 21.21% based on market price and 14.13% based on NAV. All
returns reflect reinvestment of dividends. The Trust moved from a discount to NAV to a premium by period end, which accounts for the difference between
performance based on price and performance based on NAV. The following discussion relates to performance based on NAV. The Trust’s neutral-to-high
duration and low cash balance resulted in positive capital appreciation as interest rates declined. The Trust’s holdings of lower quality bonds outperformed
as credit spreads tightened, and long-term bonds benefited from declining yields. We purchased new issues structured to create greater potential for price
appreciation. The Trust’s exposure to the health and housing sectors and Puerto Rico credits added to performance. Conversely, the Trust’s holdings with
short maturities and/or call dates, detracted from performance as they underperformed longer-dated issues. Exposure to zero-coupon bonds detracted from
performance as investors favored current coupon bonds.
The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These
views are not intended to be a forecast of future events and are no guarantee of future results.

 

¹ Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.
² Tax equivalent yield assumes the maximum federal tax rate of 35%.
³ The Monthly Distribution per Common Share, declared on September 1, 2010 was increased to $0.0795. The Yield on Closing Market Price, Current Monthly Distribution per
Common Share and Current Annualized Distribution per Common Share do not reflect the new distribution rate. The new distribution rate is not constant and is subject to change.
⁴ Represents Preferred Shares and TOBs as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to Preferred Shares and
TOBs, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Trust, please see The Benefits and Risks of Leveraging on page 12.

The table below summarizes the changes in the Trust’s market price and NAV per share:

 

The following charts show the sector and credit quality allocations of the Trust’s long-term investments:

 

 

⁵ Using the higher of S&P’s or Moody’s ratings.
⁶ The investment advisor has deemed certain of these non-rated securities to be of
investment grade quality. As of August 31, 2010 and 2009, the market value of these
securities was $3,941,088 representing 1% and $18,918,142 representing 3%,
respectively, of the Trust’s long-term investments.

ANNUAL REPORT

AUGUST 31, 2010

5

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Trust Summary as of August 31, 2010

BlackRock New Jersey Municipal Bond Trust

Trust Overview

BlackRock New Jersey Municipal Bond Trust’s (BLJ) (the “Trust”) investment objective is to provide current income exempt from regular federal income tax
and New Jersey gross income tax. The Trust seeks to achieve its investment objective by investing primarily in municipal bonds exempt from federal income
taxes (except that the interest may subject to the federal alternative minimum tax) and New Jersey gross income taxes. Under normal market conditions, the
Trust invests at least 80% of its assets in municipal bonds that are investment grade quality at the time of investment. The Trust may invest directly in such
securities or synthetically through the use of derivatives.

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

Performance

For the 12 months ended August 31, 2010, the Trust returned 22.65% based on market price and 20.04% based on NAV. For the same period, the
closed-end Lipper New Jersey Municipal Debt Funds category posted an average return of 18.63% based on market price and 16.25% based on NAV. All
returns reflect reinvestment of dividends. The Trust's premium to NAV, which widened during the period, accounts for the difference between performance
based on price and performance based on NAV. The following discussion relates to performance based on NAV. The Trust’s holdings of health and housing
bonds with maturities of 20 years and longer contributed positively to performance as each of these sectors outperformed the broader market and bonds
with longer maturities benefited from declining yields. The Trust’s exposure to zero-coupon bonds detracted from performance as retail investors shunned
them in favor of current coupon bonds.

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These
views are not intended to be a forecast of future events and are no guarantee of future results.

 

¹ Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.
² Tax equivalent yield assumes the maximum federal tax rate of 35%.
³ The distribution is not constant and is subject to change.
⁴ Represents Preferred Shares and TOBs as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to Preferred Shares
and TOBs, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Trust, please see The Benefits and Risks of Leveraging on page 12.

The table below summarizes the changes in the Trust’s market price and NAV per share:

 

The following charts show the sector and credit quality allocations of the Trust’s long-term investments:

 

 

⁵ Using the higher of S&P’s or Moody’s ratings.
⁶ The investment advisor has deemed certain of these non-rated securities to be of
investment grade quality. As of August 31, 2010, the market value of these securities
was $1,013,550 representing 2% of the Trust’s long-term investments.

6 ANNUAL REPORT

AUGUST 31, 2010

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Trust Summary as of August 31, 2010

BlackRock New York Insured Municipal Income Trust

Trust Overview

BlackRock New York Insured Municipal Income Trust’s (BSE) (the “Trust”) investment objective is to provide current income exempt from federal income
tax, including the alternative minimum tax, and New York State and New York City personal income taxes. The Trust seeks to achieve its investment objective
by investing at least 80% of its assets in municipal obligations exempt from federal income taxes (including the alternative minimum tax) and New York
State and New York City personal income taxes. Under normal market conditions, the Trust invests at least 80% of its assets in municipal obligations that
are investment grade quality at the time of investment and at least 80% of its assets in municipal obligations that are covered by insurance guaranteeing
the timely payment of principal at maturity and interest when due. The Trust may invest directly in such securities or synthetically through the use
of derivatives.
No assurance can be given that the Trust’s investment objective will be achieved.

Performance

For the 12 months ended August 31, 2010, the Trust returned 20.18% based on market price and 16.04% based on NAV. For the same period, the closed-
end Lipper Single-State Insured Municipal Debt Funds category posted an average return of 21.21% based on market price and 14.13% based on NAV. All
returns reflect reinvestment of dividends. The Trust moved from a discount to NAV to a premium by period end, which accounts for the difference between
performance based on price and performance based on NAV. The following discussion relates to performance based on NAV. The Trust’s neutral-to-high
duration and low cash balance resulted in positive capital appreciation as interest rates declined. The Trust’s holdings of lower quality bonds outperformed
as credit spreads tightened, and long-term bonds benefited from declining yields. We purchased new issues structured to create greater potential for price
appreciation. The Trust’s exposure to the health and housing sectors and Puerto Rico credits added to performance. Conversely, the Trust’s holdings with
short maturities and/or call dates, detracted from performance as they underperformed longer-dated issues. Exposure to zero-coupon bonds detracted from
performance as investors favored current coupon bonds.
The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These
views are not intended to be a forecast of future events and are no guarantee of future results.

 

¹ Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.
² Tax equivalent yield assumes the maximum federal tax rate of 35%.
³ The Monthly Distribution per Common Share, declared on September 1, 2010, was increased to $0.0715. The Yield on Closing Market Price, Current Monthly Distribution per
Common Share and Current Annualized Distribution per Common Share do not reflect the new distribution rate. The new distribution rate is not constant and is subject to change in
the future.
⁴ Represents Preferred Shares and TOBs as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to Preferred Shares and
TOBs, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Trust, please see The Benefits and Risks of Leveraging on page 12.

 

The following charts show the sector and credit quality allocations of the Trust’s long-term investments:

 

 

⁵ Using the higher of S&P’s or Moody’s ratings.
⁶ The investment advisor has deemed certain of these non-rated securities to be of
investment grade quality. As of August 31, 2010 and August 31, 2009, the market
value of these securities was $9,329,772 representing 6% and $13,920,865 repre-
senting 10%, respectively, of the Trust’s long-term investments.

ANNUAL REPORT

AUGUST 31, 2010

7

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Trust Summary as of August 31, 2010

BlackRock New York Municipal Bond Trust

Trust Overview

BlackRock New York Municipal Bond Trust’s (BQH) (the “Trust”) investment objective is to provide current income exempt from regular federal income taxes
and New York State and New York City personal income taxes. The Trust seeks to achieve its investment objective by investing primarily in municipal bonds
exempt from federal income taxes (except that the interest may be subject to the federal alternative minimum tax) and New York State and New York City
personal income taxes. Under normal market conditions, the Trust invests at least 80% of its assets in municipal bonds that are investment grade quality at
the time of investment. The Trust may invest directly in such securities or synthetically through the use of derivatives.
No assurance can be given that the Trust’s investment objective will be achieved.

Performance

For the 12 months ended August 31, 2010, the Trust returned 18.15% based on market price and 15.18% based on NAV. For the same period, the closed-
end Lipper New York Municipal Debt Funds category posted an average return of 16.45% based on market price and 15.62% based on NAV. All returns
reflect reinvestment of dividends. The Trust moved from a discount to NAV to a premium by period end, which accounts for the difference between perform-
ance based on price and performance based on NAV. The following discussion relates to performance based on NAV. The Trust’s holdings with short maturi-
ties and/or call dates, detracted from performance as they underperformed longer-dated issues. The Trust’s exposure to zero-coupon bonds detracted from
performance as investors favored current coupon bonds. Overall, the tax-exempt municipal market benefited from the Build America Bond Program, which
made the taxable market accessible to municipal issuers. This alleviated supply pressure in the tax-exempt space, which, coupled with increased investor
demand for municipals, resulted in a favorable supply-and-demand environment and strong performance. The Trust’s neutral-to-high duration (sensitivity to
interest rates) and low cash balance resulted in positive capital appreciation as declining interest rates caused a rally in bond prices. Many of the Trust’s
holdings began the period with depressed valuations resulting from their underperformance during the periods of dislocations in the credit market, which
positioned them for more upward price movement potential as the market continued its recovery. Among these holdings were lower quality bonds, which
outperformed as credit spreads tightened, and long-term bonds, which benefited from declining yields. We purchased new issues structured with the goal of
creating greater potential for price appreciation in response to declining interest rates. The Trust’s increased exposure to economically sensitive sectors and
education bonds and its holdings of Puerto Rico credits also aided performance.
The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions.
These views are not intended to be a forecast of future events and are no guarantee of future results.

 

¹ Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.
² Tax equivalent yield assumes the maximum federal tax rate of 35%.
³ The Monthly Distribution per Common Share, declared on September 1, 2010, was increased to $0.082. The Yield on Closing Market Price, Current Monthly Distribution per
Common Share and Current Annualized Distribution per Common Share do not reflect the new distribution rate. The new distribution rate is not constant and is subject to change in
the future.
⁴ Represents Preferred Shares and TOBs as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to Preferred Shares and
TOBs, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Trust, please see The Benefits and Risks of Leveraging on page 12.

The table below summarizes the changes in the Trust’s market price and NAV per share:

 

The following charts show the sector and credit quality allocations of the Trust’s long-term investments:

 

 

8 ANNUAL REPORT

AUGUST 31, 2010

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Trust Summary as of August 31, 2010

BlackRock New York Municipal Income Trust II

Trust Overview

BlackRock New York Municipal Income Trust II’s (BFY) (the “Trust”) investment objective is to provide current income exempt from regular federal income tax
and New York State and New York City personal income taxes. The Trust seeks to achieve its investment objective by investing primarily in municipal bonds
exempt from federal income taxes (except that the interest may be subject to the federal alternative minimum tax) and New York State and New York City
personal income taxes. Under normal market conditions, the Trust invests at least 80% of its assets in municipal bonds that are investment grade quality at
the time of investment. The Trust may invest directly in such securities or synthetically through the use of derivatives.
No assurance can be given that the Trust’s investment objective will be achieved.

Performance

For the 12 months ended August 31, 2010, the Trust returned 18.09% based on market price and 16.69% based NAV. For the same period, the closed-end
Lipper New York Municipal Debt Funds category posted an average return of 16.45% based on market price and 15.62% based on NAV. All returns reflect
reinvestment of dividends. The Trust moved from a discount to NAV to a premium by period end, which accounts for the difference between performance
based on price and performance based on NAV. The following discussion relates to performance based on NAV. Overall, the tax-exempt municipal market
benefited from the Build America Bond Program, which made the taxable market accessible to municipal issuers. This alleviated supply pressure in the tax-
exempt space, which, coupled with increased investor demand for municipals, resulted in a favorable supply-and-demand environment and strong perform-
ance. The Trust’s neutral-to-high duration (sensitivity to interest rates) and low cash balance resulted in positive capital appreciation as declining interest
rates caused a rally in bond prices during the period. Many of the Trust’s holdings began the period with depressed valuations resulting from their underper-
formance during the periods of dislocations in the credit market, which positioned them for more upward price movement potential as the market continued
its recovery. Among these holdings were lower quality bonds, which outperformed as credit spreads tightened, and long-term bonds, which benefited from
declining yields. We purchased a number of new issues structured with the goal of creating greater potential for price appreciation in response to declining
interest rates. The Trust’s increased exposure to economically sensitive sectors and higher education bonds and its holdings of Puerto Rico credits also
aided performance. Conversely, the Trust’s holdings on the shorter end of the yield curve, including cushion bonds with short call dates, pre-refunded bonds,
and other short maturity issues, detracted from performance as they underperformed longer-dated issues. Exposure to zero-coupon bonds detracted from
performance as investors favored current coupon bonds.
The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These
views are not intended to be a forecast of future events and are no guarantee of future results.

 

¹ Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.
² Tax equivalent yield assumes the maximum federal tax rate of 35%.
³ The Monthly Distribution per Common Share, declared on September 1, 2010, was increased to $0.0835. The Yield on Closing Market Price, Current Monthly Distribution per Common
Share and Current Annualized Distribution per Common Share do not reflect the new distribution rate. The new distribution rate is not constant and is subject to change in the future.
⁴ Represents Preferred Shares and TOBs as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to Preferred Shares and
TOBs, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Trust, please see The Benefits and Risks of Leveraging on page 12.

The table below summarizes the changes in the Trust’s market price and NAV per share:

 

The following charts show the sector and credit quality allocations of the Trust’s long-term investments:

 

 

ANNUAL REPORT

AUGUST 31, 2010

9

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Trust Summary as of August 31, 2010

BlackRock Virginia Municipal Bond Trust

Trust Overview

BlackRock Virginia Municipal Bond Trust’s (BHV) (the “Trust”) investment objective is to provide current income exempt from regular federal income tax
and Virginia personal income taxes. The Trust seeks to achieve its investment objectives by investing primarily in municipal bonds exempt from federal
income taxes (except that the interest may be subject to the federal alternative minimum tax) and Virginia personal income taxes. The Trust invests, under
normal market conditions, at least 80% of its assets in municipal bonds that are investment grade quality at the time of investment. The Trust may invest
directly in such securities or synthetically through the use of derivatives.

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

Performance

For the 12 months ended August 31, 2010, the Trust returned 15.02% based on market price and 14.15% based on NAV. For the same period, the
closed-end Lipper Other States Municipal Debt Funds category posted an average return of 17.13% based on market price and 14.69% based on NAV.
All returns reflect reinvestment of dividends. The Trust's premium to NAV, which widened during the period, accounts for the difference between perform-
ance based on price and performance based on NAV. The following discussion relates to performance based on NAV. The Trust’s exposure to bonds struc-
tured with premium coupons, short calls and/or short maturities detracted from performance as the shorter end of the yield curve underperformed longer
maturities in the declining interest rate environment. However, the Trust benefited from its overall high duration (sensitivity to interest rates) as bond prices
appreciated as yields declined. The Trust’s bias toward the longer end of the yield curve contributed to performance as falling interest rates had a greater
positive effect on longer dated issues. In addition, exposure to lower quality underlying credits aided performance as credit spreads generally tightened
over the period.

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These
views are not intended to be a forecast of future events and are no guarantee of future results.

 

¹ Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.
² Tax equivalent yield assumes the maximum federal tax rate of 35%.
³ The Monthly Distribution per Common Share, declared on September 1, 2010, was increased to $0.083. The Yield on Closing Market Price, Current Monthly Distribution per Common
Share and Current Annualized Distribution per Common Share do not reflect the new distribution rate. The new distribution rate is not constant and is subject to change in the future.
⁴ Represents Preferred Shares and TOBs as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to Preferred Shares and
TOBs, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Trust, please see The Benefits and Risks of Leveraging on page 12.

