BLACKROCK MUNIHOLDINGS INVESTMENT QUALITY FUND
Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-08349

Name of Fund: BlackRock MuniHoldings Investment Quality Fund (MFL)

Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809

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

    Investment Quality Fund, 55 East 52nd Street, New York, NY 10055

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

Date of fiscal year end: 08/31/2013

Date of reporting period: 02/28/2013


Table of Contents

Item 1 – Report to Stockholders

 


Table of Contents

FEBRUARY 28, 2013

 

 

 

 

 

SEMI-ANNUAL REPORT (UNAUDITED)

 

    LOGO

 

BlackRock Municipal Bond Investment Trust (BIE)

BlackRock Municipal Bond Trust (BBK)

BlackRock Municipal Income Investment Quality Trust (BAF)

BlackRock Municipal Income Quality Trust (BYM)

BlackRock Municipal Income Trust II (BLE)

BlackRock MuniHoldings Investment Quality Fund (MFL)

BlackRock MuniVest Fund, Inc. (MVF)

 

Not FDIC Insured • May Lose Value • No Bank Guarantee


Table of Contents
Table of Contents     

 

      Page  

Dear Shareholder

     3   

Semi-Annual Report:

  

Municipal Market Overview

     4   

The Benefits and Risks of Leveraging

     5   

Derivative Financial Instruments

     5   

Trust Summaries

     6   
Financial Statements:   

Schedules of Investments

     20   

Statements of Assets and Liabilities

     56   

Statements of Operations

     57   

Statements of Changes in Net Assets

     58   

Statements of Cash Flows

     60   

Financial Highlights

     61   

Notes to Financial Statements

     68   

Officers and Trustees

     78   

Additional Information

     79   

 

                
2    SEMI-ANNUAL REPORT    FEBRUARY 28, 2013   


Table of Contents
Dear Shareholder

 

Despite a number of headwinds, risk assets generated strong returns during the 6- and 12-month periods as investors sought meaningful yields in the ongoing low-interest-rate environment. About this time one year ago, the European debt crisis returned to the headlines as unresolved policy decisions left it unclear as to how troubled peripheral countries would finance their sovereign debt, causing yields to soar. In the second quarter of 2012, political instability in Greece and severe deficit and liquidity problems in Spain raised the specter of a full-blown euro collapse. Alongside the drama in Europe, investors were discouraged by gloomy economic reports from various parts of the world. A slowdown in China, a key powerhouse for global growth, emerged as a particular concern. As the outlook for the global economy worsened, however, investors grew increasingly optimistic that the world’s largest central banks would soon intervene to stimulate growth. This theme, along with the announcement of the European Central Bank’s (“ECB’s”) firm commitment to preserve the euro currency bloc, drove most asset classes higher through the summer. Policy relief came in early September, when the ECB announced its decision to support the eurozone’s debt-laden countries with unlimited purchases of short term sovereign debt. Days later, the US Federal Reserve announced its own much-anticipated stimulus package.

Although financial markets world-wide were buoyed by accommodative monetary policies, risk assets weakened in the fall. Global trade began to slow as many European countries fell into recession and growth continued to decelerate in China, where a once-a-decade leadership change compounded uncertainty. In the United States, stocks slid on lackluster corporate earnings reports and market volatility rose in advance of the US Presidential election. In the post-election environment, investors grew increasingly concerned over the “fiscal cliff,” the automatic tax increases and spending cuts that had been scheduled to take effect at the beginning of 2013. There was widespread fear that the fiscal cliff would push the United States into recession unless politicians could agree upon alternate measures to reduce the deficit before the end of 2012. Worries that bipartisan gridlock would preclude a timely budget deal triggered higher levels of volatility in financial markets around the world in the months leading up to the last day of the year. Ultimately, the worst of the fiscal cliff was averted with a last-minute tax deal; however, decisions relating to spending cuts and the debt ceiling continued to weigh on investors’ minds.

Investors shook off the nerve-wracking finale to 2012 and began the New Year with a powerful equity rally. Money that had been pulled to the sidelines amid year-end tax-rate uncertainty poured back into the markets in January. Key indicators signaled modest but broad-based improvements in the world’s major economies, particularly in China. Global equities soared through January while rising US Treasury yields pressured high-quality fixed income assets. However, bond markets strengthened in February when economic momentum slowed and investors toned down their risk appetite. US stocks continued to rise, but at a more moderate pace. Uncertainty about how long the Federal Reserve would maintain its easing bias drove high levels of volatility later in the month, but these fears abated as the budget sequester (automatic spending cuts scheduled to take effect March 1) began to appear imminent and was deemed likely to deter any near-term curtailment of monetary easing policies. Outside the United States, equities largely declined as political uncertainty escalated after the Italian presidential election ended in a stalemate.

On the whole, riskier asset classes outperformed lower-risk investments for the 6- and 12-month periods ended February 28, 2013. International, US small cap and emerging market equities were the leading asset classes for the 6-month period, while US stocks and high yield bonds generated the strongest returns for the 12-month period. US Treasury yields remained relatively low overall, but have inched higher in recent months, pressuring Treasuries and investment-grade bonds. Tax-exempt municipal bonds, however, continued to benefit from favorable supply-and-demand dynamics. Near-zero short term interest rates continued to keep yields on money market securities near their all-time lows.

Investors continue to face many of the same risks as in years past. But we see a world of possibilities. BlackRock was built to provide the global market insight, breadth of capabilities, unbiased investment advice and deep risk management expertise these times require. Investors everywhere are asking, “So what do I do with my money?” Visit www.blackrock.com for answers.

Sincerely,

 

LOGO

Rob Kapito

President, BlackRock Advisors, LLC

 

LOGO

“Despite a number of headwinds, risk assets generated strong returns during the 6- and 12-month periods as investors sought meaningful yields in the ongoing low-interest-rate environment.”

Rob Kapito

President, BlackRock Advisors, LLC

 

Total Returns as of February 28, 2013  
    6-month     12-month  

US large cap equities
(S&P 500® Index)

    8.95     13.46

US small cap equities
(Russell 2000® Index)

    13.02        14.02   

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

    14.41        9.84   

Emerging market equities
(MSCI Emerging Markets Index)

    12.06        0.28   

3-month Treasury bill
(BofA Merrill Lynch
3-Month US Treasury
Bill Index)

    0.05        0.11   

US Treasury securities
(BofA Merrill Lynch 10-Year US Treasury Index)

    (1.51     3.66   

US investment grade
bonds (Barclays US Aggregate Bond Index)

    0.15        3.12   

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

    2.40        5.71   

US high yield bonds

(Barclays US Corporate High Yield 2% Issuer Capped Index)

    6.67        11.79   
Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.    

 

                
   THIS PAGE NOT PART OF YOUR FUND REPORT       3


Table of Contents
Municipal Market Overview     

 

For the Reporting Period Ended February 28, 2013      

Municipal Bonds Performed Well

Market conditions remained favorable even though supply picked up considerably in the past year. Total new issuance for the 12 months ended February 28, 2013 was $383 billion as compared to $303 billion in the prior 12-month period. However, it is important to note that a significant portion (roughly 60%) of the new supply during the most recent 12-month period was attributable to refinancing activity as issuers took advantage of lower interest rates to reduce their borrowing costs.

Increased supply was met with strong demand during the period as investors were starved for yield in the low- rate environment. Investors poured into municipal bond mutual funds, particularly long-duration and high-yield funds as they tend to provide higher levels of income. For the 12 months ended February 28, 2013, municipal bond fund inflows exceeded $46 billion (according to the Investment Company Institute).

 

S&P Municipal Bond Index

Total Returns as of February 28, 2013

  6 months:   2.40%

12 months:   5.71%

A Closer Look at Yields

 

LOGO

From February 29, 2012 to February 28, 2013, muni yields declined by 32 basis points (“bps”) from 3.23% to 2.91% on AAA-rated 30-year municipal bonds, while falling a modest 4 bps from 1.85% to 1.81% on 10-year bonds and rising 9 bps from 0.68% to 0.77% on 5-year bonds (as measured by Thomson Municipal Market Data). (Bond prices rise as yields fall.) Overall, the municipal yield curve remained relatively steep, but flattened over the 12-month period as the spread between 2- and 30-year maturities tightened by 37 bps and the spread between 2- and 10-year maturities tightened by 9 bps.

During the same time period, US Treasury rates fell by 10 bps in both the 5- and 10-year space while rising 1 bp on 30-year bonds. Accordingly, tax-exempt municipal bonds moderately underperformed Treasuries in the 5- and 10-year space, but significantly outperformed Treasury bonds on the long end of the curve. This outperformance was driven largely by a supply/demand imbalance within the municipal market while evidence of a recovering domestic economy pushed interest rates higher. Additionally, as higher US tax rates began to appear imminent late in 2012, municipal bonds benefited from the increased appeal of tax-exempt investing. Municipals have become an appropriate avenue for investors seeking yield in the low-rate environment as the asset class is known for its lower volatility and preservation of earnings as tax rates rise.

Financial Conditions of Municipal Issuers Continue to Improve

Austerity and de-leveraging have been the general themes across the country as states seek to balance their budgets, although a small number of states continue to rely on a “kick-the-can” approach to close their budget gaps. Broadly speaking, state governments have demonstrated better fiscal health as their revenues have steadily improved in recent years. Many local municipalities, however, continue to face higher costs passed down from the state level. BlackRock maintains the view that municipal bond defaults will be minimal and remain in the periphery, and that the overall market is fundamentally sound. We continue to recognize that careful credit research and security selection remain imperative amid uncertainty in this economic environment.

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

 

                
4    SEMI-ANNUAL REPORT    FEBRUARY 28, 2013   


Table of Contents
The Benefits and Risks of Leveraging     

 

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

To obtain leverage, the Trusts issue Variable Rate Demand Preferred Shares (“VRDP Shares”) or Variable Rate Muni Term Preferred Shares (“VMTP Shares”) (VRDP Shares and VMTP Shares are collectively referred to as “Preferred Shares”). Preferred Shares pay dividends at prevailing short-term interest rates, and the Trusts 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, which will be based on short-term interest rates, will normally 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 shareholders will benefit from the incremental net income.

The interest earned on securities purchased with the proceeds from leverage is paid to shareholders in the form of dividends, and the value of these portfolio holdings is reflected in the per share NAV. However, in order to benefit shareholders, the yield curve must be positively sloped; that is, short-term interest rates must be lower than long-term interest rates. If the yield curve becomes negatively sloped, meaning short-term interest rates exceed long-term interest rates, income to shareholders will be lower than if the Trusts had not used leverage.

To illustrate these concepts, assume a Trust’s Common Shares capitalization 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 holders of Preferred Shares (“Preferred Shareholders”) are significantly lower than the income earned on the Trust’s long-term investments, and therefore the holders of Common Shares (“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 will be reduced or eliminated completely. Furthermore, if prevailing short-term interest rates rise above long-term interest rates, the yield curve has a negative slope. In this case, the Trust pays higher short-term interest rates whereas the Trust’s total portfolio 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 and/or debt securities does not fluctuate in relation to interest rates. As a result, changes in interest rates can influence the Trusts’ NAVs positively or negatively in addition to the impact on Trust performance from leverage from Preferred Shares and borrowings discussed above.

