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 811-02688
Name of Fund: BlackRock Municipal Bond Fund, Inc.
BlackRock High Yield Municipal Fund
BlackRock National Municipal Fund
BlackRock Short-Term Municipal Fund
Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809
Name and address of agent for service: John M. Perlowski, Chief Executive Officer, BlackRock Municipal Bond Fund, Inc., 55 East 52nd Street, New York, NY 10055
Registrant’s telephone number, including area code: (800) 441-7762
Date of fiscal year end: 06/30/2012
Date of reporting period: 06/30/2012
Item 1 – Report to Stockholders
 |
June 30, 2012 |
Annual Report
BlackRock Municipal Bond Fund, Inc.
} BlackRock High Yield Municipal Fund
} BlackRock National Municipal Fund
} BlackRock Short-Term Municipal Fund
BlackRock Multi-State Municipal Series Trust
} BlackRock New York Municipal Bond Fund
| Not FDIC Insured • No Bank Guarantee • May Lose Value |
| 2 | ANNUAL REPORT | JUNE 30, 2012 |
One year ago, risk assets were in a broad retreat as sovereign debt problems loomed over Europe and confidence in both the US and global economic recoveries was waning. Last summer’s prolonged debt ceiling debate in Washington, DC ended with Standard & Poor’s historic downgrade of US government debt, an event that triggered financial-market turmoil all over the world. Extraordinary levels of volatility persisted in the months that followed as the debt situation in Europe intensified. Macro-level news drove asset prices broadly up and down in lockstep, in a “risk on” — “risk off” trading pattern. Equity markets crumbled while safe-haven assets such as US Treasuries and gold rallied to historic highs by the end of the third quarter of 2011.
By October, however, improving economic data and more concerted efforts among European leaders toward stemming the region’s debt crisis drew investors back to the markets. Improving sentiment carried over into early 2012 as investors saw some relief from the world’s financial woes. Risk assets (including stocks, commodities and high yield bonds) moved boldly higher through the first two months of 2012 while climbing Treasury yields pressured higher-quality fixed income assets.
However, risk assets reversed course in the spring when Europe’s debt problems boiled over once again. Markets became highly volatile as political instability in Greece threatened the country’s membership in the euro zone. Spain faced severe deficit issues while the nation’s banks clamored for liquidity. Yields on Spanish and Italian government debt rose to levels deemed unsustainable. European leaders conferred and debated vehemently over the need for fiscal integration among the 17 euro-zone nations to resolve the crisis for the long term.
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, became particularly worrisome. In the United States, disappointing jobs reports dealt a crushing blow to sentiment. Risk assets sold off through April and May as investors ran back to safe havens including US, German and UK government debt as well as gold. As the period drew to a close, risk assets were beginning to rebound modestly as European leaders stepped up their efforts to move toward fiscal unity and investors anticipated additional stimulus from central banks on both sides of the Atlantic.
All asset classes posted gains for the 6-month period ended June 30, 2012, with US stocks delivering the largest returns. On a 12-month basis, US large-cap stocks generated positive results; however, small-cap stocks finished in negative territory and international and emerging equities, which experienced significant downturns in 2011, lagged the broader rebound. Among fixed income asset classes, safe-haven US Treasury bonds and municipal bonds outperformed corporate credits for the 12-month period. Continued low short-term interest rates kept yields on money market securities near their all-time lows.
We know that investors continue to face a world of uncertainty and highly volatile markets, but we also believe these challenging times present many opportunities. We remain committed to working with you and your financial professional to identify actionable ideas for your portfolio. We encourage you to visit www.blackrock.com/newworld for more information.
Sincerely,
Rob Kapito
President, BlackRock Advisors, LLC
“We know that investors continue to face a world of uncertainty and highly volatile markets, but we also believe these challenging times present many opportunities.”
Rob Kapito
President, BlackRock Advisors, LLC
Total Returns as of June 30, 2012
| 6-month | 12-month | |||
| US large cap equities | 9.49 | % | 5.45 | % |
| (S&P 500® Index) | ||||
| US small cap equities | 8.53 | (2.08 | ) | |
| (Russell 2000® Index) | ||||
| International equities | 2.96 | (13.83 | ) | |
| (MSCI Europe, Australasia, | ||||
| Far East Index) | ||||
| Emerging market | 3.93 | (15.95 | ) | |
| equities (MSCI Emerging | ||||
| Markets Index) | ||||
| 3-month Treasury bill | 0.04 | 0.05 | ||
| (BofA Merrill Lynch | ||||
| 3-Month Treasury | ||||
| Bill Index) | ||||
| US Treasury securities | 3.44 | 17.36 | ||
| (BofA Merrill Lynch 10- | ||||
| Year US Treasury Index) | ||||
| US investment grade | 2.37 | 7.47 | ||
| bonds (Barclays US | ||||
| Aggregate Bond Index) | ||||
| Tax-exempt municipal | 4.14 | 10.16 | ||
| bonds (S&P Municipal | ||||
| Bond Index) | ||||
| US high yield bonds | 7.23 | 7.21 | ||
| (Barclays US Corporate | ||||
| High Yield 2% Issuer | ||||
| Capped Index) | ||||
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 |
Investment Objective
BlackRock High Yield Municipal Fund’s (the “Fund”) investment objective is to provide shareholders with as high a level of income exempt from federal income taxes as is consistent with the investment policies of the Fund.
Portfolio Management Commentary
How did the Fund perform?
| • | For the 12-month period ended June 30, 2012, the Fund outperformed its primary benchmark, the S&P® Municipal Bond Index, and its secondary benchmark, the S&P® Customized High Yield Municipal Bond Index. The following discussion of relative performance pertains to the S&P® Customized High Yield Municipal Bond Index. |
What factors influenced performance?
| • | The Fund’s concentrated exposure to transportation, health care and corporate-related debt contributed positively to performance as these sectors outperformed the broader market during the period. The Fund’s longer duration (higher sensitivity to interest rates) as compared to the benchmark index also had a positive impact on performance as rates generally declined during the period. The Fund’s holdings were more concentrated on the long end of the yield curve, which benefited performance as the yield curve flattened and long rates declined more than rates on shorter-dated bonds. These market conditions also resulted in strong performance for the Fund’s holdings of long-dated zero-coupon or capital appreciation bonds as well as the Fund’s implementation of leverage through the use of tender option bonds, both in terms of their impact on duration and yield curve positioning. |
| • | Detracting from performance was the Fund’s underweight relative to the benchmark index in tobacco bonds given the sector’s strong performance for the 12-month period. Also hindering returns was the Fund’s modest underweight exposure to higher quality non-investment-grade issues, which outperformed other rating categories during the period. |
Describe recent portfolio activity.
| • | During the 12-month period, portfolio activity was focused on maintaining the Fund’s average credit quality and desired level of portfolio leverage as cash inflows from new subscriptions accelerated significantly. New money was invested in a manner consistent with long-held sector concentrations, while the Fund trimmed exposure to less-favored names. The Fund maintained a low average level of cash reserves throughout the period; however, a recent acceleration of cash inflows from new subscriptions resulted in a temporarily elevated cash balance at the end of the period. The Fund’s cash and cash equivalents did not have a material impact on performance. |
Describe portfolio positioning at period end.
| • | As of period end, the Fund maintained a long duration stance relative to the S&P® Customized High Yield Municipal Bond Index and a yield curve-flattening bias. The Fund remains positioned to benefit from further credit-spread tightening and declining long-term municipal yields. |
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.
Portfolio Information
| Percent of | ||
| Long-Term | ||
| Sector Allocations | Investments | |
| Health | 29 | % |
| Transportation | 15 | |
| Corporate | 13 | |
| County/City/Special District/School District | 11 | |
| Utilities | 11 | |
| Education | 7 | |
| State | 7 | |
| Tobacco | 6 | |
| Housing | 1 | |
| Percent of | ||
| Long-Term | ||
| Credit Quality Allocations1 | Investments | |
| AAA/Aaa | 2 | % |
| AA/Aa | 18 | |
| A | 12 | |
| BBB/Baa | 38 | |
| BB/Ba | 4 | |
| B | 9 | |
| CCC/Caa | 1 | |
| Not Rated2 | 16 | |
| 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 June 30, 2012, the market value of these securities was $10,070,275, representing 3% of the Fund’s long-term investments. |
| 4 | ANNUAL REPORT | JUNE 30, 2012 |
| BlackRock High Yield Municipal Fund | ||
Total Return Based on a $10,000 Investment
| 1 | Assuming maximum sales charge, if any, transaction costs and other operating expenses, including advisory fees. Institutional Shares do not have a sales charge. |
| 2 | The Fund may invest in municipal bonds rated in any rating category or in unrated municipal bonds. The Fund will usually invest in municipal bonds that have a maturity of five years or longer. |
| 3 | The S&P® Municipal Bond Index is composed of bonds held by managed municipal bond fund customers of Standard& Poor’s Securities Pricing, Inc. that are priced daily. Bonds in the S&P® Municipal Bond Index must have an outstanding par value of at least $2 million and a remaining maturity of not less than 1 month. |
| 4 | The S&P® Customized High Yield Municipal Bond Index is a blended subset of the S&P® Municipal Bond Index that includes non-insured bonds rated below BBB– or non-rated (85%) and bonds rated BBB (15%), excluding those that are in default, are pre-refunded, or are escrowed to maturity. |
| 5 | Commencement of Operations. |
Performance Summary for the Period Ended June 30, 2012
| Average Annual Total Returns6 | |||||||||||||||||||
| 1 Year | 5 Years | Since Inception 7 | |||||||||||||||||
| Standardized | 6-Month | w/o sales | w/sales | w/o sales | w/sales | w/o sales | w/sales | ||||||||||||
| 30-Day Yields | Total Returns | charge | charge | charge | charge | charge | charge | ||||||||||||
| Institutional | 4.00 | % | 9.17 | % | 16.72 | % | N/A | 4.16 | % | N/A | 4.13 | % | N/A | ||||||
| Investor A | 3.52 | 9.04 | 16.44 | 11.49 | % | 3.86 | 2.96 | % | 3.82 | 3.06 | % | ||||||||
| Investor C | 2.96 | 8.74 | 15.65 | 14.65 | 3.09 | 3.09 | 3.10 | 3.10 | |||||||||||
| S&P® Municipal Bond Index | — | 4.14 | 10.16 | N/A | 5.64 | N/A | 5.40 | N/A | |||||||||||
| S&P® Customized High Yield Municipal Bond Index | — | 9.55 | 15.26 | N/A | 4.08 | N/A | 4.39 | N/A | |||||||||||
| 6 | Assuming maximum sales charges, if any. Average annual total returns with and without sales charges reflect reductions for distribution and service fees. See “About Fund Performance” on page 12 for a detailed description of share classes, including any related sales charges and fees. |
| 7 | The Fund commenced operations on 8/01/06. | |
| N/A — Not applicable as share class and index do not have a sales charge. | ||
| Past performance is not indicative of future results. |
Expense Example
| Actual | Hypothetical10 | ||||||||||||||||||
| Expenses Paid | Including Interest Expense | Excluding Interest Expense | |||||||||||||||||
| During the Period | and Fees | and Fees | |||||||||||||||||
| Ending | Including | Excluding | Ending | Ending | |||||||||||||||
| Beginning | Account Value | Interest | Interest | Beginning | Account Value | Expenses | Account Value | Expenses | |||||||||||
| Account Value | June 30, | Expense | Expense | Account Value | June 30, | Paid During | June 30, | Paid During | |||||||||||
| January 1, 2012 | 2012 | and Fees8 | and Fees9 | January 1, 2012 | 2012 | the Period8 | 2012 | the Period9 | |||||||||||
| Institutional | $1,000.00 | $1,091.70 | $4.11 | $3.64 | $1,000.00 | $1,010.48 | $3.97 | $1,010.68 | $3.52 | ||||||||||
| Investor A | $1,000.00 | $1,090.40 | $5.56 | $5.09 | $1,000.00 | $1,009.78 | $5.37 | $1,009.98 | $4.92 | ||||||||||
| Investor C | $1,000.00 | $1,086.20 | $9.44 | $8.92 | $1,000.00 | $1,007.93 | $9.12 | $1,008.13 | $8.62 | ||||||||||
| 8 | For each class of the Fund, expenses are equal to the annualized expense ratio for the class (0.79% for Institutional, 1.07% for Investor A, and 1.82% for Investor C), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period shown). |
| 9 | For each class of the Fund, expenses are equal to the annualized expense ratio for the class (0.70% for Institutional, 0.98% for Investor A, and 1.72% for Investor C), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period shown). |
| 10 | Hypothetical 5% annual return before expenses is calculated by pro rating the number of days in the most recent fiscal half year divided by 366. | |
| See “Disclosure of Expenses” on page 13 for further information on how expenses were calculated. |
| ANNUAL REPORT | JUNE 30, 2012 | 5 |
| Fund Summary as of June 30, 2012 | BlackRock National Municipal Fund | |
Investment Objective
BlackRock National Municipal Fund’s (the “Fund”) investment objective is to provide shareholders with as high a level of income exempt from federal income taxes as is consistent with the investment policies of the Fund.
Portfolio Management Commentary
| • | On July 18, 2011, the Fund acquired substantially all of the assets and substantially all of the liabilities of the BlackRock Municipal Fund, a series of BlackRock Municipal Bond Fund, Inc., and BlackRock AMT-Free Municipal Bond Portfolio, a series of BlackRock Funds II, in exchange for newly issued shares of the Fund. |
How did the Fund perform?
| • | For the 12-month period ended June 30, 2012, the Fund outperformed its benchmark, the S&P® Municipal Bond Index. |
What factors influenced performance?
| • | The Fund’s longer duration (higher sensitivity to interest rates) as compared to the benchmark index had a positive impact on performance as rates generally declined during the period. The Fund’s holdings were more concentrated on the long end of the yield curve, which benefited performance as the yield curve flattened and long rates declined more than rates on shorter-dated bonds. The Fund’s overweights to health care and education enhanced results as those sectors outperformed the broader market during the period. Additionally, the Fund’s lower quality holdings boosted returns as credit spreads narrowed. The Fund maintained an above-industry-average coupon structure in order to maximize its income accrual, which contributed positively to total return. Exposure to tender option bonds also contributed to the Fund’s yield advantage. |
| • | Detracting from performance was the Fund’s lack of exposure to the tobacco sector, which rallied significantly as high yield municipal funds experienced large inflows, creating new demand. The Fund’s hedging strategy to temper price volatility through the use of financial futures contracts had a negative impact on returns as risk-averse investors drove US Treasury bond yields lower during a period of heightened global financial tensions stemming from the European debt crisis. Following a period of widespread municipal credit concerns that led to significant market volatility and mutual fund outflows in the earlier part of 2011, the Fund, at times, increased its reserves of cash and cash equivalents for defensive purposes. As interest rates on cash investments remained near zero, the Fund’s cash holdings hindered relative performance while longer assets performed better in the declining rate environment. |
Describe recent portfolio activity.
| • | During the 12-month period, the Fund acted to offset its higher level of cash reserves by focusing new purchases on securities that would extend portfolio duration and contribute to the Fund’s competitive income accrual. New purchases during the period were concentrated in the primary market where more generous (higher) coupon rates could be structured. The Fund also improved its relative yield distribution by maximizing its exposure to tender option bonds (as permitted in accordance with the Fund’s prospectus) while the municipal yield curve remained historically steep. As municipal bond valuations generally improved during the period, the Fund increased its credit quality profile by taking advantage of tighter credit quality spreads to sell some of the Fund’s lower-rated holdings. The Fund’s largest exposures to single names were concentrated in the highest quality structures that were suitable for the Fund. These holdings provided better relative price appreciation given strong demand from investors looking to create leveraged products, and increased the Fund’s liquidity. Overall, the Fund maintained its focus on maximizing income accrual using a high-quality asset mix, while managing portfolio volatility. |
Describe portfolio positioning at period end.
| • | As of period end, the Fund continued to hold cash equivalents for liquidity purposes, while portfolio duration remained long relative to the S&P® Municipal Bond Index. The Fund continued to maintain a large position in tender option bonds to boost current yield while the yield curve remained steep and short-term borrowing rates remained low. The Fund also continued to maintain a bias toward high quality securities as well as a high average coupon rate, which stood at 5.80% at period end. |
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.
Portfolio Information
| Percent of | ||
| Long-Term | ||
| Sector Allocations | Investments | |
| Health | 23 | % |
| Utilities | 21 | |
| State | 17 | |
| Transportation | 14 | |
| County/City/Special District/School District | 11 | |
| Education | 7 | |
| Corporate | 5 | |
| Housing | 2 | |
| Percent of | ||
| Long-Term | ||
| Credit Quality Allocations1 | Investments | |
| AAA/Aaa | 15 | % |
| AA/Aa | 46 | |
| A | 29 | |
| BBB/Baa | 6 | |
| BB/Ba | 1 | |
| B | 1 | |
| Not Rated2 | 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 June 30, 2012, the market value of these securities was $51,845,685, representing 1% of the Fund’s long-term investments. |
| 6 | ANNUAL REPORT | JUNE 30, 2012 |
| BlackRock National Municipal Fund |
Total Return Based on a $10,000 Investment
| 1 | Assuming maximum sales charge, if any, transaction costs and other operating expenses, including advisory fees. Institutional Shares do not have a sales charge. |
| 2 | The Fund may invest in municipal bonds rated in any rating category or in unrated municipal bonds. The Fund will usually invest in municipal bonds that have a maturity of five years or longer. |
| 3 | The S&P® Municipal Bond Index is composed of bonds held by managed municipal bond fund customers of Standard & Poor’s Securities Pricing, Inc. that are priced daily. Bonds in the S&P® Municipal Bond Index must have an outstanding par value of at least $2 million and a remaining maturity of not less than 1 month. |
Performance Summary for the Period Ended June 30, 2012
| Average Annual Total Returns4 | ||||||||||||||||||
| 1 Year | 5 Years | 10 Years | ||||||||||||||||
| Standardized | 6-Month | w/o sales | w/sales | w/o sales | w/sales | w/o sales | w/sales | |||||||||||
| 30-Day Yields | Total Returns | charge | charge | charge | charge | charge | charge | |||||||||||
| BlackRock | 2.90 | % | 6.19 | % | 13.38 | % | N/A | 5.97 | % | N/A | 5.75 | % | N/A | |||||
| Institutional | 2.71 | 6.13 | 13.28 | N/A | 5.84 | N/A | 5.62 | N/A | ||||||||||
| Service | 1.74 | 5.73 | 12.85 | N/A | 5.55 | N/A | 5.35 | N/A | ||||||||||
| Investor A | 2.55 | 6.05 | 13.10 | 8.29 | % | 5.63 | 4.71 | % | 5.38 | 4.92 | % | |||||||
| Investor B | 2.23 | 5.80 | 12.56 | 8.56 | 5.10 | 4.77 | 4.85 | 4.85 | ||||||||||
| Investor B1 | 1.23 | 5.78 | 12.67 | 8.17 | 4.89 | 4.55 | 4.62 | 4.62 | ||||||||||
| Investor C | 1.90 | 5.66 | 12.26 | 11.26 | 4.83 | 4.83 | 4.59 | 4.59 | ||||||||||
| Investor C1 | 2.08 | 5.76 | 12.37 | 11.37 | 5.03 | 5.03 | 4.80 | 4.80 | ||||||||||
| S&P® Municipal Bond Index | — | 4.14 | 10.16 | N/A | 5.64 | N/A | 5.35 | N/A | ||||||||||
| 4 | Assuming maximum sales charges, if any. Average annual total returns with and without sales charges reflect reductions for distribution and service fees. See “About Fund Performance” on page 12 for a detailed description of share classes, including any related sales charges and fees. |
| N/A — Not applicable as share class and index do not have a sales charge. Past performance is not indicative of future results. |
| Past performance is not indicative of future results. |
Expense Example
| Actual | Hypothetical7 | ||||||||||||||||||
| Expenses Paid | Including Interest Expense | Excluding Interest Expense | |||||||||||||||||
| During the Period | and Fees | and Fees | |||||||||||||||||
| Ending | Including | Excluding | Ending | Ending | |||||||||||||||
| Beginning | Account Value | Interest | Interest | Beginning | Account Value | Expenses | Account Value | Expenses | |||||||||||
| Account Value | June 30, | Expense | Expense | Account Value | June 30, | Paid During | June 30, | Paid During | |||||||||||
| January 1, 2012 | 2012 | and Fees5 | and Fees6 | January 1, 2012 | 2012 | the Period5 | 2012 | the Period6 | |||||||||||
| BlackRock | $ | 1,000.00 | $ | 1,061.90 | $ | 2.72 | $ | 2.36 | $1,000.00 | $ | 1,022.21 | $ | 2.66 | $ | 1,022.58 | $ | 2.31 | ||
| Institutional | $ | 1,000.00 | $ | 1,061.30 | $ | 3.33 | $ | 2.97 | $1,000.00 | $ | 1,021.64 | $ | 3.27 | $ | 1,022.00 | $ | 2.92 | ||
| Service | $ | 1,000.00 | $ | 1,057.30 | $ | 4.71 | $ | 4.35 | $1,000.00 | $ | 1,020.29 | $ | 4,62 | $ | 1,020.65 | $ | 4.27 | ||
| Investor A | $ | 1,000.00 | $ | 1,060.50 | $ | 4.05 | $ | 3.69 | $1,000.00 | $ | 1,020.91 | $ | 3.97 | $ | 1,021.28 | $ | 3.52 | ||
| Investor B | $ | 1,000.00 | $ | 1,058.00 | $ | 6.50 | $ | 6.14 | $1,000.00 | $ | 1,018.55 | $ | 6.37 | $ | 1,018.91 | $ | 6.02 | ||
| Investor B1 | $ | 1,000.00 | $ | 1,057.80 | $ | 6.60 | $ | 6.24 | $1,000.00 | $ | 1,018.47 | $ | 6.47 | $ | 1,018.82 | $ | 6.12 | ||
| Investor C | $ | 1,000.00 | $ | 1,056.60 | $ | 7.87 | $ | 7.52 | $1,000.00 | $ | 1,017.20 | $ | 7.72 | $ | 1,017.57 | $ | 7.37 | ||
| Investor C1 | $ | 1,000.00 | $ | 1,057.60 | $ | 6.91 | $ | 6.55 | $1,000.00 | $ | 1,018.13 | $ | 6.77 | $ | 1,018.50 | $ | 6.42 | ||
| 5 | For each class of the Fund, expenses are equal to the annualized expense ratio for the class (0.53% for BlackRock, 0.65% for Institutional, 0.92% for Service, 0.79% for Investor A, 1.27% for Investor B, 1.29% for Investor B1, 1.54% for Investor C and 1.35% for Investor C1), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period shown). |
| 6 | For each class of the Fund, expenses are equal to the annualized expense ratio for the class (0.46% for BlackRock, 0.58% for Institutional, 0.85% for Service, 0.72% for Investor A, 1.20% for Investor B, 1.22% for Investor B1, 1.47% for Investor C and 1.28% for Investor C1), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period shown). |
| 7 | Hypothetical 5% before expenses is calculated by pro rating the number of days in the most fiscal half year divided by 366. | |
| See “Disclosure of Expenses” on page 13 for further information on how expenses were calculated. |
| ANNUAL REPORT | JUNE 30, 2012 | 7 |
| Fund Summary as of June 30, 2012 | BlackRock Short-Term Municipal Fund | |
Investment Objective
BlackRock Short-Term Municipal Fund’s (the “Fund”) investment objective is to provide shareholders with as high a level of income exempt from federal income taxes as is consistent with the investment policies of the Fund.
Portfolio Management Commentary
How did the Fund perform?
| • | For the 12-month period ended June 30, 2012, the Fund underperformed its primary benchmark, the S&P® Municipal Bond Index, and its secondary benchmark, the S&P® Limited Maturity Municipal Bond Index. The following discussion of relative performance pertains to the Fund’s secondary benchmark, the S&P® Limited Maturity Municipal Bond Index. |
What factors influenced performance?
| • | The Fund maintains a shorter weighted average maturity than the benchmark index and will, therefore, generally underperform during periods of falling interest rates and outperform in periods of rising rates. During the reporting period, rates on short-term municipal securities fell, thus causing prices to rise, resulting in positive returns for both the Fund and its benchmark index. However, the Fund’s shorter average portfolio duration (lower sensitivity to interest rate movements) versus the benchmark index detracted from the Fund’s relative performance. |
| • | The Fund was fully invested for the majority of the 12-month period, with minimal cash reserves. This was a positive factor for performance as short-duration municipal bond yields fell to historic lows. Although the Fund underperformed its benchmark index, it continues to offer a higher-yielding alternative to money market mutual funds. |
Describe recent portfolio activity.
| • | Given the low absolute levels of interest rates during the 12-month period, the Fund generally maintained a fully invested posture and neutral portfolio duration relative to the benchmark index. Demand for short-duration municipal bonds was significant as near-zero rates on cash instruments compelled short-term investors to move further out on the yield curve. Among securities with maturities inside of four years, yields declined most dramatically in the four-year area of that range. Because the Fund is limited by its prospectus to a maximum dollar-weighted maturity of two years and, therefore, is limited in its ability to benefit from yield curve flattening in a declining interest rate environment, portfolio activity was focused on credit selection. As credit spreads narrowed during the period, the Fund maintained an underweight to pre-refunded bonds given their high-quality characteristics and hence lower yield offering. Conversely, the Fund sought investments in relatively higher-yielding credit sectors such as health care, housing and tax-exempt corporate bonds as well as tax-backed municipal securities. |
Describe portfolio positioning at period end.
| • | The Fund was fully invested at period end and maintained a portfolio duration that was neutral relative to the S&P® Limited Maturity Municipal Bond Index. |
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.
Portfolio Information
| Percent of | ||
| Long-Term | ||
| Sector Allocations | Investments | |
| State | 42 | % |
| County/City/Special District/School District | 18 | |
| Utilities | 11 | |
| Corporate | 9 | |
| Transportation | 8 | |
| Health | 5 | |
| Education | 4 | |
| Tobacco | 2 | |
| Housing | 1 | |
| Percent of | ||
| Long-Term | ||
| Credit Quality Allocations1 | Investments | |
| AAA/Aaa | 21 | % |
| AA/Aa | 47 | |
| A | 27 | |
| BBB/Baa | 4 | |
| Not Rated2 | 1 | |
| 1 | Using the higher of Standard & Poor’s (“S&P’s”) or Moody’s Investors Service (“Moody’s”) ratings. |
| 2 | The investment advisor has deemed certain of these non-rated securities to be of investment grade quality. As of June 30, 2012, the market value of these securities was $9,394,651, representing 1% of the Fund’s long-term investments. |
| 8 | ANNUAL REPORT | JUNE 30, 2012 |
| BlackRock Short-Term Municipal Fund |
Total Return Based on a $10,000 Investment
| 1 | Assuming maximum sales charge, if any, transaction costs and other operating expenses, including advisory fees. Institutional Shares do not have a sales charge. |
| 2 | The Fund invests primarily in investment grade municipal bonds or municipal notes, including variable rate demand obligations. The Fund will maintain a dollar-weighted maturity of no more than 2 years. |
| 3 | The S&P® Municipal Bond Index is composed of bonds held by managed municipal bond fund customers of Standard & Poor’s Securities Pricing, Inc. that are priced daily. Bonds in the S&P® Municipal Bond Index must have an outstanding par value of at least $2 million and a remaining maturity of not less than 1 month. |
| 4 | The S&P® Limited Maturity Municipal Bond Index includes all bonds in the S&P® Main Municipal Bond Index with a remaining maturity of less than 4 years. |
Performance Summary for the Period Ended June 30, 2012
| Average Annual Total Returns5 | ||||||||||||||||||
| 1 Year | 5 Years | 10 Years | ||||||||||||||||
| Standardized | 6-Month | w/o sales | w/sales | w/o sales | w/sales | w/o sales | w/sales | |||||||||||
| 30-Day Yields | Total Returns | charge | charge | charge | charge | charge | charge | |||||||||||
| BlackRock | 0.24 | % | 0.52 | % | 1.07 | % | N/A | 2.57 | % | N/A | 2.26 | % | N/A | |||||
| Institutional | 0.22 | 0.41 | 0.96 | N/A | 2.59 | N/A | 2.26 | N/A | ||||||||||
| Investor A | 0.00 | 0.39 | 0.69 | (2.33 | )% | 2.35 | 1.72 | % | 2.01 | 1.70 | % | |||||||
| Investor A1 | 0.13 | 0.46 | 0.84 | (0.17 | ) | 2.48 | 2.27 | 2.15 | 2.05 | |||||||||
| Investor B | 0.00 | 0.22 | 0.55 | (0.45 | ) | 2.20 | 2.20 | 1.88 | 1.88 | |||||||||
| Investor C | 0.00 | 0.00 | 0.01 | (0.99 | ) | 1.56 | 1.56 | 1.24 | 1.24 | |||||||||
| S&P® Municipal Bond Index | — | 4.14 | 10.16 | N/A | 5.64 | N/A | 5.35 | N/A | ||||||||||
| S&P® Limited Maturity Municipal Bond Index | — | 0.86 | 1.72 | N/A | 3.44 | N/A | 3.01 | N/A | ||||||||||
| 5 | Assuming maximum sales charges, if any. Average annual total returns with and without sales charges reflect reductions for distribution and service fees. See “About Fund Performance” on page 12 for a detailed description of share classes, including any related sales charges and fees. | |
| N/A — Not applicable as share class and index do not have a sales charge. | ||
| Past performance is not indicative of future results. |
Expense Example
| Actual | Hypothetical7 | |||||||||||||
| Beginning | Ending | Beginning | Ending | Annualized | ||||||||||
| Account Value | Account Value | Expenses Paid | Account Value | Account Value | Expenses Paid | Expense | ||||||||
| January 1, 2012 | June 30, 2012 | During the Period6 | January 1, 2012 | June 30, 2012 | During the Period6 | Ratio | ||||||||
| BlackRock | $1,000.00 | $1,005.20 | $1.89 | $1,000.00 | $1,022.97 | $1.91 | 0.38 | % | ||||||
| Institutional | $1,000.00 | $1,004.10 | $1.94 | $1,000.00 | $1,022.92 | $1.96 | 0.39 | % | ||||||
| Investor A | $1,000.00 | $1,003.90 | $3.24 | $1,000.00 | $1,021.63 | $3.27 | 0.65 | % | ||||||
| Investor A1 | $1,000.00 | $1,004.60 | $2.54 | $1,000.00 | $1,022.33 | $2.56 | 0.51 | % | ||||||
| Investor B | $1,000.00 | $1,002.20 | $3.93 | $1,000.00 | $1,020.93 | $3.97 | 0.79 | % | ||||||
| Investor C | $1,000.00 | $1,000.00 | $7.11 | $1,000.00 | $1,017.75 | $7.17 | 1.43 | % | ||||||
| 6 | For each class of the Fund, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period shown). |
| 7 | Hypothetical 5% annual return before expenses is calculated by pro rating the number of days in the most recent fiscal half year divided by 366. | |
| See “Disclosure of Expenses” on page 13 for further information on how expenses were calculated. |
| ANNUAL REPORT | JUNE 30, 2012 | 9 |
| Fund Summary as of June 30, 2012 | BlackRock New York Municipal Bond Fund | |
Investment Objective
BlackRock New York Municipal Fund’s (the “Fund”) investment objective is to provide shareholders with income exempt from federal income tax and New York State and New York City personal income taxes.
Portfolio Management Commentary
How did the Fund perform?
| • | For the 12-month period ended June 30, 2012, the Fund outperformed both its primary benchmark, the S&P Municipal Bond Index, and its secondary benchmark, the S&P New York Municipal Bond Index except Investor C Shares, which underperformed the primary benchmark. The following discussion of relative performance pertains to the Fund’s secondary benchmark, the S&P New York Municipal Bond Index. |
What factors influenced performance?
| • | The Fund’s longer duration posture (greater sensitivity to interest rates) relative to the benchmark index had a positive impact on returns as interest rates generally declined over the period. The Fund’s holdings were more concentrated on the long end of the yield curve, which benefited performance as the yield curve flattened and long rates declined more than rates on shorter-dated bonds. Also contributing positively to performance were the Fund’s overweights in health care and education as those sectors outperformed the broader market. The Fund’s lower quality holdings also boosted returns as credit spreads narrowed during the period. |
| • | Detracting from performance was the Fund’s exposure to tax-backed credits (the Fund’s largest credit exposure), which was among the weaker performing sectors during the period. A small allocation to pre-refunded bonds also detracted as it was the poorest performing sector. |
Describe recent portfolio activity.
| • | As interest rates declined during the 12-month period, the Fund intentionally reduced its portfolio turnover rate in order to retain more of its older, higher-yielding bonds. The Fund actively pursued attractive opportunities in the new-issue market, capitalizing on periods of heavier supply, in order to increase income accrual and diversification, and to maintain the Fund’s commitment to the longer end of the yield curve. |
Describe portfolio positioning at period end.
| • | The Fund ended the period with a longer duration bias as compared to the S&P® New York Municipal Bond Index. The Fund maintained a preference for longer-dated bonds in order to benefit from further flattening of the municipal yield curve. |
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.
Portfolio Information
| Percent of | ||
| Long-Term | ||
| Sector Allocations | Investments | |
| County/City/Special District/School District | 25 | % |
| Health | 16 | |
| Education | 13 | |
| Transportation | 12 | |
| Utilities | 11 | |
| Corporate | 8 | |
| State | 7 | |
| Housing | 6 | |
| Tobacco | 2 | |
| Percent of | ||
| Long-Term | ||
| Credit Quality Allocations1 | Investments | |
| AAA/Aaa | 6 | % |
| AA/Aa | 35 | |
| A | 38 | |
| BBB/Baa | 10 | |
| BB/Ba | 3 | |
| Not Rated2 | 8 | |
| 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 June 30, 2012, the market value of these securities was $6,341,638, representing 2% of the Fund’s long-term investments. |
| 10 | ANNUAL REPORT | JUNE 30, 2012 |
| BlackRock New York Municipal Bond Fund |
Total Return Based on a $10,000 Investment
| 1 | Assuming maximum sales charge, if any, transaction costs and other operating expenses, including advisory fees. Institutional Shares do not have a sales charge. |
| 2 | The Fund invests primarily in a portfolio of investment grade New York municipal bonds. The Fund expects to maintain an average weighted maturity of greater than ten years. |
| 3 | The S&P® Municipal Bond Index is composed of bonds held by managed municipal bond fund customers of Standard & Poor’s Securities Pricing, Inc. that are priced daily. Bonds in the S&P® Municipal Bond Index must have an outstanding par value of at least $2 million and a remaining maturity of not less than 1 month. |
| 4 | The S&P® New York Municipal Bond Index includes all New York bonds in the S&P® Municipal Bond Index. |
Performance Summary for the Period Ended June 30, 2012
| Average Annual Total Returns5 | ||||||||||||||||||
| 1 Year | 5 Years | 10 Years | ||||||||||||||||
| Standardized | 6-Month | w/o sales | w/sales | w/o sales | w/sales | w/o sales | w/sales | |||||||||||
| 30-Day Yields | Total Returns | charge | charge | charge | charge | charge | charge | |||||||||||
| Institutional | 3.02 | % | 5.98 | % | 11.06 | % | N/A | 4.98 | % | N/A | 4.75 | % | N/A | |||||
| Investor A | 2.71 | 5.85 | 10.77 | 6.06 | % | 4.70 | 3.79 | % | 4.48 | 4.02 | % | |||||||
| Investor A1 | 2.84 | 6.04 | 10.97 | 6.53 | 4.89 | 4.03 | 4.65 | 4.22 | ||||||||||
| Investor B | 2.58 | 5.71 | 10.38 | 6.38 | 4.43 | 4.10 | 4.20 | 4.20 | ||||||||||
| Investor C | 2.05 | 5.47 | 9.89 | 8.89 | 3.94 | 3.94 | 3.70 | 3.70 | ||||||||||
| Investor C1 | 2.47 | 5.78 | 10.43 | 9.43 | 4.37 | 4.37 | 4.12 | 4.12 | ||||||||||
| S&P® Municipal Bond Index | — | 4.14 | 10.16 | N/A | 5.64 | N/A | 5.35 | N/A | ||||||||||
| S&P® New York Municipal Bond Index | — | 3.66 | 8.95 | N/A | 5.65 | N/A | 5.32 | N/A | ||||||||||
| 5 | Assuming maximum sales charges, if any. Average annual total returns with and without sales charges reflect reductions for distribution and service fees. See “About Fund Performance” on page 12 for a detailed description of share classes, including any related sales charges and fees. | |
| N/A — Not applicable as share class and index do not have a sales charge. | ||
| Past performance is not indicative of future results. |
Expense Example
| Actual | Hypothetical 8 | |||||||||||||||||
| Expenses Paid | Including Interest Expense | Excluding Interest Expense | ||||||||||||||||
| During the Period | and Fees | and Fees | ||||||||||||||||
| Ending | Including | Excluding | Ending | Ending | ||||||||||||||
| Beginning | Account Value | Interest | Interest | Beginning | Account Value | Expenses | Account Value | Expenses | ||||||||||
| Account Value | June 30, | Expense | Expense | Account Value | June 30, | Paid During | June 30, | Paid During | ||||||||||
| January 1, 2012 | 2012 | and Fees6 | and Fees7 | January 1, 2012 | 2012 | the Period6 | 2012 | the Period7 | ||||||||||
| Institutional | $1,000.00 | $1,059.80 | $4.20 | $3.94 | $1,000.00 | $1,020.79 | $4.12 | $1,021.03 | $3.87 | |||||||||
| Investor A | $1,000.00 | $1,058.50 | $5.43 | $5.12 | $1,000.00 | $1,019.59 | $5.32 | $1,019.89 | $5.02 | |||||||||
| Investor A1 | $1,000.00 | $1,060.40 | $4.61 | $4.30 | $1,000.00 | $1,020.39 | $4.52 | $1,020.69 | $4.22 | |||||||||
| Investor B | $1,000.00 | $1,057.10 | $6.90 | $6.55 | $1,000.00 | $1,018.19 | $6.77 | $1,018.50 | $6.42 | |||||||||
| Investor C | $1,000.00 | $1,054.70 | $9.14 | $8.89 | $1,000.00 | $1,015.96 | $8.97 | $1,016.21 | $8.72 | |||||||||
| Investor C1 | $1,000.00 | $1,057.80 | $7.11 | $6.80 | $1,000.00 | $1,017.95 | $6.97 | $1,018.25 | $6.57 | |||||||||
| 6 | For each class of the Fund, expenses are equal to the annualized expense ratio for the class (0.82% for Institutional, 1.06% for Investor A, 0.90% for Investor A1, 1.35% for Investor B, 1.79% for Investor C and 1.39% for Investor C1), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period shown). |
| 7 | For each class of the Fund, expenses are equal to the annualized expense ratio for the class (0.77% for Institutional, 1.00% for Investor A, 0.84% for Investor A1, 1.28% for Investor B, 1.74% for Investor C and 1.33% for Investor C1), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period shown). |
| 8 | Hypothetical 5% annual return before expenses is calculated by pro rating the number of days in the most recent fiscal half year divided by 366. | |
| See “Disclosure of Expenses” on page 13 for further information on how expenses were calculated. |
| ANNUAL REPORT | JUNE 30, 2012 | 11 |
| • | BlackRock and Institutional Shares (BlackRock Shares are available only in BlackRock Short-Term Municipal Fund and BlackRock National Municipal Fund) are not subject to any sales charge. These shares bear no ongoing distribution or service fees and are available only to eligible investors. Prior to October 2, 2006, for BlackRock Short-Term Municipal Fund and prior to July 18, 2011 for BlackRock National Municipal Fund, BlackRock Share performance results are those of the Institutional Shares restated to reflect BlackRock Share fees. |
| • | Service Shares (available only in BlackRock National Municipal Fund) are not subject to any sales charge. These shares are subject to a service fee of 0.25% per year (but no distribution fee) and are available only to eligible investors. Prior to July 18, 2011, Service Share performance results are those of the Institutional Shares restated to reflect Service Share fees. |
| • | Investor A Shares are subject to a maximum initial sales charge (front-end load) of 4.25% for all Funds except BlackRock Short-Term Municipal Fund, which incurs a 3.00% maximum initial sales charge, and all Funds incur a service fee of 0.25% per year (but no distribution fee). Prior to the Investor A Shares inception date of October 2, 2006 (for BlackRock Short-Term Municipal Fund and BlackRock New York Municipal Fund), Investor A Share performance results are those of the Institutional Shares (which have no distribution or service fees) restated to reflect Investor A Share fees. |
| • | Investor A1 Shares (available only in BlackRock Short-Term Municipal Fund and BlackRock New York Municipal Bond Fund) incur a maximum initial sales charge (front-end load) of 1.00% for BlackRock Short-Term Municipal Fund and 4.00% for BlackRock New York Municipal Fund; and a service fee of 0.10% per year (but no distribution fee). |
| • | Investor B Shares (available to all Funds except BlackRock High Yield Municipal Fund) are subject to the following maximum contingent deferred sales charges (“CDSC”): |
| Maximum CDSC | |
| BlackRock Short-Term Municipal Fund | 1.00%, declining to 0% after 3 years |
| BlackRock National Municipal Fund | 4.00%, declining to 0% after 6 years |
| BlackRock New York Municipal Bond Fund | 4.00%, declining to 0% after 6 years |
In addition, these shares are subject to distribution and service fees per year as follows:
| Distribution | Service | |
| Fee | Fee | |
| BlackRock Short-Term Municipal Fund | 0.20% | 0.15% |
| BlackRock National Municipal Fund | 0.50% | 0.25% |
| BlackRock New York Municipal Bond Fund | 0.25% | 0.25% |
For BlackRock Short-Term Municipal Fund and BlackRock New York Municipal Bond Fund, the shares automatically convert to Investor A1 Shares after approximately 10 years. For BlackRock National Municipal Fund, the shares automatically convert to Investor A Shares after approximately 10 years. (There is no initial sales charge for automatic sales conversions.)
| • | Investor B1 Shares (available only in BlackRock National Municipal Fund) are subject to a maximum CDSC of 4.50%, declining to 0% after six years. In addition, these shares are subject to a distribution fee of 0.75% per year and a service fee of 0.25% per year. These shares automatically convert to Investor A Shares after approximately seven years. Prior to July 18, 2011, Investor B1 Share performance results are those of the Institutional Shares restated to reflect Investor B1 Share fees. |
| • | Investor C Shares are subject to a 1.00% CDSC if redeemed within one year of purchase. In addition, these shares are subject to a distribution fee of 0.75% per year and a service fee of 0.25% per year. Prior to the Investor C Shares inception date of October 2, 2006 (for all Funds except BlackRock High Yield Municipal Fund), Investor C Share performance results are those of Institutional Shares (which have no distribution or service fees) restated to reflect Investor C Share fees. |
| • | Investor C1 Shares (available only in BlackRock National Municipal Fund and BlackRock New York Municipal Fund) are subject to a 1.00% CDSC if redeemed within one year of purchase. |
| • | In addition, these shares are subject to distribution and service fees per year as follows: |
| Distribution | Service | |
| Fee | Fee | |
| BlackRock National Municipal Fund | 0.55% | 0.25% |
| BlackRock New York Municipal Bond Fund | 0.35% | 0.25% |
Investor A1, Investor B, Investor B1 and Investor C1 Shares of each Fund are only available through exchanges, dividend reinvestment by existing shareholders or for purchase by certain qualified employee benefit plans.
Performance information reflects past performance and does not guarantee future results. Current performance may be lower or higher than the performance data quoted. Refer to www.blackrock.com/funds to obtain performance data current to the most recent month end. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Figures shown in each of the performance tables on the previous pages assume reinvestment of all dividends and capital gain distributions, if any, at net asset value (“NAV”) on the payable date. Investment return and principal value of shares will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Dividends paid to each class of shares will vary because of the different levels of service, distribution and transfer agency fees applicable to each class, which are deducted from the income available to be paid to shareholders. The Funds’ investment advisor reimbursed a portion of each Fund’s expenses. Without such reimbursement, a Fund’s performance would have been lower.
| 12 | ANNUAL REPORT | JUNE 30, 2012 |
Shareholders of these Funds may incur the following charges: (a) expenses related to transactions, including sales charges and exchange fees; and (b) operating expenses, including advisory fees, service and distribution fees including 12b-1 fees, and other Fund expenses. The expense examples on the previous pages (which are based on a hypothetical investment of $1,000 invested on January 1, 2012 and held through June 30, 2012) are intended to assist shareholders both in calculating expenses based on an investment in a Fund and in comparing these expenses with similar costs of investing in other mutual funds.
The expense examples provide information about actual account values and actual expenses. In order to estimate the expenses a shareholder paid during the period covered by this report, shareholders can divide their account value by $1,000 and then multiply the result by the number corresponding to their Fund and share class under the headings entitled “Expenses Paid During the Period.”
The expense examples also provide information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses. In order to assist shareholders in comparing the ongoing expenses of investing in these Funds and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in other funds’ shareholder reports.
The expenses shown in the expense examples are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges or exchange fees, if any. Therefore, the hypothetical examples are useful in comparing ongoing expenses only, and will not help shareholders determine the relative total expenses of owning different funds. If these transactional expenses were included, shareholder expenses would have been higher.
| ANNUAL REPORT | JUNE 30, 2012 | 13 |
The Benefits and Risks of Leveraging
The Funds may utilize leverage to seek to enhance the yield and NAV. However, these objectives cannot be achieved in all interest rate environments.
The Funds may 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 Funds with economic benefits during periods of declining short-term interest rates, but expose the Funds to risks during periods of rising short-term interest rates. Additionally, fluctuations in the market value of municipal bonds deposited into the TOB trust may adversely affect each Fund’s NAV per share.
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 Fund on its longer-term portfolio investments. To the extent that the total assets of each Fund (including the assets obtained from leverage) are invested in higher-yielding portfolio investments, each Fund’s shareholders will benefit from the incremental net income.
Furthermore, the value of the Funds’ portfolio investments generally varies inversely with the direction of long-term interest rates, although other factors can influence the value of portfolio investments. Changes in interest rates can influence the Funds’ NAVs positively or negatively in addition to the impact on the Fund performance from leverage.
The use of leverage may enhance opportunities for increased income to the Funds, 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 Funds’ NAVs 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 Funds’ 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 Fund’s net income will be less than if leverage had not been used, and therefore the amount available for distribution to shareholders will be reduced. Each Fund 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 Fund to incur losses. The use of leverage may limit each Fund’s ability to invest in certain types of securities or use certain types of hedging strategies. Each Fund will incur expenses in connection with the use of leverage, all of which are borne by shareholders and may reduce income.