The table below summarizes the changes in the Trust’s market price and NAV per share:

 

The following charts show the sector and credit quality allocations of the Trust’s long-term investments:

 

 

10 ANNUAL REPORT

AUGUST 31, 2010

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Trust Summary as of August 31, 2010

The Massachusetts Health & Education Tax-Exempt Trust

Trust Overview

The Massachusetts Health & Education Tax-Exempt Trust’s (MHE) (the “Trust”) investment objective is to provide shareholders with as high a level of current
income exempt from both regular federal income taxes and Massachusetts personal income taxes as is consistent with the preservation of shareholders’ capital.
The Trust seeks to achieve its investment objective by investing primarily in tax-exempt obligations (including bonds, notes and capital lease obligations) issued
on behalf of Massachusetts not-for-profit health and education institutions (“Massachusetts Health & Education Obligations”). The Trust invests, under normal
market conditions, at least 80% of its assets in Massachusetts Health & Education Obligations and at least 80% of its assets in obligations that are rated invest-
ment grade at the time of investment. Under normal market conditions, the Trust invests its assets so that at least 80% of the income generated by the Trust is
exempt from federal income taxes, including federal alternative minimum tax, and Massachusetts personal income taxes. The Trust invests primarily in long term
municipal obligations with maturities of more than ten years. The Trust may invest directly in such securities or synthetically through the use of derivatives.

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

Performance

For the 12 months ended August 31, 2010, the Trust returned 24.37% based on market price and 18.40% based on NAV. For the same period, the closed-
end Lipper Other States Municipal Debt Funds category posted an average return of 17.13% based on market price and 14.69% based on NAV. All returns
reflect reinvestment of dividends. The Trust moved from a discount to NAV to a premium by period end, which accounts for the difference between perform-
ance based on price and performance based on NAV. The following discussion relates to performance based on NAV. The Trust’s holdings of health and edu-
cation bonds with maturities of 20 years and longer contributed positively to performance as each of these sectors outperformed the broader market and
bonds with longer maturities benefited from declining yields. The Trust’s exposure to pre-refunded bonds with maturities between two and three years
detracted from performance as securities on the shorter end of the yield curve underperformed longer-dated issues.

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These
views are not intended to be a forecast of future events and are no guarantee of future results.

 

¹ Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.
² Tax equivalent yield assumes the maximum federal tax rate of 35%.
³ The distribution rate is not constant and is subject to change.
⁴ Represents Preferred Shares and TOBs as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to Preferred Shares and
TOBs, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Trust, please see The Benefits and Risks of Leveraging on page 12.

The table below summarizes the changes in the Trust’s market price and NAV per share:

 

The following charts show the sector and credit quality allocations of the Trust’s long-term investments:

 

 

⁵ Using the higher of S&P’s or Moody’s ratings.
⁶ The investment advisor has deemed certain of these non-rated securities to be of
investment grade quality. As of August 31, 2010 and 2009, the market value of these
securities was $2,061,578 representing 4% and $2,117,414 representing 5%,
respectively, of the Trust’s long-term investments.

ANNUAL REPORT

AUGUST 31, 2010

11

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The Benefits and Risks of Leveraging

The Trusts may utilize leverage to seek to enhance the yield and NAV of
their Common Shares. However, these objectives cannot be achieved in all
interest rate environments.

To leverage, the Trusts issue Preferred Shares, which pay dividends at pre-
vailing short-term interest rates, and invest the proceeds in long-term
municipal bonds. In general, the concept of leveraging is based on the
premise that the financing cost of assets to be obtained from leverage will
be based on short-term interest rates, which normally will be lower than
the income earned by each Trust on its longer-term portfolio investments. To
the extent that the total assets of each Trust (including the assets obtained
from leverage) are invested in higher-yielding portfolio investments, each
Trust’s Common Shareholders will benefit from the incremental net income.

To illustrate these concepts, assume a Trust’s Common Shares capitaliza-
tion is $100 million and it issues Preferred Shares 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 3%
and long-term interest rates are 6%, the yield curve has a strongly positive
slope. In this case, the Trust pays dividends on the $50 million of Preferred
Shares based on the lower short-term interest rates. At the same time, the
securities purchased by the Trust with assets received from Preferred
Shares issuance earn income based on long-term interest rates. In this
case, the dividends paid to Preferred Shareholders are significantly lower
than the income earned on the Trust’s long-term investments, and therefore
the Common Shareholders are the beneficiaries of the incremental net
income.

If short-term interest rates rise, narrowing the differential between short-
term and long-term interest rates, the incremental net income pickup on
the Common Shares will be reduced or eliminated completely. Furthermore,
if prevailing short-term interest rates rise above long-term interest rates of
6%, the yield curve has a negative slope. In this case, the Trust pays divi-
dends on the higher short-term interest rates whereas the Trust’s total port-
folio earns income based on lower long-term interest rates.

Furthermore, the value of the Trusts’ portfolio investments generally varies
inversely with the direction of long-term interest rates, although other
factors can influence the value of portfolio investments. In contrast, the
redemption value of the Trusts’ Preferred Shares does not fluctuate in rela-
tion to interest rates. As a result, changes in interest rates can influence the
Trusts’ NAV positively or negatively in addition to the impact on Trust per-
formance from leverage from Preferred Shares discussed above.

The Trusts may also leverage their assets through the use of tender option
bond (“TOB”) programs, as described in Note 1 of the Notes to Financial
Statements. TOB investments generally will provide the Trusts with economic
benefits in periods of declining short-term interest rates, but expose the
Trusts to risks during periods of rising short-term interest rates similar to
those associated with Preferred Shares issued by the Trusts, as described
above. Additionally, fluctuations in the market value of municipal bonds
deposited into the TOB trust may adversely affect each Trust’s NAV
per share.

The use of leverage may enhance opportunities for increased income to the
Trusts and Common Shareholders, but as described above, it also creates
risks as short- or long-term interest rates fluctuate. Leverage also will gen-
erally cause greater changes in each Trust’s NAV, market price and dividend
rate than a comparable portfolio without leverage. If the income derived
from securities purchased with assets received from leverage exceeds the
cost of leverage, each Trust’s net income will be greater than if leverage had
not been used. Conversely, if the income from the securities purchased is
not sufficient to cover the cost of leverage, the Trusts’ net income will be
less than if leverage had not been used, and therefore the amount avail-
able for distribution to Common Shareholders will be reduced. Each Trust
may be required to sell portfolio securities at inopportune times or at dis-
tressed values in order to comply with regulatory requirements applicable
to the use of leverage or as required by the terms of leverage instruments,
which may cause a Trust to incur losses. The use of leverage may limit each
Trust’s ability to invest in certain types of securities or use certain types of
hedging strategies, such as in the case of certain restrictions imposed by
ratings agencies that rate preferred shares issued by the Trusts. Each Trust
will incur expenses in connection with the use of leverage, all of which are
borne by Common Shareholders and may reduce income to the
Common Shares.

Under the Investment Company Act of 1940, the Trusts are permitted to
issue Preferred Shares in an amount of up to 50% of their total managed
assets at the time of issuance. Under normal circumstances, each Trust
anticipates that the total economic leverage from Preferred Shares and/or
TOBs will not exceed 50% of its total managed assets at the time such
leverage is incurred. As of August 31, 2010, the Trusts had economic
leverage from Preferred Shares and/or TOBs as a percentage of their total
managed assets as follows:

 

12 ANNUAL REPORT

AUGUST 31, 2010

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Derivative Financial Instruments

The Trusts may invest in various derivative instruments, including financial
futures contracts, as specified in Note 2 of the Notes to Financial State-
ments, which may constitute forms of economic leverage. Such instruments
are used to obtain exposure to a market without owning or taking physical
custody of securities or to hedge market and/or interest rate risks. Such
derivative instruments involve risks, including the imperfect correlation
between the value of a derivative instrument and the underlying asset,
possible default of the counterparty to the transaction or illiquidity of the
derivative instrument. The Trusts’ ability to successfully use a derivative

instrument depends on the investment advisor’s ability to accurately
predict pertinent market movements, which cannot be assured. The use
of derivative instruments may result in losses greater than if they had not
been used, may require a Trust to sell or purchase portfolio securities at
inopportune times or for distressed values, may limit the amount of appre-
ciation a Trust can realize on an investment, may result in lower dividends
paid to shareholders or may cause a Trust to hold a security that it might
otherwise sell. The Trusts’ investments in these instruments are discussed in
detail in the Notes to Financial Statements.

ANNUAL REPORT

AUGUST 31, 2010

13

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Schedule of Investments August 31, 2010

BlackRock Maryland Municipal Bond Trust (BZM)
(Percentages shown are based on Net Assets)

 

 

 

14 ANNUAL REPORT

AUGUST 31, 2010

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Schedule of Investments (concluded)

BlackRock Maryland Municipal Bond Trust (BZM)
(Percentages shown are based on Net Assets)

 

* The cost and unrealized appreciation (depreciation) of investments as of
August 31, 2010, as computed for federal income tax purposes, were as follows:

 

(a) US government securities, held in escrow, are used to pay interest on this security as
well as to retire the bond in full at the date indicated, typically at a premium to par.
(b) Security exempt from registration under Rule 144A of the Securities Act of 1933.
These securities may be resold in transactions exempt from registration to qualified
institutional investors.
(c) Security represents a beneficial interest in a trust. The collateral deposited into the
trust is federally tax-exempt revenue bonds issued by various state or local govern-
ments, or their respective agencies or authorities. The security is subject to remarket-
ing prior to its stated maturity.
(d) Securities represent bonds transferred to a tender option bond trust in exchange for
which the Trust acquired residual interest certificates. These securities serve as col-
lateral in a financing transaction. See Note 1 of the Notes to Financial Statements
for details of municipal bonds transferred to tender option bond trusts.
(e) Investments in companies considered to be an affiliate of the Trust during the year,
for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as
amended, were as follows:

 

(f) Represents the current yield as of report date.
• For Trust compliance purposes, the Trust’s sector classifications refer to any one or
more of the sector sub-classifications used by one or more widely recognized mar-
ket indexes or ratings group indexes, and/or as defined by Trust management. This
definition may not apply for purposes of this report, which may combine such sector
sub-classifications for reporting ease.
• Fair Value Measurements — Various inputs are used in determining the fair value of
investments, which are as follows:
• Level 1 — price quotations in active markets/exchanges for identical assets
and liabilities
• Level 2 — other observable inputs (including, but not limited to: quoted prices for
similar assets or liabilities in markets that are active, quoted prices for identical
or similar assets or liabilities in markets that are not active, inputs other than
quoted prices that are observable for the assets or liabilities (such as interest
rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and
default rates) or other market-corroborated inputs)
• Level 3 — unobservable inputs based on the best information available in the
circumstances, to the extent observable inputs are not available (including the
Trust’s own assumptions used in determining the fair value of investments)
The inputs or methodologies used for valuing securities are not necessarily an indi-
cation of the risk associated with investing in those securities. For information about
the Trust’s policy regarding valuation of investments and other significant accounting
policies, please refer to Note 1 of the Notes to Financial Statements.
The following table summarizes the inputs used as of August 31, 2010 in determin-
ing the fair valuation of the Trust’s investments:

 

¹ See above Schedule of Investments for values in each sector.

See Notes to Financial Statements.

ANNUAL REPORT

AUGUST 31, 2010

15

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Schedule of Investments August 31, 2010

BlackRock MuniHoldings New York Insured Fund, Inc. (MHN)

(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

16 ANNUAL REPORT

AUGUST 31, 2010

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Schedule of Investments (continued)

BlackRock MuniHoldings New York Insured Fund, Inc. (MHN)

(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

ANNUAL REPORT

AUGUST 31, 2010

17

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Schedule of Investments (continued)

BlackRock MuniHoldings New York Insured Fund, Inc. (MHN)

(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

18 ANNUAL REPORT

AUGUST 31, 2010

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Schedule of Investments (concluded)

BlackRock MuniHoldings New York Insured Fund, Inc. (MHN)

(Percentages shown are based on Net Assets)

 

* The cost and unrealized appreciation (depreciation) of investments as of
August 31, 2010, as computed for federal income tax purposes, were as follows:

 

(a) Variable rate security. Rate shown is as of report date.
(b) US government securities, held in escrow, are used to pay interest on this security as
well as to retire the bond in full at the date indicated, typically at a premium to par.
(c) Represents a zero-coupon bond. Rate shown reflects the current yield as of
report date.
(d) Securities represent bonds transferred to a tender option bond trust in exchange for
which the Trust acquired residual interest certificates. These securities serve as col-
lateral in a financing transaction. See Note 1 of the Notes to Financial Statements
for details of municipal bonds transferred to tender option bond trusts.
(e) Variable rate security. Rate shown is as of report date and maturity shown is the
date the principal owed can be recovered through demand.
(f) Investments in companies considered to be an affiliate of the Trust during the year,
for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as
amended, were as follows:

 

(g) Represents the current yield as of report date.
• For Trust compliance purposes, the Trust’s sector classifications refer to any one or
more of the sector sub-classifications used by one or more widely recognized mar-
ket indexes or ratings group indexes, and/or as defined by Trust management. This
definition may not apply for purposes of this report, which may combine such sector
sub-classifications for reporting ease.
• Fair Value Measurements — Various inputs are used in determining the fair value of
investments, which are as follows:
• Level 1 — price quotations in active markets/exchanges for identical assets
and liabilities
• Level 2 — other observable inputs (including, but not limited to: quoted prices for
similar assets or liabilities in markets that are active, quoted prices for identical
or similar assets or liabilities in markets that are not active, inputs other than
quoted prices that are observable for the assets or liabilities (such as interest
rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and
default rates) or other market-corroborated inputs)
• Level 3 — unobservable inputs based on the best information available in the
circumstances, to the extent observable inputs are not available (including the
Trust’s own assumptions used in determining the fair value of investments)
The inputs or methodologies used for valuing securities are not necessarily an indi-
cation of the risk associated with investing in those securities. For information about
the Trust’s policy regarding valuation of investments and other significant accounting
policies, please refer to Note 1 of the Notes to Financial Statements.
The following table summarizes the inputs used as of August 31, 2010 in determin-
ing the fair valuation of the Trust’s investments:

 

See Notes to Financial Statements.

ANNUAL REPORT

AUGUST 31, 2010

19

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Schedule of Investments August 31, 2010

BlackRock New Jersey Municipal Bond Trust (BLJ)
(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

20 ANNUAL REPORT

AUGUST 31, 2010

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Schedule of Investments (continued)

BlackRock New Jersey Municipal Bond Trust (BLJ)
(Percentages shown are based on Net Assets)

 

 

* The cost and unrealized appreciation (depreciation) of investments as of
August 31, 2010, as computed for federal income tax purposes, were as follows:

 

(a) Variable rate security. Rate shown is as of report date.
(b) US government securities, held in escrow, are used to pay interest on this security as
well as to retire the bond in full at the date indicated, typically at a premium to par.
(c) Represents a zero-coupon bond. Rate shown reflects the current yield as of
report date.
(d) When-issued security. Unsettled when-issued transactions were as follows:

 

See Notes to Financial Statements.