The Trusts may also leverage their assets through the use of tender option bond trusts (“TOBs”), 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 generally cause greater changes in the Trusts’ NAVs, market prices and dividend rates than comparable portfolios without leverage. If the income derived from securities purchased with assets received from leverage exceeds the cost of leverage, the Trusts’ 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, each Trust’s net income will be less than if leverage had not been used, and therefore the amount available for distribution to Common Shareholders will be reduced. Each Trust may be required to sell portfolio securities at inopportune times or at distressed values in order to comply with regulatory requirements applicable to the use of leverage or as required by the terms of leverage instruments, which may cause 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 rating agencies that rate the 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, as amended (the “1940 Act”), the Trusts are permitted to issue senior securities in the form of equity securities (e.g., Preferred Shares) up to 50% of their total managed assets (each Trust’s total assets less the sum of its accrued liabilities). In addition, each Trust with VRDP or VMTP Shares limits its economic leverage to 45% of its total managed assets. As of February 28, 2013, the Trusts had economic leverage from Preferred Shares and/or TOBs as a percentage of their total managed assets as follows:

 

      Percent of
Economic
Leverage
 

BIE

     39

BBK

     36

BAF

     36

BYM

     37

BLE

     39

MFL

     40

MVF

     39

 

Derivative Financial Instruments     

 

The Trusts may invest in various derivative financial instruments, including financial futures contracts and options, as specified in Note 2 of the Notes to Financial Statements, which may constitute forms of economic leverage. Such derivative financial instruments are used to obtain exposure to a security, index and/or market without owning or taking physical custody of securities or to hedge market and/or interest rate risks. Derivative financial instruments involve risks, including the imperfect correlation between the value of a derivative financial instrument and the underlying asset, possible default of the counterparty to the transaction or illiquidity of the derivative financial instrument. The Trusts’ ability to use a derivative financial instrument successfully depends on the investment advisor’s ability to predict pertinent market movements accurately, which cannot be assured. The use of derivative financial instruments may result in losses greater than if they had not been used, may require a Trust to sell or purchase portfolio investments at inopportune times or for distressed values, may limit the amount of appreciation a Trust can realize on an investment, may result in lower dividends paid to shareholders or may cause a Trust to hold an investment that it might otherwise sell. The Trusts’ investments in these instruments are discussed in detail in the Notes to Financial Statements.

 

                
   SEMI-ANNUAL REPORT    FEBRUARY 28, 2013    5


Table of Contents
Trust Summary as of February 28, 2013    BlackRock Municipal Bond Investment Trust

 

 

Trust Overview      

BlackRock Municipal Bond Investment Trust’s (BIE) (the “Trust”) investment objective is to provide current income exempt from regular federal income tax and Florida intangible personal property 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 be subject to the federal alternative minimum tax). 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      

 

  Ÿ  

For the six months ended February 28, 2013, the Trust returned 4.15% based on market price and 3.94% based on NAV. For the same period, the closed-end Lipper General & Insured Municipal Debt Funds (Leveraged) category posted an average return of 2.51% based on market price and 4.16% based on NAV. All returns reflect reinvestment of dividends. The Trust’s discount to NAV, which narrowed during the period, accounts for the difference between performance based on price and performance based on NAV.

 

  Ÿ  

The Trust’s holdings in the State of California contributed positively to performance. While federal tax rate increases were supportive of municipal bonds overall, the addition of a state tax rate increase in California made these issues even more compelling on an after-tax basis. Also enhancing results were holdings in the health, education and transportation sectors. Particularly strong returns came from the Trust’s lower-quality holdings in those sectors, which benefited from strong demand as investors sought higher-yielding investments in the low interest rate environment.

 

  Ÿ  

Conversely, exposure to Puerto Rico sales tax bonds had a negative impact on performance as the continued decline of the local economy and concerns about credit rating downgrades resulted in falling prices across Puerto Rico-issued securities broadly.

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.

 

Trust Information      

Symbol on New York Stock Exchange (“NYSE”)

   BIE

Initial Offering Date

   April 30, 2002

Yield on Closing Market Price as of February 28, 2013 ($16.83)1

   5.56%

Tax Equivalent Yield2

   9.82%

Current Monthly Distribution per Common Share3

   $0.0780

Current Annualized Distribution per Common Share3

   $0.9360

Economic Leverage as of February 28, 20134

   39%

 

  1   

Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.

 

  2   

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

 

  3   

The Monthly Distribution per Common Share, declared on March 1, 2013, was decreased to $0.076 per share. 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 VRDP Shares and TOBs as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to VRDP 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 5.

 

                
6    SEMI-ANNUAL REPORT    FEBRUARY 28, 2013   


Table of Contents
     BlackRock Municipal Bond Investment Trust

 

Market Price and Net Asset Value      

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

 

        2/28/13        8/31/12        Change      High        Low  

Market Price

     $ 16.83         $ 16.61           1.32    $ 17.99         $ 16.20   

Net Asset Value

     $ 17.07         $ 16.88           1.13    $ 17.70         $ 16.61   

The following charts show the sector allocation, credit quality allocation and call/maturity schedule of the Trust’s long-term investments:

 

Sector Allocation            
      2/28/13     8/31/12  

County/City/Special District/School District

     21     19

Transportation

     21        18   

Health

     16        17   

Utilities

     16        16   

Education

     11        12   

State

     9        12   

Housing

     4        4   

Corporate

     1        1   

Tobacco

     1        1   
Credit Quality Allocation1            
      2/28/13     8/31/12  

AAA/Aaa

     13     15

AA/Aa

     57        60   

A

     26        20   

BBB/Baa

     4        5   

 

  1   

Using the higher of Standard & Poor’s (“S&P’s”) or Moody’s Investors Service (“Moody’s”) ratings.

Call/Maturity Schedule2      

Calendar Year Ended December 31,

  

2013

       

2014

     4

2015

       

2016

     2   

2017

     1   

 

  2   

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

 

                
   SEMI-ANNUAL REPORT    FEBRUARY 28, 2013    7


Table of Contents
Trust Summary as of February 28, 2013    BlackRock Municipal Bond Trust

 

 

Trust Overview

BlackRock Municipal Bond Trust’s (BBK) (the “Trust”) investment objective is to provide current income exempt from regular federal income tax. The Trust seeks to achieve its investment objective by investing primarily in municipal bonds exempt from regular federal income taxes (except that the interest may be subject to the federal alternative minimum tax). The Trust invests, under normal market conditions, at least 80% of its assets in municipal bonds that are investment grade quality. 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

 

  Ÿ  

For the six months ended February 28, 2013, the Trust returned 4.98% based on market price and 5.01% based on NAV. For the same period, the closed-end Lipper General & Insured Municipal Debt Funds (Leveraged) category posted an average return of 2.51% based on market price and 4.16% 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.

 

  Ÿ  

The Trust’s lower-quality investment grade holdings contributed positively to performance as the tightening of credit spreads drove their outperformance over higher-quality bonds during the period. Additional positive performance came from the Trust’s allocations to the higher-yielding health, corporate and school district sectors. Heavy exposure to California credits, the best performing state for the period, boosted returns. The Trust also benefited from the roll-down effect, whereby effective maturities become shorter with the passing of the year and therefore bonds are evaluated at lower yield levels, which, in a steep yield curve environment, results in higher prices.

 

  Ÿ  

Detracting from performance was the Trust’s neutral-to-long average duration (greater sensitivity to interest rates) as most of the municipal yield curve experienced slightly higher yields and lower bond prices. The Trust’s yield curve positioning favoring longer-dated maturities also had a negative effect. Exposure to Puerto Rico credits detracted from results as the commonwealth’s deteriorating credit metrics and ratings downgrades led to the underperformance of those 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.

 

Trust Information

Symbol on NYSE

   BBK

Initial Offering Date

   April 30, 2002

Yield on Closing Market Price as of February 28, 2013 ($17.35)1

   5.78%

Tax Equivalent Yield2

   10.21%

Current Monthly Distribution per Common Share3

   $0.0835

Current Annualized Distribution per Common Share3

   $1.0020

Economic Leverage as of February 28, 20134

   36%

 

  1   

Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.

 

  2   

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

 

  3   

The Monthly Distribution per Common Share, declared on March 1, 2013, was decreased to $0.0785 per share. 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 VMTP Shares and TOBs as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to VMTP 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 5.

 

                
8    SEMI-ANNUAL REPORT    FEBRUARY 28, 2013   


Table of Contents
     BlackRock Municipal Bond Trust

 

 

Market Price and Net Asset Value

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

 

      2/28/13        8/31/12        Change      High        Low  

Market Price

   $ 17.35         $ 17.16           1.11    $ 18.74         $ 16.85   

Net Asset Value.

   $ 16.98         $ 16.79           1.13    $ 17.62         $ 16.56   

The following charts show the sector allocation, credit quality allocation and call/maturity schedule of the Trust’s long-term investments:

 

Sector Allocation          
     2/28/13     8/31/12  

Health

    23     25

County/City/Special District/School District

    14        13   

Utilities

    14        8   

Transportation

    13        13   

State

    12        14   

Education

    11        11   

Housing

    6        8   

Corporate

    6        5   

Tobacco

    1        3   
Credit Quality Allocation1            
      2/28/13     8/31/12  

AAA/Aaa

     6     9

AA/Aa

     40        35   

A

     30        26   

BBB/Baa

     12        18   

BB/Ba

     5        4   

B

     1        2   

Not Rated2

     6        6   

 

  1   

Using the higher of S&P’s or Moody’s ratings.

 

  2   

The investment advisor has deemed certain of these non-rated securities to be of investment grade quality. As of February 28, 2013 and August 31, 2012, the market value of these securities was $4,854,688, representing 2%, and $3,199,110, representing 1%, respectively, of the Trust’s long-term investments.

Call/Maturity Schedule3      

Calendar Year Ended December 31,

  

2013

     9

2014

     5   

2015

     2   

2016

     3   

2017

     3   

 

  3   

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

 

                
   SEMI-ANNUAL REPORT    FEBRUARY 28, 2013    9


Table of Contents
Trust Summary as of February 28, 2013    BlackRock Municipal Income Investment Quality Trust

 

 

Trust Overview

BlackRock Municipal Income Investment Quality Trust’s (BAF) (the “Trust”) investment objective is to provide current income exempt from federal income tax, including the alternative minimum tax and Florida intangible property tax. The Trust seeks to achieve its investment objective by investing, under normal circumstances, at least 80% of its assets in municipal bonds exempt from federal income taxes, including the alternative minimum tax. The Trust also 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

 

  Ÿ  

For the six months ended February 28, 2013, the Trust returned 2.83% based on market price and 3.50% based on NAV. For the same period, the closed-end Lipper General & Insured Municipal Debt Funds (Leveraged) category posted an average return of 2.51% based on market price and 4.16% based on NAV. All returns reflect reinvestment of dividends. The Trust’s discount 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.

 

  Ÿ  

The Trust’s holdings in the State of California contributed positively to performance. While federal tax rate increases were supportive of municipal bonds overall, the addition of a state tax rate increase in California made these issues even more compelling on an after-tax basis. Also enhancing results were holdings in the health, education and transportation sectors. Particularly strong returns came from the Trust’s lower-quality holdings in those sectors, which benefited from strong demand as investors sought higher-yielding investments in the low interest rate environment.

 

  Ÿ  

Conversely, exposure to Puerto Rico sales tax bonds had a negative impact on performance as the continued decline of the local economy and concerns about credit rating downgrades resulted in falling prices across Puerto Rico-issued securities broadly.

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.

 

Trust Information

Symbol on NYSE

  BAF

Initial Offering Date

  October 31, 2002

Yield on Closing Market Price as of February 28, 2013 ($16.29)1

  5.05%

Tax Equivalent Yield2

  8.92%

Current Monthly Distribution per Common Share3

  $0.0685

Current Annualized Distribution per Common Share3

  $0.8220

Economic Leverage as of February 28, 20134

  36%

 

  1   

Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.

 

  2   

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

 

  3   

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

 

  4   

Represents VMTP Shares and TOBs as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to VMTP 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 5.