Derivative Financial Instruments
The Funds may invest in various derivative financial instruments, including financial futures contracts 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 Funds’ 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 Fund to sell or purchase portfolio investments at inopportune times or for distressed values, may limit the amount of appreciation a Fund can realize on an investment, may result in lower dividends paid to shareholders or may cause a Fund to hold an investment that it might otherwise sell. The Funds’ investments in these instruments are discussed in detail in the Notes to Financial Statements.
| 14 | ANNUAL REPORT | JUNE 30, 2012 |
| Schedule of Investments June 30, 2012 | BlackRock High Yield Municipal Fund |
| (Percentages shown are based on Net Assets) |
| Municipal Bonds | Par (000) |
Value | ||
| Alabama — 2.3% | ||||
| Alabama State Docks Department, Refunding RB, 6.00%, | ||||
| 10/01/40 | $ | 710 | $ | 806,283 |
| County of Jefferson Alabama, RB, Series A: | ||||
| 5.25%, 1/01/17 | 1,000 | 1,001,440 | ||
| 5.25%, 1/01/19 | 1,000 | 996,190 | ||
| 5.25%, 1/01/20 | 500 | 496,330 | ||
| 5.50%, 1/01/21 | 1,200 | 1,202,004 | ||
| 5.00%, 1/01/24 | 2,000 | 1,930,440 | ||
| 4.75%, 1/01/25 | 325 | 305,688 | ||
| 6,738,375 | ||||
| Alaska — 1.3% | ||||
| Northern Tobacco Securitization Corp., Refunding RB, | ||||
| Asset-Backed, Series A: | ||||
| 4.63%, 6/01/23 | 1,235 | 1,217,784 | ||
| 5.00%, 6/01/32 | 1,500 | 1,272,360 | ||
| 5.00%, 6/01/46 | 1,620 | 1,220,168 | ||
| 3,710,312 | ||||
| Arizona — 3.1% | ||||
| Maricopa County IDA Arizona, RB, Arizona Charter Schools | ||||
| Project, Series A: | ||||
| 6.63%, 7/01/20 | 25 | 20,189 | ||
| 6.75%, 7/01/29 | 300 | 209,133 | ||
| Phoenix IDA Arizona, ERB, Great Hearts Academies— | ||||
| Veritas Project, 6.40%, 7/01/47 | 415 | 436,970 | ||
| Phoenix IDA Arizona, Refunding RB, America West Airlines | ||||
| Inc. Project, AMT, 6.30%, 4/01/23 | 1,000 | 880,720 | ||
| Pima County IDA, IDRB, Tucson Electric Power, Series A, | ||||
| 5.25%, 10/01/40 | 1,390 | 1,460,445 | ||
| Pima County IDA, RB, Tucson Electric Power, Series A, | ||||
| 6.38%, 9/01/29 | 780 | 796,770 | ||
| Pima County IDA, Refunding RB, Tucson Electric Power Co. | ||||
| Project, Series A, 4.50%, 6/01/30 | 2,000 | 2,007,880 | ||
| Salt Verde Financial Corp., RB, Senior: | ||||
| 5.00%, 12/01/32 | 750 | 767,393 | ||
| 5.00%, 12/01/37 | 2,180 | 2,208,231 | ||
| Tempe IDA, Refunding RB, Friendship Village of Tempe, | ||||
| Series A, 6.25%, 12/01/42 | 280 | 295,162 | ||
| University Medical Center Corp. Arizona, RB, 6.25%, | ||||
| 7/01/29 | 180 | 205,594 | ||
| 9,288,487 | ||||
| Arkansas — 0.3% | ||||
| Benton County Public Facilities Board, Refunding RB, | ||||
| BCCSO Project, Series A, 6.00%, 6/01/40 | 750 | 832,155 | ||
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| California — 6.4% | ||||
| California Health Facilities Financing Authority, RB, Sutter | ||||
| Health, Series B, 6.00%, 8/15/42 | $ | 1,000 | $ | 1,177,800 |
| California Health Facilities Financing Authority, | ||||
| Refunding RB: | ||||
| Catholic Healthcare West, Series A, 6.00%, 7/01/39 | 265 | 307,988 | ||
| St. Joseph Health System, Series A, 5.75%, 7/01/39 | 1,000 | 1,135,390 | ||
| California HFA, RB, Home Mortgage, Series I, AMT, | ||||
| 4.60%, 8/01/21 | 1,005 | 1,016,688 | ||
| California Pollution Control Financing Authority, RB, Waste | ||||
| Management Inc. Project, Series C, AMT, 5.13%, | ||||
| 11/01/23 (a) | 750 | 812,018 | ||
| California Pollution Control Financing Authority, Refunding | ||||
| RB, Waste Management Inc. Project, Series B, AMT, | ||||
| 5.00%, 7/01/27 | 1,000 | 1,066,510 | ||
| California Statewide Communities Development | ||||
| Authority, RB: | ||||
| John Muir Health, 5.13%, 7/01/39 | 425 | 449,174 | ||
| Kaiser Permanente, Series A, 5.00%, 4/01/42 | 1,145 | 1,222,356 | ||
| Sutter Health, Series A, 6.00%, 8/15/42 | 400 | 471,120 | ||
| California Statewide Communities Development Authority, | ||||
| Refunding RB: | ||||
| American Baptist Homes of the West, 6.25%, | ||||
| 10/01/39 | 2,575 | 2,750,847 | ||
| Eskaton Properties, Inc., 5.25%, 11/15/34 | 905 | 927,516 | ||
| City of Chula Vista California, Refunding RB, San Diego | ||||
| Gas & Electric, Series A, 5.88%, 2/15/34 | 500 | 580,090 | ||
| City of Roseville California, Special Tax Bonds, Fiddyment | ||||
| Ranch Community Facilities District No. 1, 5.25%, | ||||
| 9/01/36 | 465 | 445,921 | ||
| City of San Jose California, RB, Convention Center | ||||
| Expansion & Renovation Project: | ||||
| 6.50%, 5/01/36 | 310 | 353,809 | ||
| 6.50%, 5/01/42 | 760 | 866,035 | ||
| Foothill Eastern Transportation Corridor Agency California, | ||||
| Refunding RB, CAB, 6.07%, 1/15/33 (b) | 6,525 | 1,910,129 | ||
| Lammersville School District Community Facilities District, | ||||
| Special Tax Bonds, District No. 2002, Mountain House, | ||||
| 5.13%, 9/01/35 | 325 | 317,863 | ||
| Roseville Finance Authority, Special Tax Bonds, Refunding, | ||||
| Senior Lien, Series A (AMBAC), 4.50%, 9/01/33 | 725 | 634,100 | ||
| San Marcos County Unified School District, GO, CAB, | ||||
| Election of 2010, Series B (b): | ||||
| 5.36%, 8/01/37 | 1,000 | 265,260 | ||
| 5.52%, 8/01/51 | 4,450 | 530,262 | ||
| Temecula Public Financing Authority, Special Tax Bonds, | ||||
| Refunding, Harveston, Sub-Series B, 5.10%, 9/01/36 | 175 | 164,353 | ||
| Tobacco Securitization Authority of Southern California, | ||||
| Refunding RB, Senior Series A-1, 5.00%, 6/01/37 | 2,140 | 1,636,458 | ||
| 19,041,687 | ||||
Portfolio Abbreviations
| To simplify the listings of portfolio holdings in the | COP | Certificates of Participation | LRB | Lease Revenue Bonds | |
| Schedules of Investments, the names and descriptions | EDA | Economic Development Authority | M/F | Multi-Family | |
| of many of the securities have been abbreviated | EDC | Economic Development Corp. | MRB | Mortgage Revenue Bonds | |
| according to the following list: | ERB | Education Revenue Bonds | NPFGC | National Public Finance Guarantee Corp. | |
| ERS | Extendible Reset Securities | PSF-GTD | Permanent School Fund Guaranteed | ||
| ACA | American Capital Access Corp. | FHA | Federal Housing Administration | PILOT | Payment in Lieu of Taxes |
| AGC | Assured Guaranty Corp. | GARB | General Airport Revenue Bonds | Q-SBLF | Qualified School Bond Loan Fund |
| AGM | Assured Guaranty Municipal Corp. | GO | General Obligation Bonds | RB | Revenue Bonds |
| AMBAC | American Municipal Bond Assurance Corp. | HDA | Housing Development Authority | RN | Revenue Notes |
| AMT | Alternative Minimum Tax (subject to) | HFA | Housing Finance Agency | S/F | Single-Family |
| ARB | Airport Revenue Bonds | IDA | Industrial Development Authority | SONYMA | State of New York Mortgage Agency |
| BHAC | Berkshire Hathaway Assurance Corp. | IDB | Industrial Development Board | Syncora | Syncora Guarantee |
| CAB | Capital Appreciation Bonds | IDRB | Industrial Development Revenue Bonds | VRDN | Variable Rate Demand Notes |
| CIFG | CDC IXIS Financial Guaranty | ISD | Independent School District | ||
See Notes to Financial Statements.
| ANNUAL REPORT | JUNE 30, 2012 | 15 |
| Schedule of Investments (continued) | BlackRock High Yield Municipal Fund |
| (Percentages shown are based on Net Assets) |
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| Colorado — 0.9% | ||||
| Denver Convention Center Hotel Authority, Refunding RB, | ||||
| Senior, 5.00%, 12/01/30 | $ | 1,500 | $ | 1,538,085 |
| Regional Transportation District, RB, Denver Transport | ||||
| Partners, 6.00%, 1/15/41 | 1,000 | 1,114,560 | ||
| 2,652,645 | ||||
| Connecticut — 0.2% | ||||
| Mohegan Tribe of Indians of Connecticut, Refunding RB, | ||||
| Public Improvement, Priority Distribution, 6.25%, | ||||
| 1/01/31 | 605 | 576,365 | ||
| Delaware — 0.5% | ||||
| Delaware State EDA, RB, Exempt Facilities, Indian River | ||||
| Power, 5.38%, 10/01/45 | 1,480 | 1,554,829 | ||
| District of Columbia — 2.8% | ||||
| District of Columbia, RB, Methodist Home District of | ||||
| Columbia, Series A: | ||||
| 7.38%, 1/01/30 | 310 | 321,464 | ||
| 7.50%, 1/01/39 | 500 | 518,160 | ||
| District of Columbia Tobacco Settlement Financing Corp., | ||||
| Refunding RB, Asset-Backed: | ||||
| 6.50%, 5/15/33 | 3,575 | 3,941,223 | ||
| 6.75%, 5/15/40 | 385 | 392,319 | ||
| Metropolitan Washington Airports Authority, Refunding RB: | ||||
| CAB, Second Senior Lien, Series B (AGC), 5.15%, | ||||
| 10/01/30 (b) | 3,005 | 1,187,696 | ||
| First Senior Lien, Series A, 5.00%, 10/01/39 | 85 | 91,634 | ||
| First Senior Lien, Series A, 5.25%, 10/01/44 | 1,610 | 1,750,344 | ||
| 8,202,840 | ||||
| Florida — 5.6% | ||||
| Greater Orlando Aviation Authority Florida, RB, Special | ||||
| Purpose, JetBlue Airways Corp., AMT, 6.38%, 11/15/26 | 1,740 | 1,761,785 | ||
| Highland Meadows Community Development District, | ||||
| Special Assessment Bonds, Series A, 5.50%, 5/01/36 | ||||
| (c)(d) | 490 | 195,819 | ||
| Hillsborough County IDA, RB: | ||||
| Tampa General Hospital Project, 5.25%, 10/01/41 | 1,000 | 1,034,160 | ||
| National Gypsum Co., Series B, AMT, 7.13%, | ||||
| 4/01/30 | 1,500 | 1,500,210 | ||
| Jacksonville Economic Development Commission, RB, | ||||
| Gerdau Ameristeel US Inc., AMT, 5.30%, 5/01/37 | 3,300 | 3,292,971 | ||
| Lakewood Ranch Stewardship District, Refunding, Special | ||||
| Assessment Bonds, Lakewood Center & NW Sector | ||||
| Projects, 8.00%, 5/01/40 | 515 | 559,403 | ||
| Mid-Bay Bridge Authority, RB, Series A, 7.25%, 10/01/40 | 1,450 | 1,768,681 | ||
| Palm Beach County Health Facilities Authority, RB, Acts | ||||
| Retirement Life Community, 5.50%, 11/15/33 | 1,500 | 1,604,730 | ||
| Santa Rosa Bay Bridge Authority, RB, 6.25%, 7/01/28 | ||||
| (c)(d) | 500 | 193,750 | ||
| Sarasota County Health Facilities Authority, Refunding RB, | ||||
| Village On The Isle Project, 5.50%, 1/01/27 | 210 | 217,552 | ||
| Sumter Landing Community Development District Florida, | ||||
| RB, Sub-Series B, 5.70%, 10/01/38 | 795 | 711,644 | ||
| Tolomato Community Development District, Special | ||||
| Assessment Bonds, 6.65%, 5/01/40 (c)(d) | 700 | 311,934 | ||
| Viera East Community Development District, Refunding, | ||||
| Special Assessment Bonds, 5.00%, 5/01/26 | 640 | 624,973 | ||
| Village Community Development District No. 9, Special | ||||
| Assessment Bonds: | ||||
| 7.00%, 5/01/41 | 1,760 | 2,012,771 | ||
| 5.50%, 5/01/42 | 620 | 646,015 | ||
| Watergrass Community Development District, Special | ||||
| Assessment Bonds, Series A, 5.38%, 5/01/39 | 650 | 334,880 | ||
| 16,771,278 | ||||
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| Georgia — 1.5% | ||||
| Clayton County Development Authority, Refunding RB, | ||||
| Delta Air Lines Inc. Project, Series A, 8.75%, 6/01/29 | $ | 635 | $ | 752,811 |
| County of Clayton Georgia, Tax Allocation Bonds, | ||||
| Ellenwood Project, 7.50%, 7/01/33 | 345 | 355,140 | ||
| DeKalb County Hospital Authority Georgia, Refunding RB, | ||||
| Dekalb Medical Center, Inc. Project, 6.13%, 9/01/40 | 1,240 | 1,368,402 | ||
| Gainesville & Hall County Development Authority, | ||||
| Refunding RB, Acts Retirement Life Community, Series | ||||
| A-2, 6.63%, 11/15/39 | 220 | 246,277 | ||
| Private Colleges & Universities Authority, Refunding RB, | ||||
| Mercer University Project, Series A: | ||||
| 5.25%, 10/01/27 | 820 | 883,452 | ||
| 5.00%, 10/01/32 | 395 | 412,526 | ||
| Richmond County Development Authority, RB, | ||||
| International Paper Co. Projects, Series A, AMT, | ||||
| 5.00%, 8/01/30 | 500 | 501,180 | ||
| 4,519,788 | ||||
| Guam — 1.0% | ||||
| Guam Government Waterworks Authority, Refunding RB, | ||||
| Water and Wastewater System, 6.00%, 7/01/25 | 735 | 755,271 | ||
| Territory of Guam, GO, Series A: | ||||
| 6.00%, 11/15/19 | 100 | 108,344 | ||
| 6.75%, 11/15/29 | 1,650 | 1,827,293 | ||
| 7.00%, 11/15/39 | 160 | 178,070 | ||
| 2,868,978 | ||||
| Idaho — 0.1% | ||||
| Power County Industrial Development Corp., RB, FMC | ||||
| Corp. Project, AMT, 6.45%, 8/01/32 | 265 | 265,395 | ||
| Illinois — 3.1% | ||||
| City of Chicago Illinois, Refunding RB, American Airlines | ||||
| Inc. Project, 5.50%, 12/01/30 (c)(d) | 1,000 | 617,510 | ||
| County of Cook Illinois, RB, Navistar International Corp. | ||||
| Project, Recovery Zone Facility, 6.50%, 10/15/40 | 1,500 | 1,541,370 | ||
| Illinois Finance Authority, RB, Roosevelt University Project, | ||||
| 6.50%, 4/01/44 | 830 | 905,953 | ||
| Illinois Finance Authority, Refunding RB: | ||||
| Central Dupage Health, Series B, 5.50%, 11/01/39 | 1,400 | 1,547,336 | ||
| Friendship Village of Schaumburg, 7.13%, 2/15/39 | 1,000 | 1,077,010 | ||
| Swedish Covenant, Series A, 6.00%, 8/15/38 | 1,000 | 1,112,940 | ||
| Metropolitan Pier & Exposition Authority, Refunding RB, | ||||
| CAB, McCormick Place Expansion Project, Series B | ||||
| (AGM), 5.51%, 6/15/44 (b) | 3,455 | 608,115 | ||
| Quad Cities Regional EDA, Refunding RB, Augustana | ||||
| College, 4.75%, 10/01/32 (e) | 1,000 | 979,540 | ||
| Railsplitter Tobacco Settlement Authority, RB: | ||||
| 5.50%, 6/01/23 | 355 | 406,219 | ||
| 6.00%, 6/01/28 | 390 | 443,641 | ||
| 9,239,634 | ||||
| Indiana — 0.3% | ||||
| Indiana Finance Authority, RB, Marquette Project, 5.00%, | ||||
| 3/01/39 | 725 | 719,671 | ||
| Indiana Health Facility Financing Authority, Refunding RB, | ||||
| Methodist Hospital Inc., 5.38%, 9/15/22 | 185 | 185,078 | ||
| 904,749 | ||||
| Iowa — 0.2% | ||||
| Iowa Finance Authority, Refunding RB, Development, Care | ||||
| Initiatives Project, Series A, 5.00%, 7/01/19 | 500 | 508,520 | ||
| Kentucky — 1.0% | ||||
| Kentucky Economic Development Finance Authority, RB, | ||||
| Owensboro Medical Health System, Series A: | ||||
| 6.38%, 6/01/40 | 1,050 | 1,210,157 | ||
| 6.50%, 3/01/45 | 1,000 | 1,158,710 | ||
See Notes to Financial Statements.
| 16 | ANNUAL REPORT | JUNE 30, 2012 |
| Schedule of Investments (continued) | BlackRock High Yield Municipal Fund |
| (Percentages shown are based on Net Assets) |
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| Kentucky (concluded) | ||||
| Kentucky Economic Development Finance Authority, | ||||
| Refunding RB: | ||||
| Norton Healthcare Inc., Series B (NPFGC), 4.63%, | ||||
| 10/01/24 (b) | $ | 250 | $ | 142,665 |
| Owensboro Medical Health System, Series B, 6.38%, | ||||
| 3/01/40 | 395 | 455,249 | ||
| 2,966,781 | ||||
| Louisiana — 2.0% | ||||
| Louisiana Local Government Environmental Facilities & | ||||
| Community Development Authority, RB, Westlake | ||||
| Chemical Corp. Project, 6.75%, 11/01/32 | 1,000 | 1,116,200 | ||
| Louisiana Public Facilities Authority, RB, Belle Chasse | ||||
| Educational Foundation Project, 6.75%, 5/01/41 | 645 | 732,939 | ||
| Parish of Saint John the Baptist Louisiana, RB, Marathon | ||||
| Oil Corp., Series A, 5.13%, 6/01/37 | 4,000 | 4,182,760 | ||
| 6,031,899 | ||||
| Maine — 0.4% | ||||
| Maine Health & Higher Educational Facilities Authority, | ||||
| RB, Maine General Medical Center, 6.75%, 7/01/41 | 1,075 | 1,228,510 | ||
| Maryland — 2.1% | ||||
| County of Howard Maryland, Refunding RB, Vantage | ||||
| House Facility, Series A, 5.25%, 4/01/33 | 500 | 465,015 | ||
| Gaithersburg Maryland, Refunding RB, Asbury Maryland | ||||
| Obligation, Series B, 6.00%, 1/01/23 | 750 | 824,490 | ||
| Maryland EDC, RB: | ||||
| Term Project, Series B, 5.75%, 6/01/35 | 1,500 | 1,618,755 | ||
| Transportation Facilities Project, Series A, 5.75%, | ||||
| 6/01/35 | 265 | 285,670 | ||
| Maryland EDC, Refunding RB, CNX Marine Terminals Inc., | ||||
| 5.75%, 9/01/25 | 2,000 | 2,127,740 | ||
| Maryland Health & Higher Educational Facilities Authority, | ||||
| RB, Washington Christian Academy, 5.25%, | ||||
| 7/01/18 (c)(d) | 250 | 100,000 | ||
| Maryland Health & Higher Educational Facilities Authority, | ||||
| Refunding RB, Doctors Community Hospital, 5.75%, | ||||
| 7/01/38 | 890 | 945,652 | ||
| 6,367,322 | ||||
| Massachusetts — 1.5% | ||||
| Massachusetts Development Finance Agency, RB: | ||||
| Boston Medical Center, Series C, 5.00%, 7/01/29 | 2,500 | 2,583,525 | ||
| Foxborough Regional Charter School, Series A, 7.00%, | ||||
| 7/01/42 | 350 | 408,019 | ||
| Linden Ponds, Inc. Facility, Series A-1, 6.25%, | ||||
| 11/15/39 | 353 | 260,040 | ||
| Linden Ponds, Inc. Facility, Series A-2, 5.50%, | ||||
| 11/15/46 | 19 | 11,593 | ||
| Linden Ponds, Inc. Facility, Series B, 0.00%, | ||||
| 11/15/56 (b) | 94 | 483 | ||
| Massachusetts Development Finance Agency, | ||||
| Refunding RB: | ||||
| Eastern Nazarene College, 5.63%, 4/01/29 | 500 | 499,975 | ||
| Tufts Medical Center, Series I, 6.75%, 1/01/36 | 510 | 589,570 | ||
| 4,353,205 | ||||
| Michigan — 3.1% | ||||
| City of Detroit Michigan, GO: | ||||
| Taxable Capital Improvement, Limited Tax, Series A-1, | ||||
| 5.00%, 4/01/16 | 350 | 317,520 | ||
| Taxable Capital Improvement, Limited Tax, Series A-2, | ||||
| 8.00%, 4/01/14 | 1,715 | 1,629,319 | ||
| Kentwood EDC, RB, Limited Obligation Holland Home, | ||||
| 5.63%, 11/15/41 | 1,250 | 1,255,550 | ||
| Michigan State Hospital Finance Authority, Refunding RB, | ||||
| Hospital, Henry Ford Health, 5.75%, 11/15/39 | 1,710 | 1,889,122 | ||
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| Michigan (concluded) | ||||
| Monroe County Hospital Finance Authority, Refunding RB, | ||||
| Mercy Memorial Hospital Corp. Obligation, 5.50%, | ||||
| 6/01/35 | $ | 3,065 | $ | 3,106,868 |
| Royal Oak Hospital Finance Authority Michigan, Refunding | ||||
| RB, William Beaumont Hospital, 8.25%, 9/01/39 | 915 | 1,166,579 | ||
| 9,364,958 | ||||
| Minnesota — 2.0% | ||||
| Minnesota State Higher Education Facilities Authority, RB, | ||||
| College of St. Benedict, Series 7-M, 5.13%, 3/01/36 | 275 | 286,030 | ||
| St. Paul Housing & Redevelopment Authority, RB, Nova | ||||
| Classical Academy, Series A, 6.63%, 9/01/42 | 500 | 535,285 | ||
| St. Paul Port Authority, RB, Energy Park Utility Co. Project, | ||||
| AMT, 5.70%, 8/01/36 (e) | 1,265 | 1,265,886 | ||
| Tobacco Securitization Authority Minnesota, Refunding RB, | ||||
| Tobacco Settlement, Series B, 5.25%, 3/01/31 | 3,500 | 3,853,780 | ||
| 5,940,981 | ||||
| Mississippi — 0.7% | ||||
| Warren County Mississippi, RB, Gulf Opportunity Zone | ||||
| Bonds (International Paper Company Project), Series A, | ||||
| 5.38%, 12/01/35 | 2,000 | 2,145,820 | ||
| Missouri — 0.4% | ||||
| City of Kansas City Missouri, Tax Allocation Bonds, Kansas | ||||
| City MainCor Project, Series A, 5.25%, 3/01/18 | 600 | 625,626 | ||
| Kirkwood IDA Missouri, RB, Aberdeen Heights, Series A, | ||||
| 8.25%, 5/15/39 | 435 | 510,603 | ||
| 1,136,229 | ||||
| Nebraska — 0.4% | ||||
| Central Plains Energy Project Nebraska, RB, Gas Project | ||||
| No. 3: | ||||
| 5.25%, 9/01/37 | 445 | 460,935 | ||
| 5.00%, 9/01/42 | 780 | 775,133 | ||
| 1,236,068 | ||||
| Nevada — 0.0% | ||||
| County of Clark Nevada, RB, Southwest Gas Corp. Project, | ||||
| Series A, AMT (NPFGC), 4.75%, 9/01/36 | 20 | 20,025 | ||
| New Hampshire — 1.2% | ||||
| New Hampshire Health & Education Facilities Authority, | ||||
| Refunding RB: | ||||
| Dartmouth-Hitchcock, 6.00%, 8/01/38 | 435 | 502,147 | ||
| Havenwood-Heritage Heights, Series A, 5.40%, | ||||
| 1/01/30 | 500 | 496,085 | ||
| Southern New Hampshire University, 5.00%, | ||||
| 1/01/34 | 2,500 | 2,584,075 | ||
| 3,582,307 | ||||
| New Jersey — 6.0% | ||||
| Burlington County Bridge Commission, Refunding RB, The | ||||
| Evergreens Project, 5.63%, 1/01/38 | 750 | 764,370 | ||
| New Jersey EDA, RB: | ||||
| Cigarette Tax, 5.75%, 6/15/14 (f) | 1,100 | 1,215,346 | ||
| Cigarette Tax, 5.75%, 6/15/14 (f) | 535 | 590,212 | ||
| Continental Airlines Inc. Project, AMT, 6.63%, | ||||
| 9/15/12 | 1,380 | 1,392,144 | ||
| Continental Airlines Inc. Project, AMT, 6.40%, | ||||
| 9/15/23 | 2,000 | 2,007,980 | ||
| Kapkowski Road Landfill Project, Series 1998B-MB, | ||||
| AMT, 6.50%, 4/01/31 | 3,000 | 3,469,230 | ||
| Patterson Charter School for Science and Technology, | ||||
| Inc. Project, Series A, 6.10%, 7/01/44 | 660 | 680,427 | ||
| New Jersey EDA, Refunding RB, Cigarette Tax, 5.00%, | ||||
| 6/15/23 | 795 | 899,050 | ||
| New Jersey Educational Facilities Authority, Refunding RB, | ||||
| University of Medicine & Dentistry, Series B, 7.13%, | ||||
| 12/01/23 | 580 | 718,823 | ||
See Notes to Financial Statements.
| ANNUAL REPORT | JUNE 30, 2012 | 17 |
| Schedule of Investments (continued) | BlackRock High Yield Municipal Fund |
| (Percentages shown are based on Net Assets) |
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| New Jersey (concluded) | ||||
| New Jersey Health Care Facilities Financing Authority, RB: | ||||
| Pascack Valley Hospital Association, 6.63%, | ||||
| 7/01/36 (c)(d) | $ | 650 | $ | 6 |
| RWJ Healthcare Corp., Series B, 5.00%, 7/01/35 | 1,570 | 1,559,387 | ||
| New Jersey Health Care Facilities Financing Authority, | ||||
| Refunding RB: | ||||
| Barnabas Health, Series A, 5.63%, 7/01/37 | 1,000 | 1,066,520 | ||
| St. Joseph’s Healthcare System, 6.63%, 7/01/38 | 725 | 843,769 | ||
| Tobacco Settlement Financing Corp. New Jersey, | ||||
| Refunding RB, Series 1A, 4.50%, 6/01/23 | 2,955 | 2,767,742 | ||
| 17,975,006 | ||||
| New Mexico — 0.2% | ||||
| City of Farmington New Mexico, Refunding RB, Arizona | ||||
| Public Service, Series A, 4.70%, 5/01/24 | 500 | 540,045 | ||
| New York — 2.7% | ||||
| Chautauqua County Industrial Development Agency, RB, | ||||
| NRG Dunkirk Power Project, 5.88%, 4/01/42 | 1,615 | 1,779,568 | ||
| Genesee County Industrial Development Agency New York, | ||||
| Refunding RB, United Memorial Medical Center Project, | ||||
| 5.00%, 12/01/32 | 500 | 471,875 | ||
| New York City Industrial Development Agency, RB, AMT: | ||||
| American Airlines Inc., JFK International Airport, | ||||
| 8.00%, 8/01/28 (a)(c)(d) | 235 | 249,095 | ||
| British Airways Plc Project, 7.63%, 12/01/32 | 1,500 | 1,547,520 | ||
| JetBlue Airways Corp. Project, 5.13%, 5/15/30 | 1,750 | 1,607,638 | ||
| New York Liberty Development Corp., Refunding RB, | ||||
| Second Priority, Bank of America Tower at One Bryant | ||||
| Park Project, 6.38%, 7/15/49 | 375 | 421,845 | ||
| Westchester County Industrial Development Agency | ||||
| New York, RB, Kendal on Hudson Project, Series A, | ||||
| 6.38%, 1/01/24 | 1,500 | 1,509,090 | ||
| Yonkers Industrial Development Agency New York, RB, | ||||
| Sarah Lawrence College Project, Series A, 6.00%, | ||||
| 6/01/41 | 410 | 456,781 | ||
| 8,043,412 | ||||
| North Carolina — 2.2% | ||||
| City of Charlotte North Carolina, | ||||
| Refunding RB, Charlotte-Douglas | ||||
| International Airport, Special Facilities | ||||
| Revenue, US Airway, Inc., Project, AMT, 5.60%, | ||||
| 7/01/27 | 1,180 | 1,041,527 | ||
| North Carolina Capital Facilities Finance Agency, | ||||
| Refunding RB, High Point University, 4.38%, | ||||
| 5/01/34 (e) | 2,100 | 2,063,628 | ||
| North Carolina Medical Care Commission, Refunding RB: | ||||
| Carolina Village Project, 6.00%, 4/01/38 | 1,000 | 1,029,250 | ||
| First Mortgage, Galloway Ridge Project, Series A, | ||||
| 6.00%, 1/01/39 | 1,520 | 1,609,285 | ||
| First Mortgage, Whitestone, Series A, 7.75%, | ||||
| 3/01/41 | 830 | 924,030 | ||
| 6,667,720 | ||||
| Ohio — 1.2% | ||||
| County of Hamilton Ohio, RB, Christ Hospital Project, | ||||
| 5.00%, 6/01/42 | 1,120 | 1,124,301 | ||
| Southeastern Ohio Port Authority, Refunding RB, Memorial | ||||
| Health System, 6.00%, 12/01/42 (e) | 565 | 571,515 | ||
| State of Ohio, RB, Ford Motor Co. Project, AMT, 5.75%, | ||||
| 4/01/35 | 1,720 | 1,750,908 | ||
| 3,446,724 | ||||
| Oklahoma — 0.2% | ||||
| Oklahoma Development Finance Authority, Refunding RB, | ||||
| Inverness Village Community, 6.00%, 1/01/32 | 695 | 732,023 | ||
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| Pennsylvania — 3.1% | ||||
| Allegheny County Hospital Development Authority, | ||||
| Refunding RB, Health System, West Penn, Series A, | ||||
| 5.38%, 11/15/40 | $ | 2,140 | $ | 1,747,160 |
| City of Philadelphia, Pennsylvania, RB, Ninth Series, | ||||
| 5.25%, 8/01/40 | 1,000 | 1,046,200 | ||
| Cumberland County Municipal Authority, Refunding RB, | ||||
| Diakon Lutheran, 6.38%, 1/01/39 | 2,335 | 2,514,118 | ||
| Lancaster County Hospital Authority, Refunding RB, | ||||
| Brethren Village Project, Series A, 6.50%, 7/01/40 | 835 | 886,068 | ||
| Pennsylvania Economic Development Financing Authority, | ||||
| RB, US Airways Group, Series A, 7.50%, 5/01/20 | 1,100 | 1,219,614 | ||
| Philadelphia Hospitals & Higher Education Facilities | ||||
| Authority, RB, Temple University Health System, Series | ||||
| A, 5.63%, 7/01/42 (e) | 1,865 | 1,866,399 | ||
| 9,279,559 | ||||
| Puerto Rico — 4.1% | ||||
| Commonwealth of Puerto Rico, GO, Refunding, Public | ||||
| Improvement, Series A, 5.00%, 7/01/41 | 2,500 | 2,462,350 | ||
| Puerto Rico Electric Power Authority, RB: | ||||
| Series A, 5.00%, 7/01/42 | 1,965 | 1,965,000 | ||
| Series WW, 5.50%, 7/01/38 | 1,000 | 1,044,090 | ||
| Puerto Rico Public Buildings Authority, Refunding RB, | ||||
| Government Facilities, Series U, 5.25%, 7/01/42 | 2,210 | 2,190,198 | ||
| Puerto Rico Public Finance Corp., Refunding RB, Series B, | ||||
| 5.50%, 8/01/31 | 2,500 | 2,667,400 | ||
| Puerto Rico Sales Tax Financing Corp., RB, First | ||||
| Sub-Series A, 6.50%, 8/01/44 | 750 | 877,313 | ||
| Puerto Rico Sales Tax Financing Corp., Refunding RB, | ||||
| CAB, First Sub-Series C, 5.94%, 8/01/38 (b) | 5,000 | 1,085,800 | ||
| 12,292,151 | ||||
| Tennessee — 0.5% | ||||
| Tennessee Energy Acquisition Corp., RB, Series A, 5.25%, | ||||
| 9/01/26 | 1,250 | 1,364,275 | ||
| Texas — 11.4% | ||||
| Bexar County Health Facilities Development Corp., RB, | ||||
| Army Retirement Residence Project, 6.20%, 7/01/45 | 1,320 | 1,440,714 | ||
| Brazos River Authority, RB, TXU Electric, Series A, AMT, | ||||
| 8.25%, 10/01/30 | 750 | 84,383 | ||
| Central Texas Regional Mobility Authority, Refunding RB: | ||||
| Senior Lien, 5.75%, 1/01/25 | 250 | 278,040 | ||
| Senior Lien, 6.25%, 1/01/46 | 765 | 857,596 | ||
| CAB, 5.16%, 1/01/28 (b) | 3,000 | 1,361,610 | ||
| CAB, 5.22%, 1/01/29 (b) | 500 | 213,625 | ||
| CAB, 5.34%, 1/01/30 (b) | 1,330 | 528,954 | ||
| CAB, 5.42%, 1/01/31 (b) | 4,000 | 1,486,040 | ||
| City of Houston Texas, RB, Special Facilities: | ||||
| Continental Airlines Inc. Terminal Improvement | ||||
| Projects, AMT, 6.63%, 7/15/38 | 1,110 | 1,207,491 | ||
| Continental Airlines, Series E, AMT, 7.38%, 7/01/22 | 500 | 502,135 | ||
| Continental Airlines, Series E, AMT, 6.75%, 7/01/21 | 630 | 632,362 | ||
| City of Houston Texas, Refunding RB, Senior Lien, | ||||
| Series A, 5.50%, 7/01/39 | 120 | 132,761 | ||
| Clifton Higher Education Finance Corp., ERB, Idea Public | ||||
| Schools: | ||||
| 5.50%, 8/15/31 | 370 | 404,084 | ||
| 5.75%, 8/15/41 | 280 | 305,071 | ||
| Danbury Higher Education Authority Inc., RB, A.W. Brown | ||||
| Fellowship Charter, Series A (ACA), 5.00%, 8/15/16 (f) | 355 | 418,478 | ||
| Houston Higher Education Finance Corp., RB, Cosmos | ||||
| Foundation, Inc., Series A: | ||||
| 6.50%, 5/15/31 | 1,000 | 1,190,990 | ||
| 6.88%, 5/15/41 | 205 | 250,039 | ||
| Love Field Airport Modernization Corp., RB, Southwest | ||||
| Airlines Co. Project: | ||||
| AMT, 5.00%, 11/01/28 | 530 | 548,799 | ||
| 5.25%, 11/01/40 | 500 | 525,625 | ||
See Notes to Financial Statements.
| 18 | ANNUAL REPORT | JUNE 30, 2012 |
| Schedule of Investments (continued) | BlackRock High Yield Municipal Fund |
| (Percentages shown are based on Net Assets) |
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| Texas (concluded) | ||||
| Matagorda County Navigation District No. 1 Texas, | ||||
| Refunding RB, Central Power & Light Co. Project, | ||||
| Series A, 6.30%, 11/01/29 | $ | 290 | $ | 333,256 |
| North Texas Education Finance Corporation, ERB, Uplift | ||||
| Education, Series A, 5.13%, 12/01/42 | 1,255 | 1,305,953 | ||
| North Texas Tollway Authority, RB, CAB, Special Projects | ||||
| System, Series B, 5.57%, 9/01/37 (b) | 725 | 181,700 | ||
| North Texas Tollway Authority, Refunding RB, Second Tier | ||||
| System, Series F, 6.13%, 1/01/31 | 1,150 | 1,265,517 | ||
| Red River Health Facilities Development Corp., First MRB, | ||||
| Eden Home, Inc. Project, 7.25%, 12/15/42 | 1,330 | 1,385,581 | ||
| Tarrant County Cultural Education Facilities Finance | ||||
| Corp., RB: | ||||
| CC Young Memorial Home, 8.00%, 2/15/38 | 330 | 357,509 | ||
| Senior Living Center Project, 8.25%, 11/15/44 | 800 | 875,056 | ||
| Tarrant County Cultural Education Facilities Finance Corp., | ||||
| Refunding RB, Northwest Senior Housing, Edgemere | ||||
| Project, Series A, 6.00%, 11/15/36 | 1,500 | 1,567,215 | ||
| Texas Private Activity Bond Surface Transportation Corp., | ||||
| RB, Senior Lien: | ||||
| LBJ Infrastructure Group LLC, LBJ Freeway Managed | ||||
| Lanes Project, 7.00%, 6/30/40 | 2,320 | 2,778,571 | ||
| NTE Mobility Partners LLC, North Tarrant Express | ||||
| Managed Lanes Project, 6.88%, 12/31/39 | 1,740 | 2,051,617 | ||
| Texas State Public Finance Authority, Refunding ERB, KIPP | ||||
| Inc., Series A (ACA): | ||||
| 5.00%, 2/15/28 | 680 | 700,386 | ||
| 5.00%, 2/15/36 | 2,000 | 2,053,380 | ||
| Texas State Turnpike Authority, RB (AMBAC): | ||||
| CAB, 6.02%, 8/15/30 (b) | 5,200 | 1,775,280 | ||
| CAB, 6.08%, 8/15/35 (b) | 10,000 | 2,502,200 | ||
| First Tier, Series A, 5.00%, 8/15/42 | 2,500 | 2,499,925 | ||
| 34,001,943 | ||||
| Utah — 0.3% | ||||
| Utah State Charter School Finance Authority, RB, | ||||
| Navigator Pointe Academy, Series A, 5.63%, 7/15/40 | 1,000 | 1,008,650 | ||
| Vermont — 0.3% | ||||
| Vermont EDA, Refunding RB, Wake Robin Corp. Project, | ||||
| 5.40%, 5/01/33 | 930 | 953,771 | ||
| Virginia — 3.6% | ||||
| Albemarle County IDA, Refunding RB, | ||||
| Westminster-Canterbury, 5.00%, 1/01/31 | 500 | 507,445 | ||
| City of Norfolk Virginia, Refunding RB, Series B (AMBAC), | ||||
| 5.50%, 2/01/31 | 220 | 220,176 | ||
| Fairfax County EDA, Refunding RB, Goodwin House Inc.: | ||||
| 5.13%, 10/01/37 | 2,040 | 2,076,006 | ||
| 5.13%, 10/01/42 | 1,185 | 1,202,064 | ||
| Lexington IDA, Refunding MRB, Kendal at Lexington, | ||||
| Series A, 5.38%, 1/01/28 | 210 | 210,958 | ||
| Mosaic District Community Development Authority, | ||||
| Special Assessment Bonds, Series A: | ||||
| 6.63%, 3/01/26 | 515 | 569,065 | ||
| 6.88%, 3/01/36 | 450 | 496,746 | ||
| Virginia Small Business Financing Authority, RB, Senior | ||||
| Lien, Elizabeth River Crossings, LLC Project, AMT: | ||||
| 5.25%, 1/01/32 | 420 | 438,610 | ||
| 6.00%, 1/01/37 | 3,290 | 3,622,751 | ||
| 5.50%, 1/01/42 | 610 | 641,134 | ||
| Watkins Centre Community Development Authority, RB, | ||||
| 5.40%, 3/01/20 | 650 | 668,154 | ||
| 10,653,109 | ||||
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| Washington — 1.3% | ||||
| King County, Washington Public Hospital District No. 4, | ||||
| GO, Refunding, Snoqualmie Valley Hospital, 7.00%, | ||||
| 12/01/40 | $ | 545 | $ | 587,008 |
| Tobacco Settlement Authority of Washington, RB, | ||||
| Asset-Backed, 6.50%, 6/01/26 | 2,240 | 2,335,200 | ||
| Washington Healthcare Facilities Authority, RB, Swedish | ||||
| Health Services, Series A, 6.75%, 11/15/41 | 730 | 962,651 | ||
| 3,884,859 | ||||
| West Virginia — 0.6% | ||||
| City of Princeton West Virginia, Refunding RB, Princeton | ||||
| Community Hospital Project, 5.00%, 5/01/27 | 1,575 | 1,650,616 | ||
| Wisconsin — 0.1% | ||||
| Wisconsin Health & Educational Facilities Authority, | ||||
| Refunding RB, St. John’s Communities Inc., Series A: | ||||
| 7.25%, 9/15/29 | 75 | 84,907 | ||
| 7.63%, 9/15/39 | 145 | 165,764 | ||
| 250,671 | ||||
| Total Municipal Bonds — 82.2% | 244,794,676 | |||
| Municipal Bonds Transferred to | ||||
| Tender Option Bond Trusts (g) | ||||
| California — 0.8% | ||||
| Bay Area Toll Authority, Refunding RB, San Francisco Bay | ||||
| Area, Series F-1, 5.63%, 4/01/44 | 480 | 541,876 | ||
| City of Los Angeles Calfornia Department of Airports, | ||||
| Refunding RB, Senior, Los Angeles International Airport, | ||||
| Series A, 5.00%, 5/15/40 | 1,680 | 1,848,286 | ||
| 2,390,162 | ||||
| Colorado — 2.0% | ||||
| Colorado Health Facilities Authority, Refunding RB, Sisters | ||||
| of Leavenworth, Series A, 5.00%, 1/01/40 | 5,595 | 5,980,887 | ||
| District of Columbia — 0.4% | ||||
| District of Columbia Water & Sewer Authority, RB, | ||||
| Series A, 6.00%, 10/01/35 | 950 | 1,151,973 | ||
| Florida — 1.3% | ||||
| County of Miami-Dade Florida, RB, Water & Sewer | ||||
| System, 5.00%, 10/01/34 | 3,500 | 3,854,414 | ||
| Illinois — 2.2% | ||||
| City of Chicago Illinois, RB, General Airport, Third Lien, | ||||
| Series A (NPFGC), 5.00%, 1/01/33 | 3,495 | 3,688,972 | ||
| Illinois Finance Authority, RB, Carle Foundation, Series A | ||||
| (AGM), 6.00%, 8/15/41 | 2,480 | 2,809,394 | ||
| 6,498,366 | ||||
| Michigan — 0.9% | ||||
| Detroit Water and Sewerage Department, Refunding RB, | ||||
| Senior Lien, Series A: | ||||
| 5.00%, 7/01/32 | 963 | 975,359 | ||
| 5.25%, 7/01/39 | 1,662 | 1,702,079 | ||
| 2,677,438 | ||||
| New York — 8.5% | ||||
| Hudson New York Yards Infrastructure Corp., Senior RB, | ||||
| 5.75%, 2/15/47 | 1,720 | 1,975,421 | ||
| New York City Municipal Water Finance Authority, | ||||
| Refunding RB, Water & Sewer System, Second General | ||||
| Resolution: | ||||
| Series EE, 5.50%, 6/15/43 | 3,795 | 4,409,980 | ||
| Series HH, 5.00%, 6/15/31 | 3,015 | 3,449,597 | ||
| New York State Dormitory Authority, ERB, Series F, | ||||
| 5.00%, 3/15/35 | 3,405 | 3,701,826 | ||
See Notes to Financial Statements.
| ANNUAL REPORT | JUNE 30, 2012 | 19 |
| Schedule of Investments (concluded) | BlackRock High Yield Municipal Fund |
| (Percentages shown are based on Net Assets) |
| Municipal Bonds Transferred to | Par | |||
| Tender Option Bond Trusts (g) | (000) | Value | ||
| New York (concluded) | ||||
| New York State Liberty Development Corp., RB, World | ||||
| Trade Center Port Authority, 5.25%, 12/15/43 | $ | 7,725 | $ | 8,759,146 |
| New York State Liberty Development Corp., | ||||
| Refunding RB, 4 World Trade Center Project, | ||||
| 5.75%, 11/15/51 | 2,520 | 2,889,507 | ||
| 25,185,477 | ||||
| Ohio — 1.5% | ||||
| County of Allen Ohio, Refunding RB, Catholic | ||||
| Healthcare, Series A, 5.25%, 6/01/38 | 2,200 | 2,389,750 | ||
| State of Ohio, Refunding RB, Cleveland Clinic Health, | ||||
| Series A, 5.50%, 1/01/39 | 2,010 | 2,222,034 | ||
| 4,611,784 | ||||
| South Carolina — 0.6% | ||||
| South Carolina State Housing Finance & Development | ||||
| Authority, Refunding RB, Series B-1, 5.55%, 7/01/39 | 1,709 | 1,822,643 | ||
| Virginia — 0.9% | ||||
| Virginia Small Business Financing Authority, | ||||
| Refunding RB, Sentara Healthcare, 5.00%, 11/01/40 | 2,501 | 2,706,000 | ||
| Washington — 1.1% | ||||
| City of Bellingham Washington, RB, Water & Sewer, | ||||
| 5.00%, 8/01/40 | 2,999 | 3,333,777 | ||
| Wisconsin — 0.8% | ||||
| Wisconsin Health & Educational Facilities Authority, | ||||
| Refunding RB, Froedtert & Community Health Inc., | ||||
| 5.25%, 4/01/39 | 2,180 | 2,376,982 | ||
| Total Municipal Bonds Transferred to | ||||
| Tender Option Bond Trusts — 21.0% | 62,589,903 | |||
| Total Long-Term Investments | ||||
| (Cost — $287,874,285) — 103.2% | 307,384,579 | |||
| Short-Term Securities | Shares | |||
| FFI Institutional Tax-Exempt Fund, 0.01% (h)(i) | 25,189,057 | 25,189,057 | ||
| Total Short-Term Securities | ||||
| (Cost — $25,189,057) — 8.5% | 25,189,057 | |||
| Total Investments (Cost — $313,063,342) — 111.7% | 332,573,636 | |||
| Liabilities in Excess of Other Assets — (0.3)% | (976,663) | |||
| Liability for Trust Certificates, Including Interest | ||||
| Expense and Fees Payable — (11.4)% | (33,875,068) | |||
| Net Assets — 100.0% | $ | 297,721,905 | ||
| (a) | Variable rate security. Rate shown is as of report date. |
| (b) | Represents a zero-coupon bond. Rate shown reflects the current yield as of report date. |
| (c) | Issuer filed for bankruptcy and/or is in default of principal and/or interest payments. |
| (d) | Non-income producing security. |
| (e) | When-issued security. Unsettled when-issued transactions were as follows: |
| Unrealized | ||
| Counterparty | Value | Appreciation |
| BB&T AM Distributors, Inc. | $2,063,628 | $11,403 |
| Keybank NA | $ 571,515 | $ 8,136 |
| Morgan Stanley & Co., Inc. | $1,866,399 | $66,804 |
| Piper Jaffray | $1,265,886 | $ 886 |
| Robert W. Baird & Co., Inc. | $ 979,540 | $ 4,990 |
| (f) | 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. |
| (g) | Securities represent bonds transferred to a TOB in exchange for which the Fund’s 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. |
| (h) | Investments in companies considered to be an affiliate of the Fund during the year, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows: |
| Shares Held | Shares Held | |||
| at June 30, | Net | at June 30, | ||
| Affiliate | 2011 | Activity | 2012 | Income |
| FFI Institutional | ||||
| Tax-Exempt Fund | 1,739,592 | 23,449,465 | 25,189,057 | $2,388 |
| (i) | Represents the current yield as of report date. |
| • | 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: |
| • | Level 1 — unadjusted price quotations in active markets/exchanges for identical assets and liabilities |
| • | Level 2 — other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs) |
| • | Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Fund’s own assumptions used in determining the fair value of investments) |
Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments is based on the pricing transparency of the investment and is not necessarily an indication of the risks associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.
The following table summarizes the Fund’s investments categorized in the disclosure hierarchy as of June 30, 2012:
| Level 1 | Level 2 | Level 3 | Total | |
| Assets: | ||||
| Investments: | ||||
| Long Term | ||||
| Investments1 | — | $307,384,579 | — | $307,384,579 |
| Short-Term | ||||
| Securities | $25,189,057 | — | — | 25,189,057 |
| Total | $25,189,057 | $307,384,579 | — | $332,573,636 |
| 1 | See above Schedule of Investments for values in each state or political subdivision. |
Certain of the Fund’s liabilities are held at carrying amount, which approximates fair value for financial statement purposes. As of June 30, 2012, TOB trust certificates of $33,860,884 are categorized as Level 2 within the disclosure hierarchy.
There were no transfers between levels during the year ended June 30, 2012.
See Notes to Financial Statements.
| 20 | ANNUAL REPORT | JUNE 30, 2012 |
| Schedule of Investments June 30, 2012 | BlackRock National Municipal Fund |
| (Percentages shown are based on Net Assets) |
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| Alabama — 0.9% | ||||
| Alabama State Docks Department, Refunding RB, | ||||
| 6.00%, 10/01/40 | $ | 15,500 | $ | 17,601,955 |
| Birmingham Special Care Facilities Financing Authority, | ||||
| RB (AGC), 6.00%, 6/01/39 | 15,095 | 17,332,683 | ||
| Courtland IDB Alabama, RB, International Paper Co. | ||||
| Projects, Series A, 6.25%, 11/01/33 | 2,590 | 2,882,411 | ||
| Courtland IDB, Refunding RB, AMT: | ||||
| Champion International Corp. Project, 6.00%, | ||||
| 8/01/29 | 195 | 196,209 | ||
| International Paper Co., Series B, 6.25%, 8/01/25 | 750 | 784,732 | ||
| Prattville IDB, RB, Recovery Zone Facility, Series C, | ||||
| 6.25%, 11/01/33 | 3,380 | 3,761,602 | ||
| 42,559,592 | ||||
| Alaska — 0.2% | ||||
| Borough of Matanuska-Susitna Alaska, RB, Goose Creek | ||||
| Correctional Center (AGC): | ||||
| 6.00%, 9/01/28 | 2,000 | 2,393,060 | ||
| 6.00%, 9/01/32 | 5,250 | 6,155,783 | ||
| 8,548,843 | ||||
| Arizona — 0.3% | ||||
| Maricopa County & Phoenix IDA, Refunding RB, S/F, | ||||
| Series A-2, AMT (Ginnie Mae), 5.80%, 7/01/40 | 1,540 | 1,587,432 | ||
| Maricopa County IDA Arizona, RB, Arizona Charter | ||||
| Schools Project, Series A, 6.75%, 7/01/29 | 3,100 | 2,161,041 | ||
| Peoria Improvement District No. 8401 Arizona, Special | ||||
| Assessment Bonds, No. 8802, 7.20%, 1/01/13 | 510 | 518,971 | ||
| Pima County IDA, IDRB, Tucson Electric Power, Series A, | ||||
| 6.38%, 9/01/29 | 4,065 | 4,152,398 | ||
| Pinal County IDA Arizona, RB, San Manuel Facility | ||||
| Project, AMT, 6.25%, 6/01/26 | 500 | 490,915 | ||
| Vistancia Community Facilities District Arizona, GO: | ||||
| 6.75%, 7/15/22 | 3,000 | 3,008,190 | ||
| 5.75%, 7/15/24 | 2,125 | 2,255,581 | ||
| 14,174,528 | ||||
| California — 17.6% | ||||
| ABAG Finance Authority for Nonprofit Corps, Refunding | ||||
| RB, Sharp Healthcare, 6.25%, 8/01/39 | 9,000 | 10,541,610 | ||
| California Health Facilities Financing Authority, RB: | ||||
| Catholic Healthcare West, Series A, 6.00%, | ||||
| 7/01/34 | 5,100 | 5,363,058 | ||
| Catholic Healthcare West, Series J, 5.63%, | ||||
| 7/01/32 | 10,000 | 10,903,900 | ||
| Stanford Hospital and Clinics, Series A, 5.00%, | ||||
| 8/15/51 | 26,910 | 28,784,550 | ||
| Sutter Health, Series A, 5.25%, 11/15/46 | 20,000 | 20,892,600 | ||
| Sutter Health, Series B, 6.00%, 8/15/42 | 21,340 | 25,134,252 | ||
| California Health Facilities Financing Authority, | ||||
| Refunding RB: | ||||
| Catholic Healthcare West, Series A, 6.00%, | ||||
| 7/01/39 | 11,905 | 13,836,229 | ||
| Stanford Hospital, Series A-3, 5.50%, 11/15/40 | 10,645 | 12,324,781 | ||
| California State Public Works Board, RB, Various Capital | ||||
| Projects: | ||||
| Sub-Series A-1, 6.00%, 3/01/35 | 14,125 | 16,399,690 | ||
| Sub-Series I-1, 6.13%, 11/01/29 | 10,000 | 11,774,000 | ||
| Sub-Series I-1, 6.38%, 11/01/34 | 11,680 | 13,923,611 | ||
| Sub-Series I-1, 6.63%, 11/01/34 | 5,985 | 7,246,279 | ||
| California Statewide Communities Development | ||||
| Authority, RB: | ||||
| Health Facility, Memorial Health Services, Series A, | ||||
| 6.00%, 4/01/13 (a) | 9,880 | 10,311,657 | ||
| Kaiser Permanente, Series A, 5.00%, 4/01/42 | 50,000 | 53,378,000 | ||
| Kaiser Permanente, Series B, 5.25%, 3/01/45 | 10,000 | 10,471,100 | ||
| Sutter Health, Series A, 6.00%, 8/15/42 | 10,190 | 12,001,782 | ||
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| California (continued) | ||||
| California Statewide Communities Development | ||||
| Authority, Refunding RB, Catholic Healthcare West: | ||||
| Series B, 5.50%, 7/01/30 | $ | 2,970 | $ | 3,264,891 |
| Series E, 5.50%, 7/01/31 | 1,920 | 2,110,637 | ||
| Chula Vista Community Facilities District California, | ||||
| Special Tax Bonds, District No. 06-1, Eastlake-Woods, | ||||
| Improvement Area A, 6.15%, 9/01/26 | 3,215 | 3,254,577 | ||
| City of Chula Vista California, Refunding RB, San Diego | ||||
| Gas & Electric, Series A, 5.88%, 2/15/34 | 5,850 | 6,787,053 | ||
| City of Newport Beach California, RB, Hoag Memorial | ||||
| Hospital Presbyterian, 6.00%, 12/01/40 | 7,485 | 9,009,021 | ||
| City of San Jose California, RB: | ||||
| California Airport, Series A-1, AMT, | ||||
| 5.75%, 3/01/34 | 6,000 | 6,743,940 | ||
| Convention Center Expansion & Renovation Project, | ||||
| 6.50%, 5/01/36 | 1,510 | 1,723,393 | ||
| Convention Center Expansion & Renovation Project, | ||||
| 6.50%, 5/01/42 | 5,130 | 5,845,738 | ||
| City of San Jose California, Refunding RB, Series A, AMT | ||||
| (AMBAC), 5.50%, 3/01/32 | 6,325 | 6,678,378 | ||
| County of Sacramento California, RB, Subordinated and | ||||
| Passenger Facility Charges/Grant, Series C: | ||||
| 6.00%, 7/01/39 | 16,745 | 18,994,691 | ||
| 6.00%, 7/01/41 | 13,240 | 15,003,568 | ||
| Cucamonga Valley Water District, Refunding RB, | ||||
| 5.38%, 9/01/35 | 26,315 | 30,289,881 | ||
| Desert Community College District, GO, CAB, Election | ||||
| 2004, Series C (AGM), 5.62%, 8/01/46 (b) | 50,000 | 7,558,500 | ||
| East Bay Municipal Utility District, Refunding RB, | ||||
| Sub-Series A, 5.00%, 6/01/36 | 9,000 | 10,329,030 | ||
| Grossmont Healthcare District, GO, Election of 2006, | ||||
| Series B, 6.13%, 7/15/40 | 3,500 | 4,204,550 | ||
| Los Angeles Department of Water & Power, RB, Power | ||||
| System, Sub-Series A-1 (AGM), 5.00%, 7/01/35 | 40,000 | 43,593,600 | ||
| Los Angeles Department of Water & Power, Refunding | ||||
| RB, System, Series A, 5.25%, 7/01/39 | 40,000 | 45,711,600 | ||
| Los Angeles Municipal Improvement Corp., RB, Real | ||||
| Property, Series E: | ||||
| 6.00%, 9/01/34 | 4,540 | 5,167,746 | ||
| 6.00%, 9/01/39 | 9,450 | 10,794,829 | ||
| Metropolitan Water District of Southern California, RB, | ||||
| Series A, 5.00%, 7/01/37 | 10,000 | 11,082,400 | ||
| Modesto Irrigation District, COP, Capital Improvements, | ||||
| Series A, 6.00%, 10/01/39 | 11,755 | 13,274,804 | ||
| Orange County Sanitation District, COP, Series A, | ||||
| 5.00%, 2/01/35 | 10,000 | 11,080,200 | ||
| Orange County Water District, COP: | ||||
| Refunding, 5.00%, 8/15/39 | 15,000 | 16,577,250 | ||
| Series B, (NPFGC), 5.00%, 8/15/34 | 10,000 | 10,350,100 | ||
| San Diego Community College District California, GO, | ||||
| Election of 2002 (AGM), 5.00%, 5/01/15 (a) | 20,000 | 22,576,200 | ||
| San Francisco City & County Airports Commission, RB, | ||||
| Series E, 6.00%, 5/01/39 | 24,300 | 28,269,891 | ||
| San Francisco City & County Airports Commission, | ||||
| Refunding RB, Second Series 34E, AMT (AGM): | ||||
| 5.75%, 5/01/21 | 8,220 | 9,687,105 | ||
| 5.75%, 5/01/23 | 17,000 | 19,723,060 | ||
| San Francisco City & County Redevelopment Agency, | ||||
| Special Tax Bonds, Community Facilities District No. | ||||
| 6-Mission, Series A: | ||||
| 6.00%, 8/01/21 | 5,000 | 5,009,250 | ||
| 6.00%, 8/01/25 | 2,550 | 2,553,774 | ||
| San Francisco Uptown Parking Corp. California, RB, | ||||
| Union Square (NPFGC), 6.00%, 7/01/20 | 1,075 | 1,090,577 | ||
See Notes to Financial Statements.