ANNUAL REPORT

AUGUST 31, 2010

21

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Schedule of Investments (concluded)

BlackRock New Jersey Municipal Bond Trust (BLJ)

(e) Security exempt from registration under Rule 144A of the Securities Act of 1933.
These securities may be resold in transactions exempt from registration to qualified
institutional investors.
(f) Security represents a beneficial interest in a trust. The collateral deposited into
the trust is federally tax-exempt revenue bonds issued by various state or local
governments, or their respective agencies or authorities. The security is subject to
remarketing prior to its stated maturity.
(g) Securities represent bonds transferred to a tender option bond trust in exchange for
which the Trust acquired residual interest certificates. These securities serve as col-
lateral in a financing transaction. See Note 1 of the Notes to Financial Statements
for details of municipal bonds transferred to tender option bond trusts.
(h) Investments in companies considered to be an affiliate of the Trust during the
year, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as
amended, were as follows:

 

(i) Represents the current yield as of report date.
• For Trust compliance purposes, the Trust’s sector classifications refer to any one or
more of the sector sub-classifications used by one or more widely recognized mar-
ket indexes or ratings group indexes, and/or as defined by Trust management. This
definition may not apply for purposes of this report, which may combine such sector
sub-classifications for reporting ease.

• Fair Value Measurements — Various inputs are used in determining the fair value of
investments, which are as follows:
• Level 1 — price quotations in active markets/exchanges for identical assets
and liabilities
• Level 2 — other observable inputs (including, but not limited to: quoted prices for
similar assets or liabilities in markets that are active, quoted prices for identical
or similar assets or liabilities in markets that are not active, inputs other than
quoted prices that are observable for the assets or liabilities (such as interest
rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and
default rates) or other market-corroborated inputs)
• Level 3 — unobservable inputs based on the best information available in the
circumstances, to the extent observable inputs are not available (including the
Trust’s own assumptions used in determining the fair value of investments)
The inputs or methodologies used for valuing securities are not necessarily an indi-
cation of the risk associated with investing in those securities. For information about
the Trust’s policy regarding valuation of investments and other significant accounting
policies, please refer to Note 1 of the Notes to Financial Statements.
The following table summarizes the inputs used as of August 31, 2010 in determin-
ing the fair valuation of the Trust’s investments:

 

¹ See above Schedule of Investments for values in each sector.

See Notes to Financial Statements.

22 ANNUAL REPORT

AUGUST 31, 2010

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Schedule of Investments August 31, 2010

BlackRock New York Insured Municipal Income Trust (BSE)

(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

ANNUAL REPORT

AUGUST 31, 2010

23

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Schedule of Investments (continued)

BlackRock New York Insured Municipal Income Trust (BSE)

(Percentages shown are based on Net Assets)

 

 

* The cost and unrealized appreciation (depreciation) of investments as of
August 31, 2010, as computed for federal income tax purposes, were as follows:

 

(a) Represents a zero-coupon bond. Rate shown reflects the current yield as of
report date.
(b) US government securities, held in escrow, are used to pay interest on this security
as well as to retire the bond in full at the date indicated, typically at a premium
to par.
(c) Securities represent bonds transferred to a tender option bond trust in exchange for
which the Trust acquired residual interest certificates. These securities serve as col-
lateral in a financing transaction. See Note 1 of the Notes to Financial Statements
for details of municipal bonds transferred to tender option bond trusts.
(d) Variable rate security. Rate shown is as of report date and maturity shown is the
date the principal owed can be recovered through demand.

See Notes to Financial Statements.

24 ANNUAL REPORT

AUGUST 31, 2010

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Schedule of Investments (concluded)

BlackRock New York Insured Municipal Income Trust (BSE)

(e) Investments in companies considered to be an affiliate of the Trust during the
year, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as
amended, were as follows:

 

(f) Represents the current yield as of report date.
• For Trust compliance purposes, the Trust’s sector classifications refer to any one or
more of the sector sub-classifications used by one or more widely recognized mar-
ket indexes or ratings group indexes, and/or as defined by Trust management. This
definition may not apply for purposes of this report, which may combine such sector
sub-classifications for reporting ease.

• Fair Value Measurements — Various inputs are used in determining the fair value of
investments, which are as follows:
• Level 1 — price quotations in active markets/exchanges for identical assets
and liabilities
• Level 2 — other observable inputs (including, but not limited to: quoted prices for
similar assets or liabilities in markets that are active, quoted prices for identical
or similar assets or liabilities in markets that are not active, inputs other than
quoted prices that are observable for the assets or liabilities (such as interest
rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and
default rates) or other market-corroborated inputs)
• Level 3 — unobservable inputs based on the best information available in the
circumstances, to the extent observable inputs are not available (including the
Trust’s own assumptions used in determining the fair value of investments)
The inputs or methodologies used for valuing securities are not necessarily an indi-
cation of the risk associated with investing in those securities. For information
about the Trust’s policy regarding valuation of investments and other significant
accounting policies, please refer to the Note 1 of the Notes to Financial Statements.
The following table summarizes the inputs used as of August 31, 2010 in determin-
ing the fair valuation of the Trust’s investments:

 

¹ See above Schedule of Investments for values in each sector.

See Notes to Financial Statements.

ANNUAL REPORT

AUGUST 31, 2010

25

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Schedule of Investments August 31, 2010

BlackRock New York Municipal Bond Trust (BQH)
(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

26 ANNUAL REPORT

AUGUST 31, 2010

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Schedule of Investments (continued)

BlackRock New York Municipal Bond Trust (BQH)
(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

ANNUAL REPORT

AUGUST 31, 2010

27

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Schedule of Investments (concluded)

BlackRock New York Municipal Bond Trust (BQH)
(Percentages shown are based on Net Assets)

 

* The cost and unrealized appreciation (depreciation) of investments as of
August 31, 2010, as computed for federal income tax purposes, were as follows:

 

(a) Variable rate security. Rate shown is as of report date.
(b) Represents a zero-coupon bond. Rate shown reflects the current yield as of
report date.
(c) Issuer filed for bankruptcy and/or is in default of interest payments.
(d) Non-income producing security.
(e) US government securities, held in escrow, are used to pay interest on this security as
well as to retire the bond in full at the date indicated, typically at a premium to par.
(f) Represents a step-up bond that pays an initial coupon rate for the first period and
then a higher coupon rate for the following periods. Rate shown reflects the current
yield as of report date.
(g) Security exempt from registration under Rule 144A of the Securities Act of 1933.
These securities may be resold in transactions exempt from registration to qualified
institutional investors.
(h) Security represents a beneficial interest in a trust. The collateral deposited into the
trust is federally tax-exempt revenue bonds issued by various state or local govern-
ments, or their respective agencies or authorities. The security is subject to remarket-
ing prior to its stated maturity.
(i) Securities represent bonds transferred to a tender option bond trust in exchange for
which the Trust acquired residual interest certificates. These securities serve as col-
lateral in a financing transaction. See Note 1 of the Notes to Financial Statements
for details of municipal bonds transferred to tender option bond trusts.
(j) Investments in companies considered to be an affiliate of the Trust during the year,
for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as
amended, were as follows:

 

(k) Represents the current yield as of report date.
• For Trust compliance purposes, the Trust’s sector classifications refer to any one or
more of the sector sub-classifications used by one or more widely recognized mar-
ket indexes or ratings group indexes, and/or as defined by Trust management. This
definition may not apply for purposes of this report, which may combine such sector
sub-classifications for reporting ease.

• Fair Value Measurements — Various inputs are used in determining the fair value of
investments, which are as follows:
• Level 1 — price quotations in active markets/exchanges for identical assets
and liabilities
• Level 2 — other observable inputs (including, but not limited to: quoted prices for
similar assets or liabilities in markets that are active, quoted prices for identical
or similar assets or liabilities in markets that are not active, inputs other than
quoted prices that are observable for the assets or liabilities (such as interest
rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and
default rates) or other market-corroborated inputs)
• Level 3 — unobservable inputs based on the best information available in the
circumstances, to the extent observable inputs are not available (including the
Trust’s own assumptions used in determining the fair value of investments)
The inputs or methodologies used for valuing securities are not necessarily an indi-
cation of the risk associated with investing in those securities. For information about
the Trust’s policy regarding valuation of investments and other significant accounting
policies, please refer to Note 1 of the Notes to Financial Statements.
The following table summarizes the inputs used as of August 31, 2010 in determin-
ing the fair valuation of the Trust’s investments:

 

See Notes to Financial Statements.

28 ANNUAL REPORT

AUGUST 31, 2010

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Schedule of Investments August 31, 2010

BlackRock New York Municipal Income Trust II (BFY)
(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

ANNUAL REPORT

AUGUST 31, 2010

29

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Schedule of Investments (continued)

BlackRock New York Municipal Income Trust II (BFY)
(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

30 ANNUAL REPORT

AUGUST 31, 2010

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Schedule of Investments (concluded)

BlackRock New York Municipal Income Trust II (BFY)

(Percentages shown are based on Net Assets)

 

* The cost and unrealized appreciation (depreciation) of investments as of
August 31, 2010, as computed for federal income tax purposes, were as follows:

 

(a) Variable rate security. Rate shown is as of report date.
(b) US government securities, held in escrow, are used to pay interest on this security as
well as to retire the bond in full at the date indicated, typically at a premium to par.
(c) Represents a zero-coupon bond. Rate shown reflects the current yield as of
report date.

(d) Issuer filed for bankruptcy and/or is in default of interest payments.
(e) Non-income producing security.
(f) Represents a step-up bond that pays an initial coupon rate for the first period and
then a higher coupon rate for the following periods. Rate shown reflects the current
yield as of report date.
(g) Security exempt from registration under Rule 144A of the Securities Act of 1933.
These securities may be resold in transactions exempt from registration to qualified
institutional investors.
(h) Security represents a beneficial interest in a trust. The collateral deposited into the
trust is federally tax-exempt revenue bonds issued by various state or local govern-
ments, or their respective agencies or authorities. The security is subject to remarket-
ing prior to its stated maturity.
(i) Securities represent bonds transferred to a tender option bond trust in exchange for
which the Trust acquired residual interest certificates. These securities serve as col-
lateral in a financing transaction. See Note 1 of the Notes to Financial Statements
for details of municipal bonds transferred to tender option bond trusts.
(j) Investments in companies considered to be an affiliate of the Trust during the
year, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as
amended, were as follows:

 

(k) Represents the current yield as of report date.
• For Trust compliance purposes, the Trust’s sector classifications refer to any one or
more of the sector sub-classifications used by one or more widely recognized market
indexes or ratings group indexes, and/or as defined by Trust management. This defini-
tion may not apply for purposes of this report, which may combine such sector sub-
classifications for reporting ease.
• Fair Value Measurements — Various inputs are used in determining the fair value of
investments, which are as follows:
• Level 1 — price quotations in active markets/exchanges for identical assets
and liabilities
• Level 2 — other observable inputs (including, but not limited to: quoted prices for
similar assets or liabilities in markets that are active, quoted prices for identical
or similar assets or liabilities in markets that are not active, inputs other than
quoted prices that are observable for the assets or liabilities (such as interest
rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and
default rates) or other market-corroborated inputs)
• Level 3 — unobservable inputs based on the best information available in the
circumstances, to the extent observable inputs are not available (including the
Trust’s own assumptions used in determining the fair value of investments)
The inputs or methodologies used for valuing securities are not necessarily an indi-
cation of the risk associated with investing in those securities. For information about
the Trust’s policy regarding valuation of investments and other significant accounting
policies, please refer to Note 1 of the Notes to Financial Statements.
The following table summarizes the inputs used as of August 31, 2010 in determin-
ing the fair valuation of the Trust’s investments:

 

See Notes to Financial Statements.

ANNUAL REPORT

AUGUST 31, 2010

31

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Schedule of Investments August 31, 2010

BlackRock Virginia Municipal Bond Trust (BHV)
(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

32 ANNUAL REPORT

AUGUST 31, 2010

---

Schedule of Investments (concluded)

BlackRock Virginia Municipal Bond Trust (BHV)
(Percentages shown are based on Net Assets)

 

* The cost and unrealized appreciation (depreciation) of investments as of
August 31, 2010, as computed for federal income tax purposes, were as follows:

 

(a) Variable rate security. Rate shown is as of report date.
(b) Security is collateralized by Municipal or US Treasury obligations.
(c) Security represents a beneficial interest in a trust. The collateral deposited into
the trust is federally tax-exempt revenue bonds issued by various state or local
governments, or their respective agencies or authorities. The security is subject to
remarketing prior to its stated maturity.
(d) Security exempt from registration under Rule 144A of the Securities Act of 1933.
These securities may be resold in transactions exempt from registration to qualified
institutional investors.
(e) Securities represent bonds transferred to a tender option bond trust in exchange for
which the Trust acquired residual interest certificates. These securities serve as col-
lateral in a financing transaction. See Note 1 of the Notes to Financial Statements
for details of municipal bonds transferred to tender option bond trusts.
(f) Investments in companies considered to be an affiliate of the Trust during the year,
for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as
amended, were as follows:

 

(g) Represents the current yield as of report date.
• For Trust compliance purposes, the Trust’s sector classifications refer to any one or
more of the sector sub-classifications used by one or more widely recognized mar-
ket indexes or ratings group indexes and/or as defined by Trust management. This
definition may not apply for purposes of this report, which may combine sector sub-
classifications for reporting ease.

• Fair Value Measurements — Various inputs are used in determining the fair value of
investments, which are as follows:
• Level 1 — price quotations in active markets/exchanges for identical assets
and liabilities
• Level 2 — other observable inputs (including, but not limited to: quoted prices for
similar assets or liabilities in markets that are active, quoted prices for identical
or similar assets or liabilities in markets that are not active, inputs other than
quoted prices that are observable for the assets or liabilities (such as interest
rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and
default rates) or other market-corroborated inputs)
• Level 3 — unobservable inputs based on the best information available in the
circumstances, to the extent observable inputs are not available (including the
Trust’s own assumptions used in determining the fair value of investments)
The inputs or methodologies used for valuing securities are not necessarily an indi-
cation of the risk associated with investing in those securities. For information about
the Trust’s policy regarding valuation of investments and other significant accounting
policies, please refer to Note 1 of the Notes to Financial Statements.
The following table summarizes the inputs used as of August 31, 2010 in determin-
ing the fair valuation of the Trust’s investments:

 

See Notes to Financial Statements.