 

                
10    SEMI-ANNUAL REPORT    FEBRUARY 28, 2013   


Table of Contents
     BlackRock Municipal Income Investment Quality Trust

 

 

Market Price and Net Asset Value

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

 

      2/28/13        8/31/12        Change      High        Low  

Market Price

   $ 16.29         $ 16.24           0.31    $ 17.49         $ 15.80   

Net Asset Value

   $ 16.69         $ 16.53           0.97    $ 17.35         $ 16.26   

The following charts show the sector allocation, credit quality allocation and call/maturity schedule of the Trust’s long-term investments:

 

Sector Allocation            
      2/28/13     8/31/12  

County/City/Special District/School District

     31     29

Transportation

     20        19   

Utilities

     17        20   

Health

     11        12   

State

     10        8   

Education

     9        10   

Housing

     1        1   

Tobacco

     1        1   
Credit Quality Allocation1            
      2/28/13     8/31/12  

AAA/Aaa

     10     11

AA/Aa

     69        74   

A

     19        14   

BBB/Baa

            1   

Not Rated

     2          

 

  1   

Using the higher of S&P’s or Moody’s ratings.

Call/Maturity Schedule2      

Calendar Year Ended December 31,

  

2013

       

2014

       

2015

       

2016

     1

2017

     1   

 

  2   

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

 

                
   SEMI-ANNUAL REPORT    FEBRUARY 28, 2013    11


Table of Contents
Trust Summary as of February 28, 2013    BlackRock Municipal Income Quality Trust

 

 

Trust Overview

BlackRock Municipal Income Quality Trust’s (BYM) (the “Trust”) investment objective is to provide current income exempt from federal income taxes, including the alternative minimum tax. The Trust seeks to achieve its investment objective by investing, under normal circumstances, at least 80% of its assets in municipal bonds exempt from federal income taxes, including the alternative minimum tax. The Trust also 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

 

  Ÿ  

For the six months ended February 28, 2013, the Trust returned (1.32)% based on market price and 3.62% based on NAV. For the same period, the closed-end Lipper General & Insured Municipal Debt Funds (Leveraged) category posted an average return of 2.51% based on market price and 4.16% based on NAV. All returns reflect reinvestment of dividends. The Trust moved from a premium to NAV to a discount 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.

 

  Ÿ  

The Trust’s positive performance was derived largely from income accrual as well as spread compression (price appreciation) in certain sectors, most notably health and transportation. Exposure to capital appreciation bonds (zero coupons) also had a positive impact on results as spreads generally tightened in this segment.

 

  Ÿ  

Trust performance was negatively impacted by a slight rise in interest rates during the period (bond prices fall as rates rise). Exposure to certain Puerto Rico credits detracted from performance as concerns about credit rating agency downgrades resulted in wider credit spreads (falling prices) for Puerto Rico municipal securities broadly.

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.

 

Trust Information

Symbol on NYSE

   BYM

Initial Offering Date

   October 31, 2002

Yield on Closing Market Price as of February 28, 2013 ($16.04)1

   5.84%

Tax Equivalent Yield2

   10.32%

Current Monthly Distribution per Common Share3

   $0.0780

Current Annualized Distribution per Common Share3

   $0.9360

Economic Leverage as of February 28, 20134

   37%

 

  1  

Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.

 

  2  

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

 

  3  

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

 

  4  

Represents VMTP Shares and TOBs as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to VMTP 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 5.

 

                
12    SEMI-ANNUAL REPORT    FEBRUARY 28, 2013   


Table of Contents
     BlackRock Municipal Income Quality Trust

 

 

Market Price and Net Asset Value      

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

 

        2/28/13        8/31/12        Change      High        Low  

Market Price

     $ 16.04         $ 16.73           (4.12 )%     $ 17.79         $ 15.71   

Net Asset Value

     $ 16.22         $ 16.11           0.68    $ 16.64         $ 15.88   

The following charts show the sector allocation, credit quality allocation and call/maturity schedule of the Trust’s long-term investments:

 

 

Sector Allocation            
      2/28/13     8/31/12  

County/City/Special District/School District

     25     19

Transportation

     19        21   

Utilities

     19        19   

State

     16        17   

Health

     7        9   

Tobacco

     5        5   

Education

     4        6   

Corporate

     4        3   

Housing

     1        1   
Credit Quality Allocation1            
      2/28/13     8/31/12  

AAA/Aaa

     22     17

AA/Aa

     52        55   

A

     21        19   

BBB/Baa

     4        7   

B

     1        1   

Not Rated

            1 2  

 

  1   

Using the higher of S&P’s or Moody’s ratings.

 

  2   

The investment advisor has deemed certain of these non-rated securities to be of investment grade quality. As of August 31, 2012, the market value of these securities was $8,360,761, representing 1% of the Trust’s long-term investments.

Call/Maturity Schedule3      

Calendar Year Ended December 31,

  

2013

     9

2014

     7   

2015

     5   

2016

     5   

2017

     8   

 

  3   

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

 

                
   SEMI-ANNUAL REPORT    FEBRUARY 28, 2013    13


Table of Contents
Trust Summary as of February 28, 2013    BlackRock Municipal Income Trust II

 

 

Trust Overview

BlackRock Municipal Income Trust II’s (BLE) (the “Trust”) investment objective is to provide current income exempt from regular federal 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 be subject to the federal alternative minimum tax). 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

 

  Ÿ  

For the six months ended February 28, 2013, the Trust returned 2.29% based on market price and 4.17% based on NAV. For the same period, the closed-end Lipper General & Insured Municipal Debt Funds (Leveraged) category posted an average return of 2.51% based on market price and 4.16% 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.

 

  Ÿ  

The Trust’s holdings generated a high distribution yield, which in the aggregate, had a meaningful impact on returns. Credit spread compression drove price appreciation, particularly within the Trust’s concentration of holdings in lower-quality investment grade and non-investment grade municipal bonds. Also boosting returns were the Trust’s allocations to corporate, health and transportation-related debt. Exposure to capital appreciation bonds (zero coupons) had a positive impact on results as this segment tends to outperform in a spread tightening environment.

 

  Ÿ  

Conversely, security selection within the corporate and tax-backed sectors hindered performance. The Trust’s long duration (greater sensitivity to interest rate movements) detracted as yields slightly rose during the period. Modest exposure to certain Puerto Rico credits had a negative impact on results as concerns about the commonwealth’s deteriorating credit metrics and ratings downgrades led to the underperformance of those 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.

 

Trust Information

Symbol on NYSE MKT

  BLE

Initial Offering Date

  July 30, 2002

Yield on Closing Market Price as of February 28, 2013 ($16.59)1

  6.15%

Tax Equivalent Yield2

  10.87%

Current Monthly Distribution per Common Share3

  $0.0850

Current Annualized Distribution per Common Share3

  $1.0200

Economic Leverage as of February 28, 20134

  39%

 

  1  

Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.

 

  2  

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

 

  3  

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

 

  4  

Represents VMTP Shares and TOBs as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to VMTP 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 5.

 

                
14    SEMI-ANNUAL REPORT    FEBRUARY 28, 2013   


Table of Contents
     BlackRock Municipal Income Trust II

 

 

Market Price and Net Asset Value      

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

 

       

2/28/13

       8/31/12        Change      High        Low  

Market Price

     $ 16.59         $ 16.74           (0.90 )%     $ 17.61         $ 15.85   

Net Asset Value

     $ 16.25         $ 16.10           0.93    $ 16.78         $ 15.88   

The following charts show the sector allocation, credit quality allocation and call/maturity schedule of the Trust’s long-term investments:

 

Sector Allocation            
      2/28/13     8/31/12  

Transportation

     20     17

Health

     17        18   

Utilities

     17        15   

State

     13        16   

County/City/Special District/School District

     12        11   

Corporate

     8        7   

Education

     8        9   

Tobacco

     3        4   

Housing

     2        3   
Credit Quality Allocation1            
      2/28/13     8/31/12  

AAA/Aaa

     10     13

AA/Aa

     35        36   

A

     30        25   

BBB/Baa

     18        17   

BB/Ba

            2   

B

     1        1   

Not Rated2

     6        6   

 

  1  

Using the higher of S&P’s or Moody’s ratings.

 

  2  

The investment advisor has deemed certain of these non-rated securities to be of investment grade quality. As of February 28, 2013 and August 31, 2012, the market value of these securities was $12,353,604 and $12,361,560, each representing 2%, respectively, of the Trust’s long-term investments.

Call/Maturity Schedule3      

Calendar Year Ended December 31,

  

2013

     6

2014

     1   

2015

     6   

2016

     5   

2017

     5   

 

  3  

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

 

                
   SEMI-ANNUAL REPORT    FEBRUARY 28, 2013    15


Table of Contents
Trust Summary as of February 28, 2013    BlackRock MuniHoldings Investment Quality Fund

 

 

Trust Overview

BlackRock MuniHoldings Investment Quality Fund’s (MFL) (the “Trust”) investment objective is to provide shareholders with current income exempt from federal income tax and to provide shareholders with the opportunity to own shares the value of which is exempt from Florida intangible personal property tax. The Trust seeks to achieve its investment objective by investing primarily in long-term, investment grade municipal obligations exempt from federal income taxes (except that the interest may be subject to the federal alternative minimum tax). Under normal market conditions, the Trust invests at least 80% of its assets in municipal obligations with remaining maturities of one year or more 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

 

  Ÿ  

For the six months ended February 28, 2013, the Trust returned 0.13% based on market price and 3.97% based on NAV. For the same period, the closed-end Lipper General & Insured Municipal Debt Funds (Leveraged) category posted an average return of 2.51% based on market price and 4.16% based on NAV. All returns reflect reinvestment of dividends. The Trust moved from a premium to NAV to a discount 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.

 

  Ÿ  

The Trust’s holdings in the State of California contributed positively to performance. While federal tax rate increases were supportive of municipal bonds overall, the addition of a state tax rate increase in California made these issues even more compelling on an after-tax basis. Also enhancing results were holdings in the health, education and transportation sectors. Particularly strong returns came from the Trust’s lower-quality holdings in those sectors, which benefited from strong demand as investors sought higher-yielding investments in the low interest rate environment.

 

  Ÿ  

Conversely, exposure to Puerto Rico sales tax bonds had a negative impact on performance as the continued decline of the local economy and concerns about credit rating downgrades resulted in falling prices across Puerto Rico-issued securities broadly.

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.

 

Trust Information

 

Symbol on NYSE

  MFL

Initial Offering Date

  September 26, 1997

Yield on Closing Market Price as of February 28, 2013 ($15.70)1

  5.85%

Tax Equivalent Yield2

  10.34%

Current Monthly Distribution per Common Share3

  $0.0765

Current Annualized Distribution per Common Share3

  $0.9180

Economic Leverage as of February 28, 20134

  40%

 

  1  

Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.

 

  2  

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

 

  3  

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

 

  4  

Represents VRDP Shares and TOBs as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to VRDP 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 5.

 

                
16    SEMI-ANNUAL REPORT    FEBRUARY 28, 2013   


Table of Contents
     BlackRock MuniHoldings Investment Quality Fund

 

Market Price and Net Asset Value      

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

 

        2/28/13        8/31/12        Change      High        Low  

Market Price

     $ 15.70         $ 16.13           (2.67 )%     $ 17.20         $ 15.52   

Net Asset Value

     $ 16.13         $ 15.96           1.07    $ 16.77         $ 15.70   

The following charts show the sector allocation, credit quality allocation and call/maturity schedule of the Trust’s long-term investments:

 

Sector Allocation            
      2/28/13     8/31/12  

Transportation

     28     21

Utilities

     18        18   

County/City/Special District/School District

     15        16   

State

     14        16   

Health

     12        14   

Education

     10        11   

Housing

     2        3   

Tobacco

     1        1   
Credit Quality Allocation1            
      2/28/13     8/31/12  

AAA/Aaa

     13     14

AA/Aa

     59        66   

A

     26        18   

BBB/Baa

            1   

Not Rated2

     2        1   

 

  1   

Using the higher of S&P’s or Moody’s ratings.