| ANNUAL REPORT | JUNE 30, 2012 | 21 |
| Schedule of Investments (continued) | BlackRock National Municipal Fund |
| (Percentages shown are based on Net Assets) |
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| California (concluded) | ||||
| San Joaquin County Transportation Authority, RB, | ||||
| Limited Tax Measure K, Series A: | ||||
| 6.00%, 3/01/36 | $ | 12,830 | $ | 15,401,902 |
| 5.50%, 3/01/41 | 25,740 | 29,727,126 | ||
| San Jose Financing Authority, RB, Civic Center Project, | ||||
| Series B (AMBAC), 5.00%, 6/01/32 | 9,060 | 9,087,361 | ||
| San Juan Water District, COP, Series A, | ||||
| 6.00%, 2/01/39 | 10,000 | 11,542,000 | ||
| State of California, GO, Various Purpose: | ||||
| 6.50%, 4/01/33 | 40,000 | 48,365,200 | ||
| 6.00%, 4/01/35 | 4,910 | 5,732,523 | ||
| 6.00%, 4/01/38 | 35,665 | 41,381,386 | ||
| Tahoe-Truckee Unified School District, GO, School | ||||
| Facility Improvement District 2, Election of 2002, | ||||
| Series A (NPFGC), 5.25%, 8/01/13 (a) | 2,535 | 2,672,524 | ||
| Tuolumne Wind Project Authority, RB, Tuolumne Co. | ||||
| Project, Series A, 5.88%, 1/01/29 | 19,355 | 22,733,996 | ||
| University of California, RB, Series O, 5.75%, 5/15/34 | 1,450 | 1,709,898 | ||
| 839,981,249 | ||||
| Colorado — 0.3% | ||||
| Colorado Health Facilities Authority, RB, Catholic Health | ||||
| Initiatives, Series D, 6.25%, 10/01/33 | 4,315 | 5,047,514 | ||
| Colorado Housing & Finance Authority, RB, S/F | ||||
| Program, Senior Series B-3, 6.55%, 10/01/16 | 50 | 52,017 | ||
| Colorado Housing & Finance Authority, Refunding RB, | ||||
| S/F Program: | ||||
| Senior Series A-2, AMT, 7.50%, 4/01/31 | 90 | 94,084 | ||
| Senior Series A-3, 7.35%, 10/01/30 | 40 | 41,816 | ||
| Senior Series C-3 (FHA), 6.75%, 10/01/21 | 115 | 120,213 | ||
| Senior Series C-3, (FHA), 7.15%, 10/01/30 | 35 | 35,609 | ||
| Series B-2, AMT, 7.10%, 4/01/17 | 25 | 26,259 | ||
| Series B-2, AMT, 7.25%, 10/01/31 | 305 | 320,360 | ||
| Series C-2, AMT (FHA), 7.25%, 10/01/31 | 130 | 132,140 | ||
| Plaza Metropolitan District No. 1 Colorado, Tax | ||||
| Allocation Bonds, Public Improvement Fee, | ||||
| Tax Increment: | ||||
| 8.00%, 12/01/25 | 7,700 | 7,974,428 | ||
| Subordinate, 8.13%, 12/01/25 | 1,885 | 1,882,361 | ||
| 15,726,801 | ||||
| Connecticut — 0.1% | ||||
| Connecticut State Health & Educational Facility | ||||
| Authority, RB: | ||||
| Bridgeport Hospital, Series A, (NPFGC), 6.63%, | ||||
| 7/01/18 | 1,000 | 1,000,350 | ||
| Yale University, Series Z-1, 5.00%, 7/01/42 | 4,000 | 4,455,000 | ||
| 5,455,350 | ||||
| Delaware — 0.4% | ||||
| County of Sussex Delaware, RB, NRG Energy, Inc., | ||||
| Indian River Project, 6.00%, 10/01/40 | 15,500 | 17,238,170 | ||
| District of Columbia — 1.2% | ||||
| District of Columbia, RB, Series A, 5.50%, 12/01/30 | 20,530 | 25,035,719 | ||
| District of Columbia Water & Sewer Authority, RB, | ||||
| Series A: | ||||
| 6.00%, 10/01/35 | 12,630 | 15,313,117 | ||
| 5.50%, 10/01/39 | 6,475 | 7,452,013 | ||
| Metropolitan Washington Airports Authority, | ||||
| Refunding RB, Airport System, Series A, AMT, | ||||
| 5.00%, 10/01/31 (c) | 10,000 | 10,992,900 | ||
| 58,793,749 | ||||
| Florida — 4.4% | ||||
| Anthem Park Community Development District, Special | ||||
| Assessment Bonds, 5.80%, 5/01/36 (d)(e) | 1,755 | 1,244,032 | ||
| County of Escambia Florida, RB, International Paper Co. | ||||
| Projects, Series B, 6.25%, 11/01/33 | 7,500 | 8,346,750 | ||
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| Florida (concluded) | ||||
| County of Miami-Dade Florida, GO, Building Better | ||||
| Communities Program: | ||||
| Series B, 6.38%, 7/01/28 | $ | 9,300 | $ | 11,063,838 |
| Series B-1, 5.75%, 7/01/33 | 2,400 | 2,730,576 | ||
| Series B-1, 6.00%, 7/01/38 | 30,000 | 34,450,500 | ||
| County of Miami-Dade Florida, RB, Miami International | ||||
| Airport, Series A, AMT (AGC): | ||||
| 5.50%, 10/01/26 | 7,000 | 7,652,540 | ||
| 5.50%, 10/01/27 | 5,495 | 5,983,286 | ||
| County of Miami-Dade Florida, Refunding RB, Series C, | ||||
| 6.00%, 10/01/23 | 25,000 | 31,101,250 | ||
| Fiddlers Creek Community Development District No. 2, | ||||
| Special Assessment Bonds, Series A, | ||||
| 6.38%, 5/01/35 (d)(e) | 6,850 | 3,599,881 | ||
| Florida Housing Finance Corp., Refunding RB, AMT, | ||||
| Homeowner Mortgage, Series 1 (Ginnie Mae), | ||||
| 6.00%, 7/01/39 | 2,805 | 2,815,603 | ||
| Florida Ports Financing Commission, Refunding RB, | ||||
| State Transportation Trust Fund, Series B, AMT: | ||||
| 5.13%, 6/01/27 | 10,000 | 11,252,200 | ||
| 5.38%, 10/01/29 | 1,650 | 1,862,075 | ||
| Harbor Bay Community Development District Florida, | ||||
| Special Assessment Bonds, Series A, | ||||
| 7.00%, 5/01/33 | 935 | 935,318 | ||
| Highland Meadows Community Development District, | ||||
| Special Assessment Bonds, Series A, | ||||
| 5.50%, 5/01/36 (d)(e) | 1,090 | 435,597 | ||
| Highlands County Health Facilities Authority, RB, | ||||
| Adventist Health System/Sunbelt, Series B, | ||||
| 6.00%, 11/15/37 | 4,990 | 5,752,721 | ||
| Hillsborough County IDA, RB, National Gypsum Co., | ||||
| AMT: | ||||
| Series A, 7.13%, 4/01/30 | 6,000 | 6,003,720 | ||
| Series B, 7.13%, 4/01/30 | 7,750 | 7,751,085 | ||
| Jacksonville Electric Authority Florida, RB: | ||||
| Scherer 4 Project, Series A, 6.00%, 10/01/37 | 11,225 | 12,145,225 | ||
| Sub-Series A, 5.63%, 10/01/32 | 10,525 | 11,969,030 | ||
| Sub-Series A, 5.50%, 10/01/39 | 10,000 | 10,572,000 | ||
| Jacksonville Port Authority, RB, AMT (AGC), | ||||
| 6.00%, 11/01/38 | 8,240 | 8,381,975 | ||
| Mid-Bay Bridge Authority, RB, Series A, | ||||
| 7.25%, 10/01/40 | 6,000 | 7,318,680 | ||
| State of Florida, GO, Board of Education, Series A: | ||||
| 5.38%, 6/01/33 | 4,000 | 4,755,520 | ||
| 5.50%, 6/01/38 | 4,790 | 5,691,238 | ||
| State of Florida, RB, Board of Education Lottery | ||||
| Revenue, Series A, 5.75%, 7/01/28 | 3,890 | 4,483,264 | ||
| Sterling Hill Community Development District, | ||||
| Special Assessment Bonds, Refunding, Series B, | ||||
| 5.50%, 11/01/10 (d)(e) | 160 | 112,019 | ||
| Watergrass Community Development District, | ||||
| Special Assessment Bonds, Series B: | ||||
| 5.13%, 11/01/14 | 1,000 | 735,020 | ||
| 6.96%, 11/01/17 | 1,590 | 1,484,201 | ||
| 210,629,144 | ||||
| Georgia — 2.0% | ||||
| City of Atlanta Georgia, Refunding RB, General, Series C, | ||||
| 6.00%, 1/01/30 | 30,000 | 36,286,200 | ||
| DeKalb County Hospital Authority Georgia, | ||||
| Refunding RB, Dekalb Medical Center, Inc. Project, | ||||
| 6.13%, 9/01/40 | 4,285 | 4,728,712 | ||
| Forsyth County School District, GO, 6.70%, 7/01/12 | 230 | 230,071 | ||
| Fulton County Residential Care Facilities for the Elderly | ||||
| Authority, Refunding RB, Canterbury Court Project, | ||||
| Series A, 6.00%, 2/15/22 | 2,250 | 2,250,720 | ||
See Notes to Financial Statements.
| 22 | ANNUAL REPORT | JUNE 30, 2012 |
| Schedule of Investments (continued) | BlackRock National Municipal Fund |
| (Percentages shown are based on Net Assets) |
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| Georgia (concluded) | ||||
| Municipal Electric Authority of Georgia, RB, Series Y | ||||
| (AMBAC): | ||||
| 6.40%, 1/01/13 | $ | 2,810 | $ | 2,889,102 |
| 6.40%, 1/01/13 (f) | 195 | 200,649 | ||
| Municipal Electric Authority of Georgia, Refunding RB: | ||||
| Project One, Sub-Series D, 6.00%, 1/01/23 | 10,000 | 11,818,200 | ||
| Series EE, (AMBAC), 7.00%, 1/01/25 | 20,000 | 27,933,600 | ||
| Richmond County Development Authority, RB, Recovery | ||||
| Zone Facility, International Paper Co., Series B, | ||||
| 6.25%, 11/01/33 | 3,625 | 4,034,262 | ||
| Rockdale County Development Authority, RB, Visy Paper | ||||
| Project, Series A, AMT, 6.13%, 1/01/34 | 5,000 | 5,185,650 | ||
| 95,557,166 | ||||
| Illinois — 8.3% | ||||
| Bolingbrook Special Service Area No. 1, Special Tax | ||||
| Bonds, Forest City Project, 5.90%, 3/01/27 | 1,000 | 900,010 | ||
| Chicago Board of Education Illinois, GO, Series A, | ||||
| 5.50%, 12/01/39 | 29,205 | 33,254,273 | ||
| Chicago Transit Authority, RB, Federal Transit | ||||
| Administration Section 5309, Series A (AGC), | ||||
| 6.00%, 6/01/26 | 15,000 | 17,470,500 | ||
| City of Chicago Illinois, RB, O’Hare International Airport, | ||||
| General Third Lien: | ||||
| Series B-2, AMT (NPFGC), 6.00%, 1/01/27 | 17,690 | 18,755,999 | ||
| Series B-2, AMT (Syncora), 6.00%, 1/01/29 | 70,000 | 74,304,300 | ||
| Series C, 6.50%, 1/01/41 | 24,125 | 29,035,402 | ||
| City of Chicago Illinois Wastewater Transmission, RB, | ||||
| Series A (BHAC), 5.50%, 1/01/38 | 3,000 | 3,296,520 | ||
| County of Cook Illinois, RB, Navistar International Corp. | ||||
| Project, Recovery Zone Facility, 6.50%, 10/15/40 | 4,000 | 4,110,320 | ||
| Illinois Finance Authority, RB: | ||||
| Advocate Health Care Network, Series D, | ||||
| 6.50%, 11/01/38 | 6,920 | 8,035,158 | ||
| Carle Foundation, Series A, 6.00%, 8/15/41 | 2,450 | 2,720,529 | ||
| Carle Foundation, Series A, (AGM), | ||||
| 6.00%, 8/15/41 | 3,675 | 4,163,114 | ||
| Community Rehabilitation Providers Facilities, | ||||
| 6.50%, 7/01/12 (a) | 1,730 | 1,747,906 | ||
| Community Rehabilitation Providers Facilities, Series | ||||
| A, 6.50%, 7/01/22 | 1,410 | 1,285,187 | ||
| DePaul University, Series A, 6.13%, 10/01/40 | 11,675 | 13,463,610 | ||
| Navistar International, Recovery Zone, | ||||
| 6.50%, 10/15/40 | 11,100 | 11,406,138 | ||
| Northwestern Memorial Hospital, Series A, | ||||
| 6.00%, 8/15/39 | 29,545 | 34,147,225 | ||
| Northwestern Memorial Hospital, Series B, | ||||
| 6.00%, 8/15/39 | 1,200 | 1,260,696 | ||
| Roosevelt University Project, 6.50%, 4/01/39 | 8,000 | 8,756,560 | ||
| Rush University Medical Center Obligation Group, | ||||
| Series A, 7.25%, 11/01/30 | 6,900 | 8,699,175 | ||
| Rush University Medical Center Obligation Group, | ||||
| Series B, 7.25%, 11/01/30 | 5,280 | 6,656,760 | ||
| Rush University Medical Center, Series C, | ||||
| 6.38%, 11/01/29 | 2,860 | 3,507,990 | ||
| University of Chicago, Series B, 6.25%, 7/01/38 | 25,000 | 30,651,250 | ||
| Illinois Finance Authority, Refunding RB: | ||||
| Ascension Health Alliance, 5.00%, 11/15/42 | 29,675 | 32,095,886 | ||
| Central DuPage Health, Series B, | ||||
| 5.50%, 11/01/39 | 4,205 | 4,647,534 | ||
| OSF Healthcare System, Series A, | ||||
| 7.00%, 11/15/27 | 3,335 | 3,715,290 | ||
| OSF Healthcare System, Series A, | ||||
| 7.13%, 11/15/35 | 1,970 | 2,179,234 | ||
| OSF Healthcare System, Series A, 6.00%, 5/15/39 | 10,160 | 11,484,356 | ||
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| Illinois (concluded) | ||||
| Railsplitter Tobacco Settlement Authority, RB, | ||||
| 6.00%, 6/01/28 | $ | 13,765 | $ | 15,658,238 |
| Village of Hodgkins Illinois, RB, Metropolitan Biosolids | ||||
| Management LLC Project, AMT, 6.00%, 11/01/23 | 10,000 | 10,011,800 | ||
| Village of Wheeling Illinois, Tax Allocation Bonds, North | ||||
| Milwaukee/Lake-Cook TIF Project, 6.00%, 1/01/25 | 1,440 | 1,440,317 | ||
| 398,861,277 | ||||
| Indiana — 2.1% | ||||
| Indiana Finance Authority, RB, Trinity Health, Series A, | ||||
| 5.63%, 12/01/38 | 12,000 | 13,536,720 | ||
| Indiana Finance Authority, Refunding RB: | ||||
| Duke Energy Indiana Project, Series B, | ||||
| 6.00%, 8/01/39 | 11,000 | 12,660,670 | ||
| Improvement, U.S. Steel Corp., 6.00%, 12/01/26 | 12,715 | 13,597,802 | ||
| Parkview Health System, Series A, 5.75%, 5/01/31 | 1,570 | 1,785,153 | ||
| Indiana Municipal Power Agency, RB, Series B: | ||||
| 5.75%, 1/01/34 | 700 | 742,070 | ||
| 6.00%, 1/01/39 | 17,620 | 20,229,346 | ||
| Indianapolis Local Public Improvement Bond Bank, | ||||
| Refunding RB, Waterworks Project, Series A (AGC): | ||||
| 5.50%, 1/01/38 | 21,900 | 24,455,511 | ||
| 5.75%, 1/01/38 | 12,800 | 14,391,424 | ||
| 101,398,696 | ||||
| Iowa — 0.7% | ||||
| Iowa Finance Authority, RB, Series A (AGC), | ||||
| 5.63%, 8/15/37 | 5,600 | 6,247,416 | ||
| Iowa Student Loan Liquidity Corp., RB, AMT, Senior | ||||
| Series A-2: | ||||
| 5.40%, 12/01/24 | 15,000 | 16,672,950 | ||
| 5.50%, 12/01/25 | 10,000 | 11,124,300 | ||
| 34,044,666 | ||||
| Kansas — 0.0% | ||||
| Sedgwick & Shawnee Counties Kansas, RB, | ||||
| Mortgage-Backed Securities, Series A1, AMT (Ginnie | ||||
| Mae), 6.95%, 6/01/29 | 490 | 496,336 | ||
| Kentucky — 0.6% | ||||
| Kentucky Economic Development Finance Authority, RB, | ||||
| Owensboro Medical Health System, Series A, | ||||
| 6.38%, 6/01/40 | 21,200 | 24,433,636 | ||
| Kentucky State Property & Building Commission, | ||||
| Refunding RB, 5.50%, 11/01/28 | 2,650 | 3,019,887 | ||
| 27,453,523 | ||||
| Louisiana — 0.8% | ||||
| Louisiana HFA, RB, S/F, Series D-2, AMT (Ginnie Mae), | ||||
| 5.80%, 6/01/20 | 55 | 56,089 | ||
| Louisiana Local Government Environmental Facilities & | ||||
| Community Development Authority, RB, Series A-1, | ||||
| 6.50%, 11/01/35 | 16,835 | 19,284,324 | ||
| Louisiana Local Government Environmental Facilities & | ||||
| Community Development Authority, RB, Westlake | ||||
| Chemical Corp. Project: | ||||
| 6.75%, 11/01/32 | 5,000 | 5,581,000 | ||
| Series A, 6.50%, 8/01/29 | 11,070 | 12,849,835 | ||
| New Orleans Aviation Board Louisiana, GARB, | ||||
| Refunding, Restructuring, (AGC), 6.00%, 1/01/23 | 1,370 | 1,626,395 | ||
| 39,397,643 | ||||
| Maine — 0.4% | ||||
| Maine Health & Higher Educational Facilities Authority, | ||||
| RB, Maine General Medical Center: | ||||
| 7.50%, 7/01/32 | 12,365 | 15,055,995 | ||
| 6.95%, 7/01/41 | 2,130 | 2,465,028 | ||
| 17,521,023 | ||||
See Notes to Financial Statements.
| ANNUAL REPORT | JUNE 30, 2012 | 23 |
| Schedule of Investments (continued) | BlackRock National Municipal Fund |
| (Percentages shown are based on Net Assets) |
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| Maryland — 0.2% | ||||
| Maryland Health & Higher Educational Facilities | ||||
| Authority, RB, University of Maryland Medical System, | ||||
| Series B (NPFGC), 7.00%, 7/01/22 | $ | 4,205 | $ | 5,143,135 |
| Maryland Health & Higher Educational Facilities | ||||
| Authority, Refunding RB, Charlestown Community, | ||||
| 6.25%, 1/01/41 | 6,000 | 6,726,240 | ||
| 11,869,375 | ||||
| Massachusetts — 3.0% | ||||
| Massachusetts Development Finance Agency, RB: | ||||
| Foxborough Regional Charter School, Series A, | ||||
| 7.00%, 7/01/42 | 1,375 | 1,602,934 | ||
| Linden Ponds, Inc. Facility, Series A-1, | ||||
| 6.25%, 11/15/39 | 705 | 520,080 | ||
| Linden Ponds, Inc. Facility, Series A-2, | ||||
| 5.50%, 11/15/46 | 38 | 23,185 | ||
| Linden Ponds, Inc. Facility, Series B, | ||||
| 0.00%, 11/15/56 (b) | 187 | 966 | ||
| Massachusetts Development Finance Agency, | ||||
| Refunding RB, Harvard University, Series B-1, | ||||
| 5.00%, 10/15/40 | 46,015 | 52,726,288 | ||
| Massachusetts HFA, RB: | ||||
| Rental Mortgage, Series C, AMT (AGM), | ||||
| 5.60%, 1/01/45 | 4,000 | 4,003,360 | ||
| Series B, 7.00%, 12/01/38 | 4,585 | 5,237,171 | ||
| Massachusetts School Building Authority, RB: | ||||
| Senior Series B, 5.00%, 10/15/35 | 35,000 | 40,089,350 | ||
| Senior Series B, 5.00%, 10/15/41 | 29,105 | 32,837,425 | ||
| Series A (AGM), 5.00%, 8/15/30 | 5,000 | 5,519,600 | ||
| 142,560,359 | ||||
| Michigan — 1.4% | ||||
| Eastern Michigan University, Refunding RB, General | ||||
| (AMBAC), 6.00%, 6/01/24 | 415 | 416,577 | ||
| Lansing Board of Water & Light, RB, Series A, | ||||
| 5.50%, 7/01/41 | 6,485 | 7,517,477 | ||
| Michigan State Building Authority, Refunding RB, | ||||
| Facilities Program, Series I: | ||||
| 6.00%, 10/15/38 | 12,230 | 13,928,380 | ||
| 6.25%, 10/15/38 | 7,500 | 8,648,775 | ||
| Michigan State HDA, RB, Series C, AMT, | ||||
| 5.50%, 12/01/28 | 1,690 | 1,810,818 | ||
| Michigan Strategic Fund, Refunding RB, Detroit Edison | ||||
| Co. Project, AMT (Syncora), 5.50%, 6/01/30 | 7,345 | 7,438,722 | ||
| Royal Oak Hospital Finance Authority Michigan, | ||||
| Refunding RB, William Beaumont Hospital: | ||||
| 8.25%, 9/01/39 | 18,130 | 23,114,844 | ||
| Series W, 6.00%, 8/01/39 | 5,095 | 5,721,736 | ||
| 68,597,329 | ||||
| Minnesota — 0.6% | ||||
| City of Eden Prairie Minnesota, RB, Rolling Hills Project, | ||||
| Series A (Ginnie Mae), 6.15%, 8/20/31 | 1,000 | 1,051,790 | ||
| City of Minneapolis Minnesota, Refunding RB, | ||||
| Fairview Health Services: | ||||
| Series A, 6.75%, 11/15/32 | 5,870 | 7,055,799 | ||
| Series B, (AGC), 6.50%, 11/15/38 | 14,895 | 17,587,271 | ||
| Ramsey County Housing & Redevelopment Authority | ||||
| Minnesota, RB, Hanover Townhouses Project, AMT, | ||||
| 6.00%, 7/01/31 | 1,110 | 1,111,476 | ||
| 26,806,336 | ||||
| Mississippi — 0.1% | ||||
| County of Warren Mississippi, Refunding RB, | ||||
| International Paper Co. Project, Series B, AMT, | ||||
| 6.75%, 8/01/21 | 1,700 | 1,703,060 | ||
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| Mississippi (concluded) | ||||
| Harrison County Wastewater Management District, | ||||
| Refunding RB, Wastewater Treatment Facilities, | ||||
| Series A (NPFGC), 8.50%, 2/01/13 (f) | $ | 715 | $ | 747,754 |
| 2,450,814 | ||||
| Missouri — 0.1% | ||||
| City of Fenton Missouri, Tax Allocation Bonds, | ||||
| Refunding, Gravois Bluffs Redevelopment Project, | ||||
| 5.00%, 4/01/14 | 1,000 | 1,054,940 | ||
| City of St. Louis Missouri, RB, Lambert-St. Louis | ||||
| International, Series A-1, 6.25%, 7/01/29 | 1,175 | 1,343,613 | ||
| Kansas City IDA, Refunding RB, Downtown | ||||
| Redevelopment District, Series A, 5.50%, 9/01/29 | 2,000 | 2,306,320 | ||
| 4,704,873 | ||||
| Nevada — 2.6% | ||||
| City of Las Vegas Nevada, GO, Limited Tax, Performing | ||||
| Arts Center, 6.00%, 4/01/34 | 12,925 | 14,971,157 | ||
| City of Reno Nevada, Special Assessment Bonds, | ||||
| Somerset Parkway, 6.63%, 12/01/22 | 1,565 | 1,578,428 | ||
| Clark County Water Reclamation District, GO, Series B: | ||||
| 5.75%, 7/01/34 | 3,125 | 3,821,313 | ||
| 5.75%, 7/01/38 | 32,685 | 39,826,999 | ||
| County of Clark Nevada, RB, Series B, 5.75%, 7/01/42 | 51,700 | 58,157,847 | ||
| Nevada Housing Division, RB, Multi-Unit Housing, | ||||
| Series A, AMT (Freddie Mac), 6.30%, 4/01/32 | 4,950 | 4,957,870 | ||
| 123,313,614 | ||||
| New Hampshire — 0.4% | ||||
| New Hampshire Health & Education Facilities Authority, | ||||
| Refunding RB, Dartmouth-Hitchcock, | ||||
| 6.00%, 8/01/38 | 15,500 | 17,892,580 | ||
| New Jersey — 3.8% | ||||
| Cape May County Industrial Pollution Control Financing | ||||
| Authority, Refunding RB, Atlantic City Electric Co., | ||||
| Series A (NPFGC), 6.80%, 3/01/21 | 5,000 | 6,529,750 | ||
| Garden State Preservation Trust, RB, Election of 2005, | ||||
| Series A (AGM) (a): | ||||
| 5.80%, 11/01/15 | 3,125 | 3,658,625 | ||
| 5.80%, 11/01/15 | 8,310 | 9,729,016 | ||
| 5.80%, 11/01/15 | 4,340 | 5,081,098 | ||
| Monmouth County Improvement Authority, RB, | ||||
| Brookdale Community College Project, | ||||
| 6.00%, 8/01/38 | 3,600 | 4,484,664 | ||
| New Jersey EDA, RB, Motor Vehicle Surcharge, Series A | ||||
| (NPFGC), 5.25%, 7/01/33 | 26,500 | 28,426,020 | ||
| New Jersey EDA, Refunding RB, New Jersey American | ||||
| Water Co., Inc. Project, Series B, AMT, | ||||
| 5.60%, 11/01/34 | 8,270 | 9,270,505 | ||
| New Jersey Educational Facilities Authority, Refunding | ||||
| RB, University of Medicine & Dentistry, Series B: | ||||
| 7.13%, 12/01/23 | 2,870 | 3,556,934 | ||
| 7.50%, 12/01/32 | 9,200 | 11,330,076 | ||
| New Jersey Health Care Facilities Financing Authority, | ||||
| Refunding RB, AHS Hospital Corp., 6.00%, 7/01/41 | 24,235 | 28,613,537 | ||
| New Jersey Higher Education Student Assistance | ||||
| Authority, Refunding RB, Series 1, AMT: | ||||
| 5.50%, 12/01/25 | 950 | 1,058,082 | ||
| 5.75%, 12/01/27 | 500 | 558,210 | ||
| 5.75%, 12/01/28 | 450 | 498,258 | ||
| New Jersey State Housing & Mortgage Finance Agency, | ||||
| RB, Series AA: | ||||
| 6.38%, 10/01/28 | 1,655 | 1,851,300 | ||
| 6.50%, 10/01/38 | 2,520 | 2,700,079 | ||
| New Jersey State Housing & Mortgage Finance Agency, | ||||
| Refunding RB, Series B (AGM), 6.25%, 11/01/26 | 640 | 645,254 | ||
See Notes to Financial Statements.
| 24 | ANNUAL REPORT | JUNE 30, 2012 |
| Schedule of Investments (continued) | BlackRock National Municipal Fund |
| (Percentages shown are based on Net Assets) |
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| New Jersey (concluded) | ||||
| New Jersey State Turnpike Authority, RB, | ||||
| Series C (AGM), 5.00%, 1/01/30 | $ | 13,500 | $ | 14,654,115 |
| New Jersey Transportation Trust Fund Authority, RB, | ||||
| Transportation System: | ||||
| Series A, 5.13%, 6/15/28 | 5,000 | 5,740,450 | ||
| Series A, 5.13%, 6/15/29 | 12,875 | 14,706,211 | ||
| Series A, 5.88%, 12/15/38 | 4,255 | 4,877,124 | ||
| Series B, 5.25%, 6/15/36 | 19,510 | 22,004,549 | ||
| 179,973,857 | ||||
| New Mexico — 0.0% | ||||
| County of Santa Fe New Mexico, RB (AGM), | ||||
| 6.00%, 2/01/27 | 250 | 312,012 | ||
| New Mexico Mortgage Finance Authority, RB, S/F | ||||
| Mortgage Program, Series D, AMT (Fannie Mae), | ||||
| 6.15%, 7/01/35 | 1,195 | 1,271,755 | ||
| 1,583,767 | ||||
| New York — 6.7% | ||||
| City of New York New York, GO, Series E-1, | ||||
| 6.25%, 10/15/28 | 10,100 | 12,599,447 | ||
| City of Niagara Falls New York, GO, Public Improvement | ||||
| (NPFGC), 6.90%, 3/01/24 | 5 | 5,012 | ||
| Long Island Power Authority, Refunding RB: | ||||
| General, Series A, 5.70%, 4/01/30 | 4,510 | 5,311,562 | ||
| Series A, 6.00%, 5/01/33 | 49,775 | 59,180,484 | ||
| Metropolitan Transportation Authority, RB, Series C, | ||||
| 6.50%, 11/15/28 | 21,870 | 27,991,194 | ||
| New York City Housing Development Corp., RB, | ||||
| Series M: | ||||
| 6.50%, 11/01/28 | 4,300 | 4,901,527 | ||
| 6.88%, 11/01/38 | 7,785 | 8,840,179 | ||
| New York City Industrial Development Agency, RB, | ||||
| Special Needs Facilities Pooled Program, Series C-1, | ||||
| 6.00%, 7/01/12 | 530 | 530,048 | ||
| New York State Dormitory Authority, ERB, Series B, | ||||
| 5.75%, 3/15/36 | 17,250 | 20,389,327 | ||
| New York State Dormitory Authority, RB, Columbia | ||||
| University, 5.00%, 10/01/41 | 43,000 | 49,220,810 | ||
| New York State Dormitory Authority, Refunding RB, | ||||
| State University Educational Facilities, Series A, | ||||
| 7.50%, 5/15/13 | 3,000 | 3,189,240 | ||
| New York State Environmental Facilities Corp., | ||||
| Refunding RB, Revolving Funds, New York City | ||||
| Municipal Water Project, Series K, 5.00%, 6/15/28 | 30,000 | 30,110,100 | ||
| New York State Thruway Authority, RB, Series I, | ||||
| 5.00%, 1/01/42 (c) | 28,105 | 30,494,487 | ||
| New York State Thruway Authority, Refunding RB, | ||||
| Series G (AGM), 5.00%, 1/01/32 | 10,000 | 11,020,200 | ||
| New York State Urban Development Corp., RB, | ||||
| Series A-1 (NPFGC), 5.25%, 3/15/14 (a) | 10,050 | 10,666,869 | ||
| Port Authority of New York & New Jersey, Refunding RB, | ||||
| Consolidated, 152nd Series, AMT, 5.75%, 11/01/30 | 3,250 | 3,798,047 | ||
| Sales Tax Asset Receivable Corp., Refunding RB, | ||||
| Series A: | ||||
| (AMBAC) 5.00%, 10/15/32 | 13,000 | 14,167,400 | ||
| (NPFGC) 5.00%, 10/15/20 | 10,000 | 11,009,000 | ||
| Triborough Bridge & Tunnel Authority, RB, General, | ||||
| Series A-2, 5.38%, 11/15/38 | 3,150 | 3,680,964 | ||
| Westchester County Industrial Development Agency | ||||
| New York, RB: | ||||
| Kendal on Hudson Project, Series A, | ||||
| 6.50%, 1/01/13 (a) | 8,095 | 8,352,583 | ||
| Kendal on Hudson Project, Series A, | ||||
| 6.38%, 1/01/24 | 2,500 | 2,515,150 | ||
| Special Needs Facilities Pooled Program, | ||||
| Series E-1, 6.00%, 7/01/12 | 150 | 150,014 | ||
| 318,123,644 | ||||
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| North Carolina — 1.1% | ||||
| Columbus County Industrial Facilities & Pollution Control | ||||
| Financing Authority North Carolina, RB, International | ||||
| Paper Co. Projects, Series B, 6.25%, 11/01/33 | $ | 3,000 | $ | 3,338,700 |
| North Carolina Eastern Municipal Power Agency, | ||||
| Refunding RB, Series B, 5.00%, 1/01/26 | 4,230 | 4,708,117 | ||
| North Carolina Medical Care Commission, RB: | ||||
| Duke University Health System, Series A, | ||||
| 5.00%, 6/01/42 | 33,150 | 35,983,331 | ||
| First Mortgage, Forest at Duke Project, | ||||
| 6.38%, 9/01/12 (a) | 1,000 | 1,010,590 | ||
| First Mortgage, Givens Estates Project, Series A, | ||||
| 6.50%, 7/01/13 (a) | 2,500 | 2,682,550 | ||
| North Carolina Medical Care Commission, | ||||
| Refunding RB, Mission Health Combined Group, | ||||
| 5.00%, 10/01/36 | 3,670 | 3,883,190 | ||
| 51,606,478 | ||||
| North Dakota — 0.0% | ||||
| North Dakota State HFA, RB, Housing Finance Program, | ||||
| Series C, AMT (AMBAC), 5.30%, 7/01/22 | 1,635 | 1,635,392 | ||
| Ohio — 0.8% | ||||
| County of Lucas Ohio, RB, Promedica Healthcare, | ||||
| Obligated Group, Series A, 6.00%, 11/15/41 | 400 | 469,548 | ||
| County of Lucas Ohio, Refunding RB, Promedica | ||||
| Healthcare, Series A: | ||||
| 5.75%, 11/15/31 | 500 | 591,010 | ||
| 6.50%, 11/15/37 | 12,035 | 14,737,580 | ||
| County of Montgomery Ohio, Refunding RB, Catholic | ||||
| Healthcare, Series A, 5.50%, 5/01/34 | 10,000 | 11,206,600 | ||
| Ohio Higher Educational Facility Commission, Refunding | ||||
| RB, Cleveland Clinic Health, 5.00%, 1/01/34 | 4,000 | 4,457,640 | ||
| State of Ohio, Refunding RB, Cleveland Clinic Health, | ||||
| Series A, 5.50%, 1/01/39 | 4,000 | 4,422,640 | ||
| 35,885,018 | ||||
| Oregon — 0.0% | ||||
| City of Portland Oregon, HRB, Lovejoy Station | ||||
| Apartments Project, AMT (NPFGC), 5.90%, 7/01/23 | 455 | 455,860 | ||
| Pennsylvania — 1.7% | ||||
| Allegheny County Hospital Development Authority, | ||||
| Refunding RB, Health System, West Penn, Series A, | ||||
| 5.38%, 11/15/40 | 5,330 | 4,351,572 | ||
| Allegheny County IDA, RB: | ||||
| Environmental Improvement, 6.75%, 11/01/24 | 5,785 | 6,452,647 | ||
| Environmental Improvement, 6.88%, 5/01/30 | 5,000 | 5,615,250 | ||
| U.S. Steel Corp. Project, 6.75%, 12/01/27 | 5,000 | 5,626,800 | ||
| City of Philadelphia Pennsylvania Gas Works, RB, 12th | ||||
| Series B (NPFGC), 7.00%, 5/15/20 (f) | 3,940 | 4,920,981 | ||
| Cumberland County Municipal Authority, Refunding RB, | ||||
| Diakon Lutheran: | ||||
| 6.38%, 1/01/39 | 10,575 | 11,386,208 | ||
| 6.50%, 1/01/39 | 2,245 | 2,293,896 | ||
| Dauphin County General Authority, Refunding RB, | ||||
| Pinnacle Health System Project, Series A: | ||||
| 6.00%, 6/01/29 | 12,360 | 13,890,663 | ||
| 6.00%, 6/01/36 | 2,870 | 3,193,822 | ||
| Delaware County IDA Pennsylvania, Refunding RB, | ||||
| Resource Recovery Facility, Series A, | ||||
| 6.10%, 7/01/13 | 1,970 | 1,977,801 | ||
| Lancaster County Hospital Authority, RB, Brethren | ||||
| Village Project, Series A, 6.25%, 7/01/26 | 1,160 | 1,240,434 | ||
| Pennsylvania Economic Development Financing | ||||
| Authority, RB: | ||||
| Allegheny Energy Supply Co., 7.00%, 7/15/39 | 12,000 | 14,078,160 | ||
| American Water Co. Project, 6.20%, 4/01/39 | 3,475 | 4,019,081 | ||
See Notes to Financial Statements.
| ANNUAL REPORT | JUNE 30, 2012 | 25 |
| Schedule of Investments (continued) | BlackRock National Municipal Fund |
| (Percentages shown are based on Net Assets) |
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| Pennsylvania (concluded) | ||||
| Pennsylvania Turnpike Commission, RB, Subordinate, | ||||
| Special Motor License Fund, 6.00%, 12/01/36 | $ | 950 | $ | 1,145,776 |
| Philadelphia Authority for Industrial Development, RB, | ||||
| Commercial Development, AMT, 7.75%, 12/01/17 | 1,265 | 1,266,796 | ||
| 81,459,887 | ||||
| Puerto Rico — 1.5% | ||||
| Puerto Rico Industrial Tourist Educational Medical & | ||||
| Environmental Control Facilities Financing Authority, | ||||
| RB, Hospital De La Concepcion, Series A, | ||||
| 6.13%, 11/15/25 | 4,000 | 4,015,320 | ||
| Puerto Rico Sales Tax Financing Corp., RB: | ||||
| CAB, Senior Series C, 5.58%, 8/01/39 (b) | 40,000 | 9,007,200 | ||
| First Sub-Series A, 6.38%, 8/01/39 | 22,100 | 25,651,249 | ||
| First Sub-Series A, 6.50%, 8/01/44 | 30,125 | 35,238,719 | ||
| 73,912,488 | ||||
| Rhode Island — 0.3% | ||||
| Rhode Island Health & Educational Building Corp., | ||||
| Refunding RB, Public Schools Financing Program, | ||||
| Series E (AGC), 6.00%, 5/15/29 | 13,320 | 15,121,397 | ||
| South Carolina — 0.4% | ||||
| County of Richland South Carolina, Refunding RB, | ||||
| International Paper Co. Project, AMT, | ||||
| 6.10%, 4/01/23 | 3,000 | 3,119,580 | ||
| Medical University Hospital Authority, Refunding RB, | ||||
| Series A (a): | ||||
| 6.38%, 8/15/12 | 5,400 | 5,442,390 | ||
| 6.50%, 8/15/12 | 2,450 | 2,469,625 | ||
| South Carolina Jobs-EDA, Refunding RB, Palmetto | ||||
| Health, Series A: | ||||
| 6.25%, 8/01/34 | 1,245 | 1,466,000 | ||
| (AGM), 6.50%, 8/01/39 | 2,740 | 3,241,502 | ||
| South Carolina State Public Service Authority, | ||||
| Refunding RB, Santee Cooper, Series A, | ||||
| 5.50%, 1/01/38 | 2,300 | 2,627,313 | ||
| 18,366,410 | ||||
| Tennessee — 0.7% | ||||
| Rutherford County Health & Educational Facilities | ||||
| Board, Refunding RB, Ascension Health Alliance, | ||||
| Series C, 5.00%, 11/15/47 | 23,740 | 26,165,753 | ||
| Shelby County Health Educational & Housing Facilities | ||||
| Board, Refunding RB, Methodist Healthcare (a): | ||||
| 6.50%, 9/01/12 | 2,920 | 2,951,770 | ||
| 6.50%, 9/01/12 | 4,380 | 4,427,654 | ||
| 33,545,177 | ||||
| Texas — 8.4% | ||||
| Bexar County Health Facilities Development Corp. Texas, | ||||
| Refunding RB, Army Retirement Residence Project, | ||||
| 6.30%, 7/01/12 (a) | 1,750 | 1,768,078 | ||
| Brazos River Harbor Navigation District, Refunding RB, | ||||
| Dow Chemical Co. Project, Series A7, AMT, | ||||
| 6.63%, 5/15/33 | 7,040 | 7,123,846 | ||
| City of Houston Texas, Refunding RB, Combined, First | ||||
| Lien, Series A (AGC), 6.00%, 11/15/35 | 32,350 | 38,806,736 | ||
| City of Houston Texas Airport System Revenue, | ||||
| Refunding RB, Sub Lien, Series B (AGM): | ||||
| 5.00%, 7/01/12 (a) | 9,690 | 9,692,519 | ||
| 5.00%, 7/01/32 | 2,290 | 2,292,725 | ||
| Clear Creek ISD, Refunding GO, School Building | ||||
| (PSF-GTD), 5.00%, 2/15/33 | 20,000 | 22,460,000 | ||
| County of Harris Texas, Refunding RB, Toll Road, Senior | ||||
| Lien (AGM), 5.00%, 8/15/30 | 10,000 | 10,046,100 | ||
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| Texas (concluded) | ||||
| Dallas-Fort Worth International Airport Facilities | ||||
| Improvement Corp., RB, Series A, AMT (NPFGC): | ||||
| 6.00%, 11/01/24 | $ | 9,220 | $ | 9,263,518 |
| 6.00%, 11/01/28 | 9,480 | 9,517,636 | ||
| Frisco ISD, Refunding GO, School Building (PSF-GTD), | ||||
| 5.00%, 8/15/40 | 25,000 | 28,325,000 | ||
| Gulf Coast Waste Disposal Authority, Refunding RB, | ||||
| Series A, AMT, 6.10%, 8/01/24 | 4,025 | 4,039,007 | ||
| Harris County Flood Control District, Refunding GO, | ||||
| Series A, 5.00%, 10/01/31 | 17,275 | 19,401,207 | ||
| Harris County Health Facilities Development Corp., | ||||
| Refunding RB, Memorial Hermann Healthcare System, | ||||
| Series B: | ||||
| 7.13%, 12/01/31 | 1,500 | 1,802,625 | ||
| 7.25%, 12/01/35 | 4,450 | 5,334,260 | ||
| Matagorda County Navigation District No. 1 Texas, | ||||
| Refunding RB, Central Power & Light Co. Project, | ||||
| Series A, 6.30%, 11/01/29 | 9,775 | 11,233,039 | ||
| North Texas Tollway Authority, RB, Special Projects | ||||
| System, Series A, 6.00%, 9/01/41 | 4,815 | 5,785,704 | ||
| North Texas Tollway Authority, Refunding RB: | ||||
| First Tier System, 6.00%, 1/01/34 | 11,490 | 13,412,507 | ||
| First Tier System (NPFGC), 5.75%, 1/01/40 | 9,870 | 10,900,527 | ||
| First Tier System, Series A, 6.00%, 1/01/28 | 1,000 | 1,150,600 | ||
| First Tier System, Series B (NPFGC), | ||||
| 5.75%, 1/01/40 | 7,700 | 8,503,957 | ||
| First Tier System, Series K-2 (AGC), | ||||
| 6.00%, 1/01/38 | 2,225 | 2,536,411 | ||
| Second Tier System, Series F, 6.13%, 1/01/31 | 25,615 | 28,188,027 | ||
| Port of Bay City Authority Texas, RB, Hoechst Celanese | ||||
| Corp. Project, AMT, 6.50%, 5/01/26 | 4,000 | 4,001,360 | ||
| State of Texas, Refunding GO, Water Financial | ||||
| Assistance, 5.75%, 8/01/22 | 3,445 | 3,459,848 | ||
| Tarrant County Cultural Education Facilities Finance | ||||
| Corp., RB, Scott & White Healthcare, | ||||
| 6.00%, 8/15/45 | 50,000 | 58,044,500 | ||
| Tarrant County Cultural Education Facilities Finance | ||||
| Corp., Refunding RB, Northwest Senior Housing, | ||||
| Edgemere Project, Series A, 6.00%, 11/15/26 | 2,200 | 2,311,848 | ||
| Texas Department of Housing & Community Affairs, | ||||
| MRB, Series A, AMT (NPFGC): | ||||
| 5.45%, 9/01/23 | 1,700 | 1,702,499 | ||
| 5.50%, 3/01/26 | 2,220 | 2,222,731 | ||
| Texas Private Activity Bond Surface Transportation Corp., | ||||
| RB, Senior Lien: | ||||
| LBJ Infrastructure Group LLC, LBJ Freeway Managed | ||||
| Lanes Project, 7.00%, 6/30/40 | 25,425 | 30,450,505 | ||
| NTE Mobility Partners LLC, North Tarrant Express | ||||
| Managed Lanes Project, 6.88%, 12/31/39 | 23,000 | 27,119,070 | ||
| University of Texas System, Refunding RB, Financing | ||||
| System, Series B, 5.00%, 8/15/43 | 20,000 | 22,980,400 | ||
| 403,876,790 | ||||
| Utah — 0.0% | ||||
| City of Salt Lake City Utah, Refunding RB, IHC Hospital, | ||||
| Inc., Series A, 8.13%, 5/15/15 (f) | 35 | 38,907 | ||
| Virginia — 1.0% | ||||
| Virginia Small Business Financing Authority, RB, Senior | ||||
| Lien, Elizabeth River Crossings LLC Project, AMT, | ||||
| 6.00%, 1/01/37 | 13,085 | 14,408,417 | ||
| Winchester IDA, Refunding RB, Valley Health (BHAC) | ||||
| (AMBAC), 5.25%, 1/01/37 | 31,970 | 35,154,851 | ||
| 49,563,268 | ||||
See Notes to Financial Statements.
| 26 | ANNUAL REPORT | JUNE 30, 2012 |
| Schedule of Investments (continued) | BlackRock National Municipal Fund |
| (Percentages shown are based on Net Assets) |
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| Washington — 1.7% | ||||
| Chelan County Public Utility District No. 1, RB, | ||||
| Chelan Hydro System, Series A, AMT (AMBAC), | ||||
| 5.45%, 7/01/12 (a) | $ | 10,710 | $ | 10,712,892 |
| Seattle Housing Authority Washington, RB: | ||||
| Newholly Project, AMT, 6.25%, 12/01/35 | 2,750 | 2,635,847 | ||
| Replacement Housing Projects, 6.13%, 12/01/32 | 4,260 | 4,268,392 | ||
| University of Washington, Refunding RB, Series A, | ||||
| 5.00%, 7/01/41 | 25,000 | 28,414,000 | ||
| Washington Healthcare Facilities Authority, RB: | ||||
| MultiCare Health System, Series B, (AGC), | ||||
| 6.00%, 8/15/39 | 2,000 | 2,271,580 | ||
| Swedish Health Services, Series A, | ||||
| 6.75%, 11/15/41 | 17,500 | 23,077,250 | ||
| Washington Healthcare Facilities Authority, | ||||
| Refunding RB, Catholic Health Initiatives, Series D, | ||||
| 6.38%, 10/01/36 | 10,000 | 11,795,800 | ||
| 83,175,761 | ||||
| Wisconsin — 1.6% | ||||
| City of Superior Wisconsin, Refunding RB, | ||||
| Midwest Energy Resources, Series E (NPFGC), | ||||
| 6.90%, 8/01/21 | 7,000 | 9,043,720 | ||
| State of Wisconsin, Refunding RB, Series A, | ||||
| 6.00%, 5/01/36 | 11,000 | 13,305,270 | ||
| Wisconsin Health & Educational Facilities Authority, RB: | ||||
| Ascension Health Alliance, Series D, | ||||
| 5.00%, 11/15/41 | 45,485 | 49,047,840 | ||
| SynergyHealth, Inc., 6.00%, 11/15/23 | 4,755 | 4,971,590 | ||
| Wisconsin Housing & EDA, RB, Series C, AMT, | ||||
| 6.00%, 9/01/36 | 175 | 182,660 | ||
| 76,551,080 | ||||
| Total Municipal Bonds — 78.4% | 3,750,908,217 | |||
| Municipal Bonds Transferred to | ||||
| Tender Option Bond Trusts (g) | ||||
| Arizona — 4.5% | ||||
| City of Mesa Arizona, RB, Utility System, | ||||
| 5.00%, 7/01/35 | 30,000 | 33,524,100 | ||
| Salt River Project Agricultural Improvement & Power | ||||
| District, RB, Series A: | ||||
| 5.00%, 1/01/37 | 98,935 | 107,938,056 | ||
| 5.00%, 1/01/38 | 54,016 | 59,288,381 | ||
| Salt River Project Agricultural Improvement & Power | ||||
| District, Refunding RB, Series A, 5.00%, 1/01/35 | 13,700 | 14,967,935 | ||
| 215,718,472 | ||||
| Arkansas — 0.5% | ||||
| University of Arkansas, RB, Various Facilities, UAMS | ||||
| Campus (NPFGC), 5.00%, 3/01/36 | 21,290 | 22,926,562 | ||
| California — 4.3% | ||||
| Anaheim Public Financing Authority, RB, Distribution | ||||
| System, Second Lien (BHAC), 5.00%, 10/01/34 | 10,995 | 11,404,745 | ||
| County of Orange California, ARB, Series B, | ||||
| 5.25%, 7/01/34 | 13,045 | 14,197,245 | ||
| Los Angeles Department of Water & Power, RB, Power | ||||
| System, Sub-Series A-1 (AMBAC), 5.00%, 7/01/37 | 27,500 | 30,119,375 | ||
| Metropolitan Water District of Southern California, RB, | ||||
| Series A: | ||||
| 5.00%, 1/01/39 | 10,000 | 10,981,800 | ||
| (AGM) 5.00%, 7/01/30 | 6,827 | 7,585,071 | ||
| Metropolitan Water District of Southern California, | ||||
| Refunding RB: | ||||
| Series B, 5.00%, 7/01/35 | 13,168 | 14,631,129 | ||
| Series C, 5.00%, 7/01/35 | 13,375 | 15,017,792 | ||
| Municipal Bonds Transferred to | Par | |||
| Tender Option Bond Trusts (g) | (000) | Value | ||
| California (concluded) | ||||
| San Diego Community College District California, GO, | ||||
| Election of 2006 (AGM), 5.00%, 8/01/32 | $ | 18,000 | $ | 19,811,880 |
| San Diego County Water Authority, COP, Refunding, | ||||
| Series A (AGM), 5.00%, 5/01/33 | 4,500 | 4,925,565 | ||
| San Diego Public Facilities Financing Authority, | ||||
| Refunding RB, Series B, 5.38%, 8/01/34 | 15,000 | 17,321,400 | ||
| San Francisco City & County Public Utilities | ||||
| Commission, Refunding RB, Series A, | ||||
| 5.13%, 11/01/39 | 23,000 | 25,580,370 | ||
| Sequoia Union High School District California, | ||||
| Refunding GO, Election of 2004, Series B (AGM), | ||||
| 5.50%, 7/01/35 | 10,055 | 10,893,974 | ||
| University of California, RB, Series O, 5.25%, 5/15/39 | 20,695 | 23,308,262 | ||
| 205,778,608 | ||||
| Colorado — 0.0% | ||||
| Colorado Health Facilities Authority, Refunding RB, | ||||
| Catholic Healthcare, Series A, 5.50%, 7/01/34 | 1,580 | 1,775,437 | ||
| Florida — 2.9% | ||||
| City of Tallahassee Florida, RB, Energy System (NPFGC), | ||||
| 5.00%, 10/01/37 | 10,000 | 10,664,400 | ||
| Jacksonville Electric Authority Florida, RB, Sub-Series A, | ||||
| 5.63%, 10/01/32 | 6,300 | 7,164,360 | ||
| Orange County School Board, COP, Series A (NPFGC), | ||||
| 5.00%, 8/01/30 | 2,000 | 2,172,060 | ||
| State of Florida, GO, Board of Education: | ||||
| Capital Outlay 2008, Series E, 5.00%, 6/01/37 | 39,730 | 45,312,860 | ||
| Series C, 5.00%, 6/01/37 | 65,545 | 73,270,053 | ||
| 138,583,733 | ||||
| Illinois — 0.5% | ||||
| City of Chicago Illinois, Refunding RB, Second Lien | ||||
| (AGM), 5.25%, 11/01/33 | 5,000 | 5,514,250 | ||
| Illinois Finance Authority, RB, Carle Foundation, Series A | ||||
| (AGM), 6.00%, 8/15/41 | 15,600 | 17,671,992 | ||
| 23,186,242 | ||||
| Indiana — 2.2% | ||||
| Indiana Finance Authority, RB, Sisters of St. Francis | ||||
| Health, 5.25%, 11/01/39 | 31,460 | 33,979,631 | ||
| Indianapolis Local Public Improvement Bond Bank, RB, | ||||
| PILOT, Infrastructure Project F (AGM), | ||||
| 5.00%, 1/01/40 | 7,000 | 7,726,670 | ||
| Indianapolis Local Public Improvement Bond Bank, | ||||
| Refunding RB: | ||||
| PILOT, Infrastructure Project, Series F (AGM), | ||||
| 5.00%, 1/01/35 | 23,550 | 26,242,001 | ||
| Waterworks Project, Series A, (AGC), 5.50%, 1/01/38 | 34,125 | 38,106,947 | ||
| 106,055,249 | ||||
| Louisiana — 0.3% | ||||
| State of Louisiana, RB, Series A (AGM), | ||||
| 5.00%, 5/01/31 | 11,950 | 13,143,925 | ||
| Massachusetts — 1.0% | ||||
| Massachusetts School Building Authority, RB: | ||||
| Senior Series B, 5.00%, 10/15/41 | 20,000 | 22,564,800 | ||
| Series A (AGM), 5.00%, 8/15/30 | 15,000 | 16,558,800 | ||
| Series A (AMBAC), 5.00%, 8/15/37 | 10,000 | 11,035,800 | ||
| 50,159,400 | ||||
| Nebraska — 0.2% | ||||
| Omaha Public Power District, RB, Series A, | ||||
| 5.00%, 2/01/43 | 10,000 | 11,111,400 | ||
| New York — 0.4% | ||||
| New York City Municipal Water Finance Authority, | ||||
| Refunding RB, Series A, 5.13%, 6/15/34 | 1,289 | 1,294,780 | ||
| New York State Dormitory Authority, ERB, Series B, | ||||
| 5.75%, 3/15/36 | 2,010 | 2,375,800 | ||
See Notes to Financial Statements.