ANNUAL REPORT

AUGUST 31, 2010

33

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Schedule of Investments August 31, 2010

The Massachusetts Health & Tax-Exempt Trust (MHE)
(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

34 ANNUAL REPORT

AUGUST 31, 2010

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Schedule of Investments (concluded)

The Massachusetts Health & Tax-Exempt Trust (MHE)
(Percentages shown are based on Net Assets)

 

* The cost and unrealized appreciation (depreciation) of investments as of
August 31, 2010, as computed for federal income tax purposes, were as follows:

 

(a) US government securities, held in escrow, are used to pay interest on this security as
well as to retire the bond in full at the date indicated, typically at a premium to par.
(b) When-issued security. Unsettled when-issued transactions were as follows:

 

(c) Securities represent bonds transferred to a tender option bond trust in exchange for
which the Trust acquired residual interest certificates. These securities serve as col-
lateral in a financing transaction. See Note 1 of the Notes to Financial Statements
for details of municipal bonds transferred to tender option bond trusts.
(d) 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
shown is as of report date and maturity shown is the date the principal owed can
be recovered through demand.
(e) Investments in companies considered to be an affiliate of the Trust during the
year, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as
amended, were as follows:

 

(f) Represents the current yield as of report date.
• For Trust compliance purposes, the Trust’s sector classifications refer to any one or
more of the sector sub-classifications used by one or more widely recognized mar-
ket indexes or ratings group indexes, and/or as defined by Trust management. This
definition may not apply for purposes of this report, which may combine such sector
sub-classifications for reporting ease.
• Fair Value Measurements — Various inputs are used in determining the fair value of
investments, which are as follows:
• Level 1 — price quotations in active markets/exchanges for identical assets
and liabilities
• Level 2 — other observable inputs (including, but not limited to: quoted prices for
similar assets or liabilities in markets that are active, quoted prices for identical
or similar assets or liabilities in markets that are not active, inputs other than
quoted prices that are observable for the assets or liabilities (such as interest
rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and
default rates) or other market-corroborated inputs)
• Level 3 — unobservable inputs based on the best information available in the
circumstances, to the extent observable inputs are not available (including the
Trust’s own assumptions used in determining the fair value of investments)
The inputs or methodologies used for valuing securities are not necessarily an indi-
cation of the risk associated with investing in those securities. For information about
the Trust’s policy regarding valuation of investments and other significant accounting
policies, please refer to Note 1 of the Notes to Financial Statements.
The following table summarizes the inputs used as of August 31, 2010 in determin-
ing the fair valuation of the Trust’s investments:

 

¹ See above Schedule of Investments for values in each sector.

See Notes to Financial Statements.

ANNUAL REPORT

AUGUST 31, 2010

35

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See Notes to Financial Statements.

36 ANNUAL REPORT

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See Notes to Financial Statements.

ANNUAL REPORT

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See Notes to Financial Statements.

38 ANNUAL REPORT

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See Notes to Financial Statements.

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See Notes to Financial Statements.

40 ANNUAL REPORT

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See Notes to Financial Statements.

ANNUAL REPORT

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See Notes to Financial Statements.

42 ANNUAL REPORT

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¹ Based on average Common Shares outstanding.
² Amount is less than $(0.01) per share.
³ 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. Where applicable,
total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.
⁴ Do not reflect the effect of dividends to Preferred Shareholders.
⁵ Interest expense and fees relate to tender option bond trusts. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to tender option bond trusts.

See Notes to Financial Statements.

ANNUAL REPORT

AUGUST 31, 2010

43

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¹ Based on average Common Shares outstanding.
² 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. Where applicable,
total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.
³ Do not reflect the effect of dividends to Preferred Shareholders.
⁴ Interest expense and fees relate to tender option bond trusts. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to tender option bond trusts.

See Notes to Financial Statements.

44 ANNUAL REPORT

AUGUST 31, 2010

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¹ Based on average Common Shares outstanding.

² Amount is less than $(0.01) per share.

³ 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. Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

⁴ Do not reflect the effect of dividends to Preferred Shareholders.

⁵ Interest expense and fees relate to tender option bond trusts. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to tender option bond trusts.

See Notes to Financial Statements.

ANNUAL REPORT

AUGUST 31, 2010

45

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¹ Based on average Common Shares outstanding.
² 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. Where applicable,
total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.
³ Do not reflect the effect of dividends to Preferred Shareholders.
⁴ Interest expense and fees relate to tender option bond trusts. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to tender option bond trusts.

See Notes to Financial Statements.

46 ANNUAL REPORT

AUGUST 31, 2010

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¹ Based on average Common Shares outstanding.
² Amount is less than $(0.01) per share.
³ 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. Where applicable,
total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.
⁴ Do not reflect the effect of dividends to Preferred Shareholders.
⁵ Interest expense and fees relate to tender option bond trusts. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to tender option bond trusts.

See Notes to Financial Statements.

ANNUAL REPORT

AUGUST 31, 2010

47

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¹ Based on average Common Shares outstanding.
² 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. Where applicable,
total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.
³ Do not reflect the effect of dividends to Preferred Shareholders.
⁴ Interest expense and fees relate to tender option bond trusts. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to tender option bond trusts.

See Notes to Financial Statements.

48 ANNUAL REPORT

AUGUST 31, 2010

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¹ Based on average Common Shares outstanding.
² 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. Where applicable,
total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.
³ Do not reflect the effect of dividends to Preferred Shareholders.
⁴ Interest expense and fees relate to tender option bond trusts. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to tender option bond trusts.

See Notes to Financial Statements.

ANNUAL REPORT

AUGUST 31, 2010

49

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¹ Based on average Common Shares outstanding.
² 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. Where applicable,
total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.
³ Aggregate total investment return.
⁴ Do not reflect the effect of dividends to Preferred Shareholders.
⁵ Annualized.
⁶ Interest expense and fees relate to tender option bond trusts. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to tender option bond trusts.

See Notes to Financial Statements.

50 ANNUAL REPORT

AUGUST 31, 2010

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Notes to Financial Statements

1. Organization and Significant Accounting Policies:

BlackRock MuniHoldings New York Insured Fund, Inc. ("MHN"), BlackRock
New York Insured Municipal Income Trust ("BSE")(collectively, the “Insured
Trusts”), BlackRock Maryland Municipal Bond Trust ("BZM"), BlackRock
New Jersey Municipal Bond Trust ("BLJ"), BlackRock New York Municipal
Bond Trust (“BQH"), BlackRock Virginia Municipal Bond Trust ("BHV") (col-
lectively the "Bond Trusts"), BlackRock New York Municipal Income Trust II
("BFY") and The Massachusetts Health & Education Tax-Exempt Trust
("MHE") (all, collectively the "Trusts" or individually as a "Trust") are regis-
tered under the Investment Company Act of 1940, as amended (the “1940
Act”), as non diversified, closed-end management investment companies.
The Trusts are organized as Delaware statutory trusts except MHN and
MHE, which are organized as a Maryland corporation and a Massachusetts
business trust, respectively. The Trusts' financial statements are prepared in
conformity with accounting principles generally accepted in the United
States of America ("US GAAP"), which may require management to make
estimates and assumptions that affect the reported amounts and disclo-
sures in the financial statements. Actual results could differ from those
estimates. The Trusts determine, and make available for publication the net
asset value of their Common Shares on a daily basis.

The following is a summary of significant accounting policies followed by
the Trusts:

Valuation: The Trusts fair value their financial instruments at market value
using independent dealers or pricing services under policies approved by
each Trust’s Board of Directors/Trustees (“the Board”). Municipal invest-
ments (including commitments to purchase such investments on a “when-
issued” basis) are valued on the basis of prices provided by dealers or
pricing services. In determining the value of a particular investment, pricing
services may use certain information with respect to transactions in such
investments, quotations from dealers, pricing matrixes, market transactions
in comparable investments and information with respect to various rela-
tionships between investments. Financial futures contracts traded on
exchanges are valued at their last sale price. Short-term securities with
remaining maturities of 60 days or less may be valued at amortized cost,
which approximates fair value. Investments in open-end investment compa-
nies are valued at net asset value each business day.

In the event that application of these methods of valuation results in a
price for an investment which is deemed not to be representative of the
market value of such investment or is not available, the investment will be
valued in accordance with a policy approved by the Board as reflecting fair
value ("Fair Value Assets"). When determining the price for Fair Value
Assets, the investment advisor and/or the sub-advisor seeks to determine
the price that each Trust might reasonably expect to receive from the cur-
rent sale of that asset in an arm’s-length transaction. Fair value determina-
tions shall be based upon all available factors that the investment advisor
and/or sub-advisor deems relevant. The pricing of all Fair Value Assets is
subsequently reported to the Board or a committee thereof.

Forward Commitments and When-Issued Delayed Delivery Securities: The
Trusts may purchase securities on a when-issued basis and may purchase
or sell securities on a forward commitment basis. Settlement of such

transactions normally occurs within a month or more after the purchase or
sale commitment is made. The Trusts may purchase securities under such
conditions with the intention of actually acquiring them, but may enter into
a separate agreement to sell the securities before the settlement date.
Since the value of securities purchased may fluctuate prior to settlement,
the Trusts may be required to pay more at settlement than the security is
worth. In addition, the purchaser is not entitled to any of the interest
earned prior to settlement. When purchasing a security on a delayed deliv-
ery basis, the Trusts assume the rights and risks of ownership of the secu-
rity, including the risk of price and yield fluctuations. In the event of default
by the counterparty, the Trusts' maximum amount of loss is the unrealized
appreciation of unsettled when-issued transactions, which is shown on the
Schedules of Investments, if any.

Municipal Bonds Transferred to Tender Option Bond Trusts: The Trusts
leverage their assets through the use of tender option bond trusts (“TOBs”).
A TOB is established by a third party sponsor forming a special purpose
entity, into which one or more funds, or an agent on behalf of the funds,
transfers municipal bonds. Other funds managed by the investment advisor
may also contribute municipal bonds to a TOB into which a Trust has con-
tributed bonds. A TOB typically issues two classes of beneficial interests:
short-term floating rate certificates, which are sold to third party investors,
and residual certificates (“TOB Residuals”), which are generally issued to
the participating funds that made the transfer. The TOB Residuals held by a
Trust include the right of a Trust (1) to cause the holders of a proportional
share of the short-term floating rate certificates to tender their certificates
at par, including during instances of a rise in short-term interest rates, and
(2) to transfer, within seven days, a corresponding share of the municipal
bonds from the TOB to a Trust. The TOB may also be terminated without the
consent of a Trust upon the occurrence of certain events as defined in the
TOB agreements. Such termination events may include the bankruptcy or
default of the municipal bond, a substantial downgrade in credit quality of
the municipal bond, the inability of the TOB to obtain quarterly or annual
renewal of the liquidity support agreement, a substantial decline in market
value of the municipal bond or the inability to remarket the short-term
floating rate certificates to third party investors.

The cash received by the TOB from the sale of the short-term floating rate
certificates, less transaction expenses, is paid to a Trust, which typically
invests the cash in additional municipal bonds. Each Trust’s transfer of the
municipal bonds to a TOB is accounted for as a secured borrowing, there-
fore the municipal bonds deposited into a TOB are presented in the Trusts'
Schedules of Investments and the proceeds from the issuance of the short-
term floating rate certificates are shown as trust certificates in the
Statements of Assets and Liabilities.

Interest income from the underlying municipal bonds are recorded by the
Trusts on an accrual basis. Interest expense incurred on the secured bor-
rowing and other expenses related to remarketing, administration and
trustee services to a TOB are shown as interest expense and fees in the
Statements of Operations. The short-term 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.
At August 31, 2010, the aggregate value of the underlying municipal bonds

ANNUAL REPORT

AUGUST 31, 2010

51

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Notes to Financial Statements (continued)

transferred to TOBs, the related liability for trust certificates and the range
of interest rates on the liability for trust certificates were as follows:

 

For the year ended August 31, 2010, the Trusts' average trust certificates
outstanding and the daily weighted average interest rate, including fees,
were as follows:

 

Should short-term interest rates rise, the Trusts' investments in TOBs
may adversely affect the Trusts' net investment income and dividends to
Common Shareholders. Also, fluctuations in the market values of municipal
bonds deposited into the TOB may adversely affect the Trusts' net asset
values per share.

Zero-Coupon Bonds: The Trusts may invest in zero-coupon bonds, which
are normally issued at a significant discount from face value and do not
provide for periodic interest payments. Zero-coupon bonds may experience
greater volatility in market value than similar maturity debt obligations
which provide for regular interest payments.

Segregation and Collateralization: In cases in which the 1940 Act and
the interpretive positions of the Securities and Exchange Commission
(“SEC”) require that the Trusts either deliver collateral or segregate assets
in connection with certain investments (e.g., financial futures contracts)
the Trusts will, consistent with SEC rules and/or certain interpretive letters
issued by the SEC, segregate collateral or designate on their books and
records cash or other liquid securities having a market value at least equal
to the amount that would otherwise be required to be physically segre-
gated. Furthermore, based on requirements and agreements with certain
exchanges and third party broker-dealers, each party has requirements
to deliver/deposit securities as collateral for certain investments.

Investment Transactions and Investment Income: For financial reporting
purposes, investment transactions are recorded on the dates the transac-
tions are entered into (the trade dates). Realized gains and losses on
investment transactions are determined on the identified cost basis.
Dividend income is recorded on the ex-dividend dates. Interest income,

including amortization of premium and accretion of discount on debt secu-
rities, is recognized on the accrual basis.

Dividends and Distributions: Dividends from net investment income are
declared and paid monthly. Distributions of capital gains are recorded on
the ex-dividend dates. The amount and timing of dividends and distribu-
tions are determined in accordance with federal income tax regulations,
which may differ from US GAAP. Dividends and distributions to Preferred
Shareholders are accrued and determined as described in Note 7.

Income Taxes: It is each Trust's policy to comply with the requirements of
the Internal Revenue Code of 1986, as amended, 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.

The Trusts file US federal and various state and local tax returns. No
income tax returns are currently under examination. The statutes of limita-
tions on the Trusts' US federal tax returns remain open for each of the four
years ended August 31, 2010 (two years ended August 31, 2010, the
period ended August 31, 2008 and the year ended December 31, 2007
for MHE). The statutes of limitations on the Trusts' state and local tax
returns may remain open for an additional year depending upon the juris-
diction. There are no uncertain tax positions that require recognition of a
tax liability.

Deferred Compensation and BlackRock Closed-End Share Equivalent
Investment Plan: Under the deferred compensation plan approved by each
Trust's Board, non-interested Directors/Trustees (“Independent Trustees”)
may defer a portion of their annual complex-wide compensation. Deferred
amounts earn an approximate return as though equivalent dollar amounts
had been invested in common shares of certain other BlackRock Closed-
End Funds selected by the Independent Trustees. This has approximately
the same economic effect for the Independent Trustees as if the Inde-
pendent Trustees had invested the deferred amounts directly in certain
other BlackRock Closed-End Funds.

The deferred compensation plan is not funded and obligations thereunder
represent general unsecured claims against the general assets of each
Trust. Each Trust may, however, elect to invest in common shares of certain
other BlackRock Closed-End Funds selected by the Independent Trustees in
order to match its deferred compensation obligations. Investments to cover
each Trust's deferred compensation liability, if any, are included in other
assets in the Statements of Assets and Liabilities. Dividends and distribu-
tions from the BlackRock Closed-End Fund investments under the plan are
included in income — affiliated in the Statements of Operations.

Other: Expenses directly related to a Trust are charged to the Trust. Other
operating expenses shared by several funds are pro rated among those
funds on the basis of relative net assets or other appropriate methods.
The Trusts have an arrangement with the custodian whereby fees may be
reduced by credits earned on uninvested cash balances, which, if applica-
ble, are shown as fees paid indirectly in the Statements of Operations. The
custodian imposes fees on overdrawn cash balances, which can be offset
by accumulated credits earned or may result in additional custody charges.

52 ANNUAL REPORT

AUGUST 31, 2010

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Notes to Financial Statements (continued)

2. Derivative Financial Instruments:

The Trusts engage in various portfolio investment strategies using derivative
contracts both to increase the returns of the Trusts and to economically
hedge, or protect, their exposure to certain risks such as interest rate risk.
These contracts may be transacted on an exchange.

Losses may arise if the value of the contract decreases due to an unfavor-
able change in the market rates or value of the underlying instrument or
if the counterparty does not perform under the contract. Counterparty risk
related to exchange-traded financial futures contracts is minimal because
of the protection against defaults provided by the exchange on which
they trade.