 

  2   

The investment advisor has deemed certain of these non-rated securities to be of investment grade quality. As of February 28, 2013 and August 31, 2012, the market value of these securities was $8,585,448 and $4,206,588, each representing less than 1%, respectively, of the Trust’s long-term investments.

Call/Maturity Schedule3      

Calendar Year Ended December 31,

  

2013

     1

2014

     1   

2015

       

2016

     1   

2017

     3   

 

  3   

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

 

                
   SEMI-ANNUAL REPORT    FEBRUARY 28, 2013    17


Table of Contents
Trust Summary as of February 28, 2013    BlackRock MuniVest Fund, Inc.

 

 

Trust Overview

BlackRock MuniVest Fund, Inc.’s (MVF) (the “Trust”) investment objective is to provide shareholders with as high a level of current income exempt from federal income taxes as is consistent with its investment policies and prudent investment management. The Trust seeks to achieve its investment objective by investing at least 80% of its assets in municipal obligations exempt from federal income taxes (except that the interest may be subject to the federal alternative minimum tax). The Trust invests, under normal market conditions, primarily in long term municipal obligations rated investment grade at the time of investment and invests primarily in long term municipal obligations with maturities 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

 

  Ÿ  

For the six months ended February 28, 2013, the Trust returned 3.39% based on market price and 3.97% based on NAV. For the same period, the closed-end Lipper General & Insured Municipal Debt Funds (Leveraged) category posted an average return of 2.51% based on market price and 4.16% 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.

 

  Ÿ  

The Trust’s positive performance was derived mainly from its coupon income component as municipal market performance during the six-month period, although positive, was less robust than it had been in the prior eighteen months. The Trust benefited from its zero-coupon bond holdings due to positive price movement in that segment. Exposure to lower-quality investment grade credits boosted results given strong demand from investors seeking higher-yielding investments in the low interest rate environment.

 

  Ÿ  

Interest rates inched higher during the period, which negatively impacted performance (bond prices fall as rates rise). Exposure to Puerto Rico debt detracted from performance as concerns about credit rating agency downgrades resulted in wider credit spreads (falling prices) for Puerto Rico municipal securities broadly.

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.

 

Trust Information      

 

Symbol on NYSE MKT

  MVF

Initial Offering Date

  September 29, 1988

Yield on Closing Market Price as of February 28, 2013 ($11.29)1

  6.27%

Tax Equivalent Yield2

  11.08%

Current Monthly Distribution per Common Share3

  $0.0590

Current Annualized Distribution per Common Share3

  $0.7080

Economic Leverage as of February 28, 20134

  39%

 

  1  

Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.

 

  2  

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

 

  3  

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

 

  4  

Represents VMTP Shares and TOBs as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to VMTP 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 5.

 

                
18    SEMI-ANNUAL REPORT    FEBRUARY 28, 2013   


Table of Contents
     BlackRock MuniVest Fund, Inc.

 

Market Price and Net Asset Value      

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

 

        2/28/13        8/31/12        Change      High        Low  

Market Price

     $ 11.29         $ 11.28           0.09    $ 12.29         $ 10.87   

Net Asset Value

     $ 10.75         $ 10.68           0.66    $ 11.06         $ 10.53   

The following charts show the sector allocation, credit quality allocation and call/maturity schedule of the Trust’s long-term investments:

 

Sector Allocation            
      2/28/13     8/31/12  

Health

     23     28

Transportation

     21        17   

Utilities

     13        6   

Corporate

     11        10   

County/City/Special District/School District

     11        8   

Education

     8        10   

State

     6        6   

Housing

     5        9   

Tobacco

     2        6   
Credit Quality Allocation1            
      2/28/13     8/31/12  

AAA/Aaa

     12     12

AA/Aa

     47        46   

A

     26        25   

BBB/Baa

     12        12   

BB/Ba

            2   

B

     1          

Not Rated2

     2        3   

 

  1   

Using the higher of S&P’s or Moody’s ratings.

 

  2   

The investment advisor has deemed certain of these non-rated securities to be of investment grade quality. As of February 28, 2013 and August 31, 2012, the market value of these securities was $20,449,481, representing 2%, and $30,422,382, representing 3%, respectively, of the Trust’s long-term investments.

Call/Maturity Schedule3      

Calendar Year Ended December 31,

  

2013

     9

2014

     5   

2015

     1   

2016

     6   

2017

     7   

 

  3   

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

 

                
   SEMI-ANNUAL REPORT    FEBRUARY 28, 2013    19


Table of Contents

Schedule of Investments February 28, 2013 (Unaudited)

  

BlackRock Municipal Bond Investment Trust (BIE)

(Percentages shown are based on Net  Assets)

 

Municipal Bonds   

Par  

(000)

    Value  

Alabama — 3.3%

    

Alabama Incentives Financing Authority, RB, Series A, 5.00%, 9/01/42

   $ 1,500      $    1,700,115   

Selma IDB, RB, International Paper Co. Project, Series A, 5.38%, 12/01/35

     145        159,938   
    

 

 

 
               1,860,053   

Alaska — 0.3%

    

Northern Tobacco Securitization Corp., Refunding RB, Asset-Backed, Series A, 5.00%, 6/01/46

     180        157,910   

Arizona — 0.5%

    

Arizona Board of Regents, Refunding RB, University of Arizona, Series A, 5.00%, 6/01/42

     250        284,510   

California — 8.3%

    

California Educational Facilities Authority, RB, University of Southern California, Series A, 5.25%, 10/01/38

     700        826,273   

California Health Facilities Financing Authority, Refunding RB, Catholic Healthcare West, Series A, 6.00%, 7/01/39

     120        142,472   

Los Angeles Department of Water & Power, RB, Power System, Sub-Series A-1, 5.25%, 7/01/38

            1,660        1,928,339   

San Diego Regional Building Authority California, RB, County Operations Center & Annex, Series A, 5.38%, 2/01/36

     850        969,714   

State of California, GO, Various Purpose, 6.00%, 3/01/33

     685        849,688   
    

 

 

 
               4,716,486   

Colorado — 1.6%

    

City & County of Denver Colorado, Refunding ARB, Airport System, Series B, 5.00%, 11/15/37

     235        269,221   

Colorado Health Facilities Authority, Refunding RB, Catholic Healthcare Initiatives, Series A, 5.50%, 7/01/34

     580        662,064   
    

 

 

 
               931,285   

Florida — 1.1%

    

City of Jacksonville Florida, Refunding RB, Better Jacksonville Sale Tax, Series A, 5.00%, 10/01/30

     295        344,120   

Orlando-Orange County Expressway Authority, Refunding RB, Series A, 5.00%, 7/01/29

     250        293,083   
    

 

 

 
               637,203   

Georgia — 1.2%

    

Municipal Electric Authority of Georgia, Refunding RB, Project One, Sub-Series D, 6.00%, 1/01/23

     555        678,676   

Illinois — 13.8%

    

Chicago Illinois Board of Education, GO, Series A:

    

5.50%, 12/01/39

     500        579,340   

5.00%, 12/01/42

     715        778,285   
Municipal Bonds   

Par  

(000)

    Value  

Illinois (concluded)

    

Chicago Transit Authority, RB, Sales Tax Receipts Revenue, 5.25%, 12/01/36

   $ 165      $ 189,697   

City of Chicago Illinois, ARB, O’Hare International Airport, General, Third Lien, Series C, 6.50%, 1/01/41

     1,590           2,056,013   

City of Chicago Illinois, Refunding RB, Sales Tax Revenue, Series A, 5.25%, 1/01/38

     205        235,430   

City of Chicago Illinois Wastewater Transmission, RB, Second Lien, 5.00%, 1/01/42 (a)

     310        345,585   

Cook County Forest Preserve District, GO, Series C, 5.00%, 12/15/32

     150        172,207   

Cook County Forest Preserve District, GO, Refunding, Limited Tax Project, Series B, 5.00%, 12/15/32

     70        80,364   

Illinois Finance Authority, RB, Carle Foundation, Series A, 6.00%, 8/15/41

     750        897,855   

Illinois Finance Authority, Refunding RB:

    

Northwestern Memorial Healthcare, 5.00%, 8/15/37

     115        130,879   

Northwestern Memorial Hospital, 6.00%, 8/15/39

            1,000        1,186,630   

Metropolitan Pier & Exposition Authority, Refunding RB, McCormick Place Project, Series B, 5.00%, 12/15/28

     530        621,054   

Railsplitter Tobacco Settlement Authority, RB:

    

5.50%, 6/01/23

     365        440,394   

6.00%, 6/01/28

     105        125,677   
    

 

 

 
               7,839,410   

Indiana — 2.5%

    

Indiana Municipal Power Agency, RB, Series B, 6.00%, 1/01/39

     1,190        1,424,311   

Kansas — 3.4%

    

Kansas Development Finance Authority, Refunding RB, Adventist Health System/Sunbelt Obligated Group:

    

Series A, 5.00%, 11/15/32

     750        871,252   

Series C, 5.50%, 11/15/29

     900        1,054,359   
    

 

 

 
               1,925,611   

Kentucky — 2.5%

    

Kentucky Economic Development Finance Authority, RB, Owensboro Medical Health System, Series A, 6.38%, 6/01/40

     350        420,693   

Louisville & Jefferson County Metropolitan Government Parking Authority, RB, Series A, 5.75%, 12/01/34

     800        984,808   
    

 

 

 
               1,405,501   

Louisiana — 0.8%

    

Louisiana Local Government Environmental Facilities & Community Development Authority, RB, Westlake Chemical Corp., Series A-1, 6.50%, 11/01/35

     380        448,833   

 

Portfolio Abbreviations

 

To simplify the listings of portfolio holdings in the Schedules of Investments, the names and descriptions of many of the securities have been abbreviated according to the following list:      AGC    Assured Guaranty Corp.    HRB    Housing Revenue Bonds
     AGM    Assured Guaranty Municipal Corp.    IDA    Industrial Development Authority
     AMBAC    American Municipal Bond Assurance Corp.    IDB    Industrial Development Board
     AMT    Alternative Minimum Tax (subject to)    IDRB    Industrial Development Revenue Bonds
     ARB    Airport Revenue Bonds    ISD    Independent School District
     BARB    Building Aid Revenue Bonds    LRB    Lease Revenue Bonds
     BHAC    Berkshire Hathaway Assurance Corp.    MRB    Mortgage Revenue Bonds
     CAB    Capital Appreciation Bonds    M/F    Multi-Family
     COP    Certificates of Participation    NPFGC    National Public Finance Guarantee Corp.
     EDC    Economic Development Corp.    PSF-GTD    Permanent School Fund Guaranteed
     EDA    Economic Development Authority    Q-SBLF    Qualified School Bond Loan Fund
     ERB    Education Revenue Bonds    RB    Revenue Bonds
     GARB    General Airport Revenue Bonds    SAN    State Aid Notes
     GO    General Obligation Bonds    SBPA    Stand-by Bond Purchase Agreements
     HDA    Housing Development Authority    S/F    Single-Family
     HFA    Housing Finance Agency    VRDN    Variable Rate Demand Notes

 

See Notes to Financial Statements.