| ANNUAL REPORT | JUNE 30, 2012 | 27 |
| Schedule of Investments (continued) | BlackRock National Municipal Fund |
| (Percentages shown are based on Net Assets) |
| Municipal Bonds Transferred to | Par | |||
| Tender Option Bond Trusts (g) | (000) | Value | ||
| New York (concluded) | ||||
| Sales Tax Asset Receivable Corp., Refunding RB, | ||||
| Series A (AMBAC), 5.25%, 10/15/27 | $ | 13,931 | $ | 15,294,318 |
| 18,964,898 | ||||
| Ohio — 0.5% | ||||
| County of Hamilton Ohio, Refunding RB, Sub-Series A | ||||
| (AGM), 5.00%, 12/01/32 | 20,000 | 21,387,800 | ||
| State of Ohio, RB, Cleveland Clinic Health, Series B, | ||||
| 5.50%, 1/01/34 | 1,000 | 1,119,780 | ||
| 22,507,580 | ||||
| Pennsylvania — 0.4% | ||||
| Pennsylvania HFA, Refunding RB, Series 105C, | ||||
| 5.00%, 10/01/39 | 19,460 | 20,565,523 | ||
| Texas — 3.1% | ||||
| City of Houston Texas, Refunding RB, Combined, | ||||
| First Lien, Series A: | ||||
| (AGC), 5.38%, 11/15/38 | 26,160 | 29,820,046 | ||
| (NPFGC), 5.13%, 5/15/28 | 20,000 | 21,391,800 | ||
| City of San Antonio Texas, Refunding RB, Electric and | ||||
| Gas Revenue: | ||||
| 5.00%, 2/01/17 | 220 | 245,658 | ||
| 5.00%, 2/01/32 | 28,990 | 32,370,959 | ||
| Cypress-Fairbanks ISD, GO, Refunding, Schoolhouse | ||||
| (PSF-GTD), 5.00%, 2/15/32 | 10,000 | 11,258,200 | ||
| Dallas Area Rapid Transit, Refunding RB, Senior Lien | ||||
| (AMBAC), 5.00%, 12/01/36 | 27,860 | 31,060,446 | ||
| Harris County Cultural Education Facilities Finance | ||||
| Corp., RB, Hospital, Texas Children’s Hospital Project, | ||||
| 5.50%, 10/01/39 | 8,500 | 9,511,160 | ||
| Harris County Flood Control District, Refunding RB, | ||||
| Contract Tax, Series A, 5.00%, 10/01/39 | 10,000 | 11,196,300 | ||
| 146,854,569 | ||||
| Washington — 0.8% | ||||
| Central Puget Sound Regional Transit Authority, RB, Series A: | ||||
| 5.00%, 11/01/34 | 8,500 | 9,465,685 | ||
| 5.00%, 11/01/36 | 15,715 | 17,440,027 | ||
| State of Washington, GO, Series D (AGM), | ||||
| 5.00%, 1/01/28 | 10,000 | 11,124,400 | ||
| 38,030,112 | ||||
| Total Municipal Bonds Transferred to | ||||
| Tender Option Bond Trusts — 21.6% | 1,035,361,710 | |||
| US Government Sponsored | ||||
| Agency Securities — 0.0% | ||||
| Ginnie Mae Mortgage-Backed Securities Certificates, | ||||
| 6.00%, 11/15/31 | 1 | 1,487 | ||
| Total Long-Term Investments | ||||
| (Cost — $4,389,375,959) — 100.0% | 4,786,271,414 | |||
| Short-Term Securities | Shares | |||
| FFI Institutional Tax-Exempt Fund, 0.01% (h)(i) | 444,234,095 | 444,234,095 | ||
| Total Short-Term Securities | ||||
| (Cost — $444,234,095) — 9.3% | 444,234,095 | |||
| Total Investments (Cost — $4,833,610,054) — 109.3% | 5,230,505,509 | |||
| Other Assets Less Liabilities — 0.5% | 22,434,416 | |||
| Liability for TOB Trust Certificates, Including Interest | ||||
| Expense and Fees Payable — (9.8)% | (468,841,858) | |||
| Net Assets — 100.0% | $ | 4,784,098,067 | ||
| (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) | When-issued security. Unsettled when-issued transactions were as follows: |
| Unrealized | ||
| Counterparty | Value | Appreciation |
| Barclays Plc | $10,992,900 | $ 54,200 |
| Citigroup, Inc. | $30,494,487 | $215,003 |
| (d) | Issuer filed for bankruptcy and/or is in default of principal and/or interest payments. |
| (e) | Non-income producing security. |
| (f) | Security is collateralized by Municipal or US Treasury obligations. |
| (g) | Securities represent bonds transferred to a TOB in exchange for which the Fund acquired residual interest certificates. These securities serve as collateral in a financing transaction. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs. |
| (h) | Investments in companies considered to be an affiliate of the Fund during the year, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows: |
| Shares Held | Shares Held | |||
| at June 30, | Net | at June 30, | ||
| Affiliate | 2011 | Activity | 2012 | Income |
| FFI Institutional | ||||
| Tax-Exempt Fund | 127,360,041 | 316,874,054 | 444,234,095 | $71,634 |
| (i) | Represents the current yield as of report date. |
| • | For Fund compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by Fund management. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease. |
| • | Financial futures contracts sold as of June 30, 2012 were as follows: |
| Contracts | Issue | Exchange | Expiration | Notional Value |
Unrealized Depreciation |
| 500 | 10-Year US Treasury Note |
Chicago Board of Trade |
September 2012 |
$66,687,500 | $(305,638) |
| • | 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: |
| • | Level 1 — unadjusted price quotations in active markets/exchanges for identical assets and liabilities |
| • | Level 2 — other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs) |
| • | Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Fund’s own assumptions used in determining the fair value of investments and derivative financial instruments) |
Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instruments and is not necessarily an indication of the risks associated with investing in those securities. For information about the Fund’s policy
See Notes to Financial Statements.
| 28 | ANNUAL REPORT | JUNE 30, 2012 |
| Schedule of Investments (concluded) | BlackRock National Municipal Fund |
regarding valuation of investments and derivative financial instruments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.
The following tables summarize the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy as of June 30, 2012:
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
| Assets: | |||||||||||||||||
| Investments: | |||||||||||||||||
| Long-Term | |||||||||||||||||
| Investments1 | — | $ | 4,786,271,414 | — | $ | 4,786,271,414 | |||||||||||
| Short-Term | |||||||||||||||||
| Securities | $ | 444,234,095 | — | — | 444,234,095 | ||||||||||||
| Total | $ | 444,234,095 | $ | 4,786,271,414 | — | $ | 5,230,505,509 | ||||||||||
| 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 | $ | (305,638 | ) | — | — | $ | (305,638 | ) | |||||||||
| 2 | Derivative financial instruments are financial futures contracts, which are valued at the unrealized appreciation/depreciation on the instrument. |
Certain of the Fund’s assets and liabilities are held at carrying amount, which approximates fair value for financial statement purposes. As of June 30, 2012, such assets and liabilities are categorized within the disclosure hierarchy as follows:
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
| Assets: | |||||||||||||||||
| Cash pledged as | |||||||||||||||||
| collateral for | |||||||||||||||||
| financial futures | |||||||||||||||||
| contracts | $ | 660,000 | — | — | $ | 660,000 | |||||||||||
| Liabilities: | |||||||||||||||||
| TOB trust | |||||||||||||||||
| certificates | — | $ | (468,586,354 | ) | — | (468,586,354 | ) | ||||||||||
| Bank overdraft | — | (1,945,131 | ) | — | (1,945,131 | ) | |||||||||||
| Total | $ | 660,000 | $ | (470,531,485 | ) | — | $ | (469,871,485 | ) | ||||||||
There were no transfers between levels during the year ended June 30, 2012.
See Notes to Financial Statements.
| ANNUAL REPORT | JUNE 30, 2012 | 29 |
| Schedule of Investments June 30, 2012 | BlackRock Short-Term Municipal Fund |
| (Percentages shown are based on Net Assets) |
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| Alabama — 0.5% | ||||
| Alabama 21st Century Authority, RB, Series A, | ||||
| 4.00%, 6/01/15 | $ | 2,000 | $ | 2,160,500 |
| Mobile IDB, RB, Alabama Power Co. Barry Project, | ||||
| Series B, Mandatory Put Bonds, 4.88%, 3/19/13 (a) | 3,270 | 3,367,152 | ||
| 5,527,652 | ||||
| Arizona — 1.0% | ||||
| Phoenix Civic Improvement Corp., Refunding RB, Junior | ||||
| Lien, 4.00%, 7/01/14 | 5,000 | 5,358,150 | ||
| Yavapai County IDA, RB, Waste Management Inc. | ||||
| Project, Series A-2, Mandatory Put Bonds, AMT, | ||||
| 2.88%, 3/01/13 (a) | 5,000 | 5,072,800 | ||
| 10,430,950 | ||||
| California — 12.7% | ||||
| California Pollution Control Financing Authority, RB, | ||||
| Waste Management Inc. Project, Series A-1, AMT, | ||||
| Mandatory Put Bonds, 1.88%, 4/01/15 (a) | 5,000 | 5,045,000 | ||
| California State Department of Water Resources, | ||||
| Refunding RB, Series M: | ||||
| 3.00%, 5/01/13 | 3,095 | 3,167,423 | ||
| 5.00%, 5/01/14 | 35,000 | 37,971,500 | ||
| California Statewide Communities Development | ||||
| Authority, RB: | ||||
| Kaiser Permanente, Series A, 5.00%, 4/01/13 | 5,150 | 5,327,521 | ||
| Kaiser Permanente, Series A, 5.00%, 4/01/14 | 1,000 | 1,075,250 | ||
| Proposition 1A Receivables Program, 5.00%, 6/15/13 | 33,730 | 35,240,092 | ||
| City of Long Beach California, Refunding RB, Series B, | ||||
| AMT (NPFGC), 5.50%, 5/15/14 | 5,215 | 5,659,892 | ||
| Los Angeles Unified School District California, GO: | ||||
| Election of 2004, Series H (AGM), 4.50%, 7/01/12 | 1,000 | 1,000,240 | ||
| Refunding, Series A-1, 5.00%, 7/01/15 | 6,000 | 6,762,180 | ||
| State of California, GO, Various Purpose, | ||||
| 5.00%, 10/01/14 | 2,565 | 2,809,547 | ||
| State of California, GO, Refunding, Various Purpose: | ||||
| 5.00%, 4/01/15 | 10,360 | 11,513,379 | ||
| 5.00%, 4/01/16 | 10,000 | 11,445,900 | ||
| State of California Economic Recovery, GO, Series A | ||||
| (NPFGC), 5.00%, 7/01/15 | 3,805 | 4,146,270 | ||
| 131,164,194 | ||||
| Colorado — 0.8% | ||||
| City & County of Denver Colorado, RB, Series A, AMT, | ||||
| 3.00%, 11/15/12 | 3,000 | 3,031,320 | ||
| Colorado Health Facilities Authority, Refunding RB, | ||||
| Catholic Healthcare, Series B, Mandatory Put Bonds, | ||||
| 5.00%, 11/08/12 (a) | 5,000 | 5,084,900 | ||
| 8,116,220 | ||||
| Connecticut — 4.6% | ||||
| Connecticut Municipal Electric Energy Cooperative, | ||||
| Refunding RB, Series A (AGC), 5.00%, 1/01/14 | 2,115 | 2,256,578 | ||
| Connecticut State Development Authority, RB, CT Light | ||||
| & Power Co., Series A, AMT, Mandatory Put Bonds, | ||||
| 1.55%, 4/01/15 (a) | 7,200 | 7,218,144 | ||
| Connecticut State Development Authority, Refunding | ||||
| RB, Pollution Control, Series B, Mandatory Put Bonds, | ||||
| 1.25%, 9/03/13 (a) | 10,000 | 10,045,500 | ||
| State of Connecticut, GO, Economic Recovery, Series A: | ||||
| 5.00%, 1/01/13 | 11,500 | 11,779,335 | ||
| 5.00%, 1/01/14 | 7,280 | 7,784,431 | ||
| State of Connecticut, RB, Transportation Infrastructure, | ||||
| Series A, 5.00%, 11/01/14 | 2,700 | 2,985,012 | ||
| State of Connecticut, Special Tax Bonds, Transportation | ||||
| Infrastructure, Series A, 5.00%, 11/01/13 | 5,000 | 5,314,450 | ||
| 47,383,450 | ||||
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| Delaware — 1.7% | ||||
| Delaware Transportation Authority, Refunding RB, | ||||
| Senior, 5.00%, 7/01/15 | $ | 1,945 | $ | 2,208,898 |
| State of Delaware, GO, Refunding, Series 2009C, | ||||
| 5.00%, 10/01/13 | 7,700 | 8,160,229 | ||
| University of Delaware, RB, Series A, Mandatory Put | ||||
| Bonds, 0.85%, 6/04/13 (a) | 7,000 | 7,040,950 | ||
| 17,410,077 | ||||
| District of Columbia — 0.5% | ||||
| Metropolitan Washington Airports Authority, RB, | ||||
| Series A, AMT (NPFGC), 5.25%, 10/01/13 | 5,000 | 5,293,600 | ||
| Florida — 2.2% | ||||
| Florida State Board of Education, GO, Refunding, | ||||
| Series A, 5.00%, 1/01/15 | 7,395 | 8,224,497 | ||
| Florida State Department of Environmental Protection, | ||||
| RB, Florida Forever: | ||||
| Series A, 5.00%, 7/01/13 | 4,675 | 4,889,630 | ||
| Series D, 5.00%, 7/01/13 | 3,620 | 3,786,194 | ||
| Highlands County Health Facilities Authority, RB, | ||||
| Hospital, Adventist Health System/Sunbelt, | ||||
| Mandatory Put Bonds, 3.95%, 9/01/12 (a) | 6,000 | 6,035,100 | ||
| 22,935,421 | ||||
| Hawaii — 0.9% | ||||
| State of Hawaii, Refunding RB, AMT: | ||||
| 5.00%, 7/01/14 | 5,000 | 5,413,450 | ||
| Series B, 5.00%, 7/01/13 | 4,000 | 4,186,360 | ||
| 9,599,810 | ||||
| Idaho — 0.9% | ||||
| Idaho Housing & Finance Association, RB, | ||||
| Unemployment Compensation, 5.00%, 8/15/14 | 8,585 | 9,394,651 | ||
| Illinois — 1.5% | ||||
| Illinois Finance Authority, RB, University of Chicago, | ||||
| Series B, 5.00%, 7/01/13 | 2,000 | 2,093,280 | ||
| Railsplitter Tobacco Settlement Authority, RB, 4.00%, | ||||
| 6/01/13 | 12,690 | 13,055,091 | ||
| 15,148,371 | ||||
| Indiana — 1.2% | ||||
| City of Whiting, RB, BP Products North America, Inc., | ||||
| Mandatory Put Bonds, 2.80%, 6/02/14 (a) | 3,325 | 3,449,056 | ||
| Indiana Finance Authority, RB: | ||||
| Marquette Project, 5.00%, 3/01/16 | 1,425 | 1,535,181 | ||
| Water Utilities, Citizens Energy Group Project, | ||||
| 3.00%, 10/01/14 | 5,000 | 5,223,800 | ||
| Indiana Health Facility Financing Authority, RB, | ||||
| Ascension Health, Series A1, Mandatory Put Bonds, | ||||
| 5.00%, 5/01/13 (a) | 2,265 | 2,352,293 | ||
| 12,560,330 | ||||
| Iowa — 0.8% | ||||
| Iowa Higher Education Loan Authority, RB, Private | ||||
| College Facility: | ||||
| 4.00%, 12/01/12 | 1,500 | 1,523,850 | ||
| 4.00%, 12/01/13 | 1,150 | 1,210,639 | ||
| Iowa Student Loan Liquidity Corp., RB, Senior | ||||
| Series A-1, AMT, 3.10%, 12/01/14 | 5,000 | 5,166,600 | ||
| 7,901,089 | ||||
| Kansas — 0.5% | ||||
| Kansas State Department of Transportation, | ||||
| Refunding RB, Series A, 5.00%, 9/01/12 | 5,000 | 5,041,050 | ||
| Kentucky — 0.3% | ||||
| Kentucky Economic Development Finance Authority, | ||||
| Refunding RB, Baptist Healthcare System, Series A, | ||||
| 5.00%, 8/15/12 | 2,650 | 2,664,655 | ||
See Notes to Financial Statements.
| 30 | ANNUAL REPORT | JUNE 30, 2012 |
| Schedule of Investments (continued) | BlackRock Short-Term Municipal Fund |
| (Percentages shown are based on Net Assets) |
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| Louisiana — 2.0% | ||||
| State of Louisiana, GO, Refunding, Series A (NPFGC), | ||||
| 5.00%, 8/01/14 | $ | 12,000 | $ | 13,143,960 |
| State of Louisiana, GO, Series A, 5.00%, 5/01/13 | 7,075 | 7,357,858 | ||
| 20,501,818 | ||||
| Maine — 0.1% | ||||
| Maine Municipal Bond Bank, RB, Series D, 5.00%, | ||||
| 11/01/12 | 1,460 | 1,483,827 | ||
| Maryland — 4.3% | ||||
| Maryland State Transportation Authority, Refunding RB, | ||||
| Baltimore/Washington Thurgood Marshall Airport | ||||
| Project: | ||||
| 4.00%, 3/01/14 | 3,170 | 3,345,491 | ||
| AMT, 4.00%, 3/01/14 | 7,675 | 8,073,563 | ||
| AMT, 5.00%, 3/01/16 | 8,315 | 9,430,623 | ||
| State of Maryland, GO, State & Local Facilities | ||||
| Loan-First Series B, 5.00%, 3/15/16 | 20,000 | 23,234,400 | ||
| 44,084,077 | ||||
| Massachusetts — 4.7% | ||||
| City of Boston, GO, Refunding, Series B: | ||||
| 3.00%, 2/01/14 | 10,210 | 10,645,150 | ||
| 4.00%, 2/01/15 | 6,580 | 7,178,912 | ||
| Commonwealth of Massachusetts, GO, Consolidated | ||||
| Loan: | ||||
| Series A, 5.00%, 8/01/12 | 1,180 | 1,185,062 | ||
| Series B, 5.00%, 8/01/15 | 2,500 | 2,841,575 | ||
| Commonwealth of Massachusetts, GO, Refunding, | ||||
| Consolidated Loan, Series D (NPFGC), 6.00%, | ||||
| 11/01/13 | 5,000 | 5,381,400 | ||
| Massachusetts State Department of Transportation, | ||||
| Refunding RB, Senior Series B, 5.00%, 1/01/14 | 12,155 | 12,926,964 | ||
| University of Massachusetts Building Authority, RB, | ||||
| Senior Series 1, 5.00%, 11/01/13 | 7,555 | 8,022,730 | ||
| 48,181,793 | ||||
| Michigan — 3.7% | ||||
| Michigan Finance Authority, Refunding RB, | ||||
| Unemployment Obligation Assessment, Series A: | ||||
| 5.00%, 1/01/14 | 1,000 | 1,069,290 | ||
| 5.00%, 7/01/15 | 7,000 | 7,913,780 | ||
| 5.00%, 1/01/16 | 13,525 | 15,555,779 | ||
| State of Michigan, GO Refunding, 5.25%, 12/01/12 | 3,000 | 3,063,870 | ||
| State of Michigan Trunk Line Revenue, Refunding RB, | ||||
| Series B (AGM), 5.00%, 9/01/15 | 7,825 | 8,875,037 | ||
| Utica Community Schools, GO, Refunding, School | ||||
| Building & Site (Q-SBLF), 3.00%, 5/01/14 | 1,380 | 1,435,227 | ||
| 37,912,983 | ||||
| Minnesota — 2.1% | ||||
| State of Minnesota, GO, Refunding, Various Purpose, | ||||
| Series D, 5.00%, 8/01/14 | 6,000 | 6,575,100 | ||
| State of Minnesota, GO, Various Purpose, Series H, | ||||
| 5.00%, 11/01/12 (b) | 15,000 | 15,244,200 | ||
| 21,819,300 | ||||
| Missouri — 0.2% | ||||
| County of Jackson Missouri, RB, Harry S. Truman Sports | ||||
| Complex (AMBAC), 5.00%, 12/01/12 | 2,000 | 2,035,140 | ||
| Nebraska — 0.4% | ||||
| Nebraska Public Power District, RB, General, Series A, | ||||
| 5.00%, 1/01/16 | 1,000 | 1,143,780 | ||
| Nebraska Public Power District, Refunding RB, General, | ||||
| Series B-1 (NPFGC), 5.00%, 1/01/14 | 3,000 | 3,207,870 | ||
| 4,351,650 | ||||
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| Nevada — 1.5% | ||||
| Clark County Nevada, Refunding RB, Motor Vehicle Fuel | ||||
| Tax, 5.00%, 7/01/15 | $ | 8,000 | $ | 9,007,280 |
| Clark County School District, GO, Limited Tax, Building, | ||||
| Series C, 5.00%, 6/15/13 | 6,305 | 6,587,212 | ||
| 15,594,492 | ||||
| New Jersey — 6.7% | ||||
| County of Essex New Jersey, GO, Improvement, Series A, | ||||
| 5.00%, 8/01/13 | 2,290 | 2,398,615 | ||
| Gloucester County Improvement Authority, Refunding | ||||
| RB, Waste Management Inc. Project, Series A, | ||||
| Mandatory Put Bonds, 2.63%, 12/03/12 (a) | 4,625 | 4,666,718 | ||
| New Jersey Building Authority, Refunding RB, Series A, | ||||
| 5.00%, 6/15/15 | 13,880 | 15,521,310 | ||
| New Jersey EDA, Refunding RB, Cigarette Tax Revenue, | ||||
| 5.00%, 6/15/14 | 4,000 | 4,300,920 | ||
| New Jersey Health Care Facilities Financing Authority, | ||||
| Refunding RB: | ||||
| Barnabas Health, Series A, 5.00%, 7/01/14 | 7,250 | 7,614,022 | ||
| Meridian Health, 5.00%, 7/01/14 | 2,000 | 2,157,620 | ||
| New Jersey State Housing & Mortgage Finance Agency, | ||||
| RB, Series B (AGM), 1.15%, 11/01/12 | 6,800 | 6,816,116 | ||
| New Jersey Transportation Trust Fund Authority, RB, | ||||
| Transportation System, Series B, 5.00%, 6/15/15 | 1,825 | 2,034,565 | ||
| New Jersey Transportation Trust Fund Authority, | ||||
| Refunding RB, Transportation System, Series B | ||||
| (NPFGC), 5.25%, 12/15/12 | 4,990 | 5,104,171 | ||
| State of New Jersey, GO, Refunding, Series Q, 4.00%, | ||||
| 8/15/13 | 18,000 | 18,770,940 | ||
| 69,384,997 | ||||
| New Mexico — 0.8% | ||||
| New Mexico Finance Authority, Refunding RB, Senior | ||||
| Lien, Series A, 5.00%, 6/15/13 | 8,000 | 8,368,800 | ||
| New York — 12.1% | ||||
| City of New York, GO: | ||||
| Prerefunded, Series C, 5.00%, 8/01/13 (b) | 650 | 683,644 | ||
| Prerefunded, Series D, 5.00%, 2/01/13 (b) | 1,245 | 1,280,221 | ||
| Series C, 5.00%, 8/01/13 | 7,575 | 7,961,022 | ||
| Series D, 5.00%, 2/01/13 | 755 | 776,012 | ||
| City of New York New York, GO, Refunding: | ||||
| Series B, 5.00%, 8/01/13 | 22,750 | 23,909,340 | ||
| Series B (NPFGC), 5.75%, 8/01/13 | 3,050 | 3,065,128 | ||
| Series F, 5.00%, 8/01/15 | 6,000 | 6,765,900 | ||
| Long Island Power Authority, RB, Series 2010A, 5.00%, | ||||
| 5/01/14 | 4,400 | 4,739,988 | ||
| Metropolitan Transportation Authority, Refunding RB, | ||||
| Series D, 4.00%, 11/15/15 (c) | 1,400 | 1,538,698 | ||
| New York City Transitional Finance Authority, RB, Future | ||||
| Tax Secured: | ||||
| Sub-Series E, 4.00%, 11/01/12 | 2,500 | 2,532,600 | ||
| Sub-Series E, 5.00%, 11/01/13 | 2,000 | 2,126,700 | ||
| Sub-Series F-1, 5.00%, 5/01/15 | 2,000 | 2,249,740 | ||
| New York City Transitional Finance Authority, Refunding | ||||
| RB, Future Tax Secured, Sub-Series D-2, 5.00%, | ||||
| 11/01/12 | 20,315 | 20,648,572 | ||
| New York State Dormitory Authority, RB General | ||||
| Purpose: | ||||
| Series A, 5.00%, 3/15/15 | 5,560 | 6,221,028 | ||
| Series E, 5.00%, 2/15/13 | 5,865 | 6,040,129 | ||
| New York State Energy Research & Development | ||||
| Authority, Refunding RB, Consolidated Edison Co. of | ||||
| New York Inc. Project, Mandatory Put Bonds, AMT, | ||||
| 1.45%, 11/01/12 (a) | 5,000 | 5,012,300 | ||
| New York State Environmental Facilities Corp., RB, | ||||
| Waste Management Inc. Project, Series A, Mandatory | ||||
| Put Bonds, 2.50%, 1/02/13 (a) | 5,000 | 5,049,950 | ||
See Notes to Financial Statements.
| ANNUAL REPORT | JUNE 30, 2012 | 31 |
| Schedule of Investments (continued) | BlackRock Short-Term Municipal Fund |
| (Percentages shown are based on Net Assets) |
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| New York (concluded) | ||||
| New York State Local Government Assistance Corp., | ||||
| Refunding RB, Sub-Lien, Series A, 5.00%, 4/01/15 | $ | 7,000 | $ | 7,873,250 |
| New York State Thruway Authority, RB, General, Series I, | ||||
| 5.00%, 1/01/16 (c) | 500 | 567,615 | ||
| New York State Thruway Authority, Refunding RB, | ||||
| General, Second Series B (NPFGC), 5.00%, 4/01/13 | 5,550 | 5,752,964 | ||
| New York State Urban Development Corp., | ||||
| Refunding RB, Service Contract, Series A-1, | ||||
| 5.00%, 1/01/13 | 7,320 | 7,492,166 | ||
| Port Authority of New York & New Jersey, RB, | ||||
| Consolidated, 169th Series, AMT, 5.00%, 10/15/15 | 2,680 | 3,017,117 | ||
| 125,304,084 | ||||
| North Carolina — 3.6% | ||||
| County of Mecklenburg, GO, Refunding, Series C, | ||||
| 5.00%, 2/01/13 | 9,400 | 9,666,960 | ||
| North Carolina Capital Facilities Finance Agency, | ||||
| Refunding RB, High Point University, 4.00%, 5/01/16 (c) | 1,770 | 1,907,901 | ||
| North Carolina Medical Care Commission, Refunding | ||||
| RB, Healthcare Facilities Revenue, WakeMed, | ||||
| Series A, 4.00%, 10/01/15 (c) | 730 | 798,613 | ||
| State of North Carolina, GO, Public Improvement, | ||||
| Series A, 5.00%, 3/01/13 | 9,000 | 9,291,690 | ||
| State of North Carolina, RB, Series A, 5.00%, 5/01/13 | 8,055 | 8,376,314 | ||
| State of North Carolina, Refunding RB, Series B, | ||||
| 4.00%, 11/01/14 | 4,905 | 5,311,232 | ||
| University of North Carolina at Chapel Hill, RB, Series A, | ||||
| 4.00%, 2/01/13 | 1,605 | 1,636,329 | ||
| 36,989,039 | ||||
| Ohio — 0.4% | ||||
| Ohio State University, Refunding RB, Series A, | ||||
| 5.00%, 12/01/12 | 4,000 | 4,080,280 | ||
| Oklahoma — 0.9% | ||||
| Oklahoma Turnpike Authority, Refunding RB, Second | ||||
| Senior, Series A, 5.00%, 1/01/15 | 7,875 | 8,754,165 | ||
| Oregon — 0.5% | ||||
| City of Portland Oregon, Refunding RB, Second Lien, | ||||
| Series A, 5.00%, 3/01/14 | 4,950 | 5,329,418 | ||
| Pennsylvania — 5.8% | ||||
| City of Philadelphia Pennsylvania, Refunding RB, | ||||
| Series A: | ||||
| (AGM), 5.00%, 6/15/13 | 9,000 | 9,403,740 | ||
| Airport Revenue, AMT, 5.00%, 6/15/15 | 2,550 | 2,790,593 | ||
| Commonwealth of Pennsylvania, GO: | ||||
| First Series, 5.00%, 3/15/13 | 7,455 | 7,710,408 | ||
| First Series, 5.00%, 6/01/15 | 7,980 | 9,015,405 | ||
| First Series A, 5.00%, 2/15/13 | 8,280 | 8,530,801 | ||
| Refunding, First Series (NPFGC), 5.00%, 2/01/15 | 7,605 | 8,137,730 | ||
| Pennsylvania Economic Development Financing | ||||
| Authority, RB, Waste Management Inc. Project: | ||||
| 2.75%, 9/01/13 | 4,250 | 4,341,460 | ||
| Mandatory Put Bonds, 2.63%, 12/03/12 (a) | 3,500 | 3,531,570 | ||
| Pennsylvania IDA, Refunding RB, Economic | ||||
| Development, 5.00%, 7/01/15 | 2,500 | 2,783,150 | ||
| Pennsylvania Intergovernmental Cooperation Authority, | ||||
| Special Tax Bonds, Refunding, Philadelphia Funding | ||||
| Program, 5.00%, 6/15/13 | 3,085 | 3,222,067 | ||
| 59,466,924 | ||||
| South Carolina — 0.6% | ||||
| South Carolina Transportation Infrastructure Bank, | ||||
| Refunding RB, Series A (AMBAC), 5.00%, 10/01/15 | 5,440 | 6,133,926 | ||
| Tennessee — 1.1% | ||||
| Metropolitan Government of Nashville & Davidson | ||||
| County Tennessee, Refunding RB (NPFGC), | ||||
| 5.00%, 1/01/14 | 8,110 | 8,668,130 | ||
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| Tennessee (concluded) | ||||
| Tennessee Health and Educational Facilities, The | ||||
| Metropolitan Government of Nashville and Davidson | ||||
| County, Refunding RB, The Vanderbilt University, | ||||
| Series C, 4.00%, 10/01/13 | $ | 2,300 | $ | 2,405,662 |
| 11,073,792 | ||||
| Texas — 7.8% | ||||
| City of El Paso Texas, Refunding RB, Series A, | ||||
| 4.00%, 3/01/14 | 2,000 | 2,116,900 | ||
| City of Houston Texas, Sub-Lien, Refunding RB: | ||||
| Series A, AMT, 5.00%, 7/01/14 | 4,000 | 4,330,760 | ||
| Series B, 5.00%, 7/01/14 | 1,500 | 1,621,500 | ||
| County of Harris Texas, Refunding RB, Toll Road, Senior | ||||
| Lien, Series B-1 (NPFGC), 5.00%, 8/15/14 | 1,295 | 1,419,424 | ||
| Dallas Independent School District, GO, Refunding, | ||||
| 4.00%, 2/15/15 | 2,200 | 2,402,268 | ||
| Gulf Coast Waste Disposal Authority, RB, BP Products | ||||
| North America, Inc. Project, Mandatory Put Bonds, | ||||
| 2.30%, 9/03/13 (a) | 4,615 | 4,705,915 | ||
| Harris County Cultural Education Facilities Finance | ||||
| Corp., RB, Methodist Hospital System, Series B, | ||||
| 5.25%, 12/01/14 | 2,600 | 2,888,080 | ||
| Harris County Cultural Education Facilities Finance | ||||
| Corp., Refunding RB, Methodist Hospital System, | ||||
| 5.00%, 6/01/13 | 10,000 | 10,416,300 | ||
| Lower Colorado River Authority, RB: | ||||
| 5.00%, 5/15/13 | 5,995 | 6,240,555 | ||
| 5.00%, 5/15/14 | 4,985 | 5,395,565 | ||
| Prerefunded, 5.00%, 5/15/13 (b) | 5 | 5,209 | ||
| Prerefunded, 5.00%, 5/15/14 (b) | 15 | 16,297 | ||
| Lower Colorado River Authority, Refunding RB, Series A, | ||||
| 5.00%, 5/15/14 | 3,590 | 3,884,272 | ||
| North Texas Tollway Authority, RB, System, First Tier, | ||||
| Series L-2, Mandatory Put Bonds, | ||||
| 6.00%, 1/01/13 (a) | 3,700 | 3,798,975 | ||
| State of Texas, GO, Refunding, Public Finance Authority: | ||||
| 5.00%, 10/01/12 | 11,170 | 11,307,167 | ||
| Series A, 5.00%, 10/01/12 | 3,500 | 3,543,295 | ||
| Texas A&M University, RB, Financing System, Series D, | ||||
| 5.00%, 5/15/13 | 3,325 | 3,463,985 | ||
| Texas Public Finance Authority, RB, Unemployment | ||||
| Compensation, Series A, 5.00%, 7/01/13 | 10,000 | 10,477,800 | ||
| University of Texas, RB, Revenue Finance System, | ||||
| Series B, 5.00%, 8/15/15 | 2,255 | 2,562,199 | ||
| 80,596,466 | ||||
| Utah — 0.1% | ||||
| City of Riverton Utah, RB, IHC Health Services, Inc., | ||||
| 5.00%, 8/15/13 | 1,400 | 1,471,736 | ||
| Virginia — 5.7% | ||||
| Chesterfield County, GO, Refunding, Series B, 5.00%, | ||||
| 1/01/15 | 2,810 | 3,130,424 | ||
| County of Fairfax Virginia, GO, Series D, 5.00%, 10/01/13 | 10,000 | 10,601,600 | ||
| Louisa IDA, RB, Virginia Electric & Power Co. | ||||
| Project, Series A, Mandatory Put Bonds, AMT, 2.50%, | ||||
| 3/01/13 (a) | 20,000 | 20,211,600 | ||
| Virginia College Building Authority, RB, 21st Century | ||||
| College & Equipment Programs, Series A, | ||||
| 5.00%, 2/01/16 | 11,910 | 13,741,639 | ||
| Virginia Public Building Authority, RB, Series B, | ||||
| 5.00%, 8/01/12 | 7,185 | 7,215,680 | ||
| Virginia Resources Authority, Refunding RB, Series A, | ||||
| 4.00%, 10/01/12 | 4,145 | 4,185,124 | ||
| 59,086,067 | ||||
See Notes to Financial Statements.
| 32 | ANNUAL REPORT | JUNE 30, 2012 |
| Schedule of Investments (concluded) | BlackRock Short-Term Municipal Fund |
| (Percentages shown are based on Net Assets) |
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| Washington — 1.6% | ||||
| City of Seattle Washington, GO, Refunding, Limited Tax, | ||||
| Series B, 5.00%, 8/01/13 | $ | 5,000 | $ | 5,259,800 |
| City of Seattle Washington, Refunding RB, Improvement, | ||||
| Series B, 5.00%, 2/01/14 | 10,000 | 10,734,600 | ||
| 15,994,400 | ||||
| Total Long-Term Investments | ||||
| (Cost — $989,651,667) — 96.8% | 998,570,694 | |||
| Short-Term Securities | ||||
| California — 1.8% | ||||
| California School Cash Reserve Program Authority, RN: | ||||
| Series P, 2.00%, 2/01/13 (c) | 10,000 | 10,049,000 | ||
| Series X, 2.50%, 1/31/13 | 7,955 | 8,003,234 | ||
| 18,052,234 | ||||
| Illinois — 1.7% | ||||
| Regional Transit Authority, Refunding RB, ERS, VRDN, | ||||
| Series B, 0.65%, 7/01/12 (d) | 17,600 | 17,600,000 | ||
| Shares | ||||
| Money Market Funds — 0.1% | ||||
| FFI Institutional Tax-Exempt Fund, 0.01% (e)(f) | 1,302,407 | 1,302,407 | ||
| Total Short-Term Securities | ||||
| (Cost — $36,954,641) — 3.6% | 36,954,641 | |||
| Total Investments (Cost — $1,026,606,308) — | ||||
| 100.4% | 1,035,525,335 | |||
| Liabilities in Excess of Other Assets — (0.4)% | (4,097,166) | |||
| Net Assets — 100.0% | $ | 1,031,428,169 | ||
| (a) | Variable rate security. Rate shown is as of report date. |
| (b) | US government securities, held in escrow, are used to pay interest on this security, as well as to retire the bond in full at the date indicated, typically at a premium to par. |
| (c) | When-issued security. Unsettled when-issued transactions were as follows: |
| Unrealized | ||||||||
| Counterparty | Value | Appreciation | ||||||
| BB&T | $ | 1,907,901 | $ | 2,106 | ||||
| Citigroup Global Markets | $ | 1,366,228 | $ | 474 | ||||
| Merrill Lynch, Pierce, | ||||||||
| Fenner & Smith, Inc. | $ | 1,538,698 | $ | 5,306 | ||||
| Piper Jaffray | $ | 10,049,000 | — | |||||
| (d) | Variable rate security. Rate shown is as of report date and maturity shown is the date the principal owed can be recovered through demand. |
| (e) | Investments in companies considered to be an affiliate of the Fund during the year, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows: |
| Shares Held | Shares Held | |||
| at June 30, | Net | at June 30, | ||
| Affiliate | 2011 | Activity | 2012 | Income |
| FFI Institutional | ||||
| Tax-Exempt Fund | 1,487,006 | (184,599) | 1,302,407 | $1,531 |
| (f) | Represents the current yield as of report date. |
| • | 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: |
| • | Level 1 — unadjusted price quotations in active markets/exchanges for identical assets and liabilities |
| • | Level 2 — other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs) |
| • | Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Fund’s own assumptions used in determining the fair value of investments) |
Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments is based on the pricing transparency of the investment and is not necessarily an indication of the risks associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.
The following table summarizes the Fund’s investments categorized in the disclosure hierarchy as of June 30, 2012:
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
| Assets: | |||||||||||||||||
| Investments: | |||||||||||||||||
| Long-Term | |||||||||||||||||
| Investments1 | — | $ | 998,570,694 | — | $ | 998,570,694 | |||||||||||
| Short-Term | |||||||||||||||||
| Securities | $ | 1,302,407 | 35,652,234 | — | 36,954,641 | ||||||||||||
| Total | $ | 1,302,407 | $ | 1,034,222,928 | — | $ | 1,035,525,335 | ||||||||||
| 1 | See above Schedule of Investments for values in each state or political subdivision. |
Certain of the Fund’s liabilities are held at carrying amount, which approximates fair value for financial statement purposes. As of June 30, 2012, bank overdraft of $291,639 is categorized as Level 2 within the disclosure hierarchy.
There were no transfers between levels during the year ended June 30, 2012.
See Notes to Financial Statements.
| ANNUAL REPORT | JUNE 30, 2012 | 33 |
| Schedule of Investments June 30, 2012 | BlackRock New York Municipal Bond Fund |
| (Percentages shown are based on Net Assets) |
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| New York — 84.9% | ||||
| Corporate — 8.8% | ||||
| Chautauqua County Industrial Development Agency, RB, | ||||
| NRG Dunkirk Power Project, 5.88%, 4/01/42 | $ | 750 | $ | 826,425 |
| Essex County Industrial Development Agency New York, | ||||
| RB, International Paper Co. Project, Series A, AMT, | ||||
| 6.63%, 9/01/32 | 350 | 386,099 | ||
| Jefferson County Industrial Development Agency New York, | ||||
| Refunding RB, Solid Waste, Series A, AMT, 5.20%, | ||||
| 12/01/20 | 250 | 260,728 | ||
| New York City Industrial Development Agency, RB, AMT: | ||||
| American Airlines Inc., JFK International Airport, | ||||
| 7.75%, 8/01/31 (a)(b) | 2,000 | 2,119,940 | ||
| British Airways Plc Project, 5.25%, 12/01/32 | 1,000 | 954,760 | ||
| Continental Airlines Inc. Project, 8.00%, 11/01/12 | 340 | 341,992 | ||
| Continental Airlines Inc. Project, Mandatory Put | ||||
| Bonds, 8.38%, 11/01/12 | 250 | 251,308 | ||
| New York City Industrial Development Agency, | ||||
| Refunding RB, Terminal One Group Association Project, | ||||
| AMT, 5.50%, 1/01/24 (a) | 2,500 | 2,630,700 | ||
| New York Liberty Development Corp., RB, Goldman Sachs | ||||
| Headquarters: | ||||
| 5.25%, 10/01/35 | 6,000 | 6,718,620 | ||
| 5.50%, 10/01/37 | 405 | 471,124 | ||
| Suffolk County Industrial Development Agency New York, | ||||
| RB, KeySpan, Port Jefferson, AMT, 5.25%, 6/01/27 | 1,360 | 1,404,989 | ||
| Suffolk County Industrial Development Agency New York, | ||||
| Refunding RB, Ogden Martin System Huntington, AMT | ||||
| (AMBAC), 6.25%, 10/01/12 | 7,155 | 7,260,035 | ||
| 23,626,720 | ||||
| County/City/Special District/School District — 17.9% | ||||
| Amherst Development Corp., Refunding RB, University at | ||||
| Buffalo Foundation Faculty-Student Housing Corp., | ||||
| Series A (AGM), 4.63%, 10/01/40 | 305 | 321,122 | ||
| Buffalo & Erie County Industrial Land Development Corp., | ||||
| Refunding RB, Buffalo State College Foundation | ||||
| Housing Corp., 5.38%, 10/01/41 | 620 | 695,547 | ||
| City of New York New York, GO: | ||||
| Series A-1, 5.00%, 8/01/35 | 400 | 449,668 | ||
| Sub-Series G-1, 5.00%, 4/01/28 | 1,500 | 1,741,020 | ||
| Sub-Series I-1, 5.38%, 4/01/36 | 2,650 | 3,009,605 | ||
| City of Syracuse New York, GO, AMT, 4.75%, 11/01/31 | 500 | 527,365 | ||
| Hudson New York Yards Infrastructure Corp., RB, Series A: | ||||
| 5.00%, 2/15/47 | 7,220 | 7,540,568 | ||
| 5.75%, 2/15/47 | 100 | 114,860 | ||
| New York City Industrial Development Agency, RB, PILOT: | ||||
| CAB, Yankee Stadium, (AGC), 5.19%, 3/01/42 (c) | 5,000 | 1,093,800 | ||
| CAB, Yankee Stadium, (AGC), 5.34%, 3/01/45 (c) | 1,500 | 268,620 | ||
| Queens Baseball Stadium, (AGC), 6.50%, 1/01/46 | 700 | 792,946 | ||
| Queens Baseball Stadium, (AMBAC), 5.00%, 1/01/36 | 1,610 | 1,603,383 | ||
| Queens Baseball Stadium, (AMBAC), 5.00%, 1/01/39 | 1,000 | 989,850 | ||
| Yankee Stadium, (NPFGC), 4.75%, 3/01/46 | 2,000 | 2,000,620 | ||
| New York City Transitional Finance Authority, RB: | ||||
| Fiscal 2008, Series S-1, 4.50%, 1/15/38 | 500 | 516,835 | ||
| Fiscal 2009, Series S-1, 5.63%, 7/15/38 | 200 | 227,166 | ||
| Series S-2, (NPFGC), 4.50%, 1/15/31 | 1,250 | 1,301,550 | ||
| New York Convention Center Development Corp., RB, | ||||
| Hotel Unit Fee Secured (AMBAC), 5.00%, 11/15/44 | 3,315 | 3,437,721 | ||
| New York Liberty Development Corp., Refunding RB: | ||||
| 4 World Trade Center Project, 5.00%, 11/15/31 | 860 | 963,062 | ||
| 4 World Trade Center Project, 5.75%, 11/15/51 | 1,340 | 1,536,484 | ||
| 7 World Trade Center, Class 3, 5.00%, 3/15/44 | 1,720 | 1,814,652 | ||
| Second Priority, Bank of America Tower at One Bryant | ||||
| Park Project, 5.63%, 7/15/47 | 9,305 | 10,287,515 | ||
| Second Priority, Bank of America Tower at One Bryant | ||||
| Park Project, 6.38%, 7/15/49 | 1,200 | 1,349,904 | ||
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| New York (continued) | ||||
| County/City/Special District/School District (concluded) | ||||
| New York State Dormitory Authority, RB, State University | ||||
| Dormitory Facilities, Series A: | ||||
| 5.25%, 7/01/29 | $ | 5 | $ | 5,676 |
| 5.00%, 7/01/39 | 750 | 820,335 | ||
| Niagara County Industrial Development Agency, Refunding | ||||
| RB, Series A, Mandatory Put Bonds, AMT, 5.45%, | ||||
| 11/15/12 (a) | 3,975 | 4,025,204 | ||
| North Country Development Authority, Refunding RB | ||||
| (AGM), 6.00%, 5/15/15 | 485 | 521,511 | ||
| St. Lawrence County Industrial Development Agency, RB, | ||||
| Clarkson University Project, 5.38%, 9/01/41 | 200 | 223,698 | ||
| 48,180,287 | ||||
| Education — 13.4% | ||||
| City of Troy New York, Refunding RB, Rensselaer | ||||
| Polytechnic, Series A, 5.13%, 9/01/40 | 4,000 | 4,342,800 | ||
| Madison County Industrial Development Agency New York, | ||||
| RB, Commons II LLC, Student Housing, Series A (CIFG), | ||||
| 5.00%, 6/01/33 | 400 | 407,576 | ||
| Nassau County Industrial Development Agency, Refunding | ||||
| RB, New York Institute of Technology Project, Series A, | ||||
| 4.75%, 3/01/26 | 1,000 | 1,073,950 | ||
| New York City Industrial Development Agency, RB, Lycee | ||||
| Francais de New York Project, Series C, 6.80%, | ||||
| 6/01/28 | 2,500 | 2,558,025 | ||
| New York City Trust for Cultural Resources, RB, Juilliard | ||||
| School, Series A, 5.00%, 1/01/39 | 500 | 565,320 | ||
| New York State Dormitory Authority, RB: | ||||
| 4.25%, 5/01/39 (d) | 815 | 792,058 | ||
| 4.25%, 5/01/39 (d) | 625 | 610,287 | ||
| 5.00%, 5/01/39 (d) | 360 | 380,318 | ||
| New York University, Series 1, (AMBAC), | ||||
| 5.50%, 7/01/40 | 500 | 653,220 | ||
| Personal Income Tax, Series G, 5.00%, 8/15/32 | 1,975 | 2,246,029 | ||
| Rochester Institute of Technology, Series A, | ||||
| 6.00%, 7/01/33 | 1,000 | 1,161,960 | ||
| Rochester University, Series A, 5.13%, 7/01/14 (e) | 1,500 | 1,644,285 | ||
| Rochester University, Series A, 0.00%, 7/01/39 (f) | 1,000 | 1,017,260 | ||
| Rochester University, Series B, 5.00%, 7/01/39 | 550 | 590,040 | ||
| Teachers College, 5.00%, 7/01/42 | 750 | 828,930 | ||
| The New School, (AGM), 5.50%, 7/01/43 | 1,000 | 1,117,130 | ||
| New York State Dormitory Authority, Refunding RB: | ||||
| 5.00%, 7/01/42 | 1,000 | 1,123,010 | ||
| Brooklyn Law School, 5.75%, 7/01/33 | 475 | 539,629 | ||
| New York University, Series A, 5.00%, 7/01/37 | 1,490 | 1,682,672 | ||
| Rockefeller University, Series B, 4.00%, 7/01/38 | 500 | 522,670 | ||
| Skidmore College, Series A, 5.25%, 7/01/29 | 135 | 154,235 | ||
| State University Educational Facilities, Series A, | ||||
| 5.00%, 5/15/29 | 2,000 | 2,310,080 | ||
| Teachers College, 5.50%, 3/01/39 | 850 | 943,925 | ||
| Schenectady County Industrial Development Agency, | ||||
| Refunding RB, Union College Project, 5.00%, 7/01/31 | 1,000 | 1,063,300 | ||
| Suffolk County Industrial Development Agency, Refunding | ||||
| RB, New York Institute of Technology Project, | ||||
| 5.00%, 3/01/26 | 750 | 770,587 | ||
| Tompkins County Development Corp., RB, Ithaca College | ||||
| Project (AGM), 5.50%, 7/01/33 | 450 | 512,519 | ||
| Trust for Cultural Resources, Refunding RB, Carnegie Hall, | ||||
| Series A: | ||||
| 4.75%, 12/01/39 | 1,550 | 1,652,672 | ||
| 5.00%, 12/01/39 | 1,325 | 1,435,863 | ||
| Utica Industrial Development Agency New York, RB, | ||||
| Munson-Williams-Proctor Arts Institute: | ||||
| 5.38%, 7/15/20 | 1,000 | 1,002,180 | ||
| 5.40%, 7/15/30 | 1,210 | 1,212,045 | ||
See Notes to Financial Statements.