Financial Futures Contracts: The Trusts purchase or sell financial futures
contracts and options on financial futures contracts to gain exposure to, or
economically hedge against, changes in interest rates (interest rate risk).
Financial futures contracts are contracts for delayed delivery of securities at
a specific future date and at a specific price or yield. Pursuant to the con-
tract, the Trusts agree 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 margin variation and are recognized by the Trusts
as unrealized gains or losses. When the contract is closed, the Trusts record
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.
The use of financial futures transactions involves the risk of an imperfect
correlation in the movements in the price of financial futures contracts,
interest rates and the underlying assets.

 

3. Investment Advisory Agreement and Other Transactions
with Affiliates:

The PNC Financial Services Group, Inc. ("PNC"), Bank of America
Corporation ("BAC") and Barclays Bank PLC ("Barclays") are the largest
stockholders of BlackRock, Inc. ("BlackRock"). Due to the ownership struc-
ture, PNC is an affiliate of the Trusts for 1940 Act purposes, but BAC and
Barclays are not.

Each Trust entered into an Investment Advisory Agreement with BlackRock
Advisors, LLC (the “Manager”), the Trusts' investment advisor, an indirect,
wholly owned subsidiary of BlackRock, to provide investment advisory and
administration services.

The Manager is responsible for the management of each Trust's portfolio
and provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of each Trust. For such services,
each Trust pays the Manager a monthly fee at the following annual rates of
each Trust’s average weekly net assets except MHN and MHE, which are
based upon average daily net assets as follows:

 

Average weekly net assets and average daily net assets are the average
weekly value or the average daily value of each Trust’s total assets minus
the sum of its accrued liabilities.

The Manager for MHN voluntarily agreed to waive its investment advisory
fee on the proceeds of Preferred Shares and TOBs that exceed 35% of net
assets applicable to Common Shareholders. This amount is included in fees
waived by advisor in the Statements of Operations. For the year ended
August 31, 2010, the waiver was $615,189.

The Manager voluntarily agreed to waive a portion its investment advisory
fees for certain other funds. With respect to BSE, the waiver, as a percent-
age of average weekly net assets is as follows: 0.10% through October
2009 and 0.05% through October 2010. With respect to the Bond Trusts,
the waiver, as a percentage of average weekly net assets, is as follows:
0.15% through April 2010, 0.10% through April 2011 and 0.05% through
April 2012. With respect to BFY, the waiver, as a percentage of average
weekly net assets is 0.05% through July 2012. For the year ended August
31, 2010, the Manager waived the following amounts, which are included
in fees waived by advisor in the Statements of Operations:

 

ANNUAL REPORT

AUGUST 31, 2010

53

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Notes to Financial Statements (continued)

The Manager voluntarily agreed to waive its investment advisory fees by
the amount of investment advisory fees each Trust pays to the Manager
indirectly through its investment in affiliated money market funds, however,
the Manager does not waive its investment advisory fees by the amount of
investment advisory fees paid through each Trust’s investment in other affil-
iated investment companies, if any. These amounts are shown as, or
included in, fees waived by advisor in the Statements of Operations. For
the year ended August 31, 2010, the amounts waived were as follows:

 

The Manager entered into a separate sub-advisory agreement with
BlackRock Investment Management, LLC (“BIM”) for MHN and MHE and
BlackRock Financial Management, Inc. (“BFM”) for all other Trusts. BIM and
BFM are affiliates of the Manager. The Manager pays BIM and BFM for
services they provide, a monthly fee that is a percentage of the investment
advisory fee paid by each Trust to the Manager.

For the year ended August 31, 2010, the Trusts reimbursed the Manager
for certain accounting services, which are included in accounting services
in the Statements of Operations. The reimbursements were as follows:

 

Certain officers and/or trustees of the Trusts are officers and/or directors of
BlackRock or its affiliates. The Trusts reimburse the Manager for compensa-
tion paid to the Trusts' Chief Compliance Officer.

4. Investments:

Purchases and sales of investments, excluding short-term securities, for the
year ended August 31, 2010, were as follows:

 

5. Income Tax Information:

Reclassifications: Accounting principles generally accepted in the
United States of America require that certain components of net assets
be adjusted to reflect permanent differences between financial and tax
reporting. These reclassifications have no effect on net assets or net asset
values per share. The following permanent differences as of August 31,
2010 attributable to amortization methods on fixed income securities and
the tax classification of distributions received from a regulated investment
company were reclassified to the following accounts:

 

The tax character of distributions paid during the fiscal years ended August 31, 2010 and August 31, 2009 was as follows:

 

* The differences between book-basis and tax-basis net unrealized gains were 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, book-tax differences in the accrual of income on securites in default, the deferral of post-October capital losses for tax purposes, the timing and recognition of partnership income, the difference between the book and tax treatment of residual interests in tender option bond trusts, the deferral of compensation to trustees, and other book-tax temporary differences.

54 ANNUAL REPORT

AUGUST 31, 2010

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Notes to Financial Statements (continued)

As of August 31, 2010, the Funds had capital loss carryforwards
available to offset future realized capital gains through the indicated
expiration dates:

 

6. Concentration, Market and Credit Risk:

Each Trust invests a substantial amount of its assets in issuers located in
a single state or limited number of states. Please see the Schedules of
Investments for concentrations in specific states.

Many municipalities insure repayment of their bonds, which may reduce
the potential for loss due to credit risk. The market value of these bonds
may fluctuate for other reasons, including market perception of the value
of such insurance, and there is no guarantee that the insurer will meet
its obligation.

In the normal course of business, the Trusts invest in securities and enter
into transactions where risks exist due to fluctuations in the market (market
risk) or failure of the issuer of a security to meet all its obligations (issuer
credit risk). The value of securities held by the Trusts may decline in
response to certain events, including those directly involving the issuers
whose securities are owned by the Trusts; conditions affecting the general
economy; overall market changes; local, regional or global political, social
or economic instability; and currency and interest rate and price fluctua-
tions. Similar to issuer credit risk, the Trusts may be exposed to counter-
party credit risk, or the risk that an entity with which the Trusts have
unsettled or open transactions may fail to or be unable to perform on its
commitments. The Trusts manage counterparty credit risk by entering into
transactions only with counterparties that they believe have the financial
resources to honor their obligations and by monitoring the financial stability
of those counterparties. Financial assets, which potentially expose the
Trusts to market, issuer and counterparty credit risks, consist principally of
financial instruments and receivables due from counterparties. The extent
of the Trusts' exposure to market, issuer and counterparty credit risks with
respect to these financial assets is generally approximated by their value
recorded in the Trusts' Statements of Assets and Liabilities, less any collat-
eral held by the Trusts.

As of August 31, 2010, BZM invested a significant portion of its assets in
the County/City/Special District/School District and Health sectors. MHN
invested a significant portion of its assets in the County/City/Special
District/School District and Transportation sectors. BLJ invested a signifi-
cant portion of its assets in the State sector. BSE invested a significant
portion of its assets in the Education and Transportation sectors. BQH and
BFY invested a significant portion of their assets in the County/City/Special
District/School District sector. MHE invested a significant portion of its
assets in the Education and Health sectors. Changes in economic

conditions affecting the County/City/Special District/School District,
Education, Health, State and Transportation sectors would have a greater
impact on the Trusts and could affect the value, income and/or liquidity of
positions in such securities.

7. Capital Share Transactions:

The Trusts, except MHN, are authorized to issue an unlimited number of
shares (200 million shares for MHN), all of which were initially classified as
Common Shares. The par value for the Trusts, except MHN and MHE, is
$0.001 per share ($0.10 for MHN and $0.01 for MHE). Each Trust's Board
is authorized, however, to reclassify any unissued shares without approval
of Common Shareholders.

Common Shares

Shares issued and outstanding during the years ended August 31,
2010 and 2009 increased by the following amounts as a result of
dividend reinvestment:

 

Preferred Shares

The Preferred Shares are redeemable at the option of each Trust, in whole
or in part, on any dividend payment date at their liquidation preference
per share plus any accumulated and unpaid dividends whether or not
declared. The Preferred Shares are also subject to mandatory redemption
at their liquidation preference plus any accumulated and unpaid dividends,
whether or not declared, if certain requirements relating to the composition
of the assets and liabilities of a Trust, as set forth in each Trust's Articles of
Amendment/Statement of Preferences/Certificates of Vote of Trustees (the
“Governing Instrument”) are not satisfied.

From time to time in the future, each Trust may effect repurchases of its
Preferred Shares at prices below their liquidation preference as agreed
upon by the Trust and seller. Each Trust also may redeem its Preferred
Shares from time to time as provided in the applicable Governing
Instrument. Each Trust intends to effect such redemptions and/or repur-
chases to the extent necessary to maintain applicable asset coverage
requirements or for such other reasons as the Board may determine.

The holders of Preferred Shares have voting rights equal to the holders of
Common Shares (one vote per share) and will vote together with holders of
Common Shares (one vote per share) as a single class. However, the hold-
ers of Preferred Shares, voting as a separate class, are also entitled to
elect two Directors/Trustees for each Trust. In addition, the 1940 Act
requires that along with approval by shareholders that might otherwise be
required, the approval of the holders of a majority of any outstanding

ANNUAL REPORT

AUGUST 31, 2010

55

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Notes to Financial Statements (continued)

Preferred Shares, voting separately as a class would be required to (a)
adopt any plan of reorganization that would adversely affect the Preferred
Shares, (b) change a Trust’s sub-classification as a closed-end investment
company or change its fundamental investment restrictions or (c) change
its business so as to cease to be an investment company.

The Trusts had the following series of Preferred Shares outstanding,
effective yields and reset frequency as of August 31, 2010:

 

Dividends on seven-day Preferred Shares are cumulative at a rate which is
reset every seven days, based on the results of an auction. If the Preferred
Shares fail to clear the auction on an auction date, each Trust is required
to pay the maximum applicable rate on the Preferred Shares to holders of
such shares for successive dividend periods until such time as the shares
are successfully auctioned. The maximum applicable rate on all series of
Preferred Shares is the higher of 110% of the AA commercial paper rate or
100% of 90% of the Kenny S&P 30-day High Grade Index divided by 1.00
minus the marginal tax rate. The low, high and average dividend rates on
the Preferred Shares for each Trust for the year ended August 31, 2010
were as follows:

 

Since February 13, 2008, the Preferred Shares of the Trusts failed to clear
any of their auctions. As a result, the Preferred Shares dividend rates were
reset to the maximum applicable rate, which ranged from 0.24% to 0.56%
for the year ended August 31, 2010. A failed auction is not an event of
default for the Trusts but it has a negative impact on the liquidity of
Preferred Shares. A failed auction occurs when there are more sellers of a
Trust's auction rate preferred shares than buyers. It is impossible to predict
how long this imbalance will last. A successful auction for the Trusts'
Preferred Shares may not occur for some time, if ever, and even if liquidity
does resume, holders of the Preferred Shares may not have the ability to
sell the Preferred Shares at their liquidation preference.

The Trusts may not declare dividends or make other distributions on
Common Shares or purchase any such shares if, at the time of the declara-
tion, distribution or purchase, asset coverage with respect to the out-
standing Preferred Shares is less than 200%.

The Trusts pay commissions of 0.15% on the aggregate principal amount
of all shares that fail to clear their auctions and 0.25% on the aggregate
principal amount of all shares that successfully clear their auctions. Certain
broker dealers have individually agreed to reduce commissions for
failed auctions.

Preferred Shares issued and outstanding remained constant for the year
ended August 31, 2010 for all Trusts.

During the year ended August 31, 2009, certain Trusts announced the fol-
lowing redemptions of Preferred Shares at a price of $25,000 per share
plus any accrued and unpaid dividends through the redemption date:

 

The Trusts financed the Preferred Share redemptions with cash received
from TOB transactions.

Preferred Shares issued and outstanding remained constant for the year
ended August 31, 2009 for BZM and MHE.

56 ANNUAL REPORT

AUGUST 31, 2010

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Notes to Financial Statements (concluded)

8. Subsequent Events:

Management's evaluation of the impact of all subsequent events on the
Trusts' financial statements was completed through the date the financial
statements were issued and the following items were noted:

Each Trust paid a net investment income dividend on October 1, 2010 to
Common Shareholders of record on September 15, 2010 as follows:

 

The dividends declared on Preferred Shares for the period September 1,
2010 to September 30, 2010 were as follows:

 

ANNUAL REPORT

AUGUST 31, 2010

57

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Report of Independent Registered Public Accounting Firm

To the Shareholders and Boards of Directors of
BlackRock MuniHoldings New York Insured Fund, Inc.
and to the Shareholders and Board of Trustees of:
BlackRock Maryland Municipal Bond Trust
BlackRock New Jersey Municipal Bond Trust
BlackRock New York Insured Municipal Income Trust
BlackRock New York Municipal Bond Trust
BlackRock New York Municipal Income Trust II
BlackRock Virginia Municipal Bond Trust
The Massachusetts Health & Education Tax-Exempt Trust
(collectively, the “Trusts”):

We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of BlackRock Maryland
Municipal Bond Trust, BlackRock MuniHoldings New York Insured Fund,
Inc., BlackRock New Jersey Municipal Bond Trust, BlackRock New York
Insured Municipal Income Trust, BlackRock New York Municipal Bond Trust,
BlackRock New York Municipal Income Trust II, BlackRock Virginia Municipal
Bond Trust and The Massachusetts Health & Education Tax-Exempt Trust,
as of August 31, 2010, 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 periods presented. These financial statements and financial highlights
are the responsibility of the Trusts’ 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 Trusts are not required to have, nor were
we engaged to perform an audit of their internal control over financial

reporting. Our audits included consideration of internal control over finan-
cial reporting as a basis for designing audit procedures that are appropri-
ate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Trusts’ 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 signifi-
cant estimates made by management, as well as evaluating the overall
financial statement presentation. Our procedures include confirmation of
the securities owned as of August 31, 2010, by correspondence with the
custodians 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 positions
of BlackRock Maryland Municipal Bond Trust, BlackRock MuniHoldings
New York Insured Fund, Inc., BlackRock New Jersey Municipal Bond Trust,
BlackRock New York Insured Municipal Income Trust, BlackRock New York
Municipal Bond Trust, BlackRock New York Municipal Income Trust II,
BlackRock Virginia Municipal Bond Trust and The Massachusetts Health &
Education Tax-Exempt Trust as of August 31, 2010, 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 periods presented, in conformity with accounting principles
generally accepted in the United States of America.

Deloitte & Touche LLP
Princeton, New Jersey
October 28, 2010

58 ANNUAL REPORT

AUGUST 31, 2010

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Important Tax Information

All of the net investment income distributions paid by BZM, MHN, BSE and
BFY during the taxable year ended August 31, 2010 qualify as tax-exempt
interest dividends for Federal income tax purposes.

The following table summarizes the taxable per share distributions
paid by BLJ, BQH, BHV, and MHE during the taxable year ended
August 31, 2010:

 

All other net investment income distributions paid by the Trusts during
the taxable year ended August 31, 2010 qualify as tax-exempt interest
dividends for Federal income tax purposes. Per share distributions are
based on Common Shares or Preferred Shares outstanding at the time
of distribution.