 

                
20    SEMI-ANNUAL REPORT    FEBRUARY 28, 2013   


Table of Contents

Schedule of Investments (continued)

  

BlackRock Municipal Bond Investment Trust (BIE)

(Percentages shown are based on Net  Assets)

 

Municipal Bonds   

Par  

(000)

    Value  

Maine — 1.5%

    

Maine Health & Higher Educational Facilities Authority, RB, Maine General Medical Center, 7.50%, 7/01/32

   $ 675      $ 869,387   

Massachusetts — 0.7%

    

Massachusetts Development Finance Agency, Refunding RB, Trustees of Deerfield Academy, 5.00%, 10/01/40

     375        430,234   

Michigan — 3.2%

    

Lansing Board of Water & Light Utilities System, RB, Series A, 5.50%, 7/01/41

     485        573,478   

Michigan State Building Authority, Refunding RB, Facilities Program, Series I, 6.00%, 10/15/38

     500        603,235   

Royal Oak Hospital Finance Authority Michigan, Refunding RB, William Beaumont Hospital, 8.25%, 9/01/39

     530        675,252   
    

 

 

 
               1,851,965   

Mississippi — 2.4%

    

Mississippi Development Bank, Refunding RB:

    

Jackson Mississippi Water & Sewer (AGM), 5.00%, 9/01/30

     535        623,425   

Jackson Public School District Project, Series A, 5.00%, 4/01/28

     645        735,474   
    

 

 

 
                  1,358,899   

Multi-State — 5.7%

    

Centerline Equity Issuer Trust, 7.20%, 11/15/52 (b)(c)

            3,000        3,269,220   

Nevada — 4.1%

    

City of Las Vegas Nevada, GO, Limited Tax, Performing Arts Center, 6.00%, 4/01/34

     1,000        1,173,150   

County of Clark Nevada, ARB, Series B, 5.75%, 7/01/42

     1,000        1,175,670   
    

 

 

 
               2,348,820   

New Jersey — 5.2%

    

New Jersey EDA, Refunding RB, School Facilities Construction, Series AA, 5.50%, 12/15/29

     750        871,305   

New Jersey State Housing & Mortgage Finance Agency, RB, S/F Housing, Series CC, 5.25%, 10/01/29

     610        676,917   

New Jersey Transportation Trust Fund Authority, RB, Transportation System:

    

5.50%, 6/15/41

     500        582,405   

5.88%, 12/15/38

     695        822,637   
    

 

 

 
               2,953,264   

New York — 2.0%

    

Hudson New York Yards Infrastructure Corp., RB, Series A, 5.75%, 2/15/47

     145        172,573   

New York Liberty Development Corp., Refunding RB, Second Priority, Bank of America Tower at One Bryant Park Project, 6.38%, 7/15/49

     325        386,493   

New York State Dormitory Authority, RB, Series B, 5.00%, 3/15/42

     500        570,630   
    

 

 

 
               1,129,696   

North Carolina — 1.1%

    

North Carolina Medical Care Commission, RB, Duke University Health System, Series A, 5.00%, 6/01/32

     530        618,378   

Ohio — 1.1%

    

Ohio State University, RB, Special Purpose General Receipts, Series A, 5.00%, 6/01/38

     545        632,772   
Municipal Bonds   

Par  

(000)

    Value  

Pennsylvania — 6.2%

    

Pennsylvania Economic Development Financing Authority, RB, American Water Co. Project, 6.20%, 4/01/39

   $ 300      $ 349,263   

Pennsylvania Turnpike Commission, RB:

    

Sub-Series A, 5.63%, 12/01/31

     750        880,230   

Sub-Series A, 6.00%, 12/01/41

     1,500        1,708,665   

Sub-Series C, (AGC), 6.25%, 6/01/38

     500        605,185   
    

 

 

 
               3,543,343   

Texas — 12.6%

    

Central Texas Regional Mobility Authority, Refunding RB, Senior Lien, 6.00%, 1/01/41

     890           1,035,417   

City of Houston Texas, Refunding RB, Utility System, Series D, 5.00%, 11/15/42

     500        574,610   

Conroe ISD Texas, GO, School Building, Series A, 5.75%, 2/15/35

     470        560,489   

Harris County Health Facilities Development Corp., Refunding RB, Memorial Hermann Healthcare System, Series B, 7.13%, 12/01/31

     250        319,305   

Houston Community College System, GO, 5.00%, 2/15/36 (a)

     205        232,798   

North Texas Tollway Authority, RB, Special Projects System, Series A, 5.50%, 9/01/41

     500        594,080   

North Texas Tollway Authority, Refunding RB, First Tier:

    

Series B, 5.00%, 1/01/42

     750        833,677   

Series K-1 (AGC), 5.75%, 1/01/38

     250        281,723   

Tarrant County Cultural Education Facilities Finance Corp., RB, Scott & White Healthcare, 6.00%, 8/15/45

     1,020        1,232,354   

Texas Private Activity Bond Surface Transportation Corp., RB, Senior Lien, NTE Mobility Partners LLC, North Tarrant Express Managed Lanes Project, 6.88%, 12/31/39

     500        596,450   

Texas Transportation Commission, Refunding RB, First Tier, Series A, 5.00%, 8/15/41

     175        191,998   

University of Texas System, Refunding RB, Financing System Bonds, Series B, 5.00%, 8/15/43

     615        718,996   
    

 

 

 
               7,171,897   

Utah — 2.0%

    

Utah Transit Authority, Refunding RB, Subordinated Sales Tax, 5.00%, 6/15/42

            1,000        1,128,270   

Virginia — 3.7%

    

Fairfax County IDA, RB, Health Care, Inova Health System, Series A, 5.00%, 5/15/40

     275        312,571   

Norfolk EDA, Refunding RB, Sentara Healthcare, Series B, 5.00%, 11/01/36

     500        571,670   

Virginia Public School Authority, RB, School Financing, 6.50%, 12/01/18 (d)

     500        657,335   

Virginia Resources Authority, RB, Series A-1, 5.00%, 11/01/42

     485        561,499   
    

 

 

 
               2,103,075   

Washington — 2.0%

    

Port of Seattle, Refunding RB, Intermediate Lien, Series A, 5.00%, 8/01/32

     1,000        1,165,790   

Wisconsin — 3.2%

    

University of Wisconsin Hospitals & Clinics Authority, Refunding RB, Series A, 5.00%, 4/01/38 (a)

     145        162,175   

Wisconsin Health & Educational Facilities Authority, RB, Ascension Health Alliiance, Series D, 5.00%, 11/15/41

     485        545,019   

 

See Notes to Financial Statements.

 

                
   SEMI-ANNUAL REPORT    FEBRUARY 28, 2013    21


Table of Contents

Schedule of Investments (continued)

  

BlackRock Municipal Bond Investment Trust (BIE)

(Percentages shown are based on Net  Assets)

 

Municipal Bonds   

Par  

(000)

    Value  

Wisconsin (concluded)

    

Wisconsin Health & Educational Facilities Authority, Refunding RB, Froedtert Health, Inc.:

    

Series A, 5.00%, 4/01/42

   $ 125      $ 140,486   

Series C, 5.25%, 4/01/39

     890        985,560   
    

 

 

 
               1,833,240   
Total Municipal Bonds – 96.0%              54,718,039   
    
                  
Municipal Bonds Transferred to
Tender Option Bond Trusts (e)
              

California — 19.4%

    

California Educational Facilities Authority, RB, University of Southern California, Series B, 5.25%, 10/01/39 (f)

     1,005        1,178,121   

Grossmont Union High School District, GO, Election of 2008, Series B, 5.00%, 8/01/40

     1,300           1,451,710   

Los Angeles Community College District California, GO, Election of 2008, Series C, 5.25%, 8/01/39 (f)

     1,410        1,705,381   

Los Angeles Community College District California, GO, Refunding, Series A, 6.00%, 8/01/33

     2,079        2,597,309   

Los Angeles Unified School District California, GO, Series I, 5.00%, 1/01/34

     200        224,448   

San Diego Public Facilities Financing Authority, Refunding RB, Series B, 5.50%, 8/01/39

     2,234        2,615,912   

University of California, RB, Series O, 5.75%, 5/15/34

     810        976,158   

University of California, Refunding RB, Limited Project, Series G, 5.00%, 5/15/37

     250        288,684   
    

 

 

 
               11,037,723   

District of Columbia — 3.4%

    

District of Columbia, RB, Series A, 5.50%, 12/01/30 (f)

     735        893,662   

District of Columbia Water & Sewer Authority, Refunding RB, Series A, 5.50%, 10/01/39

     899        1,061,426   
    

 

 

 
               1,955,088   

Florida — 0.5%

    

County of Miami-Dade Florida, Refunding RB, Transit System Sales Surtax, 5.00%, 7/01/42

     260        292,159   

Illinois — 8.1%

    

City of Chicago Illinois Waterworks, Refunding RB, Second Lien, 5.00%, 11/01/42

     400        451,474   

Illinois Finance Authority, RB, University of Chicago, Series B, 6.25%, 7/01/38

     1,500        1,860,045   

Illinois State Toll Highway Authority, RB, Series B, 5.50%, 1/01/33

     2,000        2,283,353   
    

 

 

 
               4,594,872   

Massachusetts — 1.6%

    

Massachusetts School Building Authority, Sales Tax RB, Senior Lien, Series B, 5.00%, 10/15/41

     790        906,091   

Nevada — 3.2%

    

Clark County Water Reclamation District, GO, Limited Tax, 6.00%, 7/01/38

            1,500        1,813,485   

New Hampshire — 1.2%

    

New Hampshire Health & Education Facilities Authority, RB, Dartmouth College, 5.25%, 6/01/39 (f)

     585        684,893   

New Jersey — 3.7%

    

New Jersey Transportation Trust Fund Authority, RB, Transportation System:

    

Series A (AGM), 5.00%, 12/15/32

     1,000        1,138,810   

Series B, 5.25%, 6/15/36

     840        959,314   
    

 

 

 
               2,098,124   
Municipal Bonds Transferred to
Tender Option Bond Trusts (e)
  

Par  

(000)

    Value  

New York — 14.3%

    

New York City Municipal Water Finance Authority, RB, Fiscal 2009, Series A, 5.75%, 6/15/40

   $ 750      $ 894,809   

New York City Municipal Water Finance Authority, Refunding RB:

    

Series FF, 5.00%, 6/15/45

     1,000        1,130,475   

Series FF-2, 5.50%, 6/15/40

     990        1,172,004   

New York City Transitional Finance Authority, BARB, Building Aid, Fiscal 2009, Series S-3, 5.25%, 1/15/39

     1,000        1,117,917   

New York City Transitional Finance Authority, RB, Future Tax Secured, Fiscal 2012, Series E, 5.00%, 2/01/42

     460        524,110   

New York Liberty Development Corp., RB, 1 World Trade Center Project, 5.25%, 12/15/43

     1,170        1,342,884   

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

     680        805,800   

New York State Dormitory Authority, ERB, Series B, 5.25%, 3/15/38

     1,000        1,171,800   
    

 

 

 
               8,159,799   

Ohio — 1.6%

    

County of Allen Ohio, Refunding RB, Catholic Healthcare, Series A, 5.25%, 6/01/38

     840        939,170   

Puerto Rico — 0.9%

    

Puerto Rico Sales Tax Financing Corp., Sales Tax, Refunding RB, Sales Tax Revenue, Series C, 5.25%, 8/01/40

     460        502,154   

Texas — 7.2%

    

City of San Antonio Texas, Refunding RB, Electric and Gas Systems Revenue, Series A, 5.25%, 2/01/31 (f)

     1,050        1,250,462   

Harris County Cultural Education Facilities Finance Corp., RB, Texas Children’s Hospital Project, 5.50%, 10/01/39

     1,450        1,715,713   

Waco Educational Finance Corp., Refunding RB, Baylor University, 5.00%, 3/01/43

     1,005        1,144,765   
    

 

 

 
               4,110,940   

Virginia — 0.9%

    

Fairfax County IDA Virginia, Refunding RB, Health Care, Inova Health System, Series A, 5.50%, 5/15/35

     460        528,879   

Washington — 1.5%

    

University of Washington, Refunding RB, Series A, 5.00%, 7/01/41

     735        850,540   
Total Municipal Bonds Transferred to
Tender Option Bond Trusts — 67.5%
        38,473,917   
Total Long-Term Investments
(Cost — $82,732,308) — 163.5%
             93,191,956   
    
                  
Short-Term Securities    Shares         

FFI Institutional Tax-Exempt Fund, 0.01% (g)(h)

     1,154,435        1,154,435   
Total Short-Term Securities
(Cost — $1,154,435) — 2.0%
             1,154,435   
Total Investments (Cost — $83,886,743) — 165.5%        94,346,391   
Liabilities in Excess of Other Assets — (0.4)%        (206,749

Liability for TOB Trust Certificates, Including Interest
Expense and Fees Payable — (33.9)%

   

    (19,347,621
VRDP Shares, at Liquidation Value — (31.2)%        (17,800,000
    

 

 

 
Net Assets Applicable to Common Shares — 100.0%      $ 56,992,021   
    

 

 

 

 

See Notes to Financial Statements.