| 34 | ANNUAL REPORT | JUNE 30, 2012 |
| Schedule of Investments (continued) | BlackRock New York Municipal Bond Fund |
| (Percentages shown are based on Net Assets) |
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| New York (continued) | ||||
| Education (concluded) | ||||
| Yonkers Industrial Development Agency New York, RB, | ||||
| Sarah Lawrence College Project, Series A, 6.00%, | ||||
| 6/01/41 | $ | 1,000 | $ | 1,114,100 |
| 36,028,675 | ||||
| Health — 17.0% | ||||
| Dutchess County Local Development Corp., Refunding RB, | ||||
| Health Quest System Inc., Series A, 5.75%, 7/01/40 | 300 | 328,773 | ||
| Erie County Industrial Development Agency, RB, Episcopal | ||||
| Church Home, Series A: | ||||
| 5.88%, 2/01/18 | 540 | 540,713 | ||
| 6.00%, 2/01/28 | 375 | 375,266 | ||
| Genesee County Industrial Development Agency New York, | ||||
| Refunding RB, United Memorial Medical Center Project: | ||||
| 5.00%, 12/01/27 | 500 | 488,945 | ||
| 5.00%, 12/01/32 | 1,080 | 1,019,250 | ||
| Monroe County Industrial Development Corp., | ||||
| Refunding RB, Unity Hospital of Rochester Project (FHA), | ||||
| 5.50%, 8/15/40 | 1,050 | 1,186,804 | ||
| Nassau County Industrial Development Agency, | ||||
| Refunding RB, Special Needs Facilities Pooled Program, | ||||
| Series F-1 (ACA), 4.90%, 7/01/21 | 525 | 477,356 | ||
| New York City Health & Hospital Corp., Refunding RB, | ||||
| Health System, Series A, 5.00%, 2/15/30 | 1,000 | 1,110,930 | ||
| New York City Industrial Development Agency, RB: | ||||
| A Very Special Place Inc. Project, Series A, 6.13%, | ||||
| 1/01/13 | 65 | 65,432 | ||
| A Very Special Place Inc. Project, Series A, 7.00%, | ||||
| 1/01/33 | 1,600 | 1,604,928 | ||
| PSCH Inc. Project, 6.38%, 7/01/33 | 2,555 | 2,565,833 | ||
| Special Needs Facilities Pooled Program, Series A-1, | ||||
| 6.50%, 7/01/17 | 1,000 | 1,008,770 | ||
| Special Needs Facilities Pooled Program, Series C-1, | ||||
| 6.50%, 7/01/17 | 2,135 | 2,153,724 | ||
| New York City Industrial Development Agency, | ||||
| Refunding RB (ACA), Special Needs FacilitiesPooled | ||||
| Program: | ||||
| Series A-1, 4.38%, 7/01/20 | 1,000 | 890,490 | ||
| Series A-1, 4.50%, 7/01/30 | 210 | 164,682 | ||
| Series C-1, 5.10%, 7/01/31 | 525 | 439,462 | ||
| New York State Dormitory Authority, RB: | ||||
| Healthcare, Series A, 5.00%, 3/15/38 | 250 | 277,133 | ||
| Hudson Valley Hospital, (BHAC), 5.00%, 8/15/36 | 750 | 803,452 | ||
| New York & Presbyterian Hospital, (AGM), 5.00%, | ||||
| 8/15/36 | 1,000 | 1,029,010 | ||
| New York State Association for Retarded Children, | ||||
| Inc., Series B, (AMBAC), 6.00%, 7/01/32 | 700 | 809,774 | ||
| North Shore-Long Island Jewish Health System, | ||||
| Series A, 5.50%, 5/01/37 | 1,675 | 1,876,017 | ||
| North Shore-Long Island Jewish Health System, | ||||
| Series A, 5.75%, 5/01/37 | 1,725 | 1,971,554 | ||
| NYU Hospital Center, Series A, 5.75%, 7/01/31 | 1,055 | 1,199,757 | ||
| NYU Hospital Center, Series B, 5.63%, 7/01/37 | 530 | 571,960 | ||
| New York State Dormitory Authority, Refunding RB: | ||||
| Mount Sinai Hospital, Series A, 5.00%, 7/01/26 | 1,635 | 1,813,362 | ||
| North Shore-Long Island Jewish Health System, | ||||
| Series A, 5.00%, 5/01/32 | 2,500 | 2,752,900 | ||
| North Shore-Long Island Jewish Health System, | ||||
| Series E, 5.50%, 5/01/33 | 1,000 | 1,118,080 | ||
| NYU Hospital Center, Series A, 5.00%, 7/01/36 | 1,500 | 1,570,905 | ||
| Orange County Industrial Development Agency New York, | ||||
| RB, Special Needs Facilities Pooled Program, Series G-1 | ||||
| (ACA), 4.90%, 7/01/21 | 845 | 768,316 | ||
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| New York (continued) | ||||
| Health (concluded) | ||||
| Suffolk County Industrial Development Agency New York, RB: | ||||
| Huntington Hospital Project, Series B, 5.88%, | ||||
| 11/01/12 (e) | $ | 2,000 | $ | 2,038,660 |
| Special Needs Facilities Pooled Program, Series D-1, | ||||
| 6.50%, 7/01/17 | 135 | 136,184 | ||
| Special Needs Facilities Pooled Program, Series D-1, | ||||
| (ACA), 4.90%, 7/01/21 | 330 | 300,053 | ||
| Sullivan County Industrial Development Agency New York, | ||||
| RB, Special Needs Facilities Pooled Program, Series H-1 | ||||
| (ACA), 4.90%, 7/01/21 | 330 | 300,053 | ||
| Westchester County Healthcare Corp. New York, Refunding | ||||
| RB, Senior Lien: | ||||
| Series A, 5.00%, 11/01/30 | 3,075 | 3,292,710 | ||
| Series B, 6.00%, 11/01/30 | 375 | 435,502 | ||
| Westchester County Industrial Development Agency | ||||
| New York, RB: | ||||
| Kendal on Hudson Project, Series A, 6.50%, | ||||
| 1/01/13 (e) | 5,200 | 5,365,464 | ||
| Kendal on Hudson Project, Series A, 6.38%, 1/01/24 | 1,000 | 1,006,060 | ||
| Special Needs Facilities Pooled Program, Series E-1, | ||||
| (ACA), 4.90%, 7/01/21 | 350 | 318,237 | ||
| Yonkers Industrial Development Agency New York, RB, | ||||
| Sacred Heart Associations Project, Series A, AMT | ||||
| (SONYMA), 5.00%, 10/01/37 | 1,640 | 1,708,060 | ||
| 45,884,561 | ||||
| Housing — 5.3% | ||||
| Monroe County Industrial Development Agency, IDRB, | ||||
| Southview Towers Project, AMT (SONYMA), 6.25%, | ||||
| 2/01/31 | 1,000 | 1,001,830 | ||
| New York City Housing Development Corp., RB, Series C, | ||||
| AMT, 5.05%, 11/01/36 | 1,220 | 1,253,074 | ||
| New York Mortgage Agency, Refunding RB, AMT: | ||||
| Series 101, 5.40%, 4/01/32 | 1,935 | 1,936,742 | ||
| Series 133, 4.95%, 10/01/21 | 395 | 411,969 | ||
| Series 143, 4.90%, 10/01/37 | 1,600 | 1,635,952 | ||
| New York State HFA, RB, M/F Housing, Series A, AMT: | ||||
| Division Street, (SONYMA), 5.10%, 2/15/38 | 875 | 896,788 | ||
| Highland Avenue Senior Apartments, (SONYMA), | ||||
| 5.00%, 2/15/39 | 2,000 | 2,050,500 | ||
| Kensico Terrace Apartments, (SONYMA), 4.90%, | ||||
| 2/15/38 | 645 | 658,751 | ||
| Watergate II, 4.75%, 2/15/34 | 580 | 585,394 | ||
| Yonkers EDC, Refunding RB, Riverview II (Freddie Mac), | ||||
| 4.50%, 5/01/25 | 3,000 | 3,216,750 | ||
| Yonkers Industrial Development Agency New York, RB, | ||||
| Monastery Manor Associates LP Project, AMT | ||||
| (SONYMA), 5.25%, 4/01/37 | 585 | 600,327 | ||
| 14,248,077 | ||||
| State — 5.3% | ||||
| New York State Dormitory Authority, LRB, Municipal Health | ||||
| Facilities, Sub-Series 2-4, 4.75%, 1/15/30 | 700 | 749,567 | ||
| New York State Dormitory Authority, RB, Mental Health | ||||
| Services Facilities Improvement, Series A (AGM), | ||||
| 5.00%, 2/15/22 | 1,000 | 1,151,560 | ||
| New York State Dormitory Authority, Refunding RB, | ||||
| Upstate Community Colleges, Series B, 5.25%, | ||||
| 7/01/21 | 1,565 | 1,695,756 | ||
| New York State Thruway Authority, Refunding RB, Series | ||||
| A-1, 5.00%, 4/01/29 | 1,000 | 1,133,860 | ||
| New York State Urban Development Corp., RB, State | ||||
| Personal Income Tax, Series A, 3.50%, 3/15/28 | 1,750 | 1,793,592 | ||
See Notes to Financial Statements.
| ANNUAL REPORT | JUNE 30, 2012 | 35 |
| Schedule of Investments (continued) | BlackRock New York Municipal Bond Fund |
| (Percentages shown are based on Net Assets) |
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| New York (concluded) | ||||
| State (concluded) | ||||
| New York State Urban Development Corp., Refunding RB: | ||||
| Clarkson Center for Advance Materials, 5.50%, | ||||
| 1/01/20 | $ | 1,685 | $ | 2,087,496 |
| University Facilities Grants, 5.50%, 1/01/19 | 3,500 | 4,298,875 | ||
| State of New York, GO, Series A, 5.00%, 2/15/39 | 1,250 | 1,381,800 | ||
| 14,292,506 | ||||
| Tobacco — 1.4% | ||||
| New York Counties Tobacco Trust I, RB, Tobacco Pass | ||||
| Thru, Series A: | ||||
| 6.50%, 6/01/35 | 750 | 731,647 | ||
| 6.63%, 6/01/42 | 490 | 479,980 | ||
| Niagara County Tobacco Asset Securitization Corp. New | ||||
| York, RB, Asset-Backed, 6.25%, 5/15/40 | 1,000 | 935,100 | ||
| Tobacco Settlement Financing Corp. New York, RB, | ||||
| Asset-Backed, Series A-1 (AMBAC), 5.25%, 6/01/20 | 1,455 | 1,518,874 | ||
| 3,665,601 | ||||
| Transportation — 9.3% | ||||
| Hudson New York Yards Infrastructure Corp., RB: | ||||
| (AGC), 5.00%, 2/15/47 | 1,000 | 1,049,140 | ||
| Series A, (AGM), 5.00%, 2/15/47 | 1,050 | 1,101,597 | ||
| Series A, (NPFGC), 4.50%, 2/15/47 | 3,815 | 3,856,126 | ||
| Metropolitan Transportation Authority, RB: | ||||
| Series A, 5.63%, 11/15/39 | 500 | 562,675 | ||
| Series C, 6.50%, 11/15/28 | 1,760 | 2,252,606 | ||
| New York Liberty Development Corp., RB, 1 World Trade | ||||
| Center Port Authority Construction, 5.00%, 12/15/41 | 1,000 | 1,110,550 | ||
| New York State Thruway Authority, RB, Series I (d): | ||||
| 5.00%, 1/01/37 | 920 | 1,005,854 | ||
| 4.13%, 1/01/42 | 1,125 | 1,118,340 | ||
| 5.00%, 1/01/42 | 280 | 303,806 | ||
| Onondaga County Industrial Development Agency New | ||||
| York, RB, AMT Air Cargo: | ||||
| Senior, 6.13%, 1/01/32 | 3,940 | 3,861,003 | ||
| Subordinate, 7.25%, 1/01/32 | 1,365 | 1,344,716 | ||
| Port Authority of New York & New Jersey, RB, Special | ||||
| Project, JFK International Air Terminal: | ||||
| Series 6, AMT (NPFGC), 6.25%, 12/01/13 | 2,575 | 2,660,001 | ||
| Series 6, AMT (NPFGC), 6.25%, 12/01/14 | 2,620 | 2,749,140 | ||
| Series 8, 6.00%, 12/01/42 | 2,000 | 2,218,500 | ||
| 25,194,054 | ||||
| Utilities — 6.5% | ||||
| Long Island Power Authority, RB, General: | ||||
| Series A, (AGM), 5.00%, 5/01/36 | 500 | 547,810 | ||
| Series C, (CIFG), 5.25%, 9/01/29 | 3,000 | 3,515,700 | ||
| Long Island Power Authority, Refunding RB, Series A: | ||||
| 5.50%, 4/01/24 | 1,250 | 1,485,825 | ||
| 6.00%, 5/01/33 | 2,450 | 2,912,952 | ||
| 5.75%, 4/01/39 | 300 | 344,556 | ||
| New York City Municipal Water Finance Authority, RB: | ||||
| Fiscal 2008, Series A, 5.00%, 6/15/38 | 1,570 | 1,738,241 | ||
| Fiscal 2009, Series A, 5.75%, 6/15/40 | 500 | 603,620 | ||
| Series FF-2, 5.50%, 6/15/40 | 800 | 915,608 | ||
| New York City Municipal Water Finance Authority, | ||||
| Refunding RB: | ||||
| Second General Resolution, Series EE, 4.00%, 6/15/45 | 1,540 | 1,523,276 | ||
| Second General Resolution, Series HH, 5.00%, 6/15/32 | 950 | 1,083,095 | ||
| Series FF, 5.00%, 6/15/45 | 1,680 | 1,859,088 | ||
| New York State Environmental Facilities Corp., Refunding | ||||
| RB, Revolving Funds New York City Municipal Water, | ||||
| Series B, 5.00%, 6/15/36 | 1,000 | 1,136,760 | ||
| 17,666,531 | ||||
| Total Municipal Bonds in New York | 228,787,012 | |||
| Par | ||||
| Municipal Bonds | (000) | Value | ||
| Guam — 0.3% | ||||
| Tobacco — 0.3% | ||||
| Guam Economic Development & Commerce Authority, | ||||
| Refunding RB, Tobacco Settlement Asset-Backed, | ||||
| 5.63%, 6/01/47 | $ | 1,075 | $ | 909,643 |
| Puerto Rico — 5.8% | ||||
| County/City/Special District/School District — 0.8% | ||||
| Puerto Rico Sales Tax Financing Corp., RB, CAB, Series A, | ||||
| 5.76%, 8/01/35 (c) | 3,000 | 808,920 | ||
| Puerto Rico Sales Tax Financing Corp., Refunding RB, | ||||
| CAB, First Sub-Series A-1, 4.48%, 8/01/24 (c) | 2,000 | 1,170,220 | ||
| 1,979,140 | ||||
| Housing — 0.7% | ||||
| Puerto Rico Housing Finance Authority, Refunding RB, | ||||
| Subordinate, Capital Fund Modernization, 5.13%, | ||||
| 12/01/27 | 1,750 | 1,907,202 | ||
| State — 2.3% | ||||
| Puerto Rico Commonwealth Infrastructure Financing | ||||
| Authority, RB, CAB, Series A (c): | ||||
| (AMBAC), 6.36%, 7/01/44 | 1,100 | 148,115 | ||
| (NPFGC), 6.33%, 7/01/42 | 7,470 | 1,150,754 | ||
| Puerto Rico Public Buildings Authority, RB, Government | ||||
| Facilities, Series I, 5.25%, 7/01/14 (e) | 55 | 60,195 | ||
| Puerto Rico Sales Tax Financing Corp., RB: | ||||
| CAB, Series A, 5.54%, 8/01/32 (c) | 500 | 166,935 | ||
| First Sub-Series A, 5.75%, 8/01/37 | 2,000 | 2,196,000 | ||
| First Sub-Series A, (AGM), 5.00%, 8/01/40 | 1,000 | 1,050,830 | ||
| Puerto Rico Sales Tax Financing Corp., Refunding RB, | ||||
| CAB, Series A (NPFGC), 5.75%, 8/01/41 (c) | 7,500 | 1,441,350 | ||
| 6,214,179 | ||||
| Transportation — 1.5% | ||||
| Puerto Rico Highway & Transportation Authority, RB, | ||||
| Series Y (AGM), 6.25%, 7/01/21 | 1,000 | 1,199,020 | ||
| Puerto Rico Highway & Transportation Authority, Refunding | ||||
| RB (AGM): | ||||
| Series AA, 4.95%, 7/01/26 | 2,175 | 2,319,964 | ||
| Series CC, 5.50%, 7/01/30 | 450 | 527,139 | ||
| 4,046,123 | ||||
| Utilities — 0.5% | ||||
| Puerto Rico Aqueduct & Sewer Authority, Refunding RB, | ||||
| Senior Lien, Series A, 6.00%, 7/01/38 | 500 | 525,665 | ||
| Puerto Rico Electric Power Authority, Refunding RB, Series | ||||
| VV (NPFGC), 5.25%, 7/01/30 | 745 | 801,002 | ||
| 1,326,667 | ||||
| Total Municipal Bonds in Puerto Rico | 15,473,311 | |||
| Total Municipal Bonds — 91.0% | 245,169,966 | |||
| Municipal Bonds Transferred to | ||||
| Tender Option Bond Trusts (g) | ||||
| New York — 14.6% | ||||
| County/City/Special District/School District — 7.9% | ||||
| City of New York New York, GO, Series J, 5.00%, 5/15/23 | 1,800 | 1,939,122 | ||
| New York City Transitional Finance Authority, RB: | ||||
| Fiscal 2009, Series S-3, 5.25%, 1/15/39 | 2,100 | 2,330,910 | ||
| Future Tax Secured, Sub-Series D-1, 5.00%, 11/01/38 | 1,650 | 1,848,429 | ||
| New York Convention Center Development Corp., RB, | ||||
| Hotel Unit Fee Secured (AMBAC), 5.00%, 11/15/35 | 3,200 | 3,322,560 | ||
See Notes to Financial Statements.
| 36 | ANNUAL REPORT | JUNE 30, 2012 |
| Schedule of Investments (continued) | BlackRock New York Municipal Bond Fund |
| (Percentages shown are based on Net Assets) |
| Municipal Bonds Transferred to | Par | |||
| Tender Option Bond Trusts (g) | (000) | Value | ||
| New York (concluded) | ||||
| County/City/Special District/School District (concluded) | ||||
| New York Liberty Development Corp., Refunding RB: | ||||
| 4 World Trade Center Project, 5.00%, 11/15/44 | $ | 830 | $ | 895,014 |
| 7 World Trade Center Project, 4.00%, 9/15/35 | 2,010 | 2,048,853 | ||
| New York State Dormitory Authority, RB, State University | ||||
| Dormitory Facilities, Series A, 5.25%, 7/01/29 | 1,350 | 1,532,425 | ||
| New York State Liberty Development Corp., RB, World | ||||
| Trade Center Port Authority, 5.25%, 12/15/43 | 6,495 | 7,364,486 | ||
| 21,281,799 | ||||
| Transportation — 1.6% | ||||
| Hudson New York Yards Infrastructure Corp., Senior RB, | ||||
| 5.75%, 2/15/47 | 2,250 | 2,584,126 | ||
| Port Authority of New York & New Jersey, RB, | ||||
| Consolidated 169th Series, AMT, 5.00%, 10/15/26 | 1,500 | 1,707,765 | ||
| 4,291,891 | ||||
| Utilities — 5.1% | ||||
| New York City Municipal Water Finance Authority, | ||||
| Refunding RB: | ||||
| Second General Resolution, Fiscal 2012, Series BB, | ||||
| 5.00%, 6/15/44 | 3,751 | 4,143,648 | ||
| Second General Resolution, Series HH, | ||||
| 5.00%, 6/15/32 | 2,790 | 3,180,879 | ||
| Series A, 4.75%, 6/15/30 | 4,000 | 4,408,800 | ||
| Suffolk County Water Authority, Refunding RB, | ||||
| 3.00%, 6/01/25 | 1,996 | 2,035,606 | ||
| 13,768,933 | ||||
| Total Municipal Bonds in New York | 39,342,623 | |||
| Puerto Rico — 0.4% | ||||
| State — 0.4% | ||||
| Puerto Rico Sales Tax Financing Corp., Refunding RB, | ||||
| Series C, 5.25%, 8/01/40 | 1,010 | 1,094,184 | ||
| Total Municipal Bonds Transferred to | ||||
| Tender Option Bond Trusts — 15.0% | 40,436,807 | |||
| Total Long-Term Investments | ||||
| (Cost — $266,826,096) — 106.0% | 285,606,773 | |||
| Short-Term Securities | Shares | |||
| BIF New York Municipal Money Fund, 0.00% (h)(i) | 3,941,016 | 3,941,016 | ||
| Total Short-Term Securities | ||||
| (Cost — $3,941,016) — 1.5% | 3,941,016 | |||
| Total Investments (Cost — $270,767,112) — 107.5% | 289,547,789 | |||
| Other Assets Less Liabilities — 0.7% | 1,851,430 | |||
| Liability for TOB Trust Certificates, Including Interest | ||||
| Expense and Fees Payable — (8.2)% | (22,011,816) | |||
| Net Assets — 100.0% | $ | 269,387,403 | ||
| (a) | Variable rate security. Rate shown is as of report date. |
| (b) | Issuer filed for bankruptcy and/or is in default of principal and/or interest payments. |
| (c) | Represents a zero-coupon bond. Rate shown reflects the current yield as of report date. |
| (d) | When-issued security. Unsettled when-issued transactions were as follows: |
| Unrealized | ||
| Counterparty | Value | Appreciation |
| Citigroup Inc. | $4,210,663 | $42,257 |
| (e) | US government securities, held in escrow, are used to pay interest on this security, as well as to retire the bond in full at the date indicated, typically at a premium to par. |
| (f) | Represents a step-up bond that pays an initial coupon rate for the first period and then a higher coupon rate for the following periods. Rate shown is as of report date. |
| (g) | Securities represent bonds transferred to a TOB in exchange for which the Fund’s 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. |
| (h) | Investments in companies considered to be an affiliate of the Fund during the year, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows: |
| Shares Held | Shares Held | |||
| at June 30, | Net | at June 30, | ||
| Affiliate | 2011 | Activity | 2012 | Income |
| BIF New York | ||||
| Municipal Money Fund | 1,241,982 | 2,699,034 | 3,941,016 | $44 |
| (i) | Represents the current yield as of report date. |
| • | For Fund compliance purposes, the Fund’s sector classifications refer to any one or more of the sector sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by Fund management. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease. |
| • | Fair Value Measurements — Various inputs are used in determining the fair value of investments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes as follows: |
| • | Level 1 — unadjusted price quotations in active markets/exchanges for identical assets and liabilities |
| • | Level 2 — other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs) |
| • | Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Fund’s own assumptions used in determining the fair value of investments) |
Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments is based on the pricing transparency of the investment and is not necessarily an indication of the risks associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.
The following table summarizes the Fund’s investments categorized in the disclosure hierarchy as of June 30, 2012:
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
| Assets: | |||||||||||||||||
| Investments: | |||||||||||||||||
| Long-Term | |||||||||||||||||
| Investments1 | — | $ | 285,606,773 | — | $ | 285,606,773 | |||||||||||
| Short-Term: | |||||||||||||||||
| Securities | $ | 3,941,016 | — | — | 3,941,016 | ||||||||||||
| Total | $ | 3,941,016 | $ | 285,606,773 | — | $ | 289,547,789 | ||||||||||
| 1 | See above Schedule of Investments for values in each sector. |
See Notes to Financial Statements.
| ANNUAL REPORT | JUNE 30, 2012 | 37 |
| Schedule of Investments (concluded) | BlackRock New York Municipal Bond Fund |
Certain of the Fund’s assets and liabilities are held at carrying amount, which approximates fair value for financial statement purposes. As of June 30, 2012, such assets and liabilities are categorized within the disclosure hierarchy as follows:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Cash | $ | 74,421 | — | — | $ | 74,421 | ||||||||||
| Liabilities: | ||||||||||||||||
| TOB trust | ||||||||||||||||
| certificates | — | $ | (22,006,793 | ) | — | (22,006,793 | ) | |||||||||
| Total | $ | 74,421 | $ | (22,006,793 | ) | — | $ | (21,932,372 | ) | |||||||
There were no transfers between levels during the year ended June 30, 2012.
See Notes to Financial Statements.
| 38 | ANNUAL REPORT | JUNE 30, 2012 |
Statements of Assets and Liabilities
| BlackRock | BlackRock | BlackRock | BlackRock | |||||||||
| High Yield | National | Short-Term | New York | |||||||||
| Municipal | Municipal | Municipal | Municipal | |||||||||
| June 30, 2012 | Fund | Fund | Fund | Bond Fund | ||||||||
| Assets | ||||||||||||
| Investments at value — unaffiliated1 | $ | 307,384,579 | $ | 4,786,271,414 | $ | 1,034,222,928 | $ | 285,606,773 | ||||
| Investments at value — affiliated 2 | 25,189,057 | 444,234,095 | 1,302,407 | 3,941,016 | ||||||||
| Cash | — | — | — | 74,421 | ||||||||
| Cash pledged as collateral for financial futures contracts | — | 660,000 | — | — | ||||||||
| Interest receivable | 3,878,939 | 71,475,300 | 11,594,291 | 3,997,759 | ||||||||
| Investments sold receivable | 1,125,825 | 33,016,089 | — | 4,703,516 | ||||||||
| Capital shares sold receivable | 2,542,714 | 14,268,427 | 2,783,448 | 598,966 | ||||||||
| Variation margin receivable | — | 273,440 | — | — | ||||||||
| Prepaid expenses | 981 | 27,840 | 4,667 | 2,479 | ||||||||
| Total assets | 340,122,095 | 5,350,226,605 | 1,049,907,741 | 298,924,930 | ||||||||
| Accrued Liabilities | ||||||||||||
| Bank overdraft | — | 1,945,131 | 291,639 | — | ||||||||
| Investments purchased payable | 6,654,748 | 72,095,970 | 14,853,940 | 6,227,675 | ||||||||
| Capital shares redeemed payable | 886,037 | 9,949,500 | 2,290,608 | 331,021 | ||||||||
| Income dividends payable | 731,965 | 10,154,443 | 480,296 | 669,842 | ||||||||
| Investment advisory fees payable | 128,210 | 1,456,295 | 184,944 | 120,589 | ||||||||
| Service and distribution fees payable | 45,176 | 813,718 | 104,825 | 48,633 | ||||||||
| Interest expense and fees payable | 14,184 | 255,504 | — | 5,023 | ||||||||
| Officer’s and Directors’ fees payable | 4,249 | — | 4,484 | 3,634 | ||||||||
| Other affiliates payable | 991 | 19,777 | 5,583 | 1,370 | ||||||||
| Other accrued expenses payable | 73,746 | 851,846 | 263,253 | 122,947 | ||||||||
| Total accrued liabilities | 8,539,306 | 97,542,184 | 18,479,572 | 7,530,734 | ||||||||
| Other Liabilities | ||||||||||||
| TOB trust certificates | 33,860,884 | 468,586,354 | — | 22,006,793 | ||||||||
| Total liabilities | 42,400,190 | 566,128,538 | 18,479,572 | 29,537,527 | ||||||||
| Net Assets | $ | 297,721,905 | $ | 4,784,098,067 | $ | 1,031,428,169 | $ | 269,387,403 | ||||
| Net Assets Consist of | ||||||||||||
| Paid-in capital | $ | 290,416,428 | $ | 4,489,978,070 | $ | 1,029,886,574 | $ | 265,160,429 | ||||
| Undistributed (distributions in excess of) net investment income |
445,615 | 3,678,316 | (480,296 | ) | 450,382 | |||||||
| Accumulated net realized loss | (12,650,432 | ) | (106,148,136 | ) | (6,897,136 | ) | (15,004,085 | ) | ||||
| Net unrealized appreciation/depreciation | 19,510,294 | 396,589,817 | 8,919,027 | 18,780,677 | ||||||||
| Net Assets | $ | 297,721,905 | $ | 4,784,098,067 | $ | 1,031,428,169 | $ | 269,387,403 | ||||
| 1 Investments at cost — unaffiliated | $ | 287,874,285 | $ | 4,389,375,959 | $ | 1,025,303,901 | $ | 266,826,096 | ||||
| 2 Investments at cost — affiliated | $ | 25,189,057 | $ | 444,234,095 | $ | 1,302,407 | $ | 3,941,016 | ||||
See Notes to Financial Statements.
| ANNUAL REPORT | JUNE 30, 2012 | 39 |
Statements of Assets and Liabilities (concluded)
| June 30, 2012 | BlackRock High Yield Municipal Fund |
BlackRock National Municipal Fund |
BlackRock Short-Term Municipal Fund |
BlackRock New York Municipal Bond Fund |
||||
| Net Asset Value | ||||||||
| BlackRock: | ||||||||
| Net assets | — | $ | 446,620,063 | $ | 63,503,189 | — | ||
| Shares outstanding, $0.10 par value | — | 40,925,832 | 6,240,959 | — | ||||
| Net asset value | — | $ | 10.91 | $ | 10.18 | — | ||
| Shares authorized | — | 375 Million | 150 Million | — | ||||
| Institutional: | ||||||||
| Net assets | $ | 176,895,049 | $ | 2,037,089,557 | $ | 643,909,822 | $ | 31,874,572 |
| Shares outstanding, $0.10 par value | 19,096,906 | 186,668,277 | 63,299,928 | 2,895,281 | ||||
| Net asset value | $ | 9.26 | $ | 10.91 | $ | 10.17 | $ | 11.01 |
| Shares authorized | 100 Million | 375 Million | 150 Million | Unlimited | ||||
| Service: | ||||||||
| Net assets | — | $ | 1,213,823 | — | — | |||
| Shares outstanding, $0.10 par value | — | 111,367 | — | — | ||||
| Net asset value | — | $ | 10.90 | — | — | |||
| Shares authorized | — | 375 Million | — | — | ||||
| Investor A: | ||||||||
| Net assets | $ | 83,839,516 | $ | 1,688,258,248 | $ | 204,728,827 | $ | 43,029,619 |
| Shares outstanding, $0.10 par value | 9,071,430 | 154,625,175 | 20,114,618 | 3,905,327 | ||||
| Net asset value | $ | 9.24 | $ | 10.92 | $ | 10.18 | $ | 11.02 |
| Shares authorized | 100 Million | 375 Million | 150 Million | Unlimited | ||||
| Investor A1: | ||||||||
| Net assets | — | — | $ | 48,377,130 | $ | 154,472,782 | ||
| Shares outstanding, $0.10 par value | — | — | 4,751,935 | 14,021,355 | ||||
| Net asset value | — | — | $ | 10.18 | $ | 11.02 | ||
| Shares authorized | — | — | 150 Million | Unlimited | ||||
| Investor B: | ||||||||
| Net assets | — | $ | 27,169,112 | $ | 2,215,887 | $ | 3,716,703 | |
| Shares outstanding, $0.10 par value | — | 2,490,581 | 217,803 | 337,504 | ||||
| Net asset value | — | $ | 10.91 | $ | 10.17 | $ | 11.01 | |
| Shares authorized | — | 375 Million | 150 Million | Unlimited | ||||
| Investor B1: | ||||||||
| Net assets | — | $ | 494,118 | — | — | |||
| Shares outstanding, $0.10 par value | — | 45,294 | — | — | ||||
| Net asset value | — | $ | 10.91 | — | — | |||
| Shares authorized | — | 375 Million | — | — | ||||
| Investor C: | ||||||||
| Net assets | $ | 36,987,340 | $ | 483,092,216 | $ | 68,693,314 | $ | 25,201,004 |
| Shares outstanding, $0.10 par value | 3,992,116 | 44,242,946 | 6,750,994 | 2,288,370 | ||||
| Net asset value | $ | 9.27 | $ | 10.92 | $ | 10.18 | $ | 11.01 |
| Shares authorized | 100 Million | 375 Million | 150 Million | Unlimited | ||||
| Investor C1: | ||||||||
| Net assets | — | $ | 100,160,930 | — | $ | 11,092,723 | ||
| Shares outstanding, $0.10 par value | — | 9,176,918 | — | 1,006,992 | ||||
| Net asset value | — | $ | 10.91 | — | $ | 11.02 | ||
| Shares authorized | — | 375 Million | — | Unlimited | ||||
See Notes to Financial Statements.
| 40 | ANNUAL REPORT | JUNE 30, 2012 |
| BlackRock | BlackRock | BlackRock | BlackRock | |||||||||
| High Yield | National | Short-Term | New York | |||||||||
| Municipal | Municipal | Municipal | Municipal | |||||||||
| Year Ended June 30, 2012 | Fund | Fund | Fund | Bond Fund | ||||||||
| Investment Income | ||||||||||||
| Interest | $ | 12,410,870 | $ | 203,883,558 | $ | 13,712,353 | $ | 13,438,134 | ||||
| Income — affiliated | 2,388 | 71,634 | 1,531 | 44 | ||||||||
| Total income | 12,413,258 | 203,955,192 | 13,713,884 | 13,438,178 | ||||||||
| Expenses | ||||||||||||
| Investment advisory | 1,146,871 | 19,610,629 | 3,426,278 | 1,413,180 | ||||||||
| Service — Service | — | 16,898 | — | — | ||||||||
| Service — Investor A | 113,331 | 3,384,298 | 544,665 | 98,622 | ||||||||
| Service — Investor A1 | — | — | 51,398 | 153,166 | ||||||||
| Service and distribution — Investor B | — | 250,441 | 12,874 | 22,805 | ||||||||
| Service and distribution — Investor B1 | — | 1,344 | — | — | ||||||||
| Service and distribution — Investor C | 245,815 | 4,097,726 | 785,733 | 205,640 | ||||||||
| Service and distribution — Investor C1 | — | 797,184 | — | 66,287 | ||||||||
| Transfer agent — BlackRock | — | 151,870 | 398 | — | ||||||||
| Transfer agent — Institutional | 28,160 | 1,905,623 | 696,630 | 20,633 | ||||||||
| Transfer agent — Service | — | 4,548 | — | — | ||||||||
| Transfer agent — Investor A | 18,981 | 960,683 | 51,336 | 31,986 | ||||||||
| Transfer agent — Investor A1 | — | — | 24,150 | 76,588 | ||||||||
| Transfer agent — Investor B | — | 35,887 | 3,747 | 4,294 | ||||||||
| Transfer agent — Investor B1 | — | 1,791 | — | — | ||||||||
| Transfer agent — Investor C | 12,306 | 203,659 | 41,496 | 8,793 | ||||||||
| Transfer agent — Investor C1 | — | 54,437 | — | 4,545 | ||||||||
| Registration | 75,709 | 221,444 | 114,134 | 71,384 | ||||||||
| Accounting services | 68,636 | 639,221 | 227,520 | 74,435 | ||||||||
| Professional | 52,245 | 89,482 | 58,425 | 112,128 | ||||||||
| Officer and Directors | 25,022 | 80,066 | 41,006 | 25,529 | ||||||||
| Custodian | 15,236 | 109,422 | 57,055 | 18,235 | ||||||||
| Printing | 11,714 | 114,010 | 48,252 | 32,231 | ||||||||
| Reorganization | — | 11,664 | — | — | ||||||||
| Miscellaneous | 23,775 | 65,135 | 44,518 | 27,774 | ||||||||
| Total expenses excluding interest expense and fees | 1,837,801 | 32,807,462 | 6,229,615 | 2,468,255 | ||||||||
| Interest expense and fees 1 | 183,941 | 3,194,793 | — | 95,574 | ||||||||
| Total expenses | 2,021,742 | 36,002,255 | 6,229,615 | 2,563,829 | ||||||||
| Less fees waived by advisor | (5,900 | ) | (1,914,274 | ) | (4,985 | ) | (6,608 | ) | ||||
| Less transfer agent fees waived and/or reimbursed — class specific | — | (1,191,522 | ) | (648,408 | ) | — | ||||||
| Less fees paid indirectly | — | (158 | ) | (46 | ) | (10 | ) | |||||
| Total expenses after fees waived and/or reimbursed
and paid indirectly |
2,015,842 | 32,896,301 | 5,576,176 | 2,557,211 | ||||||||
| Net investment income | 10,397,416 | 171,058,891 | 8,137,708 | 10,880,967 | ||||||||
| Realized and Unrealized Gain (Loss) | ||||||||||||
| Net realized gain (loss) from: | ||||||||||||
| Investments | 461,372 | 32,258,731 | 886,216 | (1,779,039 | ) | |||||||
| Financial futures contracts | (689,002 | ) | (6,376,756 | ) | — | (931,748 | ) | |||||
| (227,630 | ) | 25,881,975 | 886,216 | (2,710,787 | ) | |||||||
| Net change in unrealized appreciation/depreciation on: | ||||||||||||
| Investments | 21,780,190 | 298,667,727 | (350,465 | ) | 18,176,640 | |||||||
| Financial futures contracts | (8,632 | ) | (305,638 | ) | — | (76,858 | ) | |||||
| 21,771,558 | 298,362,089 | (350,465 | ) | 18,099,782 | ||||||||
| Total realized and unrealized gain | 21,543,928 | 324,244,064 | 535,751 | 15,388,995 | ||||||||
| Net Increase in Net Assets Resulting from Operations | $ | 31,941,344 | $ | 495,302,955 | $ | 8,673,459 | $ | 26,269,962 | ||||
| 1 | Related to TOBs. |
See Notes to Financial Statements.
| ANNUAL REPORT | JUNE 30, 2012 | 41 |
| Year Ended June 30, | ||||||
| Increase (Decrease) in Net Assets: | 2012 | 2011 | ||||
| Operations | ||||||
| Net investment income | $ | 10,397,416 | $ | 8,137,725 | ||
| Net realized loss | (227,630 | ) | (3,380,274 | ) | ||
| Net change in unrealized appreciation/depreciation | 21,771,558 | 1,092,810 | ||||
| Net increase in net assets resulting from operations | 31,941,344 | 5,850,261 | ||||
| Dividends to Shareholders From | ||||||
| Net investment income: | ||||||
| Institutional | (7,098,857 | ) | (5,823,873 | ) | ||
| Investor A | (2,158,262 | ) | (1,388,936 | ) | ||
| Investor C | (994,674 | ) | (752,102 | ) | ||
| Decrease in net assets resulting from dividends to shareholders | (10,251,793 | ) | (7,964,911 | ) | ||
| Capital Share Transactions | ||||||
| Net increase in net assets derived from capital share transactions | 118,424,930 | 25,911,196 | ||||
| Net Assets | ||||||
| Total increase in net assets | 140,114,481 | 23,796,546 | ||||
| Beginning of year | 157,607,424 | 133,810,878 | ||||
| End of year | $ | 297,721,905 | $ | 157,607,424 | ||
| Undistributed net investment income | $ | 445,615 | $ | 314,041 | ||
See Notes to Financial Statements.
| 42 | ANNUAL REPORT | JUNE 30, 2012 |
| Statements of Changes in Net Assets | BlackRock National Municipal Fund |
| Year Ended June 30, | ||||||
| Increase (Decrease) in Net Assets: | 2012 | 2011 | ||||
| Operations | ||||||
| Net investment income | $ | 171,058,891 | $ | 112,055,270 | ||
| Net realized gain (loss) | 25,881,975 | (20,239,419 | ) | |||
| Net change in unrealized appreciation/depreciation | 298,362,089 | (22,336,758 | ) | |||
| Net increase in net assets resulting from operations | 495,302,955 | 69,479,093 | ||||
| Dividends to Shareholders From | ||||||
| Net investment income: | ||||||
| BlackRock | (18,590,969 | ) | — | |||
| Institutional | (76,209,583 | ) | (57,025,147 | ) | ||
| Service | (274,401 | ) | — | |||
| Investor A | (55,356,873 | ) | (38,918,106 | ) | ||
| Investor B | (1,218,669 | ) | (1,562,654 | ) | ||
| Investor B1 | (20,399 | ) | — | |||
| Investor C | (13,732,375 | ) | (11,251,949 | ) | ||
| Investor C1 | (3,544,673 | ) | (3,251,474 | ) | ||
| Decrease in net assets resulting from dividends to shareholders | (168,947,942 | ) | (112,009,330 | ) | ||
| Capital Share Transactions | ||||||
| Net increase in net assets derived from capital share transactions | 2,009,721,670 | 140,450,808 | ||||
| Net Assets | ||||||
| Total increase in net assets | 2,336,076,683 | 97,920,571 | ||||
| Beginning of year | 2,448,021,384 | 2,350,100,813 | ||||
| End of year | $ | 4,784,098,067 | $ | 2,448,021,384 | ||
| Undistributed net investment income | $ | 3,678,316 | $ | 1,888,807 | ||
See Notes to Financial Statements.
| ANNUAL REPORT | JUNE 30, 2012 | 43 |
| Statements of Changes in Net Assets | BlackRock Short-Term Municipal Fund |
| Year Ended June 30, | |||||||
| Increase (Decrease) in Net Assets: | 2012 | 2011 | |||||
| Operations | |||||||
| Net investment income | $ | 8,137,708 | $ | 11,814,258 | |||
| Net realized gain | 886,216 | 733,958 | |||||
| Net change in unrealized appreciation/depreciation | (350,465 | ) | (1,618,994 | ) | |||
| Net increase in net assets resulting from operations | 8,673,459 | 10,929,222 | |||||
| Dividends to Shareholders From | |||||||
| Net investment income: | |||||||
| BlackRock | (607,341 | ) | (296,867 | ) | |||
| Institutional | (6,586,342 | ) | (7,987,166 | ) | |||
| Investor A | (1,714,646 | ) | (2,574,837 | ) | |||
| Investor A1 | (479,858 | ) | (671,515 | ) | |||
| Investor B | (24,129 | ) | (59,313 | ) | |||
| Investor C | (8,215 | ) | (224,914 | ) | |||
| Decrease in net assets resulting from dividends to shareholders | (9,420,531 | ) | (11,814,612 | ) | |||
| Capital Share Transactions | |||||||
| Net increase (decrease) in net assets derived from capital share transactions | 17,906,706 | (120,319,787 | ) | ||||
| Net Assets | |||||||
| Total increase (decrease) in net assets | 17,159,634 | (121,205,177 | ) | ||||
| Beginning of year | 1,014,268,535 | 1,135,473,712 | |||||
| End of year | $ | 1,031,428,169 | $ | 1,014,268,535 | |||
| Undistributed (distributions in excess of) net investment income | $ | (480,296 | ) | $ | 483,959 | ||
See Notes to Financial Statements.
| 44 | ANNUAL REPORT | JUNE 30, 2012 |
| Statements of Changes in Net Assets | BlackRock New York Municipal Bond Fund |
| Year Ended June 30, | ||||||
| Increase (Decrease) in Net Assets: | 2012 | 2011 | ||||
| Operations | ||||||
| Net investment income | $ | 10,880,967 | $ | 11,696,840 | ||
| Net realized loss | (2,710,787 | ) | (1,096,931 | ) | ||
| Net change in unrealized appreciation/depreciation | 18,099,782 | (4,209,627 | ) | |||
| Net increase in net assets resulting from operations | 26,269,962 | 6,390,282 | ||||
| Dividends to Shareholders From | ||||||
| Net investment income: | ||||||
| Institutional | (1,228,547 | ) | (1,205,096 | ) | ||
| Investor A | (1,639,226 | ) | (1,709,124 | ) | ||
| Investor A1 | (6,663,388 | ) | (7,233,004 | ) | ||
| Investor B | (178,466 | ) | (338,853 | ) | ||
| Investor C | (705,832 | ) | (666,985 | ) | ||
| Investor C1 | (425,217 | ) | (474,356 | ) | ||
| Decrease in net assets resulting from dividends to shareholders | (10,840,676 | ) | (11,627,418 | ) | ||
| Capital Share Transactions | ||||||
| Net increase (decrease) in net assets derived from capital share transactions | 7,191,618 | (11,511,267 | ) | |||
| Net Assets | ||||||
| Total increase (decrease) in net assets | 22,620,904 | (16,748,403 | ) | |||
| Beginning of year | 246,766,499 | 263,514,902 | ||||
| End of year | $ | 269,387,403 | $ | 246,766,499 | ||
| Undistributed net investment income | $ | 450,382 | $ | 799,549 | ||
See Notes to Financial Statements.
| ANNUAL REPORT | JUNE 30, 2012 | 45 |
| BlackRock | |||
| National | |||
| Municipal | |||
| Year Ended June 30, 2012 | Fund | ||
| Cash Used for Operating Activities | |||
| Net increase in net assets resulting from operations | $ | 495,302,955 | |
|
Adjustments to reconcile net increase in net assets resulting from operations to net cash used for operating activities: |
|||
| Increase in interest receivable | (19,860,263 | )1 | |
| Decrease in prepaid expenses | 80,740 | 1 | |
| Increase in variation margin receivable | (273,440 | ) | |
| Increase in service and distribution fees payable | 309,360 | 1 | |
| Increase in investment advisory fees payable | 352,393 | 1 | |
| Increase in interest expense and fees payable | 37,811 | ||
| Decrease in other affiliates payable | (123,349 | )1 | |
| Decrease in other accrued expenses payable | (639,279 | )1 | |
| Increase in cash pledged as collateral for financial futures contracts | (270,000 | ) | |
| Decrease in reorganization | (100,952 | )1 | |
| Decrease in Officer’s and Directors’ fees payable | (8,804 | )1 | |
| Net realized and unrealized loss on investments | (330,926,458 | ) | |
| Amortization of premium and accretion of discount on investments | 11,473,701 | ||
| Proceeds from sales of long-term investments | 1,605,211,102 | 1 | |
| Purchases of long-term investments | (2,281,312,974 | ) | |
| Net proceeds from purchases of short-term securities | (169,120,525 | ) | |
| Cash used for operating activities | (689,867,982 | ) | |
| Cash Provided by Financing Activities | |||
| Cash proceeds from shares sold | 1,432,136,393 | ||
| Cash payments on shares redeemed | (685,316,649 | ) | |
| Cash receipts from TOB trust certificates | 62,401,550 | ||
| Cash payments for TOB trust certificates | (47,790,179 | ) | |
| Cash dividends paid to shareholders | (73,407,819 | ) | |
| Increase in bank overdraft | 1,840,463 | 1 | |
| Cash provided by financing activities | 689,863,759 | ||
| Cash | |||
| Net decrease in cash | (4,223 | ) | |
| Cash at beginning of year | 4,223 | ||
| Cash at end of year | — | ||
| Cash Flow Information | |||
| Cash paid during the year for interest and fees | $ | 3,156,982 | |
| Non-Cash Financing Activities | |||
| Fair value of investments acquired through reorganization | $ | 1,161,678,743 | |
| Increase in trust certificates assumed in reorganization | $ | 132,560,307 | |
| Capital shares issued in reorganization | $ | 1,169,525,316 | |
| Capital shares issued in reinvestment of dividends paid to shareholders | $ | 93,976,115 | |
| 1 | Includes assets and liabilities acquired in reorganization. |
A Statement of Cash Flows is presented when a Fund had a significant amount of borrowings during the year, based on the average borrowings outstanding in relation to total assets.