ANNUAL REPORT

AUGUST 31, 2010

59

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Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements

The Board of Directors and the Board of Trustees, as the case may be
(each, a “Board,” and, collectively, the "Boards," and the members of which
are referred to as "Board Members") of each of BlackRock Maryland
Municipal Bond Trust ("BZM"), BlackRock MuniHoldings New York Insured
Fund, Inc. ("MHN"), BlackRock New Jersey Municipal Bond Trust ("BLJ"),
BlackRock New York Insured Municipal Income Trust ("BSE"), BlackRock
New York Municipal Bond Trust ("BQH"), BlackRock New York Municipal
Income Trust II ("BFY"), BlackRock Virginia Municipal Bond Trust ("BHV")
and The Massachusetts Health & Education Tax-Exempt Trust ("MHE" and,
together with BZM, MHN, BLJ, BSE, BQH, BFY and BHV, each, a “ Trust,” and,
collectively, the “Trusts”) met on April 8, 2010 and May 13 — 14, 2010 to
consider the approval of each Trust’s investment advisory agreement (each,
an “Advisory Agreement”) with BlackRock Advisors, LLC (the “Manager”),
each Trust’s investment advisor. Each Board also considered the approval
of the sub-advisory agreement (each, a “Sub-Advisory Agreement”)
between the Manager and BlackRock Financial Management, Inc. or
BlackRock Investment Management, LLC, as applicable (each, a “Sub-
Advisor”), with respect to its Trust. The Manager and the Sub-Advisors are
referred to herein as “BlackRock.” The Advisory Agreements and the Sub-
Advisory Agreements are referred to herein as the “Agreements.”

Activities and Composition of the Board

The Board of each Trust consists of ten individuals, eight of whom are not
“interested persons” of such Trust as defined in the Investment Company
Act of 1940 (the “1940 Act”) (the “Independent Board Members”). The
Board Members are responsible for the oversight of the operations of each
Trust and perform the various duties imposed on the directors of invest-
ment companies by the 1940 Act. The Independent Board Members have
retained independent legal counsel to assist them in connection with their
duties. The Chairman of the Boards is an Independent Board Member. The
Boards have established five standing committees: an Audit Committee, a
Governance and Nominating Committee, a Compliance Committee, a
Performance Oversight Committee and an Executive Committee, each of
which is composed of Independent Board Members (except for the
Executive Committee, which also has one interested Board Member) and is
chaired by an Independent Board Member. The Boards also have two ad
hoc committees, the Joint Product Pricing Committee, which consists of
Independent Board Members and the directors/trustees of the boards of
certain other BlackRock-managed funds, who are not “interested persons”
of their respective funds, and the Ad Hoc Committee on Auction Market
Preferred Shares.

The Agreements

Pursuant to the 1940 Act, the Boards are required to consider the continu-
ation of the Agreements on an annual basis. In connection with this
process, the Boards assessed, among other things, the nature, scope
and quality of the services provided to the Trusts by the personnel of
BlackRock and its affiliates, including investment management, administra-
tive and shareholder services, oversight of fupnd accounting and custody,
marketing services and assistance in meeting applicable legal and regula-
tory requirements.

From time to time throughout the year, each Board, acting directly and
through its committees, considered at each of its meetings factors that
are relevant to its annual consideration of the renewal of the Agreements,
including the services and support provided by BlackRock to the respective
Trust and its shareholders. Among the matters the Board considered were:
(a) investment performance for one-, three- and five-year periods, as appli-
cable, against peer funds, and applicable benchmarks, if any, as well as
senior management's and portfolio managers’ analysis of the reasons for
any over performance or underperformance against a Trust’s peers and/or
benchmark, as applicable; (b) fees, including advisory fees, administration
fees for MHE, and other amounts paid to BlackRock and its affiliates by
each Trust for services such as call center and fund accounting; (c) each
Trust’s operating expenses; (d) the resources devoted to and compliance
reports relating to each Trust’s investment objective, policies and restric-
tions; (e) each Trust’s compliance with its Code of Ethics and compliance
policies and procedures; (f) the nature, cost and character of non-invest-
ment management services provided by BlackRock and its affiliates;

(g) BlackRock’s and other service providers’ internal controls;
(h) BlackRock’s implementation of the proxy voting policies approved by

the Boards; (i) execution quality of portfolio transactions; (j) BlackRock’s
implementation of each Trust’s valuation and liquidity procedures; (k) an
analysis of contractual and actual management fees for products with simi-
lar investment objectives across the open-end fund, closed-end fund and
institutional account product channels, as applicable; and (l) periodic
updates on BlackRock’s business.

Board Considerations in Approving the Agreements

The Approval Process: Prior to the April 8, 2010 meeting, the Boards
requested and received materials specifically relating to the Agreements.
The Boards are engaged in a process with BlackRock to periodically review
the nature and scope of the information provided to better assist their
deliberations. The materials provided in connection with the April meeting
included (a) information independently compiled and prepared by Lipper,
Inc. (“Lipper”) on Trust fees and expenses, and the investment performance
of each Trust as compared with a peer group of funds as determined by
Lipper and a customized peer group selected by BlackRock, as applicable
(collectively, “Peers”); (b) information on the profitability of the Agreements
to BlackRock and a discussion of fall-out benefits to BlackRock and its
affiliates and significant shareholders; (c) a general analysis provided by
BlackRock concerning investment advisory fees charged to other clients,
such as institutional clients and open-end funds, under similar investment
mandates; (d) the impact of economies of scale; (e) a summary of aggre-
gate amounts paid by each Trust to BlackRock and (f) if applicable, a
comparison of management fees to similar BlackRock closed-end funds,
as classified by Lipper.

At an in-person meeting held on April 8, 2010, the Boards reviewed materi-
als relating to their consideration of the Agreements. As a result of the dis-
cussions that occurred during the April 8, 2010 meeting, the Boards
presented BlackRock with questions and requests for additional informa-

60 ANNUAL REPORT

AUGUST 31, 2010

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Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements (continued)

tion and BlackRock responded to these requests with additional written
information in advance of the May 13 — 14, 2010 Board meeting.

At an in-person meeting held on May 13 — 14, 2010, each Trust’s Board,
including the Independent Board Members, unanimously approved the
continuation of the Advisory Agreement between the Manager and each
respective Trust and the Sub-Advisory Agreement between the Manager and
the Sub-Advisor with respect to each Trust, each for a one-year term ending
June 30, 2011. In approving the continuation of the Agreements, the
Boards considered: (a) the nature, extent and quality of the services pro-
vided by BlackRock; (b) the investment performance of each Trust and
BlackRock; (c) the advisory fee and the cost of the services and profits to
be realized by BlackRock and its affiliates from their relationship with each
Trust; (d) economies of scale; and (e) other factors deemed relevant by the
Board Members.

The Boards also considered other matters they deemed important to the
approval process, such as services related to the valuation and pricing of
each Trust’s portfolio holdings, direct and indirect benefits to BlackRock
and its affiliates and significant shareholders from their relationship with
each Trust and advice from independent legal counsel with respect to the
review process and materials submitted for the Boards’ review. The Boards
noted the willingness of BlackRock personnel to engage in open, candid
discussions with the Boards. The Boards did not identify any particular
information as controlling, and each Board Member may have attributed
different weights to the various items considered.

A. Nature, Extent and Quality of the Services Provided by BlackRock: The
Boards, including the Independent Board Members, reviewed the nature,
extent and quality of services provided by BlackRock, including the invest-
ment advisory services and the resulting performance of each Trust.
Throughout the year, the Boards compared each Trust’s performance to the
performance of a comparable group of closed-end funds, and the perform-
ance of a relevant benchmark, if any. The Boards met with BlackRock’s sen-
ior management personnel responsible for investment operations, including
the senior investment officers. The Boards also reviewed the materials pro-
vided by each Trust’s portfolio management team discussing each Trust’s
performance and each Trust’s investment objective, strategies and outlook.

The Boards considered, among other factors, the number, education and
experience of BlackRock’s investment personnel generally and each Trust’s
portfolio management team, investments by portfolio managers in the
funds they manage, BlackRock’s portfolio trading capabilities, BlackRock’s
use of technology, BlackRock’s commitment to compliance, BlackRock's
credit analysis capabilities, BlackRock's risk analysis capabilities and
BlackRock’s approach to training and retaining portfolio managers and
other research, advisory and management personnel. The Boards also
reviewed a general description of BlackRock’s compensation structure with
respect to each Trust’s portfolio management team and BlackRock’s ability
to attract and retain high-quality talent.

In addition to advisory services, the Boards considered the quality of the
administrative and non-investment advisory services provided to each
Trust. BlackRock and its affiliates and significant shareholders provide each
Trust with certain administrative and other services (in addition to any such
services provided to each Trust by third parties) and officers and other per-
sonnel as are necessary for the operations of each Trust. In addition to
investment advisory services, BlackRock and its affiliates provide each Trust
with other services, including (i) preparing disclosure documents, such as
the prospectus and the statement of additional information in connection
with the initial public offering and periodic shareholder reports; (ii) prepar-
ing communications with analysts to support secondary market trading of
each Trust; (iii) assisting with daily accounting and pricing; (iv) preparing
periodic filings with regulators and stock exchanges; (v) overseeing and
coordinating the activities of other service providers; (vi) organizing Board
meetings and preparing the materials for such Board meetings; (vii) prov-
iding legal and compliance support; and (viii) performing other admini-
strative functions necessary for the operation of each Trust, such as tax
reporting, fulfilling regulatory filing requirements, and call center services.
The Boards reviewed the structure and duties of BlackRock’s fund admin-
istration, accounting, legal and compliance departments and considered
BlackRock’s policies and procedures for assuring compliance with
applicable laws and regulations.

B. The Investment Performance of the Trusts and BlackRock: The Boards,
including the Independent Board Members, also reviewed and considered
the performance history of each Trust. In preparation for the April 8, 2010
meeting, the Boards were provided with reports, independently prepared by
Lipper, which included a comprehensive analysis of each Trust’s perform-
ance. The Boards also reviewed a narrative and statistical analysis of the
Lipper data that was prepared by BlackRock, which analyzed various fac-
tors that affect Lipper’s rankings. In connection with their review, the Boards
received and reviewed information regarding the investment performance of
each Trust as compared to a representative group of similar funds as deter-
mined by Lipper and to all funds in each Trust’s applicable Lipper category
and in the case of BZM, MHN, BSE, BQH, BFY, BHV and MHE, a customized
peer group selected by BlackRock. The Boards were provided with a
description of the methodology used by Lipper to select peer funds. The
Boards regularly review the performance of each Trust throughout the year.

The Boards of BZM, MHN, BLJ, BSE, BQH and BHV noted that, in general,
BZM, MHN, BLJ, BSE, BQH and BHV performed better than their respective
Peers in that the performance of BLJ was at or above the median of its
Lipper Performance Composite in each of the one-, three- and five-year
periods reported and that the performance of each of BZM, MHN, BSE,
BQH and BHV were at or above the median of their Customized Lipper
Peer Group Composite in each of the one-, three- and five-year
periods reported.

The Boards of BFY and MHE noted that, in general, BFY and MHE per-
formed better than their respective Peers in that the performance of BFY

ANNUAL REPORT

AUGUST 31, 2010

61

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Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements (continued)

and MHE were at or above the median of their Customized Lipper Peer
Group Composite in two of the one-, three- and five-year periods reported.

The Boards noted that BlackRock has made changes to the organization of
the overall fixed income group management structure designed to result in
a strengthened leadership team with clearer accountability.

C. Consideration of the Advisory Fees and the Cost of the Services
and Profits to be Realized by BlackRock and its Affiliates from their
Relationship with the Trusts: The Boards, including the Independent Board
Members, reviewed each Trust’s contractual advisory fee rate compared
with the other funds in its Lipper category. The Boards also compared
each Trust’s total expenses, as well as actual management fees, to those of
other funds in its Lipper category. The Boards considered the services pro-
vided and the fees charged by BlackRock to other types of clients
with similar investment mandates, including separately managed
institutional accounts.

The Boards received and reviewed statements relating to BlackRock’s fin-
ancial condition and profitability with respect to the services it provided
each Trust. The Boards were also provided with a profitability analysis that
detailed the revenues earned and the expenses incurred by BlackRock for
services provided to each Trust. The Boards reviewed BlackRock’s profitabil-
ity with respect to each Trust and other funds the Boards currently oversee
for the year ended December 31, 2009 compared to available aggregate
profitability data provided for the year ended December 31, 2008. The
Boards reviewed BlackRock’s profitability with respect to other fund com-
plexes managed by the Manager and/or its affiliates. The Boards reviewed
BlackRock’s assumptions and methodology of allocating expenses in the
profitability analysis, noting the inherent limitations in allocating costs
among various advisory products. The Boards recognized that profitability
may be affected by numerous factors including, among other things, fee
waivers and expense reimbursements by the Manager, the types of funds
managed, expense allocations and business mix, and the difficulty of
comparing profitability as a result of those factors.

The Boards noted that, in general, individual fund or product line profitabil-
ity of other advisors is not publicly available. Nevertheless, to the extent
such information was available, the Boards considered BlackRock’s overall
operating margin, in general, compared to the operating margin for leading
investment management firms whose operations include advising closed-
end funds, among other product types. That data indicates that operating
margins for BlackRock with respect to its registered funds are generally
consistent with margins earned by similarly situated publicly traded com-
petitors. In addition, the Boards considered, among other things, certain
third party data comparing BlackRock’s operating margin with that of
other publicly-traded asset management firms. That third party data indi-
cates that larger asset bases do not, in themselves, translate to higher
profit margins.

In addition, the Boards considered the cost of the services provided to
each Trust by BlackRock, and BlackRock’s and its affiliates’ profits relating

to the management and distribution of each Trust and the other funds
advised by BlackRock and its affiliates. As part of their analysis, the Boards
reviewed BlackRock’s methodology in allocating its costs to the manage-
ment of each Trust. The Boards also considered whether BlackRock has the
financial resources necessary to attract and retain high quality investment
management personnel to perform its obligations under the Agreements
and to continue to provide the high quality of services that is expected by
the Boards.

The Board of each Trust noted that its Trust’s contractual management fee
rate was lower than or equal to the median contractual management fee
rate paid by the Trust’s Peers, in each case, before taking into account any
expense reimbursements or fee waivers.

D. Economies of Scale: The Boards, including the Independent Board
Members, considered the extent to which economies of scale might be
realized as the assets of each Trust increase. The Boards also considered
the extent to which each Trust benefits from such economies and whether
there should be changes in the advisory fee rate or structure in order to
enable each Trust to participate in these economies of scale, for example
through the use of breakpoints in the advisory fee based upon the asset
level of each Trust.

The Boards noted that most closed-end fund complexes do not have fund
level breakpoints because closed-end funds generally do not experience
substantial growth after the initial public offering and each fund is man-
aged independently consistent with its own investment objectives. The
Boards noted that only one closed-end fund in the Fund Complex has
breakpoints in its fee structure. Information provided by Lipper also
revealed that only one closed-end fund complex with total closed-end
fund nets assets exceeding $10 billion, as of December 31, 2009, used
a complex level breakpoint structure.

E. Other Factors Deemed Relevant by the Board Members: The Boards,
including the Independent Board Members, also took into account other
ancillary or “fall-out” benefits that BlackRock or its affiliates and significant
shareholders may derive from their respective relationships with the Trusts,
both tangible and intangible, such as BlackRock’s ability to leverage its
investment professionals who manage other portfolios, an increase in
BlackRock’s profile in the investment advisory community, and the engage-
ment of BlackRock’s affiliates and significant shareholders as service
providers to each Trust, including for administrative and distribution serv-
ices. The Boards also considered BlackRock’s overall operations and its
efforts to expand the scale of, and improve the quality of, its operations.
The Boards also noted that BlackRock may use and benefit from third party
research obtained by soft dollars generated by certain mutual fund trans-
actions to assist in managing all or a number of its other client accounts.
The Boards further noted that BlackRock completed the acquisition of a
complex of exchange-traded funds (“ETFs”) on December 1, 2009, and
that BlackRock’s funds may invest in such ETFs without any offset against
the management fees payable by the funds to BlackRock.