 

                
22    SEMI-ANNUAL REPORT    FEBRUARY 28, 2013   


Table of Contents

Schedule of Investments (concluded)

  

BlackRock Municipal Bond Investment Trust (BIE)

 

 

Notes to Schedule of investments
(a)   When-issued security. Unsettled when-issued transactions were as follows:

 

Counterparty      Value       

Unrealized

Appreciation
(Depreciation)

 
Stifel Nicolaus & Co.      $ 345,585         $ (180

JPMorgan Securities, Inc.

     $ 394,973         $ 16   

 

(b)   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.

 

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

 

(d)   US government securities, held in escrow, are used to pay interest on this security, as well as to retire the bond in full at the date indicated, typically at a premium to par.

 

(e)   Securities represent bonds transferred to a TOB in exchange for which the Trust acquired residual interest certificates. These securities serve as collateral in a financing transaction. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs.

 

(f)   All or a portion of security is subject to a recourse agreement, which may require the Trust to pay the liquidity provider in the event there is a shortfall between the TOB trust certificates and proceeds received from the sale of the security contributed to the TOB trust. In the case of a shortfall, the aggregate maximum potential amount the Trust could ultimately be required to pay under the agreements is $2,954,469.

 

(g)   Investments in issuers considered to be an affiliate of the Trust during the six months ended February 28, 2013, for purposes of Section 2(a)(3) of the 1940 Act, were as follows:

 

Affiliate   Shares Held
at August 31,
2012
       Net
Activity
       Shares Held
at February 28,
2013
       Income  

FFI Institutional Tax-Exempt Fund

    159,677           994,758           1,154,435         $ 94   

 

(h)   Represents the current yield as of report date.

 

Ÿ  

Fair Value Measurements — Various inputs are used in determining the fair value of investments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes as follows:

 

Ÿ  

Level 1 — unadjusted price quotations in active markets/exchanges for identical assets and liabilities that the Trust has the ability to access

 

Ÿ  

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)

 

Ÿ  

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 hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Trust’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments is based on the pricing transparency of the investment and is not necessarily an indication of the risks associated with investing in those securities. For information about the 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 Trust’s investments categorized in the disclosure hierarchy as of February 28, 2013:

 

     Level 1      Level 2      Level 3      Total

Assets:

                        
Investments:                         

Long-Term Investments1

               $ 93,191,956                     $ 93,191,956  

Short-Term Securities

    $ 1,154,435                                  1,154,435  
   

 

 

        

 

 

        

 

 

        

 

 

 

Total

    $ 1,154,435          $ 93,191,956                     $ 94,346,391  
   

 

 

        

 

 

        

 

 

        

 

 

 

 

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

      

 

Certain of the Trust’s liabilities are held at carrying amount, which approximates fair value for financial statement purposes. As of February 28, 2013, such liabilities are categorized within the disclosure hierarchy as follows:

   

     Level 1      Level 2      Level 3      Total

Liabilities:

                        

TOB trust certificates

               $ (19,340,052 )                   $ (19,340,052 )

VRDP Shares

                 (17,800,000 )                     (17,800,000 )
   

 

 

        

 

 

        

 

 

        

 

 

 

Total

               $ (37,140,052 )                   $ (37,140,052 )
   

 

 

        

 

 

        

 

 

        

 

 

 

There were no transfers between levels during the six months ended February 28, 2013.

 

See Notes to Financial Statements.

 

                
   SEMI-ANNUAL REPORT    FEBRUARY 28, 2013    23


Table of Contents

Schedule of Investments February 28, 2013 (Unaudited)

  

BlackRock Municipal Bond Trust (BBK)

(Percentages shown are based on Net Assets)

 

Municipal Bonds    Par  
(000)
    Value  

Alabama — 4.0%

    

Birmingham Special Care Facilities Financing Authority, RB, Children’s Hospital (AGC):

    

6.00%, 6/01/34

   $ 1,150      $ 1,352,940   

6.00%, 6/01/39

     450        529,547   

Birmingham Water Works Board, RB, 4.75%, 1/01/36

     2,100        2,295,132   

Hoover City Board of Education, Special Tax, Refunding, 4.25%, 2/15/40

     2,750        2,930,702   
    

 

 

 
               7,108,321   

Arizona — 9.4%

    

Arizona Health Facilities Authority, Refunding RB, Phoenix Children’s Hospital, Series A, 5.00%, 2/01/42

     2,200        2,372,260   

Arizona Sports & Tourism Authority, RB, Multipurpose Stadium Facilities, Series A (NPFGC), 5.00%, 7/01/13 (a)

     1,500        1,524,570   

Arizona State University, RB, Series D, 5.50%, 7/01/26

     200        241,648   

County of Pinal Arizona Election District No. 3, Refunding RB, 4.75%, 7/01/31

     3,750        4,106,287   

Pima County IDA, Refunding IDRB, Tucson Electric Power, 5.75%, 9/01/29

     900        952,470   

Salt Verde Financial Corp., RB, Senior:

    

5.00%, 12/01/32

     1,500        1,737,090   

5.00%, 12/01/37

            2,065        2,387,512   

San Luis Facility Development Corp., RB, Senior Lien, Regional Detention Center Project:

    

6.25%, 5/01/15

     185        184,273   

7.00%, 5/01/20

     300        305,130   

7.25%, 5/01/27

     600        576,858   

State of Arizona, COP, Department of Administration, Series A (AGM), 5.00%, 10/01/29

     750        851,085   

University Medical Center Corp. Arizona, RB, 6.50%, 7/01/39

     500        580,915   

University Medical Center Corp. Arizona, Refunding RB, 6.00%, 7/01/39

     900        1,040,364   
    

 

 

 
                 16,860,462   

Arkansas — 1.2%

    

City of Conway Arkansas, RB, Wastewater Revenue Improvement, Series A, 4.20%, 10/01/37

     500        534,840   

City of Springdale Arkansas, RB, Sales and Tax Use:

    

3.00%, 11/01/30

     650        628,778   

3.00%, 11/01/31

     1,010        969,347   
    

 

 

 
               2,132,965   

California — 19.6%

    

California County Tobacco Securitization Agency, RB, CAB, Stanislaus, Sub-Series C, 11.06%, 6/01/55 (b)

     4,500        47,655   

California Educational Facilities Authority, Refunding RB, Santa Clara University, 5.00%, 2/01/40

     1,000        1,114,270   

California Health Facilities Financing Authority, RB, Sutter Health, Series B, 5.88%, 8/15/31

     1,900        2,322,560   

California HFA, RB, Home Mortgage, Series G, AMT, 5.05%, 2/01/29

     2,285        2,269,850   

Carlsbad Unified School District, GO, Election of 2006, Series B, 4.99%, 5/01/34 (c)

     1,000        823,790   

City of Manteca California Sewer, Refunding RB, 4.00%, 12/01/33

     3,395        3,557,077   

City of San Jose California, Refunding ARB, San Jose Airport, Series A1, AMT, 5.75%, 3/01/34

     2,000        2,314,940   

Dinuba Unified School District, GO, Election of 2006 (AGM):

    

5.63%, 8/01/31

     250        288,243   

5.75%, 8/01/33

     500        578,845   

Hartnell Community College District California, GO, CAB, Election of 2002, Series D, 4.94%, 8/01/34 (c)

     1,650        1,247,945   
Municipal Bonds    Par  
(000)
    Value  

California (concluded)

    

Norwalk-La Mirada Unified School District California, GO, CAB, Refunding, Election of 2002, Series E (AGC), 4.81%, 8/01/38 (b)

   $ 8,000      $ 2,392,240   

Palomar Community College District, GO, CAB, Election of 2006, Series B:

    

4.36%, 8/01/30 (b)

     1,500        707,445   

5.53%, 8/01/33 (b)

     4,000        1,312,560   

4.76%, 8/01/39 (c)

     2,000        1,293,800   

San Diego Community College District California, GO, CAB, Election of 2002, 4.73%, 8/01/33 (c)

     2,800        2,361,240   

San Jose Evergreen Community College District, GO, Election of 2010, Series B, 3.50%, 8/01/32

     1,200        1,224,948   

State of California, GO, Various Purpose:

    

5.75%, 4/01/31

     2,000        2,390,080   

6.00%, 3/01/33

     1,000        1,240,420   

6.50%, 4/01/33

     1,950        2,444,500   

5.50%, 3/01/40

            2,350        2,779,110   

State of California, GO, Refunding, Veterans, AMT, 5.05%, 12/01/36

     555        567,549   

Val Verde Unified School District California, Special Tax Bonds, Refunding, Junior Lien, 6.25%, 10/01/28

     1,585        1,627,953   
    

 

 

 
               34,907,020   

Colorado — 1.2%

    

Colorado Health Facilities Authority, RB, Catholic Health Initiatives, Series D, 6.25%, 10/01/33

     1,070        1,293,673   

Park Creek Metropolitan District, Refunding RB, Limited Property Tax (AGM), 6.00%, 12/01/38

     750        875,272   
    

 

 

 
               2,168,945   

Connecticut — 1.4%

    

Connecticut State Health & Educational Facilities Authority, Refunding RB:

    

Hartford Healthcare, Series A, 5.00%, 7/01/32

     1,250        1,392,225   

Lawrence & Memorial Hospital, Series F, 5.00%, 7/01/36

     550        606,700   

Sacred Heart University, Series G, 5.38%, 7/01/31

     400        444,356   
    

 

 

 
                   2,443,281   

Delaware — 0.9%

    

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

     1,200        1,353,948   

Florida — 1.7%

    

County of Lee Florida, Refunding ARB, Lee Airport, Series A, AMT (AGM), 5.00%, 10/01/28

     2,000        2,233,620   

Orange County Health Facilities Authority, Refunding RB, Mayflower Retirement Center, 5.00%, 6/01/36

     125        132,177   

Stevens Plantation Community Development District, Special Assessment Bonds, Series A, 7.10%, 5/01/35 (d)(e)

     910        682,846   
    

 

 

 
               3,048,643   

Hawaii — 0.2%

    

Hawaii State Department of Budget & Finance Senior Living, Refunding RB, Special Purpose, Kahala Nui,
5.25%, 11/15/37

     400        432,528   

Idaho — 1.2%

    

Idaho Health Facilities Authority, Refunding RB, Trinity Health Group, Series B, 6.25%, 12/01/33

     1,750        2,097,445   

Illinois — 8.5%

    

Chicago Transit Authority, RB, Sales Tax Receipts Revenue, 5.25%, 12/01/40

     665        760,181   

City of Chicago, Refunding ARB, O’Hare International Airport, Passenger Facility Charge, Series B, AMT,
4.00%, 1/01/29

     4,000        4,080,560   

 

See Notes to Financial Statements.