See Notes to Financial Statements.
| 46 | ANNUAL REPORT | JUNE 30, 2012 |
| Institutional | Investor A | ||||||||||||||||||||||||||||||
| Year Ended June 30, | Year Ended June 30, | ||||||||||||||||||||||||||||||
| 2012 | 2011 | 2010 | 2009 | 2008 | 2012 | 2011 | 2010 | 2009 | 2008 | ||||||||||||||||||||||
| Per Share Operating Performance | |||||||||||||||||||||||||||||||
| Net asset value, beginning of year | $ | 8.35 | $ | 8.47 | $ | 7.29 | $ | 8.68 | $ | 9.96 | $ | 8.33 | $ | 8.46 | $ | 7.28 | $ | 8.67 | $ | 9.95 | |||||||||||
| Net investment income1 | 0.46 | 0.46 | 0.46 | 0.48 | 0.44 | 0.43 | 0.43 | 0.43 | 0.44 | 0.41 | |||||||||||||||||||||
| Net realized and unrealized gain (loss) | 0.90 | (0.13 | ) | 1.18 | (1.40 | ) | (1.26 | ) | 0.91 | (0.13 | ) | 1.18 | (1.39 | ) | (1.26 | ) | |||||||||||||||
| Net increase (decrease) from investment operations | 1.36 | 0.33 | 1.64 | (0.92 | ) | (0.82 | ) | 1.34 | 0.30 | 1.61 | (0.95 | ) | (0.85 | ) | |||||||||||||||||
| Dividends and distributions from: | |||||||||||||||||||||||||||||||
| Net investment income | (0.45 | ) | (0.45 | ) | (0.46 | ) | (0.47 | ) | (0.44 | ) | (0.43 | ) | (0.43 | ) | (0.43 | ) | (0.44 | ) | (0.41 | ) | |||||||||||
| Net realized gain | — | — | — | — | (0.02 | ) | — | — | — | — | (0.02 | ) | |||||||||||||||||||
| Total dividends and distributions | (0.45 | ) | (0.45 | ) | (0.46 | ) | (0.47 | ) | (0.46 | ) | (0.43 | ) | (0.43 | ) | (0.43 | ) | (0.44 | ) | (0.43 | ) | |||||||||||
| Net asset value, end of year | $ | 9.26 | $ | 8.35 | $ | 8.47 | $ | 7.29 | $ | 8.68 | $ | 9.24 | $ | 8.33 | $ | 8.46 | $ | 7.28 | $ | 8.67 | |||||||||||
| Total Investment Return2 | |||||||||||||||||||||||||||||||
| Based on net asset value | 16.72% | 4.14% | 22.88% | (10.40)% | (8.38)% | 16.44% | 3.73% | 22.58% | (10.67)% | (8.62)% | |||||||||||||||||||||
| Ratios to Average Net Assets | |||||||||||||||||||||||||||||||
| Total expenses | 0.79% | 0.78% | 0.83% | 0.93% | 0.84% | 1.06% | 1.05% | 1.09% | 1.18% | 1.08% | |||||||||||||||||||||
| Total expenses after fees waived | 0.79% | 0.78% | 0.83% | 0.92% | 0.81% | 1.06% | 1.05% | 1.09% | 1.17% | 1.05% | |||||||||||||||||||||
| Total expenses after fees waived and excluding | |||||||||||||||||||||||||||||||
| interest expense and fees 3 | 0.70% | 0.72% | 0.79% | 0.89% | 0.78% | 0.97% | 0.99% | 1.05% | 1.14% | 1.03% | |||||||||||||||||||||
| Net investment income | 5.18% | 5.49% | 5.63% | 6.52% | 4.76% | 4.85% | 5.21% | 5.33% | 6.13% | 4.52% | |||||||||||||||||||||
| Supplemental Data | |||||||||||||||||||||||||||||||
| Net assets, end of year (000) | $ | 176,895 | $ | 111,669 | $ | 94,146 | $ | 45,997 | $ | 71,203 | $ | 83,840 | $ | 27,993 | $ | 25,105 | $ | 4,798 | $ | 6,513 | |||||||||||
| Portfolio turnover | 17% | 31% | 32% | 39% | 33% | 17% | 31% | 32% | 39% | 33% | |||||||||||||||||||||
| 1 | Based on average shares outstanding. |
| 2 | Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions. |
| 3 | Interest expense and fees relate to TOBs. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs. |
See Notes to Financial Statements.
| ANNUAL REPORT | JUNE 30, 2012 | 47 |
| Financial Highlights (concluded) | BlackRock High Yield Municipal Fund |
| Investor C | ||||||||||||||||||||
| Year Ended June 30, | ||||||||||||||||||||
| 2012 | 2011 | 2010 | 2009 | 2008 | ||||||||||||||||
| Per Share Operating Performance | ||||||||||||||||||||
| Net asset value, beginning of year | $ | 8.35 | $ | 8.47 | $ | 7.29 | $ | 8.68 | $ | 9.97 | ||||||||||
| Net investment income1 | 0.36 | 0.37 | 0.37 | 0.41 | 0.34 | |||||||||||||||
| Net realized and unrealized gain (loss) | 0.92 | (0.12 | ) | 1.18 | (1.41 | ) | (1.27 | ) | ||||||||||||
| Net increase (decrease) from investment operations | 1.28 | 0.25 | 1.55 | (1.00 | ) | (0.93 | ) | |||||||||||||
| Dividends and distributions from: | ||||||||||||||||||||
| Net investment income | (0.36 | ) | (0.37 | ) | (0.37 | ) | (0.39 | ) | (0.34 | ) | ||||||||||
| Net realized gain | — | — | — | — | (0.02 | ) | ||||||||||||||
| Total dividends and distributions | (0.36 | ) | (0.37 | ) | (0.37 | ) | (0.39 | ) | (0.36 | ) | ||||||||||
| Net asset value, end of year | $ | 9.27 | $ | 8.35 | $ | 8.47 | $ | 7.29 | $ | 8.68 | ||||||||||
| Total Investment Return2 | ||||||||||||||||||||
| Based on net asset value | 15.65% | 3.07% | 21.61% | (11.33)% | (9.40)% | |||||||||||||||
| Ratios to Average Net Assets | ||||||||||||||||||||
| Total expenses | 1.82% | 1.82% | 1.88% | 1.97% | 1.85% | |||||||||||||||
| Total expenses after fees waived | 1.82% | 1.82% | 1.88% | 1.97% | 1.82% | |||||||||||||||
| Total expenses after fees waived and excluding interest expense and fees3 | 1.73% | 1.77% | 1.84% | 1.94% | 1.80% | |||||||||||||||
| Net investment income | 4.12% | 4.45% | 4.58% | 5.59% | 3.76% | |||||||||||||||
| Supplemental Data | ||||||||||||||||||||
| Net assets, end of year (000) | $ | 36,987 | $ | 17,945 | $ | 14,560 | $ | 5,389 | $ | 4,527 | ||||||||||
| Portfolio turnover | 17% | 31% | 32% | 39% | 33% | |||||||||||||||
| 1 | Based on average shares outstanding. |
| 2 | Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions. |
| 3 | Interest expense and fees relate to TOBs. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs. |
See Notes to Financial Statements.
| 48 | ANNUAL REPORT | JUNE 30, 2012 |
| Financial Highlights | BlackRock National Municipal Fund |
| BlackRock | |||
| July 18, 20111 | |||
| to June 30, | |||
| 2012 | |||
| Per Share Operating Performance | |||
| Net asset value, beginning of period | $ | 10.11 | |
| Net investment income2 | 0.45 | ||
| Net realized and unrealized gain | 0.79 | ||
| Net increase from investment operations | 1.24 | ||
| Dividends from net investment income | (0.44 | ) | |
| Net asset value, end of period | $ | 10.91 | |
| Total Investment Return3 | |||
| Based on net asset value | 12.48% | 4 | |
| Ratios to Average Net Assets | |||
| Total expenses | 0.62% | 5 | |
| Total expenses after fees waived and/or reimbursed and paid indirectly | 0.54% | 5 | |
|
Total expenses after fees waived and/or reimbursed and paid indirectly and excluding interest expense and fees and reorganization costs6 |
0.46% | 5 | |
| Net investment income | 4.41% | 5 | |
| Supplemental Data | |||
| Net assets, end of period (000) | $ | 446,620 | |
| Portfolio turnover | 39% | ||
| 1 | Commencement of operations. |
| 2 | Based on average shares outstanding. |
| 3 | Where applicable, total investment returns include the reinvestment of dividends and distributions. |
| 4 | Aggregate total investment return. |
| 5 | Annualized. |
| 6 | Interest expense and fees relate to TOBs. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs. |
See Notes to Financial Statements.
| ANNUAL REPORT | JUNE 30, 2012 | 49 |
| Financial Highlights (continued) | BlackRock National Municipal Fund |
| Institutional | ||||||||||||||||||||
| Year Ended June 30, | ||||||||||||||||||||
| 2012 | 2011 | 2010 | 2009 | 2008 | ||||||||||||||||
| Per Share Operating Performance | ||||||||||||||||||||
| Net asset value, beginning of year | $ | 10.05 | $ | 10.19 | $ | 9.61 | $ | 9.95 | $ | 10.39 | ||||||||||
| Net investment income1 | 0.46 | 0.49 | 0.48 | 0.48 | 0.48 | |||||||||||||||
| Net realized and unrealized gain (loss) | 0.85 | (0.14 | ) | 0.57 | (0.35 | ) | (0.44) | |||||||||||||
| Net increase from investment operations | 1.31 | 0.35 | 1.05 | 0.13 | 0.04 | |||||||||||||||
| Dividends from net investment income | (0.45 | ) | (0.49 | ) | (0.47 | ) | (0.47 | ) | (0.48) | |||||||||||
| Net asset value, end of year | $ | 10.91 | $ | 10.05 | $ | 10.19 | $ | 9.61 | $9.95 | |||||||||||
| Total Investment Return2 | ||||||||||||||||||||
| Based on net asset value | 13.28% | 3.49% | 11.16% | 1.56% | 0.35% | |||||||||||||||
| Ratios to Average Net Assets | ||||||||||||||||||||
| Total expenses | 0.69% | 0.69% | 0.62% | 0.67% | 0.79% | |||||||||||||||
| Total expenses after fees waived and/or reimbursed and paid indirectly | 0.65% | 0.69% | 0.62% | 0.65% | 0.78% | |||||||||||||||
| Total expenses after fees waived and/or reimbursed and paid indirectly and | ||||||||||||||||||||
| excluding interest expense and fees and reorganization costs3 | 0.57% | 0.60% | 0.59% | 0.60% | 0.60% | |||||||||||||||
| Net investment income | 4.31% | 4.83% | 4.76% | 5.10% | 4.69% | |||||||||||||||
| Supplemental Data | ||||||||||||||||||||
| Net assets, end of year (000) | $ | 2,037,090 | $ | 1,207,501 | $ | 1,103,381 | $ | 934,807 | $ | 977,642 | ||||||||||
| Portfolio turnover | 39% | 51% | 70% | 65% | 61% | |||||||||||||||
| 1 | Based on average shares outstanding. |
| 2 | Where applicable, total investment returns include the reinvestment of dividends and distributions. |
| 3 | Interest expense and fees relate to TOBs. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs. |
See Notes to Financial Statements.
| 50 | ANNUAL REPORT | JUNE 30, 2012 |
| Financial Highlights (continued) | BlackRock National Municipal Fund |
| Service | |||
| July 18, 20111 | |||
| to June 30, | |||
| 2012 | |||
| Per Share Operating Performance | |||
| Net asset value, beginning of period | $ | 10.11 | |
| Net investment income2 | 0.42 | ||
| Net realized and unrealized gain | 0.77 | ||
| Net increase from investment operations | 1.19 | ||
| Dividends from net investment income | (0.40 | ) | |
| Net asset value, end of period | $ | 10.90 | |
| Total Investment Return3 | |||
| Based on net asset value | 11.97% | 4 | |
| Ratios to Average Net Assets | |||
| Total expenses | 0.91% | 5 | |
| Total expenses after fees waived and/or reimbursed and paid indirectly | 0.86% | 5 | |
|
Total expenses after fees waived and/or reimbursed and paid indirectly and excluding interest expense and fees and reorganization costs6 |
0.78% | 5 | |
| Net investment income | 4.11% | 5 | |
| Supplemental Data | |||
| Net assets, end of period (000) | $ | 1,214 | |
| Portfolio turnover | 39% | ||
| 1 | Commencement of operations. |
| 2 | Based on average shares outstanding. |
| 3 | Where applicable, total investment returns include the reinvestment of dividends and distributions. |
| 4 | Aggregate total investment return. |
| 5 | Annualized. |
| 6 | Interest expense and fees relate to TOBs. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs. |
See Notes to Financial Statements.
| ANNUAL REPORT | JUNE 30, 2012 | 51 |
| Financial Highlights (continued) | BlackRock National Municipal Fund |
| Investor A | ||||||||||||||||||||
| Year Ended June 30, | ||||||||||||||||||||
| 2012 | 2011 | 2010 | 2009 | 2008 | ||||||||||||||||
| Per Share Operating Performance | ||||||||||||||||||||
| Net asset value, beginning of year | $ | 10.06 | $ | 10.19 | $ | 9.62 | $ | 9.96 | $ | 10.39 | ||||||||||
| Net investment income1 | 0.44 | 0.46 | 0.45 | 0.46 | 0.45 | |||||||||||||||
| Net realized and unrealized gain (loss) | 0.85 | (0.13 | ) | 0.57 | (0.35 | ) | (0.43 | ) | ||||||||||||
| Net increase from investment operations | 1.29 | 0.33 | 1.02 | 0.11 | 0.02 | |||||||||||||||
| Dividends from net investment income | (0.43 | ) | (0.46 | ) | (0.45 | ) | (0.45 | ) | (0.45 | ) | ||||||||||
| Net asset value, end of year | $ | 10.92 | $ | 10.06 | $ | 10.19 | $ | 9.62 | $ | 9.96 | ||||||||||
| Total Investment Return2 | ||||||||||||||||||||
| Based on net asset value | 13.10% | 3.36% | 10.77% | 1.32% | 0.22% | |||||||||||||||
| Ratios to Average Net Assets | ||||||||||||||||||||
| Total expenses | 0.91% | 0.92% | 0.87% | 0.91% | 1.02% | |||||||||||||||
| Total expenses after fees waived and/or reimbursed and paid indirectly | 0.80% | 0.92% | 0.87% | 0.90% | 1.01% | |||||||||||||||
| Total expenses after fees waived and/or reimbursed and paid indirectly and excluding interest | ||||||||||||||||||||
| expense and fees and reorganization costs3 | 0.72% | 0.83% | 0.84% | 0.84% | 0.82% | |||||||||||||||
| Net investment income | 4.15% | 4.60% | 4.52% | 4.87% | 4.46% | |||||||||||||||
| Supplemental Data | ||||||||||||||||||||
| Net assets, end of year (000) | $ | 1,688,258 | $ | 855,849 | $ | 820,009 | $ | 635,090 | $ | 472,018 | ||||||||||
| Portfolio turnover | 39% | 51% | 70% | 65% | 61% | |||||||||||||||
| 1 | Based on average shares outstanding. |
| 2 | Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions. |
| 3 | Interest expense and fees relate to TOBs. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs. |
See Notes to Financial Statements.
| 52 | ANNUAL REPORT | JUNE 30, 2012 |
| Financial Highlights (continued) | BlackRock National Municipal Fund |
| Investor B | ||||||||||||||||||||
| Year Ended June 30, | ||||||||||||||||||||
| 2012 | 2011 | 2010 | 2009 | 2008 | ||||||||||||||||
| Per Share Operating Performance | ||||||||||||||||||||
| Net asset value, beginning of year | $ | 10.05 | $ | 10.18 | $ | 9.61 | $ | 9.95 | $ | 10.38 | ||||||||||
| Net investment income1 | 0.39 | 0.41 | 0.40 | 0.41 | 0.40 | |||||||||||||||
| Net realized and unrealized gain (loss) | 0.85 | (0.12 | ) | 0.57 | (0.35 | ) | (0.43 | ) | ||||||||||||
| Net increase (decrease) from investment operations | 1.24 | 0.29 | 0.97 | 0.06 | (0.03 | ) | ||||||||||||||
| Dividends from net investment income | (0.38 | ) | (0.42 | ) | (0.40 | ) | (0.40 | ) | (0.40 | ) | ||||||||||
| Net asset value, end of year | $ | 10.91 | $ | 10.05 | $ | 10.18 | $ | 9.61 | $ | 9.95 | ||||||||||
| Total Investment Return2 | ||||||||||||||||||||
| Based on net asset value | 12.56% | 2.89% | 10.21% | 0.79% | (0.30 | )% | ||||||||||||||
| Ratios to Average Net Assets | ||||||||||||||||||||
| Total expenses | 1.44% | 1.44% | 1.39% | 1.43% | 1.54% | |||||||||||||||
| Total expenses after fees waived and/or reimbursed and paid indirectly | 1.30% | 1.38% | 1.38% | 1.41% | 1.53% | |||||||||||||||
| Total expenses after fees waived and/or reimbursed and paid indirectly and excluding interest | ||||||||||||||||||||
| expense and fees and reorganization costs 3 | 1.22% | 1.30% | 1.36% | 1.36% | 1.35% | |||||||||||||||
| Net investment income | 3.69% | 4.10% | 3.99% | 4.35% | 3.94% | |||||||||||||||
| Supplemental Data | ||||||||||||||||||||
| Net assets, end of year (000) | $ | 27,169 | $ | 30,346 | $ | 46,152 | $ | 58,079 | $ | 69,859 | ||||||||||
| Portfolio turnover | 39% | 51% | 70% | 65% | 61% | |||||||||||||||
| 1 | Based on average shares outstanding. |
| 2 | Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions. |
| 3 | Interest expense and fees relate to TOBs. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs. |
See Notes to Financial Statements.
| ANNUAL REPORT | JUNE 30, 2012 | 53 |
| Financial Highlights (continued) | BlackRock National Municipal Fund |
| Investor B1 | |||
| July 18, 20111 | |||
| to June 30, | |||
| 2012 | |||
| Per Share Operating Performance | |||
| Net asset value, beginning of period | $ | 10.11 | |
| Net investment income2 | 0.39 | ||
| Net realized and unrealized gain | 0.79 | ||
| Net increase from investment operations | 1.18 | ||
| Dividends from net investment income | (0.38 | ) | |
| Net asset value, end of period | $ | 10.91 | |
| Total Investment Return3 | |||
| Based on net asset value | 11.83% | 4 | |
| Ratios to Average Net Assets | |||
| Total expenses | 1.17% | 5 | |
| Total expenses after fees waived and/or reimbursed and paid indirectly | 1.12% | 5 | |
|
Total expenses after fees waived and/or reimbursed and paid indirectly and excluding interest expense and fees and reorganization costs6 |
1.04% | 5 | |
| Net investment income | 3.84% | 5 | |
| Supplemental Data | |||
| Net assets, end of period (000) | $ | 494 | |
| Portfolio turnover | 39% | ||
| 1 | Commencement of operations. |
| 2 | Based on average shares outstanding. |
| 3 | Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions. |
| 4 | Aggregate total investment return. |
| 5 | Annualized. |
| 6 | Interest expense and fees relate to TOBs. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs. |
See Notes to Financial Statements.
| 54 | ANNUAL REPORT | JUNE 30, 2012 |
| Financial Highlights (concluded) | BlackRock National Municipal Fund |
| Investor C | Investor C1 | ||||||||||||||||||||||||||||||||||||||||
| Year Ended June 30, | Year Ended June 30, | ||||||||||||||||||||||||||||||||||||||||
| 2012 | 2011 | 2010 | 2009 | 2008 | 2012 | 2011 | 2010 | 2009 | 2008 | ||||||||||||||||||||||||||||||||
| Per Share Operating Performance | |||||||||||||||||||||||||||||||||||||||||
| Net asset value, beginning of year | $ | 10.06 | $ | 10.19 | $ | 9.62 | $ | 9.96 | $ | 10.39 | $ | 10.06 | $ | 10.19 | $ | 9.61 | $ | 9.95 | $ | 10.39 | |||||||||||||||||||||
| Net investment income1 | 0.36 | 0.39 | 0.38 | 0.39 | 0.37 | 0.38 | 0.41 | 0.40 | 0.41 | 0.40 | |||||||||||||||||||||||||||||||
| Net realized and unrealized gain (loss) | 0.86 | (0.13 | ) | 0.57 | (0.35 | ) | (0.43 | ) | 0.85 | (0.13 | ) | 0.57 | (0.35 | ) | (0.44) | ||||||||||||||||||||||||||
| Net increase (decrease) from investment operations | 1.22 | 0.26 | 0.95 | 0.04 | (0.06 | ) | 1.23 | 0.28 | 0.97 | 0.06 | (0.04) | ||||||||||||||||||||||||||||||
| Dividends from net investment income | (0.36 | ) | (0.39 | ) | (0.38 | ) | (0.38 | ) | (0.37 | ) | (0.38 | ) | (0.41 | ) | (0.39 | ) | (0.40 | ) | (0.40) | ||||||||||||||||||||||
| Net asset value, end of year | $ | 10.92 | $ | 10.06 | $ | 10.19 | $ | 9.62 | $ | 9.96 | $ | 10.91 | $ | 10.06 | $ | 10.19 | $ | 9.61 | $9.95 | ||||||||||||||||||||||
| Total Investment Return2 | |||||||||||||||||||||||||||||||||||||||||
| Based on net asset value | 12.26% | 2.60% | 9.95% | 0.56% | (0.57)% | 12.37% | 2.80% | 10.28% | 0.76% | (0.44)% | |||||||||||||||||||||||||||||||
| Ratios to Average Net Assets | |||||||||||||||||||||||||||||||||||||||||
| Total expenses | 1.64% | 1.66% | 1.61% | 1.66% | 1.82% | 1.44% | 1.47% | 1.42% | 1.46% | 1.58% | |||||||||||||||||||||||||||||||
| Total expenses after fees waived and/or reimbursed | |||||||||||||||||||||||||||||||||||||||||
| and paid indirectly | 1.55% | 1.66% | 1.61% | 1.65% | 1.81% | 1.36% | 1.46% | 1.42% | 1.44% | 1.57% | |||||||||||||||||||||||||||||||
| Total expenses after fees waived and/or reimbursed | |||||||||||||||||||||||||||||||||||||||||
| and paid indirectly and excluding interest | |||||||||||||||||||||||||||||||||||||||||
| expense and fees and reorganization costs 3 | 1.47% | 1.58% | 1.58% | 1.59% | 1.62% | 1.28% | 1.38% | 1.39% | 1.39% | 1.39% | |||||||||||||||||||||||||||||||
| Net investment income | 3.40% | 3.85% | 3.77% | 4.12% | 3.66% | 3.60% | 4.04% | 3.96% | 4.32% | 3.90% | |||||||||||||||||||||||||||||||
| Supplemental Data | |||||||||||||||||||||||||||||||||||||||||
| Net assets, end of year (000) | $ | 483,092 | $ | 281,024 | $ | 292,132 | $ | 195,475 | $ | 103,504 | $ | 100,161 | $ | 73,302 | $ | 88,427 | $ | 95,790 | $ | 114,746 | |||||||||||||||||||||
| Portfolio turnover | 39% | 51% | 70% | 65% | 61% | 39% | 51% | 70% | 65% | 61% | |||||||||||||||||||||||||||||||
1 Based on average shares outstanding.
2 Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.
3 Interest expense and fees relate to TOBs. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs.
See Notes to Financial Statements.
| ANNUAL REPORT | JUNE 30, 2012 | 55 |
| Financial Highlights | BlackRock Short-Term Municipal Fund |
| BlackRock | Institutional | ||||||||||||||||||||||||||||||||||||||||
| Year Ended June 30, | Year Ended June 30, | ||||||||||||||||||||||||||||||||||||||||
| 2012 | 2011 | 2010 | 2009 | 2008 | 2012 | 2011 | 2010 | 2009 | 2008 | ||||||||||||||||||||||||||||||||
| Per Share Operating Performance | |||||||||||||||||||||||||||||||||||||||||
| Net asset value, beginning of year | $ | 10.18 | $ | 10.19 | $ | 10.14 | $ | 9.98 | $ | 9.89 | $ | 10.18 | $ | 10.18 | $ | 10.13 | $ | 9.97 | $ | 9.88 | |||||||||||||||||||||
| Net investment income1 | 0.09 | 0.12 | 0.15 | 0.26 | 0.33 | 0.09 | 0.13 | 0.15 | 0.27 | 0.33 | |||||||||||||||||||||||||||||||
| Net realized and unrealized gain (loss) | 0.02 | (0.00 | )2 | 0.06 | 0.17 | 0.09 | 0.01 | (0.00 | )2 | 0.06 | 0.17 | 0.09 | |||||||||||||||||||||||||||||
| Net increase from investment operations | 0.11 | 0.12 | 0.21 | 0.43 | 0.42 | 0.10 | 0.13 | 0.21 | 0.44 | 0.42 | |||||||||||||||||||||||||||||||
| Dividends from net investment income | (0.11 | ) | (0.13 | ) | (0.16 | ) | (0.27 | ) | (0.33 | ) | (0.11 | ) | (0.13 | ) | (0.16 | ) | (0.28 | ) | (0.33) | ||||||||||||||||||||||
| Net asset value, end of year | $ | 10.18 | $ | 10.18 | $ | 10.19 | $ | 10.14 | $ | 9.98 | $ | 10.17 | $ | 10.18 | $ | 10.18 | $ | 10.13 | $9.97 | ||||||||||||||||||||||
| Total Investment Return3 | |||||||||||||||||||||||||||||||||||||||||
| Based on net asset value | 1.07% | 1.17% | 2.04% | 4.36% | 4.26% | 0.96% | 1.27% | 2.04% | 4.45% | 4.31% | |||||||||||||||||||||||||||||||
| Ratios to Average Net Assets | |||||||||||||||||||||||||||||||||||||||||
| Total expenses | 0.39% | 0.40% | 0.41% | 0.45% | 0.42% | 0.50% | 0.49% | 0.48% | 0.47% | 0.49% | |||||||||||||||||||||||||||||||
| Total expenses after fees waived and/or | |||||||||||||||||||||||||||||||||||||||||
| reimbursed and paid indirectly | 0.39% | 0.39% | 0.40% | 0.44% | 0.39% | 0.40% | 0.40% | 0.40% | 0.35% | 0.35% | |||||||||||||||||||||||||||||||
| Net investment income | 0.93% | 1.25% | 1.42% | 2.65% | 3.28% | 0.93% | 1.26% | 1.50% | 2.68% | 3.30% | |||||||||||||||||||||||||||||||
| Supplemental Data | |||||||||||||||||||||||||||||||||||||||||
| Net assets, end of year (000) | $ | 63,503 | $ | 43,941 | $ | 17,244 | $ | 2,424 | $ | 1,822 | $ | 643,910 | $ | 603,837 | $ | 628,194 | $ | 403,143 | $ | 181,624 | |||||||||||||||||||||
| Portfolio turnover | 51% | 44% | 36% | 21% | 33% | 51% | 44% | 36% | 21% | 33% | |||||||||||||||||||||||||||||||
| 1 | Based on average shares outstanding. |
| 2 | Amount is less than $(0.01) per share. |
| 3 | Where applicable, total investment returns include the reinvestment of dividends and distributions. |
See Notes to Financial Statements.
| 56 | ANNUAL REPORT | JUNE 30, 2012 |
| Financial Highlights (continued) | BlackRock Short-Term Municipal Fund |
| Investor A | Investor A1 | |||||||||||||||||||||||||||||||||||||
| Year Ended June 30, | Year Ended June 30, | |||||||||||||||||||||||||||||||||||||
| 2012 | 2011 | 2010 | 2009 | 2008 | 2012 | 2011 | 2010 | 2009 | 2008 | |||||||||||||||||||||||||||||
| Per Share Operating Performance | ||||||||||||||||||||||||||||||||||||||
| Net asset value, beginning of year | $ | 10.19 | $ | 10.19 | $ | 10.13 | $ | 9.98 | $ | 9.88 | $ | 10.19 | $ | 10.19 | $ | 10.14 | $9.98 | $9.89 | ||||||||||||||||||||
| Net investment income1 | 0.07 | 0.10 | 0.12 | 0.21 | 0.30 | 0.08 | 0.12 | 0.14 | 0.27 | 0.32 | ||||||||||||||||||||||||||||
| Net realized and unrealized gain (loss) | 0.00 | 2 | (0.00 | )3 | 0.07 | 0.19 | 0.11 | 0.01 | (0.00 | )3 | 0.05 | 0.16 | 0.09 | |||||||||||||||||||||||||
| Net increase from investment operations | 0.07 | 0.10 | 0.19 | 0.40 | 0.41 | 0.09 | 0.12 | 0.19 | 0.43 | 0.41 | ||||||||||||||||||||||||||||
| Dividends from net investment income | (0.08 | ) | (0.10 | ) | (0.13 | ) | (0.25 | ) | (0.31 | ) | (0.10 | ) | (0.12 | ) | (0.14) | (0.27) | (0.32) | |||||||||||||||||||||
| Net asset value, end of year | $ | 10.18 | $ | 10.19 | $ | 10.19 | $ | 10.13 | $ | 9.98 | $ | 10.18 | $ | 10.19 | $ | 10.19 | $10.14 | $9.98 | ||||||||||||||||||||
| Total Investment Return4 | ||||||||||||||||||||||||||||||||||||||
| Based on net asset value | 0.69% | 0.99% | 1.86% | 4.08% | 4.15% | 0.84% | 1.14% | 1.91% | 4.34% | 4.20% | ||||||||||||||||||||||||||||
| Ratios to Average Net Assets | ||||||||||||||||||||||||||||||||||||||
| Total expenses | 0.66% | 0.67% | 0.68% | 0.72% | 0.79% | 0.54% | 0.54% | 0.55% | 0.58% | 0.59% | ||||||||||||||||||||||||||||
| Total expenses after fees waived and/or | ||||||||||||||||||||||||||||||||||||||
| reimbursed and paid indirectly | 0.66% | 0.67% | 0.67% | 0.60% | 0.60% | 0.51% | 0.52% | 0.52% | 0.45% | 0.45% | ||||||||||||||||||||||||||||
| Net investment income | 0.67% | 1.00% | 1.20% | 2.26% | 3.03% | 0.81% | 1.14% | 1.41% | 2.70% | 3.22% | ||||||||||||||||||||||||||||
| Supplemental Data | ||||||||||||||||||||||||||||||||||||||
| Net assets, end of year (000) | $ | 204,729 | $ | 221,827 | $ | 297,336 | $ | 121,355 | $ | 9,403 | $ | 48,377 | $ | 53,141 | $ | 66,404 | $78,606 | $105,580 | ||||||||||||||||||||
| Portfolio turnover | 51% | 44% | 36% | 21% | 33% | 51% | 44% | 36% | 21% | 33% | ||||||||||||||||||||||||||||
1 Based on average shares outstanding.
2 Amount is less than $0.01 per share.
3 Amount is less than $(0.01) per share.
4 Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.
See Notes to Financial Statements.
| ANNUAL REPORT | JUNE 30, 2012 | 57 |
| Financial Highlights (continued) | BlackRock Short-Term Municipal Fund |
| Investor B | |||||||||||||||||||||
| Year Ended June 30, | |||||||||||||||||||||
| 2012 | 2011 | 2010 | 2009 | 2008 | |||||||||||||||||
| Per Share Operating Performance | |||||||||||||||||||||
| Net asset value, beginning of year | $ | 10.18 | $ | 10.18 | $ | 10.13 | $ | 9.97 | $ | 9.88 | |||||||||||
| Net investment income1 | 0.06 | 0.09 | 0.11 | 0.24 | 0.30 | ||||||||||||||||
| Net realized and unrealized gain (loss) | 0.00 | 2 | (0.00 | )3 | 0.05 | 0.16 | 0.08 | ||||||||||||||
| Net increase from investment operations | 0.06 | 0.09 | 0.16 | 0.40 | 0.38 | ||||||||||||||||
| Dividends from net investment income | (0.07 | ) | (0.09 | ) | (0.11 | ) | (0.24 | ) | (0.29 | ) | |||||||||||
| Net asset value, end of year | $ | 10.17 | $ | 10.18 | $ | 10.18 | $ | 10.13 | $ | 9.97 | |||||||||||
| Total Investment Return4 | |||||||||||||||||||||
| Based on net asset value | 0.55% | 0.85% | 1.62% | 4.08% | 3.94% | ||||||||||||||||
| Ratios to Average Net Assets | |||||||||||||||||||||
| Total expenses | 0.84% | 0.82% | 0.82% | 0.85% | 0.85% | ||||||||||||||||
| Total expenses after fees
waived and/or reimbursed and paid indirectly | 0.80% | 0.81% | 0.81% | 0.70% | 0.70% | ||||||||||||||||
| Net investment income | 0.54% | 0.86% | 1.13% | 2.41% | 2.97% | ||||||||||||||||
| Supplemental Data | |||||||||||||||||||||
| Net assets, end of year (000) | $ | 2,216 | $ | 5,258 | $ | 8,503 | $ | 9,917 | $ | 10,612 | |||||||||||
| Portfolio turnover | 51% | 44% | 36% | 21% | 33% | ||||||||||||||||
| 1 | Based on average shares outstanding. |
| 2 | Amount is less than $0.01 per share. |
| 3 | Amount is less than $(0.01) per share. |
| 4 | Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions. |
See Notes to Financial Statements.
| 58 | ANNUAL REPORT | JUNE 30, 2012 |
| Financial Highlights (concluded) | BlackRock Short-Term Municipal Fund |
| Investor C | |||||||||||||||||||
| Year Ended June 30, | |||||||||||||||||||
| 2012 | 2011 | 2010 | 2009 | 2008 | |||||||||||||||
| Per Share Operating Performance | |||||||||||||||||||
| Net asset value, beginning of year | $ | 10.18 | $ | 10.18 | $ | 10.13 | $ | 9.97 | $ | 9.88 | |||||||||
| Net investment income (loss)1 | (0.01 | ) | 0.02 | 0.05 | 0.15 | 0.23 | |||||||||||||
| Net realized and unrealized gain (loss) | 0.01 | (0.00 | )2 | 0.05 | 0.19 | 0.09 | |||||||||||||
| Net increase from investment operations | — | 0.02 | 0.10 | 0.34 | 0.32 | ||||||||||||||
| Dividends from net investment income | (0.00 | )2 | (0.02 | ) | (0.05 | ) | (0.18 | ) | (0.23) | ||||||||||
| Net asset value, end of year | $ | 10.18 | $ | 10.18 | $ | 10.18 | $ | 10.13 | $9.97 | ||||||||||
| Total Investment Return3 | |||||||||||||||||||
| Based on net asset value | 0.01% | 0.21% | 0.97% | 3.41% | 3.27% | ||||||||||||||
| Ratios to Average Net Assets | |||||||||||||||||||
| Total expenses | 1.44% | 1.45% | 1.46% | 1.52% | 1.78% | ||||||||||||||
| Total expenses after fees
waived and/or reimbursed and paid indirectly | 1.44% | 1.45% | 1.45% | 1.35% | 1.35% | ||||||||||||||
| Net investment income (loss) | (0.11)% | 0.22% | 0.44% | 1.56% | 2.28% | ||||||||||||||
| Supplemental Data | |||||||||||||||||||
| Net assets, end of year (000) | $ | 68,693 | $ | 86,264 | $ | 117,792 | $ | 69,632 | $ | 7,365 | |||||||||
| Portfolio turnover | 51% | 44% | 36% | 21% | 33% | ||||||||||||||
| 1 | Based on average shares outstanding. |
| 2 | Amount is less than $(0.01) per share. |
| 3 | Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions. |
See Notes to Financial Statements.
| ANNUAL REPORT | JUNE 30, 2012 | 59 |
| Financial Highlights | BlackRock New York Municipal Bond Fund |
| Institutional | ||||||||||||||||||||||||
| Period | ||||||||||||||||||||||||
| October 1, | ||||||||||||||||||||||||
| 2007 to | Year Ended | |||||||||||||||||||||||
| Year Ended June 30, | June 30, | September 30, | ||||||||||||||||||||||
| 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | |||||||||||||||||||
| Per Share Operating Performance | ||||||||||||||||||||||||
| Net asset value, beginning of period | $ | 10.36 | $ | 10.55 | $ | 9.81 | $ | 10.38 | $ | 10.84 | $ | 11.10 | ||||||||||||
| Net investment income1 | 0.47 | 0.50 | 0.49 | 0.48 | 0.36 | 0.49 | ||||||||||||||||||
| Net realized and unrealized gain (loss) | 0.65 | (0.20 | ) | 0.74 | (0.56 | ) | (0.46 | ) | (0.26 | ) | ||||||||||||||
| Net increase (decrease) from investment operations | 1.12 | 0.30 | 1.23 | (0.08 | ) | (0.10 | ) | 0.23 | ||||||||||||||||
| Dividends from net investment income | (0.47 | ) | (0.49 | ) | (0.49 | ) | (0.49 | ) | (0.36 | ) | (0.49 | ) | ||||||||||||
| Net asset value, end of period | $ | 11.01 | $ | 10.36 | $ | 10.55 | $ | 9.81 | $ | 10.38 | $ | 10.84 | ||||||||||||
| Total Investment Return2 | ||||||||||||||||||||||||
| Based on net asset value | 11.06% | 2.97% | 12.74% | (0.60)% | (0.91)% | 3 | 2.12% | |||||||||||||||||
| Ratios to Average Net Assets | ||||||||||||||||||||||||
| Total expenses | 0.80% | 0.72% | 0.76% | 0.78% | 0.82% | 4 | 0.85% | |||||||||||||||||
| Total expenses after fees waived and paid indirectly | 0.80% | 0.72% | 0.76% | 0.77% | 0.81% | 4 | 0.85% | |||||||||||||||||
| Total expenses after fees
waived and paid indirectly excluding interest expense and fees5 | 0.76% | 0.70% | 0.75% | 0.76% | 0.74% | 4 | 0.73% | |||||||||||||||||
| Net investment income | 4.43% | 4.78% | 4.77% | 5.01% | 4.56% | 4 | 4.51% | |||||||||||||||||
| Supplemental Data | ||||||||||||||||||||||||
| Net assets, end of period (000) | $ | 31,875 | $ | 25,864 | $ | 23,841 | $ | 19,105 | $ | 17,949 | $ | 14,927 | ||||||||||||
| Portfolio turnover | 19% | 17% | 19% | 30% | 16% | 19% | ||||||||||||||||||
| 1 | Based on average shares outstanding. |
| 2 | Where applicable, total investment returns include the reinvestment of dividends and distributions. |
| 3 | Aggregate total investment return. |
| 4 | Annualized. |
| 5 | Interest expense and fees relate to TOBs. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs. |
See Notes to Financial Statements.
| 60 | ANNUAL REPORT | JUNE 30, 2012 |
| Financial Highlights (continued) | BlackRock New York Municipal Bond Fund |
| Investor A | ||||||||||||||||||||||||
| Period | Period | |||||||||||||||||||||||
| October 1, | October 2, | |||||||||||||||||||||||
| 2007 to | 20061 | |||||||||||||||||||||||
| Year Ended June 30, | June 30, | September 30, | ||||||||||||||||||||||
| 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | |||||||||||||||||||
| Per Share Operating Performance | ||||||||||||||||||||||||
| Net asset value, beginning of period | $ | 10.37 | $ | 10.55 | $ | 9.82 | $ | 10.39 | $ | 10.85 | $ | 11.10 | ||||||||||||
| Net investment income2 | 0.45 | 0.47 | 0.47 | 0.46 | 0.34 | 0.46 | ||||||||||||||||||
| Net realized and unrealized gain (loss) | 0.65 | (0.19 | ) | 0.72 | (0.57 | ) | (0.46 | ) | (0.25 | ) | ||||||||||||||
| Net increase (decrease) from investment operations | 1.10 | 0.28 | 1.19 | (0.11 | ) | (0.12 | ) | 0.21 | ||||||||||||||||
| Dividends from net investment income | (0.45 | ) | (0.46 | ) | (0.46 | ) | (0.46 | ) | (0.34 | ) | (0.46 | ) | ||||||||||||
| Net asset value, end of period | $ | 11.02 | $ | 10.37 | $ | 10.55 | $ | 9.82 | $ | 10.39 | $ | 10.85 | ||||||||||||
| Total Investment Return3 | ||||||||||||||||||||||||
| Based on net asset value | 10.77% | 2.76% | 12.33% | (0.85)% | (1.10)% | 4 | 1.93% | 4 | ||||||||||||||||
| Ratios to Average Net Assets | ||||||||||||||||||||||||
| Total expenses | 1.06% | 1.02% | 1.02% | 1.05% | 1.07% | 5 | 1.10% | 5 | ||||||||||||||||
| Total expenses after fees waived and paid indirectly | 1.06% | 1.01% | 1.02% | 1.04% | 1.06% | 5 | 1.10% | 5 | ||||||||||||||||
| Total expenses after fees
waived and paid indirectly excluding interest expense and fees6 | 1.02% | 1.00% | 1.01% | 1.02% | 0.99% | 5 | 0.99% | 5 | ||||||||||||||||
| Net investment income | 4.17% | 4.47% | 4.50% | 4.77% | 4.31% | 5 | 4.27% | 5 | ||||||||||||||||
| Supplemental Data | ||||||||||||||||||||||||
| Net assets, end of period (000) | $ | 43,030 | $ | 35,751 | $ | 37,736 | $ | 20,528 | $ | 16,181 | $ | 11,964 | ||||||||||||
| Portfolio turnover | 19% | 17% | 19% | 30% | 16% | 19% | ||||||||||||||||||
| 1 | Commencement of operations. |
| 2 | Based on average shares outstanding. |
| 3 | Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions. |
| 4 | Aggregate total investment return. |
| 5 | Annualized. |
| 6 | Interest expense and fees relate to TOBs. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs. |
See Notes to Financial Statements.
| ANNUAL REPORT | JUNE 30, 2012 | 61 |
| Financial Highlights (continued) | BlackRock New York Municipal Bond Fund |
| Investor A1 | ||||||||||||||||||||||||
| Period | ||||||||||||||||||||||||
| October 1, | ||||||||||||||||||||||||
| 2007 to | Year Ended | |||||||||||||||||||||||
| Year Ended June 30, | June 30, | September 30, | ||||||||||||||||||||||
| 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | |||||||||||||||||||
| Per Share Operating Performance | ||||||||||||||||||||||||
| Net asset value, beginning of period | $ | 10.37 | $ | 10.55 | $ | 9.82 | $ | 10.39 | $ | 10.85 | $ | 11.10 | ||||||||||||
| Net investment income1 | 0.47 | 0.49 | 0.48 | 0.48 | 0.36 | 0.49 | ||||||||||||||||||
| Net realized and unrealized gain (loss) | 0.65 | (0.19 | ) | 0.73 | (0.57 | ) | (0.47 | ) | (0.26 | ) | ||||||||||||||
| Net increase (decrease) from investment operations | 1.12 | 0.30 | 1.21 | (0.09 | ) | (0.11 | ) | 0.23 | ||||||||||||||||
| Dividends from net investment income | (0.47 | ) | (0.48 | ) | (0.48 | ) | (0.48 | ) | (0.35 | ) | (0.48 | ) | ||||||||||||
| Net asset value, end of period | $ | 11.02 | $ | 10.37 | $ | 10.55 | $ | 9.82 | $ | 10.39 | $ | 10.85 | ||||||||||||
| Total Investment Return2 | ||||||||||||||||||||||||
| Based on net asset value | 10.97% | 2.95% | 12.49% | (0.70)% | (0.99)% | 3 | 2.11% | |||||||||||||||||
| Ratios to Average Net Assets | ||||||||||||||||||||||||
| Total expenses | 0.88% | 0.84% | 0.88% | 0.89% | 0.92% | 4 | 0.95% | |||||||||||||||||
| Total expenses after fees waived and paid indirectly | 0.88% | 0.83% | 0.87% | 0.88% | 0.91% | 4 | 0.95% | |||||||||||||||||
| Total expenses after fees waived and paid indirectly excluding interest expense and fees5 | 0.84% | 0.82% | 0.86% | 0.87% | 0.84% | 4 | 0.83% | |||||||||||||||||
| Net investment income | 4.36% | 4.66% | 4.65% | 4.90% | 4.45% | 4 | 4.40% | |||||||||||||||||
| Supplemental Data | ||||||||||||||||||||||||
| Net assets, end of period (000) | $ | 154,473 | $ | 151,327 | $ | 162,305 | $ | 157,706 | $ | 177,080 | $ | 204,497 | ||||||||||||
| Portfolio turnover | 19% | 17% | 19% | 30% | 16% | 19% | ||||||||||||||||||
| 1 | Based on average shares outstanding. |
| 2 | Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions. |
| 3 | Aggregate total investment return. |
| 4 | Annualized. |
| 5 | Interest expense and fees relate to TOBs. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs. |
See Notes to Financial Statements.
| 62 | ANNUAL REPORT | JUNE 30, 2012 |
| Financial Highlights (continued) | BlackRock New York Municipal Bond Fund |
| Investor B | ||||||||||||||||||||||||
| Period | ||||||||||||||||||||||||
| October 1, | ||||||||||||||||||||||||
| 2007 to | Year Ended | |||||||||||||||||||||||
| Year Ended June 30, | June 30, | September 30, | ||||||||||||||||||||||
| 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | |||||||||||||||||||
| Per Share Operating Performance | ||||||||||||||||||||||||
| Net asset value, beginning of period | $ | 10.37 | $ | 10.55 | $ | 9.81 | $ | 10.38 | $ | 10.84 | $ | 11.10 | ||||||||||||
| Net investment income1 | 0.42 | 0.44 | 0.44 | 0.44 | 0.33 | 0.44 | ||||||||||||||||||
| Net realized and unrealized gain (loss) | 0.64 | (0.18 | ) | 0.74 | (0.57 | ) | (0.47 | ) | (0.26 | ) | ||||||||||||||
| Net increase (decrease) from investment operations | 1.06 | 0.26 | 1.18 | (0.13 | ) | (0.14 | ) | 0.18 | ||||||||||||||||
| Dividends from net investment income | (0.42 | ) | (0.44 | ) | (0.44 | ) | (0.44 | ) | (0.32 | ) | (0.44 | ) | ||||||||||||
| Net asset value, end of period | $ | 11.01 | $ | 10.37 | $ | 10.55 | $ | 9.81 | $ | 10.38 | $ | 10.84 | ||||||||||||
| Total Investment Return2 | ||||||||||||||||||||||||
| Based on net asset value | 10.38% | 2.52% | 12.15% | (1.11)% | (1.29)% | 3 | 1.60% | |||||||||||||||||
| Ratios to Average Net Assets | ||||||||||||||||||||||||
| Total expenses | 1.32% | 1.26% | 1.29% | 1.30% | 1.31% | 4 | 1.36% | |||||||||||||||||
| Total expenses after fees waived and paid indirectly | 1.32% | 1.26% | 1.28% | 1.29% | 1.31% | 4 | 1.36% | |||||||||||||||||
| Total expenses after fees waived and paid indirectly excluding interest expense and fees5 | 1.28% | 1.24% | 1.28% | 1.27% | 1.24% | 4 | 1.24% | |||||||||||||||||
| Net investment income | 3.93% | 4.22% | 4.25% | 4.48% | 4.06% | 4 | 3.99% | |||||||||||||||||
| Supplemental Data | ||||||||||||||||||||||||
| Net assets, end of period (000) | $ | 3,717 | $ | 5,950 | $ | 9,645 | $ | 11,770 | $ | 18,535 | $ | 25,264 | ||||||||||||
| Portfolio turnover | 19% | 17% | 19% | 30% | 16% | 19% | ||||||||||||||||||
| 1 | Based on average shares outstanding. |
| 2 | Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions. |
| 3 | Aggregate total investment return. |
| 4 | Annualized. |
| 5 | Interest expense and fees relate to TOBs. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs. |
See Notes to Financial Statements.
| ANNUAL REPORT | JUNE 30, 2012 | 63 |
| Financial Highlights (continued) | BlackRock New York Municipal Bond Fund |
| Investor C | ||||||||||||||||||||||||
| Period | Period | |||||||||||||||||||||||
| October 1, | October 2, | |||||||||||||||||||||||
| 2007 to | 20061 to | |||||||||||||||||||||||
| Year Ended June 30, | June 30, | September 30, | ||||||||||||||||||||||
| 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | |||||||||||||||||||
| Per Share Operating Performance | ||||||||||||||||||||||||
| Net asset value, beginning of period | $ | 10.37 | $ | 10.55 | $ | 9.81 | $ | 10.38 | $ | 10.84 | $ | 11.10 | ||||||||||||
| Net investment income2 | 0.37 | 0.39 | 0.39 | 0.39 | 0.28 | 0.37 | ||||||||||||||||||
| Net realized and unrealized gain (loss) | 0.64 | (0.18 | ) | 0.74 | (0.56 | ) | (0.46 | ) | (0.25 | ) | ||||||||||||||
| Net increase (decrease) from investment operations | 1.01 | 0.21 | 1.13 | (0.17 | ) | (0.18 | ) | 0.12 | ||||||||||||||||
| Dividends from net investment income | (0.37 | ) | (0.39 | ) | (0.39 | ) | (0.40 | ) | (0.28 | ) | (0.38 | ) | ||||||||||||
| Net asset value, end of period | $ | 11.01 | $ | 10.37 | $ | 10.55 | $ | 9.81 | $ | 10.38 | $ | 10.84 | ||||||||||||
| Total Investment Return3 | ||||||||||||||||||||||||
| Based on net asset value | 9.89% | 2.03% | 11.62% | (1.59)% | (1.65)% | 4 | 1.08% | 4 | ||||||||||||||||
| Ratios to Average Net Assets | ||||||||||||||||||||||||
| Total expenses | 1.77% | 1.73% | 1.77% | 1.79% | 1.82% | 5 | 1.85% | 5 | ||||||||||||||||
| Total expenses after fees waived and paid indirectly | 1.77% | 1.73% | 1.76% | 1.78% | 1.81% | 5 | 1.85% | 5 | ||||||||||||||||
| Total expenses after fees
waived and paid indirectly excluding interest expense and fees6 | 1.73% | 1.72% | 1.75% | 1.76% | 1.74% | 5 | 1.74% | 5 | ||||||||||||||||
| Net investment income | 3.45% | 3.76% | 3.76% | 4.03% | 3.57% | 5 | 3.52% | 5 | ||||||||||||||||
| Supplemental Data | ||||||||||||||||||||||||
| Net assets, end of period (000) | $ | 25,201 | $ | 17,180 | $ | 17,597 | $ | 12,294 | $ | 8,535 | $ | 4,611 | ||||||||||||
| Portfolio turnover | 19% | 17% | 19% | 30% | 16% | 19% | ||||||||||||||||||
| 1 | Commencement of operations. |
| 2 | Based on average shares outstanding. |
| 3 | Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions. |
| 4 | Aggregate total investment return. |
| 5 | Annualized. |
| 6 | Interest expense and fees relate to TOBs. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs. |
See Notes to Financial Statements.
| 64 | ANNUAL REPORT | JUNE 30, 2012 |
| Financial Highlights (concluded) | BlackRock New York Municipal Bond Fund |
| Investor C1 | ||||||||||||||||||||||||
| Period | ||||||||||||||||||||||||
| October 1, | ||||||||||||||||||||||||
| 2007 to | Year Ended | |||||||||||||||||||||||
| Year Ended June 30, | June 30, | September 30, | ||||||||||||||||||||||
| 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | |||||||||||||||||||
| Per Share Operating Performance | ||||||||||||||||||||||||
| Net asset value, beginning of period | $ | 10.37 | $ | 10.55 | $ | 9.81 | $ | 10.39 | $ | 10.85 | $ | 11.10 | ||||||||||||
| Net investment income1 | 0.42 | 0.43 | 0.43 | 0.43 | 0.32 | 0.43 | ||||||||||||||||||
| Net realized and unrealized gain (loss) | 0.64 | (0.18 | ) | 0.74 | (0.58 | ) | (0.47 | ) | (0.25 | ) | ||||||||||||||
| Net increase (decrease) from investment operations | 1.06 | 0.25 | 1.17 | (0.15 | ) | (0.15 | ) | 0.18 | ||||||||||||||||
| Dividends from net investment income | (0.41 | ) | (0.43 | ) | (0.43 | ) | (0.43 | ) | (0.31 | ) | (0.43 | ) | ||||||||||||
| Net asset value, end of period | $ | 11.02 | $ | 10.37 | $ | 10.55 | $ | 9.81 | $ | 10.39 | $ | 10.85 | ||||||||||||
| Total Investment Return2 | ||||||||||||||||||||||||
| Based on net asset value | 10.43% | 2.44% | 12.06% | (1.29)% | (1.35)% | 3 | 1.61% | |||||||||||||||||
| Ratios to Average Net Assets | ||||||||||||||||||||||||
| Total expenses | 1.37% | 1.33% | 1.37% | 1.38% | 1.41% | 4 | 1.45% | |||||||||||||||||
| Total expenses after fees waived and paid indirectly | 1.37% | 1.33% | 1.37% | 1.37% | 1.40% | 4 | 1.45% | |||||||||||||||||
| Total expenses after fees
waived and paid indirectly excluding interest expense and fees5 | 1.33% | 1.32% | 1.36% | 1.36% | 1.33% | 4 | 1.33% | |||||||||||||||||
| Net investment income | 3.86% | 4.16% | 4.16% | 4.41% | 3.97% | 4 | 3.91% | |||||||||||||||||
| Supplemental Data | ||||||||||||||||||||||||
| Net assets, end of period (000) | $ | 11,093 | $ | 10,694 | $ | 12,391 | $ | 12,491 | $ | 14,217 | $ | 16,364 | ||||||||||||
| Portfolio turnover | 19% | 17% | 19% | 30% | 16% | 19% | ||||||||||||||||||
| 1 | Based on average shares outstanding. |
| 2 | Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions. |
| 3 | Aggregate total investment return. |
| 4 | Annualized. |
| 5 | Interest expense and fees relate to TOBs. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to TOBs. |
See Notes to Financial Statements.
| ANNUAL REPORT | JUNE 30, 2012 | 65 |
1. Organization and Significant Accounting Policies:
BlackRock High Yield Municipal Fund (“High Yield Municipal”), BlackRock National Municipal Fund (“National Municipal”) and BlackRock Short-Term Municipal Fund (“Short-Term Municipal”) of BlackRock Municipal Bond Fund, Inc. (the “Corporation”) and BlackRock New York Municipal Bond Fund (“New York Municipal”) of BlackRock Multi-State Municipal Series Trust (the “Trust”) (collectively, the “Funds” or individually as the “Fund”) are registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as diversified, open-end management investment companies. The Corporation is organized as a Maryland corporation. The Trust is organized as a Massachusetts business trust. The Funds’ financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. The Board of Directors of the Corporation and the Board of Trustees of the Trust are referred to throughout this report as the “Board of Directors” or the “Board”. Each Fund offers multiple classes of shares. BlackRock, Institutional and Service Shares are sold without a sales charge and only to certain eligible investors. Investor A and Investor A1 Shares are generally sold with a front-end sales charge. Investor B, Investor B1, Investor C and Investor C1 Shares may be subject to a CDSC. All classes of shares have identical voting, dividend, liquidation and other rights and the same terms and conditions, except that Service, Investor A, Investor A1, Investor B, Investor B1, Investor C and Investor C1 Shares bear certain expenses related to the shareholder servicing of such shares, and Investor B, Investor B1, Investor C and Investor C1 Shares also bear certain expenses related to the distribution of such shares. For Short-Term Municipal and New York Municipal, Investor B Shares automatically convert to Investor A1 Shares after approximately 10 years. For National Municipal, Investor B Shares automatically convert to Investor A after approximately 10 years and Investor B1 Shares convert to Investor A Shares after approximately 7 years. Investor A1, Investor B, Investor B1 and Investor C1 Shares are only available through exchanges, dividend reinvestment by existing shareholders or for purchase by certain qualified employee benefit plans. Each class has exclusive voting rights with respect to matters relating to its shareholder servicing and distribution expenditures (except that Investor B and Investor B1 shareholders may vote on material changes to the Investor A and Investor A1 distribution and service plans as applicable).
Reorganization: The Board and shareholders of National Municipal and the Board and shareholders of each of BlackRock Municipal Fund of the Corporation (“Municipal”) and BlackRock AMT-Free Municipal Bond Portfolio of BlackRock Funds II (“AMT-Free Municipal”) (individually, a “Target Fund” and collectively the “Target Funds”) approved the reorganizations of each Target Fund into National Municipal pursuant to which National Municipal acquired substantially all of the assets and substantially all of the liabilities of each Target Fund in exchange for an equal aggregate value of newly-issued shares of National Municipal.