62 ANNUAL REPORT

AUGUST 31, 2010

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Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements (concluded)

In connection with its consideration of the Agreements, the Boards also
received information regarding BlackRock’s brokerage and soft dollar prac-
tices. The Boards received reports from BlackRock which included informa-
tion on brokerage commissions and trade execution practices throughout
the year.

The Boards noted the competitive nature of the closed-end fund market-
place, and that shareholders are able to sell their respective Trust shares in
the secondary market if they believe that the Trust’s fees and expenses are
too high or if they are dissatisfied with the performance of the Trust.

Conclusion

The Boards, including the Independent Board Members, unanimously
approved the continuation of the Advisory Agreement between the Manager
and each Trust for a one-year term ending June 30, 2011 and the Sub-
Advisory Agreement between the Manager and the applicable Sub-Advisor,
with respect to each Trust, for a one-year term ending June 30, 2011. As
part of its approval, each Board considered the discussions of BlackRock’s
fee structure, as it applies to its respective Trust, being conducted by
the ad hoc Joint Product Pricing Committee. Based upon its evaluation
of all of the aforementioned factors in their totality, the Boards, including
the Independent Board Members, were satisfied that the terms of the
Agreements were fair and reasonable and in the best interest of each Trust
and its shareholders. In arriving at a decision to approve the Agreements,
the Boards did not identify any single factor or group of factors as all-
important or controlling, but considered all factors together, and different
Board Members may have attributed different weights to the various factors
considered. The Independent Board Members were also assisted by the
advice of independent legal counsel in making this determination. The con-
tractual fee arrangements for each Trust reflect the results of several years
of review by the Board Members and predecessor Board Members, and
discussions between such Board Members (and predecessor Board
Members) and BlackRock. Certain aspects of the arrangements may be the
subject of more attention in some years than in others, and the Board
Members’ conclusions may be based in part on their consideration of these
arrangements in prior years.

ANNUAL REPORT

AUGUST 31, 2010

63

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Automatic Dividend Reinvestment Plans

Pursuant to each Fund’s Dividend Reinvestment Plan (the “Plan”), common
shareholders are automatically enrolled to have all distributions of divi-
dends and capital gains reinvested by BNY Mellon Shareowner Services
for MHN and MHE and Computershare Trust Company, N.A. for BZM, BLJ,
BSE, BQH, BFY and BHV (individually, the “Plan Agent” or together, the “Plan
Agents”) in the respective Fund’s shares pursuant to the Plan. Shareholders
who do not participate in the Plan will receive all distributions in cash paid
by check and mailed directly to the shareholders of record (or if the shares
are held in street or other nominee name, then to the nominee) by the
Plan Agent, which serves as agent for the shareholders in administering
the Plan.

After the Funds declare a dividend or determine to make a capital gain dis-
tribution, the Plan Agent will acquire shares for the participants’ accounts,
depending upon the following circumstances, either (i) through receipt of
unissued but authorized shares from the Fund (“newly issued shares”) or
(ii) by purchase of outstanding shares on the open market, on the Fund’s
primary exchange or elsewhere (“open-market purchases”). If, on the divi-
dend payment date, the net asset value per share (“NAV”) is equal to or
less than the market price per share plus estimated brokerage commis-
sions (such condition often referred to as a “market premium”), the Plan
Agent will invest the dividend amount in newly issued shares on behalf of
the participants. The number of newly issued shares to be credited to each
participant’s account will be determined by dividing the dollar amount of
the dividend by the NAV on the date the shares are issued. However, if the
NAV is less than 95% of the market price on the payment date, the dollar
amount of the dividend will be divided by 95% of the market price on the
payment date. If, on the dividend payment date, the NAV is greater than
the market value per share plus estimated brokerage commissions (such
condition often referred to as a “market discount”), the Plan Agent will
invest the dividend amount in shares acquired on behalf of the participants
in open-market purchases. If the Plan Agents are 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 Agents will
invest any un-invested portion in newly issued shares.

Participation in the Plan is completely voluntary and may be terminated or
resumed at any time without penalty by notice if received and processed
by the Plan Administrator prior to the dividend record date; otherwise such
termination or resumption will be effective with respect to any subsequently
declared dividend or other distribution.

The Plan Agent’s fees for the handling of the reinvestment of dividends and
distributions will be paid by each Fund. However, each participant will pay
a pro rata share of brokerage commissions incurred with respect to the
Plan Agent’s open market purchases in connection with the reinvestment
of dividends and distributions. The automatic reinvestment of dividends
and distributions will not relieve participants of any federal income tax
that may be payable on such dividends or distributions.

Each Fund reserves the right to amend or terminate the Plan. There is
no direct service charge to participants in the Plan; however, each Fund
reserves the right to amend the Plan to include a service charge payable
by the participants. Participants that request a sale of shares through
Computershare Trust Company, N.A. are subject to a $2.50 sales fee and
a $0.15 per share sold brokerage commission. Participants that request
a sale of shares through BNY Mellon Shareowner Services are subject to
a $0.02 per share sold brokerage commission. All correspondence con-
cerning the Plan should be directed to the respective Plan Agent: BNY
Mellon Shareowner Services, P.0. Box 358035, Pittsburgh, PA 15252-
8035, Telephone: (866) 216-0242 for shareholders of MHN and MHE
or Computershare Trust Company, N.A., P.O. Box 43078, Providence, RI
02940-3078, Telephone: (800) 699-1BFM or overnight correspondence
should be directed to the Plan Agent at 250 Royall Street, Canton, MA
02021 for shareholders of BZM, BLJ, BSE, BQH, BFY and BHV.

64 ANNUAL REPORT

AUGUST 31, 2010

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ANNUAL REPORT

AUGUST 31, 2010

65

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³ Mr. Davis is an “interested person,” as defined in the Investment Company Act of 1940, of the Trusts based on his position with BlackRock, Inc. and
its affiliates. Mr. Gabbay is an “interested person” of the Trusts based on his former positions with BlackRock, Inc. and its affiliates as well as his ownership
of BlackRock, Inc. and The PNC Financial Services Group, Inc. securities. Trustees serve until their resignation, removal or death, or until December 31 of
the year in which they turn 72.

66 ANNUAL REPORT

AUGUST 31, 2010

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³ For all Trusts except MHN and MHE.
⁴ For MHN and MHE.
⁵ For all Trusts except MHN.
⁶ For MHN.

ANNUAL REPORT

AUGUST 31, 2010

67

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Additional Information

Trust Certification

Those Trusts listed for trading on the New York Stock Exchange (“NYSE”)
have filed with the NYSE their annual chief executive officer certification
regarding compliance with the NYSE’s listing standards. The Trusts filed

with the Securities and Exchange Commission (“SEC”) the certification of
its chief executive officer and chief financial officer required by section 302
of the Sarbanes-Oxley Act.

General Information

On July 29, 2010, the Manager announced that a derivative complaint had
been filed by shareholders of BSE and BQH on July 27, 2010 in the
Supreme Court of the State of New York, New York County. The complaint
names the Manager, BlackRock, Inc. and certain of the directors, officers
and portfolio managers of BSE and BQH as defendants. The complaint
alleges, among other things, that the parties named in the complaint
breached fiduciary duties owed to BSE and BQH and their Common
Shareholders by redeeming auction-market preferred shares, auction rate
preferred securities, auction preferred shares and auction rate securities
(collectively, “AMPS”) at their liquidation preference. The complaint seeks
unspecified damages for losses purportedly suffered by BSE and BQH as
a result of the prior redemptions and injunctive relief preventing BSE and
BQH from redeeming AMPS at their liquidation preference in the future. The
Manager, BlackRock, Inc. and the other parties named in the complaint
believe that the claims asserted in the complaint are without merit and
intend to vigorously defend themselves in the litigation.

The Trusts do not make available copies of their Statements of Additional
Information because the Trusts’ shares are not continuously offered, which
means that the Statement of Additional Information of each Trust has not
been updated after completion of the respective Trust’s offerings and the
information contained in each Trust’s Statement of Additional Information
may have become outdated.

Other than the revisions discussed on the Board approvals on page 70,
there were no material changes in the Trusts’ investment objectives of
policies or to the Trusts’ charters or by-laws that would delay or prevent
a change of controls of the Trusts that were not approved by the sharehold-
ers or in the principal risk factors associated with investment in the Trusts.
There have been no changes in the persons who are primarily responsible
for the day-to-day management of the Trusts’ portfolio.

Quarterly performance, semi-annual and annual reports and other informa-
tion regarding the Trusts may be found on BlackRock’s website, which can
be accessed at http://www.blackrock.com. This reference to BlackRock’s
website is intended to allow investors public access to information regard-
ing the Trusts and does not, and is not intended to, incorporate BlackRock’s
website into this report.

Electronic Delivery

Electronic copies of most financial reports are available on the Trusts’ web-
sites or shareholders can sign up for e-mail notifications of quarterly state-
ments, annual and semi-annual reports by enrolling in the Trusts’ electronic
delivery program.

Shareholders Who Hold Accounts with Investment Advisors, Banks
or Brokerages:

Please contact your financial advisor to enroll. Please note that not all
investment advisors, banks or brokerages may offer this service.

Householding

The Trusts will mail only one copy of shareholder documents, including
annual and semi-annual reports and proxy statements, to shareholders
with multiple accounts at the same address. This practice is commonly
called “householding” and is intended to reduce expenses and eliminate
duplicate mailings of shareholder documents. Mailings of your shareholder
documents may be householded indefinitely unless you instruct us other-
wise. If you do not want the mailing of these documents to be combined
with those for other members of your household, please
call (800) 441-7762.

Availability of Quarterly Schedule of Investments

Each Trust files its complete schedule of portfolio holdings with the
Securities and Exchange Commission (“SEC”) for the first and third quar-
ters of each fiscal year on Form N-Q. The Trusts’ Forms N-Q are available on
the SEC’s website at http://www.sec.gov and 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
(800) SEC-0330. Each Trust’s Forms N-Q may also be obtained upon
request and without charge by calling (800) 441-7762.

Availability of Proxy Voting Policies and Procedures

A description of the policies and procedures that the Trusts use to
determine how to vote proxies relating to portfolio securities is available
(1) without charge, upon request, by calling (800) 441-7762;
(2) at http://www.blackrock.com; and (3) on the SEC’s website
at http://www.sec.gov.

Availability of Proxy Voting Record

Information about how the Trusts voted proxies relating to securities
held in the Trusts’ portfolios during the most recent 12-month period
ended June 30 is available upon request and without charge (1) at
http://www.blackrock.com or by calling (800) 441-7762 and
(2) on the SEC’s website at http://www.sec.gov.

68 ANNUAL REPORT

AUGUST 31, 2010

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Additional Information (continued)

Board Approvals

On September 1, 2010, the Board of Directors/Trustees (the “Boards”) of
MHN and BSE (the “Insured Trusts”) approved changes to certain invest-
ment policies of the Insured Trusts.

Historically, under normal market conditions, each Insured Trust has been
required to invest at least 80% of its assets in municipal bonds either

(i) insured under an insurance policy purchased by the Insured Trust or
(ii) insured under an insurance policy obtained by the issuer of the muni-

cipal bond or any other party. In September 2008, the Insured Trusts
adopted an amended investment policy of purchasing only municipal
bonds insured by insurance providers with claims-paying abilities rated
investment grade at the time of investment (the “Insurance Policy”).

Following the onset of the credit and liquidity crises, the claims-paying
ability rating of most of the municipal bond insurance providers has been
lowered by the rating agencies. These downgrades have called into question
the long-term viability of the municipal bond insurance market, which has
the potential to severely limit the ability of BlackRock Advisors, LLC, the
Insured Trusts’ investment advisor (the “Manager”), to manage the Insured
Trusts under the Insurance Policy.

As a result, on September 1, 2010, the Manager recommended, and the
Boards approved, the removal of the Insurance Policy. As a result of this
investment policy change, the Insured Trusts will not be required to dispose
of assets currently held within the Insured Trusts. The Insured Trusts will
maintain, and have no current intention to amend, their investment
policy of, under normal market conditions, generally investing in municipal
obligations rated investment grade at the time of investment.

As each Insured Trust increases the amount of its assets that are invested
in municipal obligations that are not insured, each Insured Trust’s share-
holders will be exposed to the risk of the failure of such securities’ issuers
to pay interest and repay principal and will not have the benefit of protec-
tion provided under municipal bond insurance policies. As a result, share-
holders will be more dependent on the analytical ability of the Manager to

evaluate the credit quality of issuers of municipal obligations in which
each Insured Trust invests. The Boards believe that the amended invest-
ment policy is in the best interests of each Insured Trust and its sharehold-
ers because it believes that the potential benefits from increased flexibility
outweigh the potential increase in risk from the lack of insurance policies
provided by weakened insurance providers. Of course, the new investment
policy cannot assure that each Insured Trust will achieve its
investment objective.

As disclosed in each Insured Trust’s prospectus, each Insured Trust is
required to provide shareholders 60 days notice of a change to the
Insurance Policy. Accordingly, a notice describing the changes discussed
above was mailed to shareholders of record as of September 1, 2010.
The new investment policy is expected to take effect on November 9, 2010.
After the amended policy takes effect, the Manager anticipates that it will
gradually reposition each Insured Trust’s portfolios over time, and that dur-
ing such period, each Insured Trust may continue to hold a substantial por-
tion of its assets in insured municipal bonds. At this time, it is uncertain
how long it may take to reposition each Insured Trust’s portfolio once the
amended policy takes effect, and the Insured Trusts may continue to be
subject to risks associated with investing a substantial portion of their
assets in insured municipal bonds until the repositioning is complete. No
action is required by shareholders of the Insured Trusts in connection with
this change.

In connection with this change in non-fundamental policy, each of the
Insured Trusts will undergo a name change to reflect its new portfolio
characteristics. The new names of the Insured Trusts will be announced
at or prior to the expiration of the 60-day notice period. Each Insured
Trust will continue to trade on New York Stock Exchange under its current
ticker symbol.

The approved changes will not alter any Insured Trust’s investment
objective.

Section 19(a) Notices

These reported amounts and sources of distributions are estimates and are not being provided for tax reporting purposes. The actual amounts and sources
for tax reporting purposes wll depend upon each Trust’s investment experience during the year and may be subject to changes based on the tax regula-
tions. Each Trust will provide a Form 1099-DIV each calendar year that will explain the character of these dividends and distributions for federal income
tax purposes.

 

ANNUAL REPORT

AUGUST 31, 2010

69

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Additional Information (concluded)

BlackRock Privacy Principles

BlackRock is committed to maintaining the privacy of its current and for-
mer fund investors and individual clients (collectively, “Clients”) and to
safeguarding their non-public personal information. The following infor-
mation is provided to help you understand what personal information
BlackRock collects, how we protect that information and why in certain
cases we share such information with select parties.

If you are located in a jurisdiction where specific laws, rules or regulations
require BlackRock to provide you with additional or different privacy-related
rights beyond what is set forth below, then BlackRock will comply with those
specific laws, rules or regulations.

BlackRock obtains or verifies personal non-public information from and
about you from different sources, including the following: (i) information we
receive from you or, if applicable, your financial intermediary, on applica-
tions, 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 websites.