 

                
24    SEMI-ANNUAL REPORT    FEBRUARY 28, 2013   


Table of Contents

Schedule of Investments (continued)

  

BlackRock Municipal Bond Trust (BBK)

(Percentages shown are based on Net Assets)

 

Municipal Bonds    Par  
(000)
    Value  

Illinois (concluded)

    

Illinois Finance Authority, RB:

    

Navistar International, Recovery Zone, 6.50%, 10/15/40

   $ 560      $ 605,438   

Rush University Medical Center, Series C, 6.63%, 11/01/39

     650        795,594   

Illinois Finance Authority, Refunding RB:

    

Friendship Village Schaumburg, Series A, 5.63%, 2/15/37

     210        211,117   

OSF Healthcare System, 6.00%, 5/15/39

     1,025        1,189,185   

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

     1,000        1,136,730   

Railsplitter Tobacco Settlement Authority, RB:

    

6.25%, 6/01/24

     1,000        1,117,890   

6.00%, 6/01/28

     1,150        1,376,458   

Village of Bolingbrook Illinois, GO, Refunding, Series B (NPFGC), 6.25%, 1/01/36 (b)

          16,065        3,936,728   
    

 

 

 
                 15,209,881   

Indiana — 0.6%

    

Indiana Finance Authority, Refunding RB, Improvement, U.S. Steel Corp., 6.00%, 12/01/26

     1,000        1,060,780   

Iowa — 0.9%

    

Iowa Higher Education Loan Authority, Refunding RB, Private College Facility:

    

5.75%, 9/01/30

     500        566,310   

6.00%, 9/01/39

     1,000        1,124,680   
    

 

 

 
               1,690,990   

Kansas — 0.6%

    

Pratt County Public Building Commission, RB, 3.25%, 12/01/32

     1,000        989,880   

Louisiana — 2.5%

    

Lafayette Public Trust Financing Authority, Refunding RB, Ragin Cajun Facilities Project (AGM), 3.75%, 10/01/32

     520        534,264   

Louisiana Local Government Environmental Facilities & Community Development Authority, RB:

    

Parish of Plaquemines Project (AGM), 4.00%, 9/01/42

     480        487,214   

Westlake Chemical Corp, Series A-1, 6.50%, 11/01/35

     1,050        1,240,197   

Louisiana Public Facilities Authority, RB:

    

Belle Chasse Educational Foundation Project, 6.50%, 5/01/31

     400        466,688   

Franciscan Missionaries of Our Lady Health System Project, Series B, 5.00%, 7/01/42

     1,600        1,764,272   
    

 

 

 
               4,492,635   

Maryland — 2.0%

    

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

     250        278,648   

Maryland Health & Higher Educational Facilities Authority, Refunding RB, Doctor’s Community Hospital,
5.63%, 7/01/30

     2,900        3,273,781   
    

 

 

 
               3,552,429   

Michigan — 3.0%

    

Board of Control of Michigan Technological University, Refunding RB, General, Series A, 4.00%, 10/01/30

     1,290        1,357,635   

Michigan State Building Authority, Refunding RB, Facilities Program, Series I, 6.25%, 10/15/38

     1,250        1,524,600   

Royal Oak Hospital Finance Authority Michigan, Refunding RB, William Beaumont Hospital, 8.25%, 9/01/39

     1,950        2,484,417   
    

 

 

 
               5,366,652   
Municipal Bonds    Par  
(000)
    Value  

Minnesota — 3.2%

    

City of Minneapolis Minnesota, Refunding RB, Fairview Health Services, Series B (AGC), 6.50%, 11/15/38

   $ 4,600      $ 5,667,522   

Mississippi — 3.2%

    

Mississippi Development Bank, RB, Special Obligation:

    

Hinds Community College District, CAB (AGM), 5.00%, 4/01/36

     845        943,713   

Jackson County Limited Tax Note (AGC), 5.50%, 7/01/32

     1,750        1,990,047   

University of Southern Mississippi, RB, Campus Facilities Improvements Project, 5.38%, 9/01/36

     2,100        2,384,907   

Warren County Mississippi, RB, Gulf Opportunity Zone Bonds, International Paper Co. Project, Series A, AMT, 5.38%, 12/01/35

     400        441,208   
    

 

 

 
                   5,759,875   

Missouri — 3.1%

    

Missouri State Development Finance Board, RB:

    

St. Joseph Sewage System Improvements, Series E, 5.25%, 5/01/31

     580        623,674   

Annual Appropriation Sewer System, Series B, 5.00%, 11/01/41

     900        978,435   

Missouri State Development Finance Board, Refunding RB, Electric System Projects, Series F, 4.00%, 6/01/32

     2,490        2,553,894   

Missouri State Health & Educational Facilities Authority, RB:

    

A.T. Still University Health Sciences, 5.25%, 10/01/31

     500        568,005   

Heartland Regional Medical Center, 4.13%, 2/15/43

     770        769,330   
    

 

 

 
               5,493,338   

Montana — 0.8%

    

Montana Facility Finance Authority, Refunding RB, Sisters of Leavenworth, Series A, 4.75%, 1/01/40

     1,350        1,468,949   

Multi-State — 6.4%

    

Centerline Equity Issuer Trust, 7.20%, 11/15/14 (f)(g)

          10,500        11,442,270   

Nebraska — 3.8%

    

Central Plains Energy Project Nebraska, RB, Gas Project No. 3, Gas Project No. 3, 5.00%, 9/01/42

     600        655,014   

Omaha Nebraska Sanitation Sewer, RB, System:

    

3.25%, 11/15/37

     2,400        2,294,688   

4.25%, 11/15/38

     1,440        1,541,678   

4.00%, 11/15/42

     2,200        2,310,198   
    

 

 

 
               6,801,578   

Nevada — 1.1%

    

City of Las Vegas Nevada, Special Assessment Bonds, Summerlin Area, 5.65%, 6/01/23

     1,265        1,252,274   

County of Clark Nevada, Refunding RB, Alexander Dawson School Nevada Project, 5.00%, 5/15/29

     575        631,287   
    

 

 

 
               1,883,561   

New Jersey — 10.3%

    

Middlesex County Improvement Authority, RB, Subordinate, Heldrich Center Hotel, Series B, 6.25%, 1/01/37 (d)(e)

     915        68,094   

New Jersey EDA, RB, Continental Airlines, Inc. Project, AMT, 7.25%, 11/15/30 (h)

     3,000        3,011,910   

New Jersey EDA, Refunding RB:

    

First Mortgage, Winchester, Series A, 5.80%, 11/01/31

     1,500        1,535,745   

Kapkowski Road Landfill Project, 6.50%, 4/01/28

     7,500        8,983,275   

 

See Notes to Financial Statements.

 

                
   SEMI-ANNUAL REPORT    FEBRUARY 28, 2013    25


Table of Contents

Schedule of Investments (continued)

  

BlackRock Municipal Bond Trust (BBK)

(Percentages shown are based on Net Assets)

 

Municipal Bonds    Par  
(000)
    Value  

New Jersey (concluded)

    

New Jersey Educational Facilities Authority, Refunding RB, University of Medicine & Dentistry, Series B:

    

7.13%, 12/01/23

   $ 630      $ 805,487   

7.50%, 12/01/32

     800        1,000,344   

New Jersey Health Care Facilities Financing Authority, Refunding RB Barnabas Health, Series A:

    

4.63%, 7/01/23

     510        577,779   

5.63%, 7/01/37

     1,700        1,916,036   

New Jersey State Housing & Mortgage Finance Agency, RB, Series AA, 6.50%, 10/01/38

     485        507,349   
    

 

 

 
               18,406,019   

New York — 5.8%

    

Albany Industrial Development Agency, RB, New Covenant Charter School Project, Series A, 7.00%, 5/01/35 (d)(e)

     455        68,218   

Hudson New York Yards Infrastructure Corp., RB, Series A (NPFGC), 4.50%, 2/15/47

     750        782,242   

New York City Industrial Development Agency, RB, American Airlines Inc., JFK International Airport, AMT, 7.75%, 8/01/31 (d)(e)(h)

     3,165        3,599,270   

New York Liberty Development Corp., Refunding RB, Second Priority, Bank of America Tower at One Bryant Park Project, 6.38%, 7/15/49

     800        951,368   

New York State Dormitory Authority, RB, Rochester Institute of Technology, Series A, 6.00%, 7/01/18 (a)

     1,000        1,258,540   

Niagara Area Development Corp., Refunding RB, Covanta Energy Project, Series A, AMT, 5.25%, 11/01/42

     400        419,020   

Onondaga Civic Development Corp., Refunding RB, Saint Joseph’s Hospital Health Center Project:

    

4.50%, 7/01/32

     1,110        1,093,028   

5.00%, 7/01/42

     540        553,743   

Westchester County Healthcare Corp. New York, Refunding RB, Senior Lien, Series A, Remarketing,
5.00%, 11/01/30

     1,500        1,676,535   
    

 

 

 
                 10,401,964   

North Carolina — 3.3%

    

Gaston County Industrial Facilities & Pollution Control Financing Authority North Carolina, RB, Exempt Facilities, National Gypsum Co. Project, AMT, 5.75%, 8/01/35

            2,945        2,725,126   

North Carolina Capital Facilities Finance Agency, Refunding RB, Duke Energy Carolinas, Series B,
4.38%, 10/01/31

     1,000        1,074,430   

North Carolina Medical Care Commission, Refunding RB:

    

South Eastern Regional Medical Center, 3.25%, 6/01/27

     300        301,425   

South Eastern Regional Medical Center, 5.00%, 6/01/32

     660        760,221   

University Health System, Series D, 6.25%, 12/01/33

     800        962,160   
    

 

 

 
               5,823,362   

North Dakota — 1.1%

    

City of Fargo North Dakota, Refunding RB, University Facilities Development Foundation Project, 3.00%, 12/01/30

     400        388,208   

City of Grand Forks North Dakota, Refunding RB, Healthcare Systems, 5.00%, 12/01/32

     1,415        1,541,515   
    

 

 

 
               1,929,723   

Ohio — 0.9%

    

Kent State University, RB, General Receipts, Series A, 5.00%, 5/01/42

     800        901,472   
Municipal Bonds    Par  
(000)
    Value  

Ohio (concluded)

    

Miami University/Oxford Ohio, RB, General Receipts, 3.25%, 9/01/34

   $ 800      $ 770,184   
    

 

 

 
               1,671,656   

Oklahoma — 1.3%

    

Oklahoma Municipal Power Authority, RB, Power Supply System, Series A, 4.00%, 1/01/38

     2,250        2,312,663   

Oregon — 3.5%

    

City of Madras Oregon, GO, Refunding, 4.00%, 2/15/33

     500        492,550   

Clackamas County Housing Authority, RB, M/F Housing, Easton Ridge Apartments Project, Series A (i):

    

3.50%, 9/01/33

     755        745,193   

4.00%, 9/01/43

     660        653,103   

4.00%, 9/01/49

     1,000        981,150   

Oregon Health & Science University, RB, Series A, 5.75%, 7/01/39

     750        886,552   

Oregon Health & Science University, Refunding RB:

    

Series A, 3.00%, 7/01/24

            1,000        1,016,150   

Series E, 5.00%, 7/01/32

     750        868,073   

Oregon State Facilities Authority, Refunding RB, Limited College Project, Series A, 5.25%, 10/01/40

     500        553,310   
    

 

 

 
                   6,196,081   

Pennsylvania — 3.3%

    

County of Allegheny Pennsylvania IDA, Refunding RB, U.S. Steel Corp. Project, 6.55%, 12/01/27

     1,695        1,880,602   

Delaware River Port Authority, RB, Series D (AGM), 5.00%, 1/01/40

     2,600        2,897,258   

Pennsylvania Higher Educational Facilities Authority, RB, University of the Sciences Philadelphia, 5.00%, 11/01/42

     1,000        1,102,300   
    

 

 

 
               5,880,160   

Puerto Rico — 1.3%

    

Puerto Rico Sales Tax Financing Corp., RB, First Sub-Series A, 5.75%, 8/01/37

     1,000        1,080,610   

Puerto Rico Sales Tax Financing Corp., RB, CAB, Series A, 5.79%, 8/01/35 (b)

     1,000        278,110   

Puerto Rico Sales Tax Financing Corp., Refunding RB, CAB, Series A (NPFGC), 5.60%, 8/01/41 (b)

     5,000        1,040,900   
    

 

 

 
               2,399,620   

Rhode Island — 1.2%

    

Rhode Island Health & Educational Building Corp., RB, Hospital Financing, LifeSpan Obligation, Series A (AGC), 7.00%, 5/15/39

     1,000        1,204,150   

State of Rhode Island, COP, Series C, School for the Deaf (AGC), 5.38%, 4/01/28

     900        1,021,392   
    

 

 

 
               2,225,542   

Tennessee — 1.4%

    

Johnson City Health & Educational Facilities Board, RB, Mountain States Health, 5.00%, 8/15/42

     800        874,368   

Memphis-Shelby County Sports Authority, Inc., Refunding RB, Memphis Arena Project, Series A, 5.38%, 11/01/28

     275        310,415   

Shelby County Health Educational & Housing Facilities Board, RB, Methodist Le Bonheur Healthcare, 5.00%, 5/01/42

     1,200        1,338,168   
    

 

 

 
               2,522,951   

Texas — 16.6%

    

Harris County Cultural Education Facilities Finance Corp., Refunding RB, Young Men’s Christian Association of the Greater Houston Area, Series A, 5.00%, 6/01/38

     345        370,468   

 

See Notes to Financial Statements.