Each shareholder of a Target Fund received shares of National Municipal in an amount equal to the aggregate net asset value of such shareholder’s Target Fund shares, as determined at the close of business on July 15, 2011, less the costs of the Target Fund’s reorganization. In connection with the reorganizations, National Municipal issued newly created BlackRock, Service and Investor B1 Share classes.
The reorganizations were accomplished by a tax-free exchange of shares of National Municipal in the following amounts and at the following conversion ratios:
| National | Shares of | ||||
| Target Fund’s | Shares Prior to | Conversion | Municipal’s | National | |
| Target Fund | Share Class | Reorganization | Ratio | Share Class | Municipal |
| Municipal | Institutional | 60,313,178 | 0.73000752 | BlackRock | 44,029,074 |
| Municipal | Investor A | 23,362,907 | 0.72932033 | Investor A | 17,039,043 |
| Municipal | Investor B | 1,504,648 | 0.72970352 | Investor B | 1,097,947 |
| Municipal | Investor C | 5,968,504 | 0.73017144 | Investor C | 4,358,031 |
| Municipal | Investor C1 | 3,835,529 | 0.72955036 | Investor C1 | 2,798,212 |
| AMT-Free Municipal | BlackRock | 32,187 | 1.04459481 | BlackRock | 33,622 |
| AMT-Free Municipal | Institutional | 36,915,636 | 1.04362536 | Institutional | 38,526,093 |
| AMT-Free Municipal | Service | 807,665 | 1.04194269 | Service | 841,541 |
| AMT-Free Municipal | Investor A | 4,388,828 | 1.04337638 | Investor A | 4,579,199 |
| AMT-Free Municipal | Investor B | 66,195 | 1.04405653 | Investor B1 | 69,111 |
| AMT-Free Municipal | Investor C | 2,211,771 | 1.04317692 | Investor C | 2,307,268 |
Each Target Fund’s net assets and composition of net assets on July 15, 2011, the date of the reorganization, were as follows:
| Distributions in | ||||||||||||||||||||
| Excess of Net | Accumulated | Net | ||||||||||||||||||
| Investment | Net Realized | Unrealized | ||||||||||||||||||
| Target Fund | Net Assets | Paid-in Capital | Income | Loss | Appreciation | |||||||||||||||
| Municipal | $ | 700,874,018 | $ | 711,500,571 | $ | (50,550 | ) | $ | (30,657,517 | ) | $ | 20,081,514 | ||||||||
| AMT-Free Municipal | $ | 468,651,298 | $ | 471,981,418 | $ | (10,420 | ) | $ | (19,847,261 | ) | $ | 16,527,561 | ||||||||
| 66 | ANNUAL REPORT | JUNE 30, 2012 |
Notes to Financial Statements (continued)
For financial reporting purposes, assets received and shares issued by National Municipal were recorded at fair value. However, the cost basis of the investments received from the Target Funds were carried forward to align ongoing reporting of National Municipal’s realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes.
The net assets of National Municipal before the acquisition were $2,481,619,738.
The aggregate net assets of National Municipal immediately after the acquisition amounted to $3,651,145,054. Each Target Fund’s fair value and cost of investments prior to the reorganization were as follows:
| Fair Value of | Cost of | |||
| Target Fund | Investments | Investments | ||
| Municipal | $ | 697,035,650 | $ | 676,954,136 |
| AMT-Free Municipal | $ | 464,643,093 | $ | 448,115,532 |
The purpose of these transactions was to combine three funds managed by the manager with the same or substantially similar (but not identical) investment objectives, investment policies, strategies, risks and restrictions. Each reorganization was a tax-free event and was effective on July 18, 2011.
In connection with the reorganizations, National Municipal’s manager contractually agreed to waive and/or reimburse fees and expenses, excluding interest expense, dividend expense, acquired fund fees and expenses and certain other fund expenses, in order to limit expenses. This agreement is in effect until November 1, 2013. The expense limitations as a percentage of average daily net assets are as follows:
| BlackRock | 0.46 | % |
| Investor A | 0.72 | % |
| Investor B | 1.23 | % |
| Investor C | 1.47 | % |
| Investor C1 | 1.28 | % |
Assuming the acquisition had been completed on July 1, 2011, the beginning of the fiscal reporting period of National Municipal, the pro forma results of operations for the year ended June 30, 2012 are as follows:
| • | Net investment income: $173,305,533 |
| • | Net realized and change in unrealized gain/loss on investments: $328,129,422 |
| • | Net increase in net assets resulting from operations: $501,434,955 |
Because the combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed, it is not practicable to separate the amounts of revenue and earnings of the Target Funds that have been included in National Municipal’s Statement of Operations since July 18, 2011.
Reorganization costs incurred in connection with the reorganization were expensed by National Municipal.
The following is a summary of significant accounting policies followed by the Funds:
Valuation: US GAAP defines fair value as the price the Funds would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Funds fair value their financial instruments at market value using independent dealers or pricing services under policies approved annually by the Board of the Funds. The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to provide oversight of the pricing oversight of the pricing function for the Funds for all financial instruments.
Municipal investments (including commitments to purchase such investments on a “when-issued” basis) are valued on the basis of prices provided by dealers or pricing services. In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from dealers, pricing matrixes, market transactions in comparable investments and information with respect to various relationships between investments. Financial futures contracts traded on exchanges are valued at their last sale price. Investments in open-end registered investment companies are valued at NAV each business day. Short-term securities with remaining maturities of 60 days or less may be valued at amortized cost, which approximates fair value.
In the event that application of these methods of valuation results in a price for an investment, which is deemed not to be representative of the market value of such investment or if a price is not available, the investment will be valued by the Global Valuation Committee, or its delegate, in accordance with a policy approved by the Board as reflecting fair value (“Fair Value Assets”). When determining the price for Fair Value Assets, Global Valuation Committee, or its delegate, seeks to determine the price that each Fund might reasonably expect to receive from the current sale of that asset in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the investment advisor and/or sub-advisor deems relevant. These factors include but are not limited to (i) attributes specific to the investment or asset; (ii) the principal market for the investment or asset; (iii) the customary participants in the principal market for the investment or asset; (iv) data assumptions by market participants for the investment or asset, if reasonably available; (v) quoted prices for similar investments or assets in active markets; and (vi) other factors, such as future cash flows, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and/or default rates. The Global Valuation Committee, or its delegate, employs various methods for calibrating valuation approaches, including regular due diligence of the Funds’ pricing vendors, a regular review of key inputs and assumptions, transactional back-testing or disposition analysis to compare unrealized gains and losses to realized gains and losses, reviews of missing or stale prices and large movements in market values and reviews of any market related activity. The pricing of all Fair Value Assets is subsequently reported to the Board or a committee thereof on a quarterly basis.
| ANNUAL REPORT | JUNE 30, 2012 | 67 |
Notes to Financial Statements (continued)
Zero-Coupon Bonds: The Funds may invest in zero-coupon bonds, which are normally issued at a significant discount from face value and do not provide for periodic interest payments. Zero-coupon bonds may experience greater volatility in market value than similar maturity debt obligations which provide for regular interest payments.
Forward Commitments and When-Issued Delayed Delivery Securities: The Funds may purchase securities on a when-issued basis and may purchase or sell securities on a forward commitment basis. Settlement of such transactions normally occurs within a month or more after the purchase or sale commitment is made. The Funds may purchase securities under such conditions with the intention of actually acquiring them, but may enter into a separate agreement to sell the securities before the settlement date. Since the value of securities purchased may fluctuate prior to settlement, the Funds may be required to pay more at settlement than the security is worth. In addition, the Funds are not entitled to any of the interest earned prior to settlement. When purchasing a security on a delayed delivery basis, the Funds assume the rights and risks of ownership of the security, including the risk of price and yield fluctuations. In the event of default by the counterparty, the Funds’ maximum amount of loss is the unrealized appreciation of unsettled when-issued transactions, which is shown in the Schedules of Investments.
Municipal Bonds Transferred to TOBs: The Funds leverage their assets through the use of TOBs. A TOB is established by a third party sponsor forming a special purpose entity, into which one or more funds, or an agent on behalf of the funds, transfers municipal bonds. Other funds managed by the investment advisor may also contribute municipal bonds to a TOB into which a Fund has contributed bonds. A TOB typically issues two classes of beneficial interests: short-term floating rate certificates, which are sold to third party investors, and residual certificates (“TOB Residuals”), which are generally issued to the participating funds that made the transfer. The TOB Residuals held by a Fund include the right of a Fund (1) to cause the holders of a proportional share of the short-term floating rate certificates to tender their certificates at par, including during instances of a rise in short-term interest rates, and (2) to transfer, within seven days, a corresponding share of the municipal bonds from the TOB to a Fund. The TOB may also be terminated without the consent of a Fund upon the occurrence of certain events as defined in the TOB agreements. Such termination events may include the bankruptcy or default of the municipal bond, a substantial downgrade in credit quality of the municipal bond, the inability of the TOB to obtain quarterly or annual renewal of the liquidity support agreement, a substantial decline in market value of the municipal bond or the inability to remarket the short-term floating rate certificates to third party investors. During the year ended June 30, 2012, no TOBs in which the Funds participated were terminated without the consent of the Funds.
The cash received by the TOB from the sale of the short-term floating rate certificates, less transaction expenses, is paid to a Fund, in exchange for TOB trust certificates. The Funds typically invest the cash in additional municipal bonds. Each Fund’s transfer of the municipal bonds to a TOB is accounted for as a secured borrowing; therefore, the municipal bonds deposited into a TOB are presented in the Funds’ Schedules of Investments and TOB trust certificates are shown in other liabilities in the Statements of Assets and Liabilities. The carrying amount of the Funds’ payable to the holder of the short-term floating rate certificates as reported in the Funds’ Statements of Assets and Liabilities as TOB trust certificates approximate their fair value. Interest income, including amortization and accretion of premiums and discounts, from the underlying municipal bonds is recorded by the Funds on an accrual basis. Interest expense incurred on the secured borrowing and other expenses related to remarketing, administration and trustee services to a TOB are shown as interest expense and fees in the Statements of Operations. The short-term floating rate certificates have interest rates that generally reset weekly and their holders have the option to tender certificates to the TOB for redemption at par at each reset date. At June 30, 2012, the aggregate value of the underlying municipal bonds transferred to TOBs, the related liability for TOB trust certificates and the range of interest rates on the liability for TOB trust certificates were as follows:
| Underlying | ||||||||||||
| Municipal | ||||||||||||
| Bonds | Liability for | Range of | ||||||||||
| Transferred | TOB Trust | Interest | ||||||||||
| to TOBs | Certificates | Rates | ||||||||||
| High Yield Municipal | $ | 62,589,903 | $ | 33,860,884 | 0.15% – 0.50% | |||||||
| National Municipal | $ | 1,035,361,710 | $ | 468,586,354 | 0.17% – 0.38% | |||||||
| New York Municipal | $ | 40,436,807 | $ | 22,006,793 | 0.15% – 0.26% | |||||||
For the year ended June 30, 2012, the Funds’ average TOB trust certificates outstanding and the daily weighted average interest rate, including fees, were as follows:
| Average TOB Trust | Daily Weighted | |||||||
| Certificates | Average Interest | |||||||
| Outstanding | Rate | |||||||
| High Yield Municipal | $ | 22,542,140 | 0.81 | % | ||||
| National Municipal | $ | 458,686,345 | 0.70 | % | ||||
| New York Municipal | $ | 11,342,334 | 0.84 | % | ||||
Should short-term interest rates rise, the Funds’ investments in TOBs may adversely affect the Funds’ net investment income and dividends to shareholders. Also, fluctuations in the market value of municipal bonds deposited into the TOB may adversely affect the Funds’ NAVs per share.
Segregation and Collateralization: In cases in which the 1940 Act and the interpretive positions of the Securities and Exchange Commission (“SEC”) require that the Funds either deliver collateral or segregate assets in connection with certain investments (e.g., financial futures contracts), the Funds will, consistent with SEC rules and/or certain interpretive letters issued by the SEC, segregate collateral or designate on their books and records cash or liquid securities having a market value at least equal to the amount that would otherwise be required to be physically segregated. Furthermore, based on requirements and agreements with certain exchanges and third party broker-dealers, each party to such transactions has requirements to deliver/deposit securities as collateral for certain investments.
Investment Transactions and Investment Income: For financial reporting purposes, investment transactions are recorded on the dates the transactions are entered into (the trade dates). Realized gains and losses on investment transactions are determined on the identified cost basis.
| 68 | ANNUAL REPORT | JUNE 30, 2012 |
Notes to Financial Statements (continued)
Interest income, including amortization and accretion of premiums and discounts on debt securities, is recognized on the accrual basis. Income and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets. Consent fees are compensation for agreeing to changes in the terms of debt instruments and are included in interest income in the Statements of Operations.
Dividends and Distributions: Dividends from net investment income are declared daily and paid monthly. Distributions of capital gains are recorded on the ex-dividend dates. The amount and timing of dividends and distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP.
Income Taxes: It is each Fund’s policy to comply with the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no federal income tax provision is required.
Each Fund files US federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Funds’ US federal tax returns remains open for each of the four years ended June 30, 2012. The statutes of limitations on each Funds’ state and local tax returns may remain open for an additional year depending upon the jurisdiction. Management does not believe there are any uncertain tax positions that require recognition of a tax liability.
Recent Accounting Standard: In December 2011, the Financial Accounting Standards Board issued guidance that will expand current disclosure requirements on the offsetting of certain assets and liabilities. The new disclosures will be required for investments and derivative financial instruments subject to master netting or similar agreements, which are eligible for offset in the Statements of Assets and Liabilities and will require an entity to disclose both gross and net information about such investments and transactions in the financial statements. The guidance is effective for financial statements with fiscal years beginning on or after January 1, 2013, and interim periods within those fiscal years. Management is evaluating the impact of this guidance on the Funds’ financial statement disclosures.
Other: Expenses directly related to a Fund or its classes are charged to that Fund or class. Other operating expenses shared by several funds are pro rated among those funds on the basis of relative net assets or other appropriate methods. Expenses directly related to the Funds and other shared expenses pro rated to the Funds are allocated daily to each class based on its relative net assets or other appropriate methods.
The Funds have an arrangement with the custodians whereby fees may be reduced by credits earned on uninvested cash balances, which, if applicable, are shown as fees paid indirectly in the Statements of Operations. The custodians impose fees on overdrawn cash balances, which can be offset by accumulated credits earned or may result in additional custody charges.
2. Derivative Financial Instruments:
The Funds engage in various portfolio investment strategies using derivative contracts both to increase the returns of the Funds and/or to economically hedge, or protect, their exposure to certain risks such as interest rate risk. These contracts may be transacted on an exchange.
Losses may arise if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument or if the counterparty does not perform under the contract. Counterparty risk related to exchange-traded financial futures contracts is deemed to be minimal due to the protection against defaults provided by the exchange on which these contracts trade.
Financial Futures Contracts: The Funds purchase or sell financial futures contracts and options on financial futures contracts to gain exposure to, or economically hedge against, changes in interest rates (interest rate risk). Financial futures contracts are agreements between the Funds and the counterparty to buy or sell a specific quantity of an underlying instrument at a specified price and at a specified date. Depending on the terms of the particular contract, financial futures contracts are settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount on the settlement date. Pursuant to the contract, the Funds agree to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as variation margin and are recorded by the Funds as unrealized appreciation or depreciation. When the contract is closed, the Funds record a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The use of financial futures contracts involves the risk of an imperfect correlation in the movements in the price of financial futures contracts, interest rates and the underlying assets.
Derivative Financial Instruments Categorized by Risk Exposure:
| Fair Values of Derivative Financial Instruments as of June 30, 2012 | ||||
| Liability Derivatives | ||||
| Statement of Assets | ||||
| and Liabilities | National | |||
| Location | Municipal | |||
| Net unrealized | ||||
| Interest rate contracts | appreciation/depreciation1 | $ | (305,638 | ) |
| 1 | Includes cumulative appreciation/depreciation on financial futures contracts as reported in the Schedules of Investments. Only current day’s variation margin is reported within the Statements of Assets and Liabilities. |
| The Effect of Derivative Financial Instruments in the Statements of Operations Year Ended June 30, 2012 | |||||||||
| Net Realized Gain (Loss) From | |||||||||
| High Yield | National | New York | |||||||
| Municipal | Municipal | Municipal | |||||||
| Interest rate contracts: | |||||||||
| Financial futures contracts | $ | (689,002 | ) | $ | (6,376,756 | ) | $ | (931,748 | ) |
| Net Change in Unrealized Appreciation/Depreciation on | |||||||||
| High Yield | National | New York | |||||||
| Municipal | Municipal | Municipal | |||||||
| Interest rate contracts: | |||||||||
| Financial futures contracts | $ | (8,632 | ) | $ | (305,638 | ) | $ | (76,858 | ) |
| ANNUAL REPORT | JUNE 30, 2012 | 69 |
Notes to Financial Statements (continued)
For the year ended June 30, 2012, the average quarterly balances of outstanding derivative financial instruments were as follows:
| High Yield | National | New York | ||||||||||
| Municipal | Municipal | Municipal | ||||||||||
| Financial futures contracts: | ||||||||||||
| Average number of contracts sold | 45 | 625 | 50 | |||||||||
| Average notional value of contracts sold | $ | 5,782,984 | $ | 81,619,141 | $ | 6,496,719 | ||||||
3. Administration Agreement and Other Transactions with Affiliates:
The PNC Financial Services Group, Inc. (“PNC”) is the largest stockholder and an affiliate, for 1940 Act purposes, of BlackRock, Inc. (“BlackRock”).
The Corporation and the Trust, on behalf of each Fund, entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the “Manager”), the Funds’ investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services. The Manager is responsible for the management of each Fund’s portfolio and provides the necessary personnel, facilities, equipment and certain other services necessary to the operations of each Fund.
High Yield Municipal’s annual investment advisory fee rates are as follows:
| Portion of Average Daily Net Assets | Rate | |
| First $250 million | 0.550 | % |
| $250 million — $500 million | 0.525 | % |
| Greater than $500 million | 0.500 | % |
For such services, each Fund pays the Manager a monthly fee based on a percentage each Fund’s average daily net assets at the following annual rates:
| Rate of Advisory Fee | ||||
| Aggregate of Average Daily Net | National | Short-Term | ||
| Assets of the Two Combined Funds 1 | Municipal | Municipal | ||
| First $250 million | 0.500 | % | 0.400 | % |
| $250 million — $400 million | 0.475 | % | 0.375 | % |
| $400 million — $550 million | 0.475 | % | 0.350 | % |
| Greater than $550 million | 0.475 | % | 0.325 | % |
| 1 | The portion of the assets of a Fund to which the rate of each breakpoint level applies will be determined on a “uniform percentage” basis. The uniform percentage applicable to a breakpoint level is determined by dividing the amount of the aggregate average daily net assets of the two combined Funds that falls within that breakpoint level by the aggregate average daily net assets of the two combined Funds. The amount of the fee for a Fund at each breakpoint level is determined by multiplying the average daily net assets of that Fund by the uniform percentage applicable to that breakpoint level and multiplying the product by the advisory fee rate. |
New York Municipal’s annual investment advisory fee rate is 0.55%.
The Manager voluntarily agreed to waive a portion of its fees payable by New York Municipal, which is shown as fees waived by advisor in the Statements of Operations, so that such fee is reduced for average daily net assets of the Fund as follows:
| Portion of Average Daily Net Assets | Rate | |
| First $500 million | 0.550 | % |
| $500 million — $1 billion | 0.525 | % |
| Greater than $1 billion | 0.500 | % |
For National Municipal and Short-Term Municipal, the Manager contractually or voluntarily agreed to waive and/or reimburse fees and expenses, excluding interest expense, dividend expense, acquired fund fees and expenses and certain other fund expenses, in order to limit expenses. The expense limitations as a percentage of net assets are as follows:
| National | Short-Term | |||
| Municipal | Municipal | |||
| Contractual1 | Voluntary2 | |||
| BlackRock | 0.46 | % | — | |
| Institutional | — | 0.40 | % | |
| Investor A | 0.72 | % | 0.69 | % |
| Investor A1 | — | 0.52 | % | |
| Investor B | 1.23 | % | 0.81 | % |
| Investor C | 1.47 | % | 1.55 | % |
| Investor C1 | 1.28 | % | — | |
| 1 | The Manager has agreed not to reduce or discontinue this contractual waiver and/or reimbursement prior to November 1, 2013 unless approved by the Board, including a majority of the Independent Directors. |
| 2 | These voluntary waivers and/or reimbursements may be reduced or discontinued at any time without notice. |
As a result, for National Municipal and Short-Term Municipal, the Manager waived or reimbursed the following amounts which are shown as transfer agent fees waived and/or reimbursed — class specific in the Statements of Operations:
| National | Short-Term | |||||||
| Municipal | Municipal | |||||||
| BlackRock | $ | 151,827 | — | |||||
| Institutional | — | $ | 636,514 | |||||
| Investor A | $ | 808,071 | — | |||||
| Investor A1 | — | $ | 10,524 | |||||
| Investor B | $ | 33,725 | $ | 1,370 | ||||
| Investor C | $ | 164,872 | — | |||||
| Investor C1 | $ | 33,027 | — | |||||
The following Funds had waivers that are included in fees waived by advisor in the Statements of Operations. For the year ended June 30, 2012, the amounts were as follows:
| Fees Waived | ||
| by Manager | ||
| National Municipal | $ | 1,708,625 |
| Short-Term Municipal | $ | 4,752 |
The Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees each Fund pays to the Manager indirectly through its investment in affiliated money market funds. However, the Manager does not waive its investment advisory fees by the amount of investment advisory fees paid in connection with each Fund’s investment in other affiliated investment companies, if any. These amounts are shown as, or included in, fees waived by advisor in the Statements of Operations.
| 70 | ANNUAL REPORT | JUNE 30, 2012 |
Notes to Financial Statements (continued)
For the year ended June 30, 2012, the amounts waived were as follows:
| High Yield Municipal | $ | 5,900 |
| National Municipal | $ | 205,649 |
| Short-Term Municipal | $ | 233 |
| New York Municipal | $ | 6,608 |
The Corporation and the Trust, on behalf of the Manager, entered into a sub-advisory agreement with BlackRock Investment Management, LLC (“BIM”), an affiliate of the Manager. The Manager pays BIM, for services it provides, a monthly fee that is a percentage of the investment advisory fees paid by each Fund to the Manager.
For the year ended June 30, 2012, the Funds reimbursed the Manager for certain accounting services, which are included in accounting services in the Statements of Operations. The reimbursements were as follows:
| High Yield Municipal | $ | 1,890 |
| National Municipal | $ | 38,225 |
| Short-Term Municipal | $ | 10,182 |
| New York Municipal | $ | 2,500 |
The Funds entered into a Distribution Agreement and Distribution and Service Plan with BlackRock Investments, LLC (“BRIL”), an affiliate of the Manager. Pursuant to the Distribution and Service Plan and in accordance with Rule 12b-1 under the 1940 Act, each Fund pays BRIL ongoing service and distribution fees. The fees are accrued daily and paid monthly at annual rates based upon the average daily net assets of the shares of each Fund as follows:
| Service Fees | ||||||||
| High Yield | National | Short-Term | New York | |||||
| Municipal | Municipal | Municipal | Municipal | |||||
| Service | — | 0.25 | % | — | — | |||
| Investor A | 0.25 | % | 0.25 | % | 0.25 | % | 0.25 | % |
| Investor A1 | — | — | 0.10 | % | 0.10 | % | ||
| Investor B | — | 0.25 | % | 0.15 | % | 0.25 | % | |
| Investor B1 | — | 0.25 | % | — | — | |||
| Investor C | 0.25 | % | 0.25 | % | 0.25 | % | 0.25 | % |
| Investor C1 | — | 0.25 | % | — | 0.25 | % | ||
| Distribution Fees | ||||||||
| High Yield | National | Short-Term | New York | |||||
| Municipal | Municipal | Municipal | Municipal | |||||
| Investor B | — | 0.50 | % | 0.20 | % | 0.25 | % | |
| Investor B1 | — | 0.75 | %1 | — | — | |||
| Investor C | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % |
| Investor C1 | — | 0.55 | % | — | 0.35 | % | ||
| 1 | National Municipal did not pay a portion of its respective distribution fees during the year. |
Pursuant to sub-agreements with BRIL, broker-dealers and BRIL provide shareholder servicing and distribution services to each Fund. The ongoing service and/or distribution fee compensates BRIL and each broker-dealer for providing shareholder servicing and/or distribution related services to Investor A, Investor A1, Investor B, Investor B1, Investor C and Investor C1 shareholders.
For the year ended June 30, 2012, affiliates earned underwriting discounts, direct commissions and dealer concessions on sales of the Funds’ Investor A Shares as follows:
| High Yield | National | Short-Term | New York | |||||||||||||||||
| Municipal | Municipal | Municipal | Municipal | |||||||||||||||||
| Investor A | $ | 29,620 | $ | 232,663 | $ | 4,947 | $ | 16,153 | ||||||||||||
| Investor A1 | — | — | — | $ | 81 | |||||||||||||||
For the year ended June 30, 2012, affiliates received CDSCs as follows:
| High Yield | National | Short-Term | New York | ||||||||||||||||
| Municipal | Municipal | Municipal | Municipal | ||||||||||||||||
| Investor A | $ | 10,918 | $ | 108,349 | $ | 74,192 | $ | 540 | |||||||||||
| Investor B | — | $ | 4,868 | $ | 834 | $ | 2,006 | ||||||||||||
| Investor B1 | — | $ | 387 | — | — | ||||||||||||||
| Investor C | $ | 3,922 | $ | 42,106 | $ | 5,604 | $ | 2,262 | |||||||||||
| Investor C1 | — | $ | 420 | — | — | ||||||||||||||
The Manager maintains a call center, which is responsible for providing certain shareholder services to the Funds, such as responding to shareholder inquiries and processing transactions based upon instructions from shareholders with respect to the subscription and redemption of Fund shares. For the year ended June 30, 2012, each Fund reimbursed the Manager the following amounts for costs incurred in running the call center, which are included in transfer agent — class specific in the Statements of Operations:
| Call Center Fees | ||||||||||||||||
| High Yield Municipal |
National Municipal |
Short-Term Municipal |
New York Municipal |
|||||||||||||
| BlackRock | — | $ | 3,436 | $ | 145 | — | ||||||||||
| Institutional | $ | 433 | $ | 27,428 | $ | 2,798 | $ | 187 | ||||||||
| Service | — | $ | 476 | — | — | |||||||||||
| Investor A | $ | 451 | $ | 23,734 | $ | 1,819 | $ | 358 | ||||||||
| Investor A1 | — | — | $ | 499 | $ | 2,244 | ||||||||||
| Investor B | — | $ | 644 | $ | 99 | $ | 87 | |||||||||
| Investor B1 | — | $ | 17 | — | — | |||||||||||
| Investor C | $ | 268 | $ | 3,901 | $ | 943 | $ | 196 | ||||||||
| Investor C1 | — | $ | 1,032 | — | $ | 115 | ||||||||||
4. Investments:
Purchases and sales of investments, excluding short-term securities, for the year ended June 30, 2012, were as follows:
| Purchases | Sales | |||||||
| High Yield Municipal | $ | 153,645,207 | $ | 36,800,323 | ||||
| National Municipal | $ | 2,351,524,422 | $ | 1,624,443,679 | ||||
| Short-Term Municipal | $ | 550,920,648 | $ | 508,841,277 | ||||
| New York Municipal | $ | 73,262,141 | $ | 49,435,696 | ||||
| ANNUAL REPORT | JUNE 30, 2012 | 71 |
Notes to Financial Statements (continued)
5. Income Tax Information:
US GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or net asset values per share. The following permanent differences as of June 30, 2012 attributable to amortization methods on fixed income securities, income recognized from pass-through entities, the expiration of capital loss carryforwards, distributions paid in excess of taxable income, distributions received from a regulated investment company and the sale of bonds received from TOB trusts were reclassified to the following accounts:
| High Yield | National | Short-Term | New York | |||||||||||||
| Municipal | Municipal | Municipal | Municipal | |||||||||||||
| Paid-in capital | — | $ | (6,783,501 | ) | $ | (318,624 | ) | — | ||||||||
| Undistributed (distributions in excess of) net investment income | $ | (14,049 | ) | $ | (260,470 | ) | $ | 318,568 | $ | (389,458 | ) | |||||
| Accumulated net realized loss | $ | 14,049 | $ | 7,043,971 | $ | 56 | $ | 389,458 | ||||||||
The tax character of distributions paid during the fiscal years ended June 30, 2012 and June 30, 2011 was as follows:
| High Yield | National | Short-Term | New York | |||||||||||||||||
| Municipal | Municipal | Municipal | Municipal | |||||||||||||||||
| Tax-exempt income | 6/30/12 | $ | 10,248,618 | $ | 168,906,088 | $ | 9,101,662 | $ | 10,816,674 | |||||||||||
| 6/30/11 | 7,889,554 | 111,766,061 | 11,814,462 | 11,596,179 | ||||||||||||||||
| Ordinary income | 6/30/12 | 3,175 | 41,854 | 318,869 | 24,002 | |||||||||||||||
| 6/30/11 | 75,357 | 243,269 | 150 | 31,239 | ||||||||||||||||
| Total | 6/30/12 | $ | 10,251,793 | $ | 168,947,942 | $ | 9,420,531 | $ | 10,840,676 | |||||||||||
| 6/30/11 | $ | 7,964,911 | $ | 112,009,330 | $ | 11,814,612 | $ | 11,627,418 | ||||||||||||
As of June 30, 2012, the tax components of accumulated net earnings were as follows:
| High Yield | National | Short-Term | New York | |||||||||||||
| Municipal | Municipal | Municipal | Municipal | |||||||||||||
| Undistributed tax-exempt income | $ | 196,382 | $ | 3,577,765 | — | $ | 307,942 | |||||||||
| Undistributed ordinary income | 23,088 | 29,366 | — | 14,315 | ||||||||||||
| Capital loss carryforwards | (12,051,752 | ) | (107,233,863 | ) | $ | (6,897,136 | ) | (12,392,126 | ) | |||||||
| Net unrealized gains1 | 19,448,650 | 397,746,729 | 8,438,731 | 18,316,507 | ||||||||||||
| Qualified late-year losses2 | (310,891 | ) | — | — | (2,019,664 | ) | ||||||||||
| Total | $ | 7,305,477 | $ | 294,119,997 | $ | 1,541,595 | $ | 4,226,974 | ||||||||
| 1 | The difference between book-basis and tax-basis net unrealized gains was attributable primarily to the tax deferral of losses on wash sales and straddles, amortization methods for premiums and discounts on fixed income securities, the accrual of income on securities in default, the realization for tax purposes of unrealized gains/losses on certain futures contracts and the treatment of residual interests in tender option bond trusts. |
| 2 | The Funds have elected to defer certain qualified late-year losses and recognize such losses in the year ending June 30, 2013. |
As of June 30, 2012, the Funds had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates as follows:
| High Yield | National | Short-Term | New York | ||||||||||||||
| Expires June 30, | Municipal | Municipal | Municipal | Municipal | |||||||||||||
| 2013 | — | $ | 602,181 | — | $ | 8,935,207 | |||||||||||
| 2014 | — | — | $ | 3,586,981 | — | ||||||||||||
| 2015 | — | 1,741,602 | 2,987,949 | — | |||||||||||||
| 2016 | $ | 258,523 | 9,699,108 | 322,206 | — | ||||||||||||
| 2017 | 3,758,709 | 29,857,944 | — | 2,020,225 | |||||||||||||
| 2018 | 4,665,271 | 41,255,757 | — | 367,311 | |||||||||||||
| 2019 | 1,973,257 | — | — | 1,028,212 | |||||||||||||
| No expiration date3 | 1,395,992 | 24,077,271 | — | 41,171 | |||||||||||||
| Total | $ | 12,051,752 | $ | 107,233,863 | $ | 6,897,136 | $ | 12,392,126 | |||||||||
| 3 | Must be utilized prior to losses subject to expiration. |
During the year ended June 30, 2012, Short-Term Municipal utilized $886,272 of its capital loss carryforward.
As of June 30, 2012, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:
| High Yield | National | Short-Term | New York | |||||||||||||
| Municipal | Municipal | Municipal | Municipal | |||||||||||||
| Tax cost | $ | 279,213,503 | $ | 4,364,121,696 | $ | 1,026,606,308 | $ | 249,210,584 | ||||||||
| Gross unrealized appreciation | $ | 23,419,418 | $ | 404,263,184 | $ | 8,972,488 | $ | 20,287,288 | ||||||||
| Gross unrealized depreciation | (3,920,169 | ) | (6,465,725 | ) | (53,461 | ) | (1,956,876 | ) | ||||||||
| Net unrealized appreciation | $ | 19,499,249 | $ | 397,797,459 | $ | 8,919,027 | $ | 18,330,412 | ||||||||
| 72 | ANNUAL REPORT | JUNE 30, 2012 |
Notes to Financial Statements (continued)
6. Borrowings:
The Corporation and the Trust, on behalf of the Funds, along with certain other funds managed by the Manager and its affiliates, are a party to a $500 million credit agreement with a group of lenders. The Funds may borrow under the credit agreement to fund shareholder redemptions. Effective November 2010 to November 2011, the credit agreement had the following terms: a commitment fee of 0.08% per annum based on each Fund’s pro rata share of the unused portion of the credit agreement and interest at a rate equal to the higher of (a) the one-month LIBOR plus 1.00% per annum or (b) the Fed Funds rate plus 1.00% per annum on amounts borrowed. In addition, the Funds paid administration and arrangement fees which were allocated to the Funds based on their net assets as of October 31, 2010. The credit agreement, which expired in November 2011, was renewed until November 2012. Effective November 2011 to November 2012, the credit agreement has the following terms: a commitment fee of 0.065% per annum based on the Funds’ pro rata share of the unused portion of the credit agreement and interest at a rate equal to the higher of (a) the one-month LIBOR plus 0.80% per annum or (b) the Fed Funds rate plus 0.80% per annum on amounts borrowed. In addition, the Funds paid administration and arrangement fees which were allocated to the Funds based on their net assets as of October 31, 2011. The Funds did not borrow under the credit agreement during the year ended June 30, 2012.
7. Concentration, Market and Credit Risk:
New York Municipal invests a substantial amount of its assets in issuers located in a single state or limited number of states. Please see New York Municipal’s Schedule of Investments for concentrations in specific states.
Many municipalities insure repayment of their bonds, which may reduce the potential for loss due to credit risk. The market value of these bonds may fluctuate for other reasons, including market perception of the value of such insurance, and there is no guarantee that the insurer will meet its obligation.
In the normal course of business, the Funds invest in securities and enter into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (issuer credit risk). The value of securities held by the Funds may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Funds; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to issuer credit risk, the Funds may be exposed to counterparty credit risk, or the risk that an entity with which the Funds have unsettled or open transactions may fail to or be unable to perform on its commitments. The Funds manage counterparty credit risk by entering into transactions only with counterparties that they believe have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Funds’ exposure to market, issuer and counterparty credit risks with respect to these financial assets is generally approximated by their value recorded in the Funds’ Statements of Assets and Liabilities, less any collateral held by the Funds.
As of June 30, 2012, High Yield Municipal invested a significant portion of its assets in securities in the health sector. National Municipal invested a significant portion of its assets in securities in the health and utilities sectors. Short-Term Municipal invested a significant portion of its assets in securities in the state sector. New York Municipal invested a significant portion of its assets in securities in the county/city/special district/school district sector. Changes in economic conditions affecting the county/city/ special district/school district, health, state and utilities sectors would have a greater impact on the Funds and could affect the value, income and/or liquidity of positions in such securities.
| ANNUAL REPORT | JUNE 30, 2012 | 73 |
Notes to Financial Statements (continued)
8. Capital Share Transactions:
Transactions in capital shares for each class were as follows:
| Year Ended | Year Ended | |||||||||||||||
| June 30, 2012 | June 30, 2011 | |||||||||||||||
| High Yield Municipal | Shares | Amount | Shares | Amount | ||||||||||||
| Institutional | ||||||||||||||||
| Shares sold | 10,222,237 | $ | 90,564,901 | 6,149,068 | $ | 51,299,139 | ||||||||||
| Shares issued to shareholders in reinvestment of dividends and distributions | 316,672 | 2,818,724 | 233,028 | 1,943,654 | ||||||||||||
| Shares redeemed | (4,822,125 | ) | (42,644,678 | ) | (4,115,993 | ) | (34,165,925 | ) | ||||||||
| Net increase | 5,716,784 | $ | 50,738,947 | 2,266,103 | $ | 19,076,868 | ||||||||||
| Investor A | ||||||||||||||||
| Shares sold and automatic conversion of shares | 7,033,684 | $ | 62,791,787 | 2,565,047 | $ | 21,343,797 | ||||||||||
| Shares issued to shareholders in reinvestment of dividends and distributions | 148,616 | 1,323,316 | 106,181 | 885,713 | ||||||||||||
| Shares redeemed | (1,472,331 | ) | (12,971,093 | ) | (2,278,814 | ) | (19,113,460 | ) | ||||||||
| Net increase | 5,709,969 | $ | 51,144,010 | 392,414 | $ | 3,116,050 | ||||||||||
| Investor C | ||||||||||||||||
| Shares sold | 2,261,769 | $ | 20,209,135 | 1,249,127 | $ | 10,496,942 | ||||||||||
| Shares issued to shareholders in reinvestment of dividends and distributions | 87,477 | 776,603 | 63,641 | 529,304 | ||||||||||||
| Shares redeemed | (506,780 | ) | (4,443,765 | ) | (881,601 | ) | (7,307,968 | ) | ||||||||
| Net increase | 1,842,466 | 16,541,973 | 431,167 | 3,718,278 | ||||||||||||
| Total Net Increase | 13,269,219 | $ | 118,424,930 | 3,089,684 | $ | 25,911,196 | ||||||||||
| Year Ended | Year Ended | |||||||||||||||
| June 30, 2012 | June 30, 2011 | |||||||||||||||
| National Municipal | Shares | Amount | Shares | Amount | ||||||||||||
| BlackRock 1 | ||||||||||||||||
| Shares sold | 503,324 | $ | 5,257,007 | — | — | |||||||||||
| Shares issued resulting from reorganization | 44,062,696 | 445,420,985 | — | — | ||||||||||||
| Shares issued to shareholders in reinvestment of dividends | 532,438 | 5,646,292 | — | — | ||||||||||||
| Shares redeemed | (4,172,626 | ) | (43,865,073 | ) | — | — | ||||||||||
| Net increase | 40,925,832 | $ | 412,459,211 | — | — | |||||||||||
| Institutional | ||||||||||||||||
| Shares sold | 50,171,029 | $ | 530,508,205 | 39,093,064 | $ | 397,384,403 | ||||||||||
| Shares issued resulting from reorganization | 38,526,093 | 389,452,572 | — | — | ||||||||||||
| Shares issued to shareholders in reinvestment of dividends | 4,273,106 | 45,238,469 | 4,148,257 | 41,607,185 | ||||||||||||
| Shares redeemed | (26,393,768 | ) | (278,112,885 | ) | (31,453,097 | ) | (313,408,653 | ) | ||||||||
| Net increase | 66,576,460 | $ | 687,086,361 | 11,788,224 | $ | 125,582,935 | ||||||||||
| Service1 | ||||||||||||||||
| Shares sold and automatic conversion of shares | 106,236 | $ | 1,116,938 | — | — | |||||||||||
| Shares issued resulting from reorganization | 841,541 | 8,511,177 | — | — | ||||||||||||
| Shares issued to shareholders in reinvestment of dividends | 23,458 | 247,537 | — | — | ||||||||||||
| Shares redeemed | (859,868 | ) | (9,240,523 | ) | — | — | ||||||||||
| Net increase | 111,367 | $ | 635,129 | — | — | |||||||||||
| Investor A | ||||||||||||||||
| Shares sold and automatic conversion of shares | 70,184,569 | $ | 743,859,390 | 32,944,655 | $ | 329,287,957 | ||||||||||
| Shares issued resulting from reorganization | 21,618,242 | 218,642,582 | — | — | ||||||||||||
| Shares issued to shareholders in reinvestment of dividends | 2,827,234 | 29,970,354 | 2,260,688 | 22,698,564 | ||||||||||||
| Shares redeemed | (25,081,203 | ) | (265,697,067 | ) | (30,577,063 | ) | (302,644,541 | ) | ||||||||
| Net increase | 69,548,842 | $ | 726,775,259 | 4,628,280 | $ | 49,341,980 | ||||||||||
| Investor B | ||||||||||||||||
| Shares sold and automatic conversion of shares | 132,043 | $ | 1,379,943 | 79,100 | $ | 783,623 | ||||||||||
| Shares issued resulting from reorganization | 1,097,947 | 11,094,970 | — | — | ||||||||||||
| Shares issued to shareholders in reinvestment of dividends | 57,357 | 604,193 | 73,349 | 736,467 | ||||||||||||
| Shares redeemed | (1,815,927 | ) | (19,095,305 | ) | (1,665,029 | ) | (16,604,956 | ) | ||||||||
| Net decrease | (528,580 | ) | $ | (6,016,199 | ) | (1,512,580 | ) | $ | (15,084,866 | ) | ||||||
| Investor B11 | ||||||||||||||||
| Shares sold | 5 | $ | 67 | — | — | |||||||||||
| Shares issued resulting from reorganization | 69,111 | 698,380 | — | — | ||||||||||||
| Shares issued to shareholders in reinvestment of dividends | 1,357 | 14,324 | — | — | ||||||||||||
| Shares redeemed and automatic conversion of shares | (25,179 | ) | (261,605 | ) | — | — | ||||||||||
| Net increase | 45,294 | $ | 451,166 | — | — | |||||||||||
| 74 | ANNUAL REPORT | JUNE 30, 2012 |
Notes to Financial Statements (continued)
| Year Ended | Year Ended | |||||||||||||||
| June 30, 2012 | June 30, 2011 | |||||||||||||||
| National Municipal (concluded) | Shares | Amount | Shares | Amount | ||||||||||||
| Investor C | ||||||||||||||||
| Shares sold | 14,400,357 | $ | 152,322,976 | 7,754,446 | $ | 78,331,889 | ||||||||||
| Shares issued resulting from reorganization | 6,665,299 | 67,414,170 | — | — | ||||||||||||
| Shares issued to shareholders in reinvestment of dividends | 965,581 | 10,233,155 | 805,169 | 8,083,890 | ||||||||||||
| Shares redeemed | (5,722,400 | ) | (60,390,739 | ) | (9,284,072 | ) | (92,009,941 | ) | ||||||||
| Net increase (decrease) | 16,308,837 | $ | 169,579,562 | (724,457 | ) | $ | (5,594,162 | ) | ||||||||
| Investor C1 | ||||||||||||||||
| Shares sold | 12,080 | $ | 128,032 | 5,088 | $ | 51,933 | ||||||||||
| Shares issued resulting from reorganization | 2,798,212 | 28,290,480 | — | — | ||||||||||||
| Shares issued to shareholders in reinvestment of dividends | 191,343 | 2,021,791 | 196,503 | 1,973,965 | ||||||||||||
| Shares redeemed | (1,113,861 | ) | (11,689,122 | ) | (1,590,814 | ) | (15,820,977 | ) | ||||||||
| Net increase (decrease) | 1,887,774 | 18,751,181 | (1,389,223 | ) | (13,795,079 | ) | ||||||||||
| Total Net Increase | 194,875,826 | $ | 2,009,721,670 | 12,790,244 | $ | 140,450,808 | ||||||||||
1 For the period July 18, 2011 (commencement of operations) to June 30, 2012.
| Year Ended | Year Ended | |||||||||||||||
| June 30, 2012 | June 30, 2011 | |||||||||||||||
| Short-Term Municipal | Shares | Amount | Shares | Amount | ||||||||||||
| BlackRock | ||||||||||||||||
| Shares sold | 1,968,713 | $ | 20,021,875 | 3,196,351 | $ | 32,406,000 | ||||||||||
| Shares issued to shareholders in reinvestment of dividends and distributions | 59,638 | 607,341 | 29,185 | 296,667 | ||||||||||||
| Shares redeemed | (103,085 | ) | (1,050,100 | ) | (602,469 | ) | (6,134,904 | ) | ||||||||
| Net increase | 1,925,266 | $ | 19,579,116 | 2,623,067 | $ | 26,567,763 | ||||||||||
| Institutional | ||||||||||||||||
| Shares sold | 28,312,802 | $ | 288,283,154 | 33,475,138 | $ | 340,121,082 | ||||||||||
| Shares issued to shareholders in reinvestment of dividends and distributions | 278,496 | 2,835,273 | 342,602 | 3,481,932 | ||||||||||||
| Shares redeemed | (24,608,284 | ) | (250,550,776 | ) | (36,198,366 | ) | (367,502,652 | ) | ||||||||
| Net increase (decrease) | 3,983,014 | $ | 40,567,651 | (2,380,626 | ) | $ | (23,899,638 | ) | ||||||||
| Investor A | ||||||||||||||||
| Shares sold and automatic conversion of shares | 11,354,797 | $ | 115,663,198 | 9,605,026 | $ | 97,784,236 | ||||||||||
| Shares issued to shareholders in reinvestment of dividends and distributions | 135,047 | 1,375,573 | 198,989 | 2,024,025 | ||||||||||||
| Shares redeemed | (13,153,186 | ) | (133,982,696 | ) | (17,211,292 | ) | (174,908,611 | ) | ||||||||
| Net decrease | (1,663,342 | ) | $ | (16,943,925 | ) | (7,407,277 | ) | $ | (75,100,350 | ) | ||||||
| Investor A1 | ||||||||||||||||
| Shares sold | 230,997 | $ | 2,353,743 | 86,611 | $ | 880,738 | ||||||||||
| Shares issued to shareholders in reinvestment of dividends and distributions | 26,476 | 269,721 | 37,013 | 376,554 | ||||||||||||
| Shares redeemed | (721,561 | ) | (7,354,006 | ) | (1,424,180 | ) | (14,493,105 | ) | ||||||||
| Net decrease | (464,088 | ) | $ | (4,730,542 | ) | (1,300,556 | ) | $ | (13,235,813 | ) | ||||||
| Investor B | ||||||||||||||||
| Shares sold | 28,396 | $ | 289,094 | 23,038 | $ | 233,890 | ||||||||||
| Shares issued to shareholders in reinvestment of dividends and distributions | 1,851 | 18,848 | 4,074 | 41,423 | ||||||||||||
| Shares redeemed | (328,869 | ) | (3,348,836 | ) | (345,678 | ) | (3,509,881 | ) | ||||||||
| Net decrease | (298,622 | ) | $ | (3,040,894 | ) | (318,566 | ) | $ | (3,234,568 | ) | ||||||
| Investor C | ||||||||||||||||
| Shares sold | 1,558,941 | $ | 15,876,887 | 2,102,990 | $ | 21,388,921 | ||||||||||
| Shares issued to shareholders in reinvestment of dividends and distributions | 609 | 6,205 | 16,363 | 166,373 | ||||||||||||
| Shares redeemed | (3,280,095 | ) | (33,407,792 | ) | (5,213,299 | ) | (52,972,475 | ) | ||||||||
| Net decrease | (1,720,545 | ) | (17,524,700 | ) | (3,093,946 | ) | (31,417,181 | ) | ||||||||
| Total Net Increase (Decrease) | 1,761,683 | $ | 17,906,706 | (11,877,904 | ) | $ | (120,319,787 | ) | ||||||||
| ANNUAL REPORT | JUNE 30, 2012 | 75 |
Notes to Financial Statements (concluded)
| Year Ended | Year Ended | |||||||||||||||
| June 30, 2012 | June 30, 2011 | |||||||||||||||
| New York Municipal | Shares | Amount | Shares | Amount | ||||||||||||
| Institutional | ||||||||||||||||
| Shares sold | 1,226,986 | $ | 13,208,631 | 891,752 | $ | 9,296,262 | ||||||||||
| Shares issued to shareholders in reinvestment of dividends | 62,776 | 674,237 | 65,748 | 682,553 | ||||||||||||
| Shares redeemed | (889,968 | ) | (9,498,486 | ) | (722,809 | ) | (7,399,948 | ) | ||||||||
| Net increase | 399,794 | $ | 4,384,382 | 234,691 | $ | 2,578,867 | ||||||||||
| Investor A | ||||||||||||||||
| Shares sold and automatic conversion of shares | 1,253,876 | $ | 13,509,272 | 852,297 | $ | 9,007,593 | ||||||||||
| Shares issued to shareholders in reinvestment of dividends | 124,628 | 1,338,552 | 127,802 | 1,326,522 | ||||||||||||
| Shares redeemed | (920,076 | ) | (9,951,227 | ) | (1,108,881 | ) | (11,399,887 | ) | ||||||||
| Net increase (decrease) | 458,428 | $ | 4,896,597 | (128,782 | ) | $ | (1,065,772 | ) | ||||||||
| Investor A1 | ||||||||||||||||
| Shares sold and automatic conversion of shares | 222,668 | $ | 2,371,161 | 201,631 | $ | 2,067,823 | ||||||||||
| Shares issued to shareholders in reinvestment of dividends | 399,487 | 4,286,720 | 433,519 | 4,504,716 | ||||||||||||
| Shares redeemed | (1,192,050 | ) | (12,776,941 | ) | (1,423,955 | ) | (14,617,083 | ) | ||||||||
| Net decrease | (569,895 | ) | $ | (6,119,060 | ) | (788,805 | ) | $ | (8,044,544 | ) | ||||||
| Investor B | ||||||||||||||||
| Shares sold | 3,844 | $ | 40,739 | 4,881 | $ | 49,501 | ||||||||||
| Shares issued to shareholders in reinvestment of dividends | 8,240 | 88,072 | 16,248 | 169,016 | ||||||||||||
| Shares redeemed and automatic conversion of shares | (248,539 | ) | (2,643,106 | ) | (361,409 | ) | (3,719,896 | ) | ||||||||
| Net decrease | (236,455 | ) | $ | (2,514,295 | ) | (340,280 | ) | $ | (3,501,379 | ) | ||||||
| Investor C | ||||||||||||||||
| Shares sold | 978,449 | $ | 10,525,990 | 472,359 | $ | 4,956,141 | ||||||||||
| Shares issued to shareholders in reinvestment of dividends and distributions | 46,111 | 495,489 | 39,903 | 413,964 | ||||||||||||
| Shares redeemed | (393,369 | ) | (4,209,526 | ) | (523,147 | ) | (5,371,233 | ) | ||||||||
| Net increase (decrease) | 631,191 | $ | 6,811,953 | (10,885 | ) | $ | (1,128 | ) | ||||||||
| Investor C1 | ||||||||||||||||
| Shares sold | 56 | $ | 603 | 712 | $ | 7,180 | ||||||||||
| Shares issued to shareholders in reinvestment of dividends and distributions | 24,255 | 260,290 | 27,481 | 285,720 | ||||||||||||
| Shares redeemed | (48,579 | ) | (528,852 | ) | (171,218 | ) | (1,770,211 | ) | ||||||||
| Net decrease | (24,268 | ) | (267,959 | ) | (143,025 | ) | (1,477,311 | ) | ||||||||
| Total Net Increase (Decrease) | 658,795 | $ | 7,191,618 | (1,177,086 | ) | $ | (11,511,267 | ) | ||||||||
9. Subsequent Events:
Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were issued and has determined that there were no subsequent events requiring adjustment or additional disclosure in the financial statements.
| 76 | ANNUAL REPORT | JUNE 30, 2012 |
Report of Independent Registered Public Accounting Firm
To the Shareholders of BlackRock High Yield Municipal Fund, BlackRock National Municipal Fund, BlackRock Short-Term Municipal Fund and BlackRock New York Municipal Bond Fund and Board of Directors of BlackRock Municipal Bond Fund, Inc. and Board of Trustees of BlackRock Multi-State Municipal Series Trust:
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of BlackRock High Yield Municipal Fund, BlackRock National Municipal Fund and BlackRock Short-Term Municipal Fund of BlackRock Municipal Bond Fund, Inc., and BlackRock New York Municipal Bond Fund of BlackRock Multi-State Municipal Series Trust (collectively the “Funds”), as of June 30, 2012, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented and the statement of cash flows for BlackRock National Municipal Fund for the year ended June 30, 2012. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of June 30, 2012, by correspondence with the custodians and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial positions of BlackRock High Yield Municipal Fund, BlackRock National Municipal Fund and BlackRock Short-Term Municipal Fund of BlackRock Municipal Bond Fund, Inc., and BlackRock New York Municipal Bond Fund of BlackRock Multi-State Municipal Series Trust, as of June 30, 2012, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented and the cash flows of BlackRock National Municipal Fund for the year ended June 30, 2012, in conformity with accounting principles generally accepted in the United States of America.