BlackRock does not sell or disclose to non-affiliated third parties any non-
public personal information about its Clients, except as permitted by law
or as is necessary to respond to regulatory requests or to service Client
accounts. These non-affiliated third parties are required to protect the
confidentiality and security of this information and to use it only for its
intended purpose.

We may share information with our affiliates to service your account or to
provide you with information about other BlackRock products or services
that may be of interest to you. In addition, BlackRock restricts access
to non-public personal information about its Clients to those BlackRock
employees with a legitimate business need for the information. BlackRock
maintains physical, electronic and procedural safeguards that are designed
to protect the non-public personal information of its Clients, including pro-
cedures relating to the proper storage and disposal of such information.

70 ANNUAL REPORT

AUGUST 31, 2010

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This report is transmitted to shareholders only. It is not a prospectus. Past performance results shown in this report should not be

considered a representation of future performance. The Trusts have leveraged their Common Shares, which creates risks for Common

Shareholders, including the likelihood of greater volatility of net asset value and market price of the Common Shares and the risk that

fluctuations in the short-term dividend rates of the Preferred Shares, currently set at the maximum reset rate as a result of failed

auctions, may reduce the Common Shares’ yield. Statements and other information herein are as dated and are subject to change.

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Item 2 – Code of Ethics – The registrant (or the “Fund”) has adopted a code of ethics, as of the end
of the period covered by this report, applicable to the registrant’s principal executive officer,
principal financial officer and principal accounting officer, or persons performing similar
functions. During the period covered by this report, there have been no amendments to or
waivers granted under the code of ethics. A copy of the code of ethics is available without
charge at www.blackrock.com.

Item 3 – Audit Committee Financial Expert – The registrant’s board of directors or trustees, as
applicable (the “board of directors”), has determined that (i) the registrant has the following
audit committee financial experts serving on its audit committee and (ii) each audit
committee financial expert is independent:
Kent Dixon (retired effective December 31, 2009)
Frank J. Fabozzi
James T. Flynn
W. Carl Kester
Karen P. Robards

The registrant’s board of directors has determined that W. Carl Kester and Karen P. Robards
qualify as financial experts pursuant to Item 3(c)(4) of Form N-CSR.

Prof. Kester has a thorough understanding of generally accepted accounting principles,
financial statements and internal control over financial reporting as well as audit committee
functions. Prof. Kester has been involved in providing valuation and other financial
consulting services to corporate clients since 1978. Prof. Kester’s financial consulting
services present a breadth and level of complexity of accounting issues that are generally
comparable to the breadth and complexity of issues that can reasonably be expected to be
raised by the registrant’s financial statements.

Ms. Robards has a thorough understanding of generally accepted accounting principles,
financial statements and internal control over financial reporting as well as audit committee
functions. Ms. Robards has been President of Robards & Company, a financial advisory
firm, since 1987. Ms. Robards was formerly an investment banker for more than 10 years
where she was responsible for evaluating and assessing the performance of companies based
on their financial results. Ms. Robards has over 30 years of experience analyzing financial
statements. She also is a member of the audit committee of one publicly held company and
a non-profit organization.

Under applicable securities laws, a person determined to be an audit committee financial
expert will not be deemed an “expert” for any purpose, including without limitation for the
purposes of Section 11 of the Securities Act of 1933, as a result of being designated or
identified as an audit committee financial expert. The designation or identification as an
audit committee financial expert does not impose on such person any duties, obligations, or
liabilities greater than the duties, obligations, and liabilities imposed on such person as a
member of the audit committee and board of directors in the absence of such designation or
identification. The designation or identification as an audit committee financial expert does
not affect the duties, obligations, or liability of any other member of the audit committee or
board of directors.

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1 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.
2 The nature of the services include tax compliance, tax advice and tax planning.
3 The nature of the services include a review of compliance procedures and attestation thereto.

(e)(1) Audit Committee Pre-Approval Policies and Procedures:
The registrant’s audit committee (the “Committee”) has adopted policies and
procedures with regard to the pre-approval of services. Audit, audit-related and tax
compliance services provided to the registrant on an annual basis require specific pre-
approval by the Committee. The Committee also must approve other non-audit services
provided to the registrant and those non-audit services provided to the registrant’s affiliated
service providers that relate directly to the operations and the financial reporting of the
registrant. Certain of these non-audit services that the Committee believes are a) consistent
with the SEC’s auditor independence rules and b) routine and recurring services that will
not impair the independence of the independent accountants may be approved by the
Committee without consideration on a specific case-by-case basis (“general pre-approval”).
The term of any general pre-approval is 12 months from the date of the pre-approval, unless
the Committee provides for a different period. Tax or other non-audit services provided to
the registrant which have a direct impact on the operation or financial reporting of the
registrant will only be deemed pre-approved provided that any individual project does not
exceed $10,000 attributable to the registrant or $50,000 per project. For this purpose,
multiple projects will be aggregated to determine if they exceed the previously mentioned
cost levels.

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. At this meeting, an analysis of such services is presented to the Committee
for ratification. The Committee may delegate to the Committee Chairman the authority to
approve the provision of and fees for any specific engagement of permitted non-audit
services, including services exceeding pre-approved cost levels.

(e)(2) None of the services described in each of Items 4(b) through (d) were approved by
the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

(f) Not Applicable

(g) Affiliates’ Aggregate Non-Audit Fees:

 

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(h) The registrant’s audit committee has considered and determined that the provision of
non-audit services that were rendered to the registrant’s investment adviser (not including
any non-affiliated sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by the registrant’s investment adviser), and any entity
controlling, controlled by, or under common control with the investment adviser that
provides ongoing services to the registrant that were not pre-approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal
accountant’s independence.

Regulation S-X Rule 2-01(c)(7)(ii) – $10,777, 0%

Item 5 – Audit Committee of Listed Registrants –

(a) 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
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(58)(A)):

Kent Dixon (retired effective December 31, 2009)
Frank J. Fabozzi
James T. Flynn
W. Carl Kester
Karen P. Robards

(b) Not Applicable

Item 6 – Investments
(a) The registrant’s Schedule of Investments is included as part of the Report to
Stockholders filed under Item 1 of this Form.
(b) Not Applicable due to no such divestments during the semi-annual period covered since
the previous Form N-CSR filing.

Item 7 – Disclosure of Proxy Voting Policies and Procedures for Closed-End Management
Investment Companies – The board of directors has delegated the voting of proxies for the
Fund securities to the Fund’s investment adviser (“Investment Adviser”) pursuant to the
Investment Adviser’s proxy voting guidelines. Under these guidelines, the Investment
Adviser will vote proxies related to Fund securities in the best interests of the Fund and its
stockholders. From time to time, a vote may present a conflict between the interests of the
Fund’s stockholders, on the one hand, and those of the Investment Adviser, or any affiliated
person of the Fund or the Investment Adviser, on the other. In such event, provided that the
Investment Adviser’s Equity Investment Policy Oversight Committee, or a sub-committee
thereof (the “Oversight Committee”) is aware of the real or potential conflict or material
non-routine matter and if the Oversight Committee does not reasonably believe it is able to
follow its general voting guidelines (or if the particular proxy matter is not addressed in the
guidelines) and vote impartially, the Oversight Committee may retain an independent
fiduciary to advise the Oversight Committee on how to vote or to cast votes on behalf of the
Investment Adviser’s clients. If the Investment Adviser determines not to retain an
independent fiduciary, or does not desire to follow the advice of such independent fiduciary,
the Oversight Committee shall determine how to vote the proxy after consulting with the
Investment Adviser’s Portfolio Management Group and/or the Investment Adviser’s Legal
and Compliance Department and concluding that the vote cast is in its client’s best interest

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notwithstanding the conflict. A copy of the Fund’s Proxy Voting Policy and Procedures are
attached as Exhibit 99.PROXYPOL. Information on how the Fund voted proxies relating to
portfolio securities during the most recent 12-month period ended June 30 is available
without charge, (i) at www.blackrock.com and (ii) on the SEC’s website at
http://www.sec.gov.

Item 8 – Portfolio Managers of Closed-End Management Investment Companies – as of August 31,
2010.

(a)(1) The registrant (or “Fund”) is managed by a team of investment professionals
comprised of Phillip Soccio, CFA, Director at BlackRock, Inc., Theodore R. Jaeckel,
Jr., CFA, Managing Director at BlackRock, Inc. and Walter O’Connor, Managing
Director at BlackRock, Inc. Each is a member of BlackRock, Inc.’s municipal tax-
exempt management group. Each is jointly responsible for the day-to-day
management of the registrant’s portfolio, which includes setting the registrant’s
overall investment strategy, overseeing the management of the registrant and/or
selection of its investments. Messrs. Soccio, Jaeckel and O’Connor have been
members of the registrant’s portfolio management team since 2007, 2006 and 2006,
respectively.

 

BlackRock, Inc., individually and together with its affiliates (“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

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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 significant shareholders 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 significant shareholders, 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’ or significant shareholders’) officers, directors or employees
are directors or officers, or companies as to which BlackRock or any of its affiliates or
significant shareholders 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 a fund. In this connection, it should be noted that a portfolio
manager may currently manage certain accounts that are subject to performance fees. In
addition, a portfolio manager may 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 August 31, 2010:

Portfolio Manager Compensation Overview

BlackRock’s financial arrangements with its portfolio managers, its competitive
compensation and its career path emphasis at all levels reflect the value senior management
places on key resources. Compensation may include a variety of components and may vary
from year to year based on a number of factors. The principal components of compensation
include a base salary, a performance-based discretionary bonus, participation in various
benefits programs and one or more of the incentive compensation programs established by
BlackRock such as its Long-Term Retention and Incentive Plan.

Base compensation. Generally, portfolio managers receive base compensation based on
their seniority and/or their position with the firm. Senior portfolio managers who perform

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additional management functions within the portfolio management group or within
BlackRock may receive additional compensation for serving in these other capacities.

Discretionary Incentive Compensation
Discretionary incentive compensation is a function of several components: the performance
of BlackRock, Inc., the performance of the portfolio manager’s group within BlackRock,
the investment performance, including risk-adjusted returns, of the firm’s assets under
management or supervision by that portfolio manager relative to predetermined
benchmarks, and the individual’s seniority, role within the portfolio management team,
teamwork and contribution to the overall performance of these portfolios and BlackRock.
In most cases, including for the portfolio managers of the Fund, these benchmarks are the
same as the benchmark or benchmarks against which the performance of the Fund or other
accounts managed by the portfolio managers are measured. BlackRock’s Chief Investment
Officers determine the benchmarks against which the performance of funds and other
accounts managed by each portfolio manager is compared and the period of time over which
performance is evaluated. With respect to the portfolio managers, such benchmarks for the
Fund include a combination of market-based indices (e.g., Barclays Capital Municipal Bond
Index), certain customized indices and certain fund industry peer groups.

BlackRock’s Chief Investment Officers make a subjective determination with respect to the
portfolio managers’ compensation based on the performance of the funds and other accounts
managed by each portfolio manager relative to the various benchmarks noted above.
Performance is measured on both a pre-tax and after-tax basis over various time periods
including 1, 3, 5 and 10-year periods, as applicable.

Distribution of Discretionary Incentive Compensation
Discretionary incentive compensation is distributed to portfolio managers in a combination
of cash and BlackRock, Inc. restricted stock units which vest ratably over a number of
years. The BlackRock, Inc. restricted stock units, if properly vested, will be settled in
BlackRock, Inc. common stock. Typically, the cash bonus, when combined with base
salary, represents more than 60% of total compensation for the portfolio managers. Paying
a portion of annual bonuses in stock puts compensation earned by a portfolio manager for a
given year “at risk” based on BlackRock’s ability to sustain and improve its performance
over future periods.

Long-Term Retention and Incentive Plan (“LTIP”) — From time to time long-
term incentive equity awards are granted to certain key employees to aid in retention, align
their interests with long-term shareholder interests and motivate performance. Equity
awards are generally granted in the form of BlackRock, Inc. restricted stock units that, once
vested, settle in BlackRock, Inc. common stock. Messrs. O’Connor and Jaeckel have each
received awards under the LTIP.

Deferred Compensation Program — A portion of the compensation paid to
eligible BlackRock employees may be voluntarily deferred into an account that tracks the
performance of certain of the firm’s investment products. Each participant in the deferred
compensation program is permitted to allocate his deferred amounts among the various
investment options. Messrs. O’Connor and Jaeckel have each participated in the deferred
compensation program.

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Other compensation benefits. In addition to base compensation and discretionary
incentive compensation, portfolio managers may be eligible to receive or participate in one
or more of the following:

Incentive Savings Plans — BlackRock, Inc. has created a variety of incentive savings plans
in which BlackRock employees are eligible to participate, including a 401(k) plan, the
BlackRock Retirement Savings Plan (RSP), and the BlackRock Employee Stock Purchase
Plan (ESPP). The employer contribution components of the RSP include a company match
equal to 50% of the first 6% of eligible pay contributed to the plan capped at $4,000 per
year, and a company retirement contribution equal to 3-5% of eligible compensation. The
RSP offers a range of investment options, including registered investment companies
managed by the firm. BlackRock contributions follow the investment direction set by
participants for their own contributions or, absent employee investment direction, are
invested into a balanced portfolio. The ESPP allows for investment in BlackRock common
stock at a 5% discount on the fair market value of the stock on the purchase date. Annual
participation in the ESPP is limited to the purchase of 1,000 shares or a dollar value of
$25,000. Each portfolio manager is eligible to participate in these plans.

(a)(4) Beneficial Ownership of Securities – As of August 31, 2010.

 

(b) Not Applicable

Item 9 – Purchases of Equity Securities by Closed-End Management Investment Company and
Affiliated Purchasers – Not Applicable due to no such purchases during the period covered
by this report.

Item 10 – Submission of Matters to a Vote of Security Holders – On October 25, 2010, the Board of
Trustees of the Fund amended and restated in its entirety the bylaws of the Fund (the
"Amended and Restated Bylaws"). The Amended and Restated Bylaws were deemed
effective as of October 28, 2010 and set forth, among other things, the processes and
procedures that shareholders of the Fund must follow, and specifies additional information
that shareholders of the Fund must provide, when proposing trustee nominations at any
annual meeting or special meeting in lieu of an annual meeting or other business to be
considered at an annual meeting or special meeting.

Item 11 – Controls and Procedures

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

11(b) – There were no changes in the registrant’s internal control over financial reporting (as
defined in Rule 30a-3(d) under the 1940 Act) that occurred during the second fiscal quarter

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of the period covered by this report that have materially affected, or are reasonably likely to
materially affect, the registrant’s internal control over financial reporting.

Item 12 – Exhibits attached hereto

12(a)(1) – Code of Ethics – See Item 2

12(a)(2) – Certifications – Attached hereto

12(a)(3) – Not Applicable

12(b) – Certifications – Attached hereto

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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 Virginia Municipal Bond Trust

By: /s/ Anne F. Ackerley
Anne F. Ackerley
Chief Executive Officer of
BlackRock Virginia Municipal Bond Trust

Date: November 5, 2010

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/ Anne F. Ackerley
Anne F. Ackerley
Chief Executive Officer (principal executive officer) of
BlackRock Virginia Municipal Bond Trust

Date: November 5, 2010

By: /s/ Neal J. Andrews
Neal J. Andrews
Chief Financial Officer (principal financial officer) of
BlackRock Virginia Municipal Bond Trust

Date: November 5, 2010

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