 

                
26    SEMI-ANNUAL REPORT    FEBRUARY 28, 2013   


Table of Contents

Schedule of Investments (continued)

  

BlackRock Municipal Bond Trust (BBK)

(Percentages shown are based on Net Assets)

 

Municipal Bonds    Par  
(000)
    Value  

Texas (concluded)

    

Harris County Health Facilities Development Corp., Refunding RB, Memorial Hermann Healthcare System,
Series B:

    

7.13%, 12/01/31

   $ 500      $ 638,610   

7.25%, 12/01/35

     1,750        2,174,025   

Harris County-Houston Sports Authority, Refunding RB, CAB, Senior Lien, Series G (NPFGC), 5.58%, 11/15/41 (b)

     11,690        2,409,894   

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

     1,500        1,765,695   

Midland County Fresh Water Supply District No. 1, Refunding RB:

    

CAB, City of Midland Project, Series A, 4.49%, 9/15/36 (b)

     4,900        1,724,261   

CAB, City of Midland Project, Series A, 4.67%, 9/15/38 (b)

     10,760        3,306,440   

City of Midland Project, 3.38%, 9/15/32

     1,575        1,582,796   

Texas Private Activity Bond Surface Transportation Corp., RB, Senior Lien, LBJ Infrastructure Group LLC, LBJ Freeway Managed Lanes Project, 7.00%, 6/30/40

     2,000        2,426,380   

Texas State Turnpike Authority, RB, CAB (AMBAC), 6.02%, 8/15/35 (b)

          50,000        13,201,500   
    

 

 

 
               29,600,069   

Vermont — 1.7%

    

University of Vermont & State Agricultural College, Refunding RB, Series A, 4.00%, 10/01/38

     1,200        1,245,924   

Vermont Educational & Health Buildings Financing Agency, RB, Hospital, Fletcher Allen Health, Series A,
4.75%, 12/01/36

     800        838,536   

Vermont Educational & Health Buildings Financing Agency, Refunding RB, St. Michaels College, 5.00%, 10/01/42

     900        988,380   
    

 

 

 
               3,072,840   

Virginia — 0.6%

    

Virginia Small Business Financing Authority, RB, Senior Lien, Elizabeth River Crossings OpCo LLC Project, AMT, 5.50%, 1/01/42

     940        1,038,155   

Washington — 0.9%

    

Washington Healthcare Facilities Authority, RB, MultiCare Health System, Series B (AGC), 6.00%, 8/15/39

     1,400        1,632,932   

West Virginia — 0.7%

    

West Virginia State University, RB, West Virginia University Projects, Series B, 5.00%, 10/01/36

     1,100        1,279,080   

Wyoming — 0.8%

    

County of Sweetwater Wyoming, Refunding RB, Idaho Power Co. Project, 5.25%, 7/15/26

     1,200        1,363,236   
Total Municipal Bonds – 135.2%              241,189,951   
    
   

Municipal Bonds Transferred to

Tender Option Bond Trusts (j)

 

Colorado — 2.3%

    

Colorado Health Facilities Authority, RB, Catholic Health, Series C-7 (AGM), 5.00%, 9/01/36

     3,750        4,031,625   

Massachusetts — 0.9%

    

Massachusetts Water Resources Authority, Refunding RB, General, Series A, 5.00%, 8/01/41

     1,450        1,636,847   

Municipal Bonds Transferred to

Tender Option Bond Trusts (j)

   Par  
(000)
    Value  

Michigan — 2.3%

    

Michigan State Hospital Finance Authority, Refunding RB, Trinity Health Credit Group, Series C, 4.00%, 12/01/32

   $ 4,000      $ 4,131,240   

New Jersey — 0.9%

    

New Jersey Transportation Trust Fund Authority, RB, Series B, 5.25%, 6/15/36

     1,400        1,598,856   

New York — 12.5%

    

Hudson New York Yards Infrastructure Corp., RB, Series A, 5.75%, 2/15/47

     2,500        2,975,139   

New York City Municipal Water Finance Authority, RB, Fiscal 2009, Series A, 5.75%, 6/15/40

     450        536,885   

New York City Municipal Water Finance Authority, Refunding RB:

    

5.50%, 6/15/40

     405        479,456   

Second General Resolution, Series CC, 5.00%, 6/15/47

     6,000        6,804,420   

Water & Sewer System, Series A, 4.75%, 6/15/30

     3,000        3,365,250   

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

     2,505        2,875,150   

New York State Dormitory Authority, RB, New York University, Series A, 5.00%, 7/01/38

     2,199        2,498,221   

New York State Dormitory Authority, Refunding LRB, State University Dormitory Facilities, Series A, 5.00%, 7/01/42

     760        874,311   

New York State Thruway Authority, Refunding RB, Transportation, Series A, 5.00%, 3/15/31

     1,560        1,833,515   
    

 

 

 
               22,242,347   

Ohio — 2.0%

    

County of Montgomery Ohio, RB, Catholic Health, Series C-1 (AGM), 5.00%, 10/01/41

     1,260        1,344,269   

Ohio Higher Educational Facility Commission, Refunding RB, Hospital, Cleveland Clinic Health, Series A,
5.25%, 1/01/33

     2,000        2,227,060   
    

 

 

 
               3,571,329   

Total Municipal Bonds Transferred to

Tender Option Bond Trusts — 20.9%

             37,212,244   
Total Long-Term Investments
(Cost — $253,103,120) — 156.1%
        278,402,195   
    
   
Short-Term Securities    Shares         

FFI Institutional Tax-Exempt Fund, 0.01% (k)(l)

     3,101,522        3,101,522   
Total Short-Term Securities
(Cost — $3,101,522) — 1.7%
             3,101,522   
Total Investments (Cost—$256,204,642) — 157.8%        281,503,717   
Liabilities in Excess of Other Assets — (1.4)%        (2,513,458

Liability for TOB Trust Certificates, Including Interest
Expense and Fees Payable — (11.6)%

   

    (20,615,148
VMTP Shares, at Liquidation Value — (44.8)%        (79,900,000
    

 

 

 
Net Assets Applicable to Common Shares — 100.0%      $ 178,475,111   
    

 

 

 

 

See Notes to Financial Statements.

 

                
   SEMI-ANNUAL REPORT    FEBRUARY 28, 2013    27


Table of Contents

Schedule of Investments (continued)

  

BlackRock Municipal Bond Trust (BBK)

 

 

Notes to Schedule of Investments

 

(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)   Represents a zero-coupon bond. Rate shown reflects the current yield as of report date.

 

(c)   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 is as of report date.

 

(d)   Issuer filed for bankruptcy and/or is in default of principal and/or interest payments.

 

(e)   Non-income producing security.

 

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

 

(h)   Variable rate security. Rate shown is as of report date.

 

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

 

Counterparty      Value        Unrealized
Appreciation
 

Wedbush Morgan Securities

     $ 2,379,446         $ 2,207   

 

(j)   Securities represent bonds transferred to a TOB in exchange for which the Trust acquired residual interest certificates. These securities serve as collateral in a financing transaction. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs.

 

(k)   Investments in issuers considered to be an affiliate of the Trust during the six months ended February 28, 2013, for purposes of Section 2(a)(3) of the 1940 Act, were as follows:

 

Affiliate   Shares Held
at August 31,
2012
       Net
Activity
       Shares Held
at February 28,
2013
       Income  

FFI Institutional Tax-Exempt Fund

    583,607           2,517,915           3,101,522         $ 340   

 

(l)   Represents the current yield as of report date.

 

Ÿ  

Financial futures contracts as of February 28, 2013 were as follows:

 

Contracts
Sold
    Issue   Exchange   Expiration   Notional
Value
    Unrealized
Depreciation
 
  (22   30-Year US Treasury Bond   Chicago Board of Trade   June 2013   $ 3,163,188      $ (1,409

 

Ÿ  

Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes as follows:

 

Ÿ  

Level 1 — unadjusted price quotations in active markets/exchanges for identical assets and liabilities that the Trust has the ability to access

 

Ÿ  

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)

 

Ÿ  

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 and derivative financial instruments)

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Trust’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument and is not necessarily an indication of the risks associated with investing in those securities. For information about the Trust’s policy regarding valuation of investments and derivative financial instruments and other significant accounting policies, please refer Note 1 of the Notes to Financial Statements.

 

See Notes to Financial Statements.

 

                
28    SEMI-ANNUAL REPORT    FEBRUARY 28, 2013   


Table of Contents

Schedule of Investments (concluded)

  

BlackRock Municipal Bond Trust (BBK)

 

The following tables summarize the Trust’s investments and derivative financial instruments categorized in the disclosure hierarchy as of February 28, 2013:

 

     Level 1      Level 2    Level 3    Total

Assets:

                    
Investments:                     

Long-Term Investments1

               $ 278,402,195                 $ 278,402,195  

Short-Term Securities

    $ 3,101,522                              3,101,522  
   

 

 

        

 

 

      

 

 

      

 

 

 

Total

    $ 3,101,522          $ 278,402,195                 $ 281,503,717  
   

 

 

        

 

 

      

 

 

      

 

 

 

 

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

      

     Level 1      Level 2    Level 3    Total
Derivative Financial Instruments2             

Liabilities:

                    

Interest rate contracts

    $ (1,409 )                          $ (1,409 )

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

      

 

Certain of the Trust’s assets and liabilities are held at carrying amount, which approximates fair value for financial statement purposes. As of February 28, 2013, such assets and liabilities are categorized within the disclosure hierarchy as follows:

 

   

     Level 1      Level 2    Level 3    Total

Assets:

  

         
Investments:                     

Cash

    $ 122,644                            $ 122,644  

Cash pledged as collateral for financial futures contracts

               $ 66,000                   66,000  

Liabilities:

                    

TOB trust certificates

                 (20,608,872 )                 (20,608,872 )

VMTP Shares

                 (79,900,000 )                 (79,900,000 )
   

 

 

        

 

 

      

 

 

      

 

 

 

Total

    $ 122,644          $ (100,442,872 )               $ (100,320,228 )
   

 

 

        

 

 

      

 

 

      

 

 

 

There were no transfers between levels during the six months ended February 28, 2013.

 

See Notes to Financial Statements.