Deloitte & Touche LLP
Boston, Massachusetts
August 24, 2012
Important Tax Information (Unaudited)
The following table summarizes the taxable per share distributions paid by the following Funds during the fiscal year ended June 30, 2012.
| Payable | Ordinary | ||
| Date | Income1 | ||
| High Yield Municipal | 12/20/2011 | $ | 0.000128 |
| National Municipal | 12/20/2011 | $ | 0.000080 |
| New York Municipal | 12/20/2011 | $ | 0.001006 |
| 1 | Additionally, all ordinary income distributions are comprised of interest related dividends for non-US residents and are eligible for exemption from US withholding tax for nonresident aliens and foreign corporations. |
3.385% of the net investment income distributions paid by BlackRock Short-Term Municipal Fund are treated as taxable ordinary dividends.
All other net investment income distributions paid by BlackRock High Yield Municipal Fund, BlackRock National Municipal Fund, BlackRock Short-Term Municipal Fund and BlackRock New York Municipal Bond Fund qualify as tax-exempt interest dividends for federal income tax purposes.
| ANNUAL REPORT | JUNE 30, 2012 | 77 |
Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements
The Board of Directors of BlackRock High Yield Municipal Fund (the “High Yield Fund”), BlackRock National Municipal Fund (the “National Fund”) and BlackRock Short-Term Municipal Fund (the “Short-Term Fund”), each a series of BlackRock Municipal Bond Fund, Inc. (the “Corporation”), and the Board of Trustees of the BlackRock New York Municipal Bond Fund (the “New York Fund,” along with the High Yield Fund, National Fund and Short-Term Fund, each a “Fund,” and collectively, the “Funds”), a series of BlackRock Multi-State Municipal Series Trust (the “Trust”), (collectively, the “Board,” and the members of which are referred to as “Board Members”) met on April 10, 2012 and May 8-9, 2012 to consider the approval of the Corporation’s, on behalf of the High Yield Fund, the National Fund and the Short-Term Fund, and the Trust’s on behalf of the New York Fund, investment advisory agreements (collectively, the “Advisory Agreements”) with BlackRock Advisors, LLC (the “Manager”), each Fund’s investment advisor. The Board also considered the approval of the sub-advisory agreements (collectively, the “Sub-Advisory Agreements”) between the Manager and BlackRock Investment Management, LLC (the “Sub-Advisor”), with respect to each Fund. The Manager and the Sub-Advisor are referred to herein as “BlackRock.” The Advisory Agreements and the Sub-Advisory Agreements are referred to herein as the “Agreements.”
Activities and Composition of the Board
The Board consists of thirteen individuals, ten of whom are not “interested persons” of the Corporation or the Trust as defined in the Investment Company Act of 1940, as amended (the “1940 Act”) (the “Independent Board Members”). The Board Members are responsible for the oversight of the operations of the Funds and perform the various duties imposed on the directors of investment companies by the 1940 Act. The Independent Board Members have retained independent legal counsel to assist them in connection with their duties. The Chairman of the Board is an Independent Board Member. The Board has established five standing committees: an Audit Committee, a Governance and Nominating Committee, a Compliance Committee, a Performance Oversight Committee and an Executive Committee, each of which is chaired by an Independent Board Member and composed of Independent Board Members (except for the Performance Oversight Committee and the Executive Committee, each of which also has one interested Board Member).
The Agreements
Pursuant to the 1940 Act, the Board is required to consider the continuation of the Agreements on an annual basis. The Board has four quarterly meetings per year, each extending over two days, and a fifth meeting to consider specific information surrounding the consideration of renewing the Agreements. In connection with this process, the Board assessed, among other things, the nature, scope and quality of the services provided to each Fund by BlackRock, its personnel and its affiliates, including investment management, administrative and shareholder services, oversight of fund accounting and custody, marketing services, risk oversight, compliance and assistance in meeting applicable legal and regulatory requirements.
The Board, acting directly and through its committees, considers at each of its meetings, and from time to time as appropriate, factors that are relevant to its annual consideration of the renewal of the Agreements, including the services and support provided by BlackRock to each Fund and its shareholders. Among the matters the Board considered were: (a) investment performance for one-, three- and five-year periods, as applicable, against peer funds, and applicable benchmarks, if any, as well as senior management’s and portfolio managers’ analysis of the reasons for any over performance or underperformance against its peers and/or benchmark, as applicable; (b) fees, including advisory, administration, if applicable, and other amounts paid to BlackRock and its affiliates by each Fund for services, such as marketing and distribution, call center and fund accounting; (c) Fund operating expenses and how BlackRock allocates expenses to each Fund; (d) the resources devoted to, risk oversight of, and compliance reports relating to, implementation of each Fund’s investment objective, policies and restrictions; (e) each Fund’s compliance with its Code of Ethics and other compliance policies and procedures; (f) the nature, cost and character of non-investment management services provided by BlackRock and its affiliates; (g) BlackRock’s and other service providers’ internal controls and risk and compliance oversight mechanisms; (h) BlackRock’s implementation of the proxy voting policies approved by the Board; (i) execution quality of portfolio transactions; (j) BlackRock’s implementation of each Fund’s valuation and liquidity procedures; (k) an analysis of management fees for products with similar investment objectives across the open-end fund, exchange traded fund (“ETF”), closed-end fund and institutional account product channels, as applicable; (l) BlackRock’s compensation methodology for its investment professionals and the incentives it creates; and (m) periodic updates on BlackRock’s business.
The Board has engaged in an ongoing strategic review with BlackRock of opportunities to consolidate funds and of BlackRock’s commitment to investment performance. In addition, the Board requested, to the extent reasonably possible, an analysis of the risk and return relative to selected funds in peer groups. BlackRock provides information to the Board in response to specific questions. These questions covered issues such as profitability, investment performance and management fee levels. The Board considered the importance of: (i) managing fixed income assets with a view toward preservation of capital; (ii) portfolio managers’ investments in the funds they manage; (iii) BlackRock’s controls surrounding the coding of quantitative investment models; and (iv) BlackRock’s oversight of relationships with third party service providers.
Board Considerations in Approving the Agreements
The Approval Process: Prior to the April 10, 2012 meeting, the Board requested and received materials specifically relating to the Agreements. The Board is engaged in a process with its independent legal counsel and BlackRock to review periodically the nature and scope of the information provided to better assist its deliberations. The materials provided in connection with the April meeting included (a) information independently compiled and prepared by Lipper, Inc. (“Lipper”) on Fund fees and expenses and the investment performance of each Fund as compared with a peer group of funds as determined by Lipper and, for the National Fund and Short-Term Fund, a customized peer group selected by BlackRock (collectively, “Peers”); (b) information on the profitability of the Agreements to BlackRock and a discussion of fall-out benefits to BlackRock and its affiliates; (c) a general analysis provided by BlackRock concerning investment management fees (a combination of the advisory fee and the administration fee, if any) charged to other clients, such as institutional
| 78 | ANNUAL REPORT | JUNE 30, 2012 |
Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements (continued)
clients, ETFs and closed-end funds, under similar investment mandates, as well as the performance of such other clients, as applicable; (d) the existence, impact and sharing of potential economies of scale; (e) a summary of aggregate amounts paid by each Fund to BlackRock; (f) sales and redemption data regarding each Fund’s shares; and (g) if applicable, a comparison of management fees to similar BlackRock open-end funds, as classified by Lipper.
At an in-person meeting held on April 10, 2012, the Board reviewed materials relating to its consideration of the Agreements. As a result of the discussions that occurred during the April 10, 2012 meeting, and as a culmination of the Board’s year-long deliberative process, the Board presented BlackRock with questions and requests for additional information. BlackRock responded to these requests with additional written information in advance of the May 8-9, 2012 Board meeting.
At an in-person meeting held on May 8-9, 2012, the Board, including all the Independent Board Members, approved the continuation of the Advisory Agreements between the Manager and the Corporation, on behalf of the High Yield Fund, the National Fund and the Short-Term Fund, and the Trust, on behalf of the New York Fund, and the Sub-Advisory Agreements between the Manager and the Sub-Advisor with respect to each Fund, each for a one-year term ending June 30, 2013. In approving the continuation of the Agreements, the Board considered: (a) the nature, extent and quality of the services provided by BlackRock; (b) the investment performance of each Fund and BlackRock; (c) the advisory fee and the cost of the services and profits to be realized by BlackRock and its affiliates from their relationship with each Fund; (d) economies of scale; (e) fall-out benefits to BlackRock as a result of its relationship with each Fund; and (f) other factors deemed relevant by the Board Members.
The Board also considered other matters it deemed important to the approval process, such as payments made to BlackRock or its affiliates relating to the distribution of Fund shares and securities lending, services related to the valuation and pricing of Fund portfolio holdings, direct and indirect benefits to BlackRock and its affiliates from their relationship with each Fund and advice from independent legal counsel with respect to the review process and materials submitted for the Board’s review. The Board noted the willingness of BlackRock personnel to engage in open, candid discussions with the Board. The Board did not identify any particular information as controlling, and each Board Member may have attributed different weights to the various items considered.
A. Nature, Extent and Quality of the Services Provided by BlackRock: The Board, including the Independent Board Members, reviewed the nature, extent and quality of services provided by BlackRock, including the investment advisory services and the resulting performance of each Fund. Throughout the year, the Board compared Fund performance to the performance of a comparable group of mutual funds and/or the performance of a relevant benchmark, if any. The Board met with BlackRock’s senior management personnel responsible for investment operations, including the senior investment officers. The Board also reviewed the materials provided by each Fund’s portfolio management team discussing Fund performance and each Fund’s investment objective, strategies and outlook.
The Board considered, among other factors, the number, education and experience of BlackRock’s investment personnel generally and each Fund’s portfolio management team, investments by portfolio managers in the funds they manage, BlackRock’s portfolio trading capabilities, BlackRock’s use of technology, BlackRock’s commitment to compliance, BlackRock’s credit analysis capabilities, BlackRock’s risk analysis and oversight capabilities and BlackRock’s approach to training and retaining portfolio managers and other research, advisory and management personnel. The Board engaged in a review of BlackRock’s compensation structure with respect to each Fund’s portfolio management team and BlackRock’s ability to attract and retain high-quality talent and create performance incentives.
In addition to advisory services, the Board considered the quality of the administrative and non-investment advisory services provided to each Fund. BlackRock and its affiliates provide each Fund with certain administrative, shareholder and other services (in addition to any such services provided to each Fund by third parties) and officers and other personnel as are necessary for the operations of each Fund. In particular, BlackRock and its affiliates provide each Fund with the following administrative services including, among others: (i) preparing disclosure documents, such as the prospectus, the statement of additional information and periodic shareholder reports; (ii) assisting with daily accounting and pricing; (iii) overseeing and coordinating the activities of other service providers; (iv) organizing Board meetings and preparing the materials for such Board meetings; (v) providing legal and compliance support; and (vi) performing other administrative functions necessary for the operation of each Fund, such as tax reporting, fulfilling regulatory filing requirements and call center services. The Board reviewed the structure and duties of BlackRock’s fund administration, accounting, legal and compliance departments and considered BlackRock’s policies and procedures for assuring compliance with applicable laws and regulations.
B. The Investment Performance of each Fund and BlackRock: The Board, including the Independent Board Members, also reviewed and considered the performance history of each Fund. In preparation for the April 10, 2012 meeting, the Board worked with its independent legal counsel, BlackRock and Lipper to develop a template for, and was provided with, reports independently prepared by Lipper, which included a comprehensive analysis of each Fund’s performance. The Board also reviewed a narrative and statistical analysis of the Lipper data that was prepared by BlackRock, which analyzed various factors that affect Lipper’s rankings. In connection with its review, the Board received and reviewed information regarding the investment performance of each Fund as compared to funds in each Fund’s applicable Lipper category and, for the National Fund and Short-Term Fund, a customized peer group selected by BlackRock. The Board was provided with a description of the methodology used by Lipper to select peer funds and periodically meets with Lipper representatives to review their methodology. The Board and the Board’s Performance Oversight Committee regularly review, and meet with Fund management to discuss, the performance of each Fund throughout the year.
The Board noted that the High Yield Fund ranked in the second, second and fourth quartiles against its Lipper Performance Universe Composite for the one-, three- and five-year periods reported, respectively. Based on its discussions with BlackRock and the Board’s review of the High Yield
| ANNUAL REPORT | JUNE 30, 2012 | 79 |
Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements (continued)
Fund’s investment performance compared to its Lipper Peer Group, the methodology used by Lipper to select peer funds, and other relevant information provided by BlackRock, the Board noted that the High Yield Fund’s investment performance as compared to its Lipper Performance Universe Composite provided a more meaningful comparison of the High Yield Fund’s relative performance. The composite performance metric is a measurement blend of total return and yield.
The Board noted that the National Fund ranked in the second, second and first quartiles against its Customized Lipper Peer Group Composite for the one-, three- and five-year periods reported, respectively. Based on its discussions with BlackRock and the Board’s review of the National Fund’s investment performance compared to its Lipper Peer Group, the methodology used by Lipper to select peer funds, and other relevant information provided by BlackRock, the Board noted that the National Fund’s investment performance as compared to its Customized Lipper Peer Group Composite provided a more meaningful comparison of the National Fund’s relative performance. The composite performance metric is a measurement blend of total return and yield.
The Board noted that the Short-Term Fund ranked in the third, fourth and fourth quartiles against its Customized Lipper Peer Group for the one-, three- and five-year periods reported, respectively. Based on its discussions with BlackRock and the Board’s review of the Short-Term Fund’s investment performance compared to its Lipper Peer Group, the methodology used by Lipper to select peer funds, and other relevant information provided by BlackRock, the Board noted that the Short-Term Fund’s investment performance as compared to its Customized Lipper Peer Group provided a more meaningful comparison of the Short-Term Fund’s relative performance. The Board and BlackRock reviewed and discussed the reasons for the Short-Term Fund’s underperformance during these periods compared with its Peers. The Board was informed that, among other things, the Short-Term Fund’s performance can generally be tied to the performance of the yield curve in any given period since the Short-Term Fund is restricted to holding securities with a maximum four-year maturity. Many of the funds in the peer group do not have restrictions with regard to final maturity of permissible securities as long as the funds maintain shorter portfolio duration.
The Board and BlackRock discussed BlackRock’s strategy for improving the Short-Term Fund’s performance and BlackRock’s commitment to providing the resources necessary to assist the Short-Term Fund’s portfolio managers and to improve the Short-Term Fund’s performance.
The Board noted that the New York Fund ranked in the third, second and second quartiles against its Lipper Performance Universe Composite for the one-, three- and five-year periods reported, respectively. The Board and BlackRock reviewed and discussed the reasons for the New York Fund’s underperformance during the one-year period and will monitor closely the New York Fund’s performance in the coming year. Based on its discussions with BlackRock and the Board’s review of the New York Fund’s investment performance compared to its Lipper Peer Group, the methodology used by Lipper to select peer funds, and other relevant information provided by BlackRock, the Board noted that the New York Fund’s investment performance as compared to its Lipper Performance Universe Composite provided a more meaningful comparison of the New York Fund’s relative performance. The composite performance metric is a measurement blend of total return and yield.
C. Consideration of the Advisory/Management Fees and the Cost of the Services and Profits to be Realized by BlackRock and its Affiliates from their Relationship with each Fund: The Board, including the Independent Board Members, reviewed each Fund’s contractual management fee rate compared with the other funds in its Lipper category. It also compared each Fund’s total expense ratio, as well as actual management fee rate, to those of other funds in its Lipper category. The Board considered the services provided and the fees charged by BlackRock to other types of clients with similar investment mandates, including separately managed institutional accounts.
The Board received and reviewed statements relating to BlackRock’s financial condition and profitability with respect to the services it provided each Fund. The Board was also provided with a profitability analysis that detailed the revenues earned and the expenses incurred by BlackRock for services provided to each Fund. The Board reviewed BlackRock’s profitability with respect to each Fund and other funds the Board currently oversees for the year ended December 31, 2011 compared to available aggregate profitability data provided for the years ended December 31, 2010 and December 31, 2009. The Board reviewed BlackRock’s profitability with respect to other fund complexes managed by the Manager and/or its affiliates. The Board reviewed BlackRock’s assumptions and methodology of allocating expenses in the profitability analysis, noting the inherent limitations in allocating costs among various advisory products. The Board recognized that profitability may be affected by numerous factors including, among other things, fee waivers and expense reimbursements by the Manager, the types of funds managed, expense allocations and business mix, and the difficulty of comparing profitability as a result of those factors.
The Board noted that, in general, individual fund or product line profitability of other advisors is not publicly available. The Board considered BlackRock’s operating margin, in general, compared to the operating margin for leading investment management firms whose operations include advising open-end funds, among other product types. In addition, the Board considered, among other things, certain third party data comparing BlackRock’s operating margin with that of other publicly-traded asset management firms. The Board considered the differences between BlackRock and these other firms, including the contribution of technology at BlackRock, BlackRock’s expense management, and the relative product mix.
In addition, the Board considered the cost of the services provided to each Fund by BlackRock, and BlackRock’s and its affiliates’ profits relating to the management and distribution of each Fund and the other funds advised by BlackRock and its affiliates. As part of its analysis, the Board reviewed BlackRock’s methodology in allocating its costs to the management of each Fund. The Board also considered whether BlackRock has the financial resources necessary to attract and retain high quality investment management personnel to perform its obligations under the Agreements and to continue to provide the high quality of services that is expected by the Board.
| 80 | ANNUAL REPORT | JUNE 30, 2012 |
Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements (concluded)
The Board noted that the High Yield Fund’s contractual management fee ratio (a combination of the advisory fee and the administration fee, if any) was lower than or equal to the median contractual management fee ratio paid by the High Yield Fund’s Peers, in each case before taking into account any expense reimbursements or fee waivers. The Board also noted that the High Yield Fund has an advisory fee arrangement that includes breakpoints that adjust the fee ratio downward as the size of the High Yield Fund increases above certain contractually specified levels.
The Board noted that the National Fund’s contractual management fee ratio (a combination of the advisory fee and the administration fee, if any) was above the median contractual management fee ratio paid by the National Fund’s Peers, in each case before taking into account any expense reimbursements or fee waivers. The Board also noted, however, that the National Fund’s actual management fee ratio, after giving effect to any expense reimbursements or fee waivers by BlackRock, was lower than or equal to the median actual management fee ratio paid by the National Fund’s Peers, after giving effect to any expense reimbursements or fee waivers. The Board further noted that the National Fund has an advisory fee arrangement that includes breakpoints that adjust the fee ratio downward as the aggregate assets of the National Fund, combined with the assets of the Short-Term Fund, increase above certain contractually specified levels. Additionally, the Board noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit, to a specified amount, the National Fund’s total net expenses on a class-by-class basis, as applicable.
The Board noted that the Short-Term Fund’s contractual management fee ratio (a combination of the advisory fee and the administration fee, if any) was lower than or equal to the median contractual management fee ratio paid by the Short-Term Fund’s Peers, in each case before taking into account any expense reimbursements or fee waivers. The Board also noted that the Short-Term Fund has an advisory fee arrangement that includes breakpoints that adjust the fee ratio downward as the aggregate assets of the Short-Term Fund, combined with the assets of the National Fund, increase above certain contractually specified levels. The Board further noted that BlackRock has voluntarily agreed to waive fees or reimburse expenses in order to limit, to a specified amount, the Short-Term Fund’s total net expenses on a class-by-class basis, as applicable.
The Board noted that the New York Fund’s contractual management fee ratio (a combination of the advisory fee and the administration fee, if any) was above the median contractual management fee ratio paid by the New York Fund’s Peers, in each case before taking into account any expense reimbursements or fee waivers. Additionally, the Board noted that BlackRock has voluntarily agreed to waive management fees for the New York Fund.
D. Economies of Scale: The Board, including the Independent Board Members, considered the extent to which economies of scale might be realized as the assets of each Fund increase, as well as the existence of expense caps. The Board also considered the extent to which each Fund benefits from such economies and whether there should be changes in the advisory fee rate or structure in order to enable each Fund to participate in these economies of scale, for example through the use of revised breakpoints, or with respect to the New York Fund, through the use of contractual breakpoints and/or revised voluntary breakpoints, in the advisory fee based upon the asset level of the Fund, and in the case of the National Fund and the Short-Term Fund, based on the combined assets of those two funds. In its consideration, the Board Members took into account the existence of expense caps and further considered the continuation and/or implementation, as applicable, of such caps.
E. Other Factors Deemed Relevant by the Board Members: The Board, including the Independent Board Members, also took into account other ancillary or “fall-out” benefits that BlackRock or its affiliates may derive from their respective relationships with each Fund, both tangible and intangible, such as BlackRock’s ability to leverage its investment professionals who manage other portfolios and risk management personnel, an increase in BlackRock’s profile in the investment advisory community, and the engagement of BlackRock’s affiliates as service providers to the Fund, including for administrative, distribution, securities lending and cash management services. The Board also considered BlackRock’s overall operations and its efforts to expand the scale of, and improve the quality of, its operations. The Board also noted that BlackRock may use and benefit from third party research obtained by soft dollars generated by certain registered fund transactions to assist in managing all or a number of its other client accounts. The Board further noted that it had considered the investment by BlackRock’s funds in ETFs without any offset against the management fees payable by the funds to BlackRock.
In connection with its consideration of the Agreements, the Board also received information regarding BlackRock’s brokerage and soft dollar practices. The Board received reports from BlackRock which included information on brokerage commissions and trade execution practices throughout the year.
The Board noted the competitive nature of the open-end fund marketplace, and that shareholders are able to redeem their Fund shares if they believe that each Fund’s fees and expenses are too high or if they are dissatisfied with the performance of the Fund.
Conclusion
The Board, including all the Independent Board Members, approved the continuation of the Advisory Agreements between the Manager and the Corporation, on behalf of the High Yield Fund, the National Fund and the Short-Term Fund, and the Trust, on behalf of the New York Fund, for a one-year term ending June 30, 2013, and the Sub-Advisory Agreements between the Manager and the Sub-Advisor with respect to each Fund for a one-year term ending June 30, 2013. Based upon its evaluation of all of the aforementioned factors in their totality, the Board, including the Independent Board Members, was satisfied that the terms of the Agreements were fair and reasonable and in the best interest of each Fund and its shareholders. In arriving at its decision to approve the Agreements, the Board did not identify any single factor or group of factors as all-important or controlling, but considered all factors together, and different Board Members may have attributed different weights to the various factors considered. The Independent Board Members were also assisted by the advice of independent legal counsel in making this determination. The contractual fee arrangements for each Fund reflect the results of several years of review by the Board Members and predecessor Board Members, and discussions between such Board Members (and predecessor Board Members) and BlackRock. As a result, the Board Members’ conclusions may be based in part on their consideration of these arrangements in prior years.
| ANNUAL REPORT | JUNE 30, 2012 | 81 |
| Name,
Address and Year of Birth |
Position(s) Held with Funds |
Length of Time Served as a Director2 |
Principal
Occupation(s) During Past Five Years |
Number
of BlackRock- Advised Registered Investment Companies (“RICs”) Consisting of Investment Portfolios (“Portfolios”) Overseen |
Public Directorships | |||||
| Independent Directors1 | ||||||||||
| Robert M. Hernandez 55 East 52nd Street New York, NY 10055 1944 |
Chairman of the Board and Director | Since 2007 | Director, Vice Chairman and Chief Financial Officer of USX Corporation (energy and steel business) from 1991 to 2001; Director, TE Connectivity (electronics) from 2006 to 2012. | 29 RICs consisting of 82 Portfolios | ACE Limited (insurance company); Eastman Chemical Company (chemicals); RTI International Metals, Inc. (metals) | |||||
| Fred G. Weiss 55 East 52nd Street New York, NY 10055 1941 |
Vice Chairman of the Board and Director | Since 2007 | Managing Director, FGW Associates (consulting and investment company) since 1997; Director and Treasurer, Michael J. Fox Foundation for Parkinson’s Research since 2000; Director, BTG International Plc (medical technology commercialization company) from 2001 to 2007. | 29 RICs consisting of 82 Portfolios | Watson Pharmaceuticals, Inc. | |||||
| James H. Bodurtha 55 East 52nd Street New York, NY 10055 1944 |
Director | Since 1995 | Director, The China Business Group, Inc. (consulting firm) since 1996 and Executive Vice President thereof from 1996 to 2003; Chairman of the Board, Berkshire Holding Corporation since 1980. | 29 RICs consisting of 82 Portfolios | None | |||||
| Bruce R. Bond 55 East 52nd Street New York, NY 10055 1946 |
Director | Since 2007 | Trustee and Member of the Governance Committee, State Street Research Mutual Funds from 1997 to 2005; Board Member of Governance, Audit and Finance Committee, Avaya Inc. (computer equipment) from 2003 to 2007. | 29 RICs consisting of 82 Portfolios | None | |||||
| Donald W. Burton 55 East 52nd Street New York, NY 10055 1944 |
Director | Since 2007 | Managing General Partner, The Burton Partnership, LP (an investment partnership) since 1979; Managing General Partner, The South Atlantic Venture Funds since 1983; Director, Lifestyle Family Fitness (fitness industry) since 2006; Director, IDology, Inc. (technology solutions) since 2006; Member of the Investment Advisory Council of the Florida State Board of Administration from 2001 to 2007. | 29 RICs consisting of 82 Portfolios | Knology, Inc. (telecommunications); Capital Southwest (financial) | |||||
| Honorable Stuart E. Eizenstat 55 East 52nd Street New York, NY 10055 1943 |
Director | Since 2007 | Partner and Head of International Practice, Covington and Burling LLP (law firm) since 2001; International Advisory Board Member, The Coca-Cola Company from 2002 to 2011; Advisory Board Member, Veracity Worldwide, LLC (risk management) since 2007; Member of the International Advisory Board GML (energy) since 2003; Advisory Board Member, BT Americas (telecommunications) from 2004 to 2010. | 29 RICs consisting of 82 Portfolios | Alcatel-Lucent (telecommunications); Global Specialty Metallurgical (metallurgical industry); UPS Corporation (delivery service) | |||||
| Kenneth A. Froot 55 East 52nd Street New York, NY 10055 1957 |
Director | Since 2005 | Professor, Harvard University since 1992. | 29 RICs consisting of 82 Portfolios | None | |||||
| John F. O’Brien 55 East 52nd Street New York, NY 10055 1943 |
Director | Since 2007 | Chairman and Director, Woods Hole Oceanographic Institute since 2009 and Trustee thereof from 2003 to 2009; Director, Ameresco, Inc. (energy solutions company) from 2006 to 2007. | 29 RICs consisting of 82 Portfolios | Cabot Corporation (chemicals); LKQ Corporation (auto parts manufacturing); TJX Companies, Inc. (retailer) | |||||
| Roberta Cooper Ramo 55 East 52nd Street New York, NY 10055 1942 |
Director | Since 2000 | Shareholder, Modrall, Sperling, Roehl, Harris & Sisk, P.A. (law firm) since 1993; Chairman of the Board, Cooper’s Inc., (retail) since 2000; Director, ECMC Group (service provider to students, schools and lenders) since 2001; President, The American Law Institute (non-profit) since 2008; President, American Bar Association from 1995 to 1996. | 29 RICs consisting of 82 Portfolios | None |
| 82 | ANNUAL REPORT | JUNE 30, 2012 |
| Officers and Directors (continued) |
| Name, Address and Year of Birth |
Position(s) Held with Funds |
Length of Time Served as a Director2 |
Principal Occupation(s) During Past Five Years | Number of BlackRock- Advised Registered Investment Companies (“RICs”) Consisting of Investment Portfolios (“Portfolios”) Overseen |
Public Directorships | |||||
| Independent Directors1 (concluded) | ||||||||||
| David H. Walsh 55 East 52nd Street New York, NY 10055 1941 |
Director | Since 2007 | Director, National Museum of Wildlife Art since 2007; Trustee, University of Wyoming Foundation since 2008; Director, Ruckelshaus Institute and Haub School of Natural Resources at the University of Wyoming from 2006 to 2008; Director, The American Museum of Fly Fishing since 1997; Director, The National Audubon Society from 1998 to 2005. | 29 RICs consisting of 82 Portfolios | None | |||||
| 1 | Directors serve until their resignation, removal or death, or until December 31 of the year in which they turn 72. |
| 2 | Date shown is the earliest date a person has served for the Funds covered by this annual report. Following the combination of Merrill Lynch Investment Managers, L.P. (“MLIM”) and BlackRock, Inc. (“BlackRock”) in September 2006, the various legacy MLIM and legacy BlackRock Fund boards were realigned and consolidated into three new Fund boards in 2007. As a result, although the chart shows certain directors as joining the Funds’ board in 2007, each Director first became a member of the board of other legacy MLIM or legacy BlackRock Funds as follows: James H. Bodurtha, 1995; Bruce R. Bond, 2005; Donald W. Burton, 2002; Honorable Stuart E. Eizenstat, 2001; Kenneth A. Froot, 2005; Robert M. Hernandez, 1996; John F. O’Brien, 2004; Roberta Cooper Ramo, 2000; David H. Walsh, 2003 and Fred G. Weiss, 1998. |
Interested Directors3
| Paul L. Audet 55 East 52nd Street New York, NY 10055 1953 |
President4 and Director | Since 2011 | Senior Managing Director, BlackRock and Head of U.S. Mutual Funds since 2011; Chair of the U.S. Mutual Funds Committee reporting to the Global Executive Committee since 2011; Head of BlackRock’s Real Estate business from 2008 to 2011; Member of BlackRock’s Global Operating and Corporate Risk Management Committees and of the BlackRock Alternative Investors Executive Committee and Investment Committee for the Private Equity Fund of Funds business since 2008; Head of BlackRock’s Global Cash Management business from 2005 to 2010; Acting Chief Financial Officer of BlackRock from 2007 to 2008; Chief Financial Officer of BlackRock from 1998 to 2005. | 159 RICs consisting of 278 Portfolios | None | |||||
| Laurence D. Fink 55 East 52nd Street New York, NY 10055 1952 |
Director | Since 2007 | Chairman and Chief Executive Officer of BlackRock since its formation in 1998 and of BlackRock’s predecessor entities since 1988 and Chairman of the Executive and Management Committees; Formerly Managing Director, The First Boston Corporation, Member of its Management Committee, Co-head of its Taxable Fixed Income Division and Head of its Mortgage and Real Estate Products Group; Chairman of the Board of several of BlackRock’s alternative investment vehicles; Director of several of BlackRock’s offshore funds; Member of the Board of Trustees of New York University, Chair of the Financial Affairs Committee and a member of the Executive Committee, the Ad Hoc Committee on Board Governance, and the Committee on Trustees; Co-Chairman of the NYU Hospitals Center Board of Trustees, Chairman of the Development/Trustee Stewardship Committee and Chairman of the Finance Committee; Trustee, The Boys’ Club of New York. | 29 RICs consisting of 82 Portfolios | BlackRock | |||||
| Henry Gabbay 55 East 52nd Street New York, NY 10055 1947 |
Director | Since 2007 | Consultant, BlackRock from 2007 to 2008; Managing Director, BlackRock from 1989 to 2007; Chief Administrative Officer, BlackRock Advisors, LLC from 1998 to 2007; President of BlackRock Funds and BlackRock Bond Allocation Target Shares from 2005 to 2007 and Treasurer of certain closed-end funds in the BlackRock fund complex from 1989 to 2006. | 159 RICs consisting of 278 Portfolios | None |
| 3 | Messrs. Audet and Fink are both “interested persons,” as defined in the 1940 Act, of the Funds based on their positions with BlackRock and its affiliates. Mr. Gabbay is an “interested person” of the Funds based on his former positions with BlackRock and its affiliates as well as his ownership of BlackRock and The PNC Financial Services Group, Inc. securities. Mr. Audet and Mr. Gabbay are also Directors of the BlackRock registered closed-end funds and Directors of other BlackRock registered open-end funds. Directors serve until their resignation, removal or death, or until December 31 of the year in which they turn 72. |
| 4 | For BlackRock Multi-State Municipal Series Trust. |
| ANNUAL REPORT | JUNE 30, 2012 | 83 |
Officers and Directors (concluded)
| Name, Address and Year of Birth |
Position(s) Held with Funds |
Length of Time Served |
Principal Occupation(s) During Past Five Years | |||
| Officers1 | ||||||
| John M. Perlowski 55 East 52nd Street New York, NY 10055 1964 |
President2 and Chief Executive Officer | Since 2010 | Managing Director of BlackRock since 2009; Global Head of BlackRock Fund Administration since 2009; Managing Director and Chief Operating Officer of the Global Product Group at Goldman Sachs Asset Management, L.P. from 2003 to 2009; Treasurer of Goldman Sachs Mutual Funds from 2003 to 2009 and Senior Vice President thereof from 2007 to 2009; Director of Goldman Sachs Offshore Funds from 2002 to 2009; Director, Family Resource Network (charitable foundation) since 2009. | |||
| Brendan Kyne 55 East 52nd Street New York, NY 10055 1977 |
Vice President | Since 2009 | Managing Director of BlackRock since 2010; Director of BlackRock, Inc. from 2008 to 2009; Head of Product Development and Management for BlackRock’s U.S. Retail Group since 2009, and Co-head thereof from 2007 to 2009; Vice President of BlackRock from 2005 to 2008. | |||
| Neal Andrews 55 East 52nd Street New York, NY 10055 1966 |
Chief Financial Officer | Since 2007 | Managing Director of BlackRock since 2006; Senior Vice President and Line of Business Head of Fund Accounting and Administration at PNC Global Investment Servicing (U.S.)Inc. from 1992 to 2006. | |||
| Jay Fife 55 East 52nd Street New York, NY 10055 1970 |
Treasurer | Since 2007 | Managing Director of BlackRock since 2007; Director of BlackRock in 2006; Assistant Treasurer of the MLIM and Fund Asset Management, L.P. advised funds from 2005 to 2006; Director of MLIM Fund Services Group from 2001 to 2006. | |||
| Brian Kindelan 55 East 52nd Street New York, NY 10055 1959 |
Chief Compliance Officer and Anti-Money Laundering Officer | Since 2007 | Chief Compliance Officer of the BlackRock-advised funds since 2007; Managing Director and Senior Counsel of BlackRock since 2005. | |||
| Benjamin Archibald 55 East 52nd Street New York, NY 10055 1975 |
Secretary | Since 2012 | Director of BlackRock since 2010; Assistant Secretary to the Funds from 2010 to 2012; General Counsel and Chief Operating Officer of Uhuru Capital Management from 2009 to 2010; Executive Director and Counsel of Goldman Sachs Asset Management from 2005 to 2009. | |||
| 1 Officers of the Funds serve at the pleasure of the Board. | ||||||
| Further information about the Funds’ Officers and Directors is available in the Funds’ Statement of Additional Information, which can be obtained without charge by calling (800) 441-7762. | ||||||
| Investment Advisor | Custodians | Accounting Agent | Legal Counsel | Address of Funds |
| BlackRock Advisors, LLC | The Bank of | State Street Bank | Willkie Farr & Gallagher LLP | 100 Bellevue Parkway |
| Wilmington, DE 19809 | New York Mellon2 | and Trust Company | New York, NY 10019 | Wilmington, DE 19809 |
| New York, NY 10286 | Boston, MA 02110 | |||
| Sub-Advisor | Independent Registered | |||
| BlackRock Investment | State Street Bank | Distributor | Public Accounting Firm | |
| Management, LLC | and Trust Company3 | BlackRock Investments, LLC | Deloitte & Touche LLP | |
| Princeton, NJ 08540 | Boston, MA 02110 | New York, NY 10022 | Boston, MA 02116 | |
| Transfer Agent | ||||
| BNY Mellon Investment | ||||
| Servicing (US) Inc. | ||||
| Wilmington, DE 19809 |
| Effective May 8, 2012, Ira P. Shapiro resigned as Secretary of the Corporation and the Trust, and Benjamin Archibald became Secretary of the Corporation and the Trust. |
2 For BlackRock Municipal Bond Fund, Inc.
3 For BlackRock Multi-State Municipal Series Trust.
| 84 | ANNUAL REPORT | JUNE 30, 2012 |
General Information
Electronic Delivery
Electronic copies of most financial reports and prospectuses are available on the Fund’s website or shareholders can sign up for e-mail notifications of quarterly statements, annual and semi-annual reports and prospectuses by enrolling in the Fund’s electronic delivery program.
To enroll:
Shareholders Who Hold Accounts with Investment Advisors, Banks or Brokerages:
Please contact your financial advisor. Please note that not all investment advisors, banks or brokerages may offer this service.
Shareholders Who Hold Accounts Directly with BlackRock:
| 1) | Access the BlackRock website at http://www.blackrock.com/edelivery |
| 2) | Select “eDelivery” under the “More Information” section |
| 3) | Log into your account |
Householding
The Funds will mail only one copy of shareholder documents, including prospectuses, annual and semi-annual reports and proxy statements, to shareholders with multiple accounts at the same address. This practice is commonly called “householding” and it is intended to reduce expenses and eliminate duplicate mailings of shareholder documents. Mailings of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact the Funds at (800) 441-7762.
Availability of Quarterly Schedule of Investments
The Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the SEC’s website at http://www.sec.gov and may also be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on how to access documents on the SEC’s website may be obtained by calling (800) SEC-0330. The Funds’ Forms N-Q may also be obtained upon request and without charge by calling (800) 441-7762.
Availability of Proxy Voting Policies and Procedures
A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available (1) without charge, upon request, by calling (800) 441-7762; (2) at http://www.blackrock.com; and (3) on the SEC’s website at http://www.sec.gov.
Availability of Proxy Voting Record
Information about how the Funds voted proxies relating to securities held in the Funds’ portfolios during the most recent 12-month period ended June 30 is available upon request and without charge (1) at http://www.blackrock.com or by calling (800) 441-7762 and (2) on the SEC’s website at http://www.sec.gov.
| ANNUAL REPORT | JUNE 30, 2012 | 85 |
Additional Information (concluded)
Shareholder Privileges
Account Information
Call us at (800) 441-7762 from 8:00 AM to 6:00 PM EST on any business day to get information about your account balances, recent transactions and share prices. You can also reach us on the Web at http://www.blackrock.com/funds.
Automatic Investment Plans
Investor Class shareholders who want to invest regularly can arrange to have $50 or more automatically deducted from their checking or savings account and invested in any of the BlackRock funds.
Systematic Withdrawal Plans
Investor Class shareholders can establish a systematic withdrawal plan and receive periodic payments of $50 or more from their BlackRock funds, as long as their account balance is at least $10,000.
Retirement Plans
Shareholders may make investments in conjunction with Traditional, Rollover, Roth, Coverdell, Simple IRAs, SEP IRAs and 403(b) Plans.
BlackRock Privacy Principles
BlackRock is committed to maintaining the privacy of its current and former fund investors and individual clients (collectively, “Clients”) and to safeguarding their non-public personal information. The following information is provided to help you understand what personal information BlackRock collects, how we protect that information and why in certain cases we share such information with select parties.
If you are located in a jurisdiction where specific laws, rules or regulations require BlackRock to provide you with additional or different privacy-related rights beyond what is set forth below, then BlackRock will comply with those specific laws, rules or regulations.
BlackRock obtains or verifies personal non-public information from and about you from different sources, including the following: (i) information we receive from you or, if applicable, your financial intermediary, on applications, forms or other documents; (ii) information about your transactions with us, our affiliates, or others; (iii) information we receive from a consumer reporting agency; and (iv) from visits to our websites.
BlackRock does not sell or disclose to non-affiliated third parties any non-public personal information about its Clients, except as permitted by law or as is necessary to respond to regulatory requests or to service Client accounts. These non-affiliated third parties are required to protect the confidentiality and security of this information and to use it only for its intended purpose.
We may share information with our affiliates to service your account or to provide you with information about other BlackRock products or services that may be of interest to you. In addition, BlackRock restricts access to non-public personal information about its Clients to those BlackRock employees with a legitimate business need for the information. BlackRock maintains physical, electronic and procedural safeguards that are designed to protect the non-public personal information of its Clients, including procedures relating to the proper storage and disposal of such information.
| 86 | ANNUAL REPORT | JUNE 30, 2012 |
A World-Class Mutual Fund Family
BlackRock offers a diverse lineup of open-end mutual funds crossing all investment styles and managed by experts in equity, fixed income and tax-exempt investing.
Equity Funds
| BlackRock ACWI ex-US Index Fund | BlackRock Global Dividend Income Portfolio | BlackRock Mid-Cap Growth Equity Portfolio |
| BlackRock All-Cap Energy & Resources Portfolio | BlackRock Global Dynamic Equity Fund | BlackRock Mid Cap Value Opportunities Fund |
| BlackRock Balanced Capital Fund† | BlackRock Global Opportunities Portfolio | BlackRock Natural Resources Trust |
| BlackRock Basic Value Fund | BlackRock Global SmallCap Fund | BlackRock Pacific Fund |
| BlackRock Capital Appreciation Fund | BlackRock Health Sciences Opportunities Portfolio | BlackRock Russell 1000 Index Fund |
| BlackRock China Fund | BlackRock Index Equity Portfolio | BlackRock Science & Technology |
| BlackRock Commodity Strategies Fund | BlackRock India Fund | Opportunities Portfolio |
| BlackRock Emerging Markets Fund | BlackRock International Fund | BlackRock Small Cap Growth Equity Portfolio |
| BlackRock Emerging Markets Long/Short | BlackRock International Index Fund | BlackRock Small Cap Growth Fund II |
| Equity Fund | BlackRock International Opportunities Portfolio | BlackRock Small Cap Index Fund |
| BlackRock Energy & Resources Portfolio | BlackRock Large Cap Core Fund | BlackRock S&P 500 Index Fund |
| BlackRock Equity Dividend Fund | BlackRock Large Cap Core Plus Fund | BlackRock S&P 500 Stock Fund |
| BlackRock EuroFund | BlackRock Large Cap Growth Fund | BlackRock U.S. Opportunities Portfolio |
| BlackRock Flexible Equity Fund | BlackRock Large Cap Value Fund | BlackRock Value Opportunities Fund |
| BlackRock Focus Growth Fund | BlackRock Latin America Fund | BlackRock World Gold Fund |
| BlackRock Global Allocation Fund† | BlackRock Managed Volatility Portfolio† |
Fixed Income Funds
| BlackRock Bond Index Fund | BlackRock High Yield Bond Portfolio | BlackRock Strategic Income |
| BlackRock Core Bond Portfolio | BlackRock Inflation Protected Bond Portfolio | Opportunities Portfolio |
| BlackRock CoreAlpha Bond Fund | BlackRock International Bond Portfolio | BlackRock Total Return Fund |
| BlackRock Emerging Market Debt Portfolio | BlackRock Long Duration Bond Portfolio | BlackRock US Government Bond Portfolio |
| BlackRock Floating Rate Income Portfolio | BlackRock Low Duration Bond Portfolio | BlackRock US Mortgage Portfolio |
| BlackRock Global Long/Short Credit Fund | BlackRock Multi-Asset Income Portfolio† | BlackRock World Income Fund |
| BlackRock GNMA Portfolio | BlackRock Secured Credit Portfolio |
Municipal Bond Funds
| BlackRock California Municipal Bond Fund | BlackRock National Municipal Fund | BlackRock Pennsylvania Municipal Bond Fund |
| BlackRock High Yield Municipal Fund | BlackRock New Jersey Municipal Bond Fund | BlackRock Short-Term Municipal Fund |
| BlackRock Intermediate Municipal Fund | BlackRock New York Municipal Bond Fund |
Target Risk & Target Date Funds†
| BlackRock Prepared Portfolios | BlackRock Lifecycle Prepared Portfolios | LifePath Portfolios | LifePath Index Portfolios | |||
| Conservative Prepared Portfolio | 2015 | 2035 | Retirement | 2040 | Retirement | 2040 |
| Moderate Prepared Portfolio | 2020 | 2040 | 2020 | 2045 | 2020 | 2045 |
| Growth Prepared Portfolio | 2025 | 2045 | 2025 | 2050 | 2025 | 2050 |
| Aggressive Growth Prepared Portfolio | 2030 | 2050 | 2030 | 2055 | 2030 | 2055 |
| 2035 | 2035 | |||||
| † | Mixed asset fund. |
BlackRock mutual funds are currently distributed by BlackRock Investments, LLC. You should consider the investment objectives, risks, charges and expenses of the funds under consideration carefully before investing. Each fund’s prospectus contains this and other information and is available at www.blackrock.com or by calling (800) 441-7762 or from your financial advisor. The prospectus should be read carefully before investing.
| ANNUAL REPORT | JUNE 30, 2012 | 87 |
This report is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Funds unless accompanied or preceded by the Funds’ current prospectus. Past performance results shown in this report should not be considered a representation of future performance. Investment returns and principal value of shares will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Statements and other information herein are as dated and are subject to change.
#MBNYMB-6/12-AR
Item 2 – Code of Ethics – The registrant (or the “Fund”) has adopted a code of ethics, as of the end of the period covered by this report, applicable to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. During the period covered by this report, there have been no amendments to or waivers granted under the code of ethics. A copy of the code of ethics is available without charge at www.blackrock.com.
Item 3 – Audit Committee
Financial Expert – The registrant’s board of trustees (the “board of trustees”), has determined that (i)
the registrant has the following audit committee financial experts serving on its audit committee and (ii) each audit committee
financial expert is independent:
Robert M. Hernandez
Fred G. Weiss
Stuart E. Eizenstat
Under applicable securities laws, a person determined to be an audit committee financial expert will not be deemed an “expert” for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification of a person as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and board of trustees in the absence of such designation or identification.
Item 4 – Principal Accountant Fees and Services
The following table presents fees billed by Deloitte & Touche LLP (“D&T”) in each of the last two fiscal years for the services rendered to the Fund:
| (a) Audit Fees | (b) Audit-Related Fees1 | (c) Tax Fees2 | (d) All Other Fees3 | |||||
| Entity Name | Current Fiscal Year End | Previous Fiscal Year End | Current Fiscal Year End | Previous Fiscal Year End | Current Fiscal Year End | Previous Fiscal Year End | Current Fiscal Year End | Previous Fiscal Year End |
| BlackRock High Yield Municipal Fund | $33,500 | $32,900 | $0 | $0 | $12,100 | $12,100 | $0 | $0 |
| BlackRock National Municipal Fund | $37,700 | $37,100 | $0 | $16,800 | $12,100 | $24,200 | $0 | $0 |
| BlackRock Short-Term Municipal Fund | $29,300 | $28,700 | $0 | $0 | $12,100 | $12,100 | $0 | $0 |
The following table presents fees billed by D&T that were required to be approved by the registrant’s audit committee (the “Committee”) for services that relate directly to the operations or financial reporting of the Fund and that are rendered on behalf of BlackRock Advisors, LLC (“Investment Adviser” or “BlackRock”) and entities controlling, controlled by, or under common control with BlackRock (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) that provide ongoing services to the Fund (“Fund Service Providers”):
| Current Fiscal Year End | Previous Fiscal Year End | |
| (b) Audit-Related Fees1 | $0 | $0 |
| (c) Tax Fees2 | $0 | $0 |
| (d) All Other Fees3 | $2,970,000 | $3,030,000 |
1 The nature of the services includes assurance and related services reasonably related to the performance of the audit of financial statements not included in Audit Fees.
2 The nature of the services includes tax compliance, tax advice and tax planning.
3 Aggregate fees borne by
BlackRock in connection with the review of compliance procedures and attestation thereto performed by D&T with respect to all
of the registered closed-end funds and some of the registered open-end funds advised by BlackRock.
2
The Committee has adopted policies and procedures with regard to the pre-approval of services. Audit, audit-related and tax compliance services provided to the registrant on an annual basis require specific pre-approval by the Committee. The Committee also must approve other non-audit services provided to the registrant and those non-audit services provided to the Investment Adviser and Fund Service Providers that relate directly to the operations and the financial reporting of the registrant. Certain of these non-audit services that the Committee believes are (a) consistent with the SEC’s auditor independence rules and (b) routine and recurring services that will not impair the independence of the independent accountants may be approved by the Committee without consideration on a specific case-by-case basis (“general pre-approval”). The term of any general pre-approval is 12 months from the date of the pre-approval, unless the Committee provides for a different period. Tax or other non-audit services provided to the registrant which have a direct impact on the operations or financial reporting of the registrant will only be deemed pre-approved provided that any individual project does not exceed $10,000 attributable to the registrant or $50,000 per project. For this purpose, multiple projects will be aggregated to determine if they exceed the previously mentioned cost levels.
Any
proposed services exceeding the pre-approved cost levels will require specific pre-approval by the Committee, as will any other
services not subject to general pre-approval (e.g., unanticipated but permissible services). The Committee is informed of each
service approved subject to general pre-approval at the next regularly scheduled in-person board meeting. At this meeting, an
analysis of such services is presented to the Committee for ratification. The Committee may delegate to the Committee Chairman
the authority to approve the provision of and fees for any specific engagement of permitted non-audit services, including services
exceeding pre-approved cost levels.
(e)(2) None of the services described in each of Items 4(b) through (d) were approved by the Committee pursuant to paragraph (c)(7)(i)(C)
of Rule 2-01 of Regulation S-X.
(f) Not Applicable
(g) The aggregate non-audit fees paid to the accountant for services rendered by the accountant to the registrant, the Investment
Adviser and the Fund Service Providers were:
| Entity Name | Current Fiscal Year End | Previous Fiscal Year End |
| BlackRock High Yield Municipal Fund | $12,100 | $12,100 |
| BlackRock National Municipal Fund | $12,100 | $41,000 |
| BlackRock Short-Term Municipal Fund | $12,100 | $12,100 |
| 3 |
Additionally, SSAE 16 Review (Formerly, SAS No. 70) fees for the current and previous fiscal years of $2,970,000 and $3,030,000, respectively, were billed by D&T to the Investment Adviser.
(h) The Committee has considered and determined that the provision of non-audit services that were rendered to the Investment
Adviser and the Fund Service Providers that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation
S-X is compatible with maintaining the principal accountant’s independence.
Item 5 – Audit Committee of Listed Registrants – Not Applicable
Item 6 – Investments
(a) The registrant’s Schedule of Investments is included as part of the Report to Stockholders filed under Item 1 of this
Form.
(b) Not Applicable due to no such divestments during the semi-annual period covered since the previous Form N-CSR filing.
Item 7 – Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies – Not Applicable
Item 8 – Portfolio Managers of Closed-End Management Investment Companies – Not Applicable
Item 9 – Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers – Not Applicable
Item 10 – Submission of Matters to a Vote of Security Holders – There have been no material changes to these procedures.
Item 11 – Controls and Procedures
(a) – The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing of this report based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 15d-15(b) under the Securities Exchange Act of 1934, as amended.
(b) – There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12 – Exhibits attached hereto
(a)(1) – Code of Ethics – See Item 2
(a)(2) – Certifications – Attached hereto
| 4 |
(a)(3) – Not Applicable
(b) – Certifications – Attached hereto
| 5 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BlackRock Municipal Bond Fund, Inc.
| By: | /s/ John M. Perlowski | |
| John M. Perlowski | ||
| Chief Executive Officer (principal executive officer) of | ||
| BlackRock Municipal Bond Fund, Inc. | ||
Date: September 4, 2012
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By: | /s/ John M. Perlowski | |
| John M. Perlowski | ||
| Chief Executive Officer (principal executive officer) of | ||
| BlackRock Municipal Bond Fund, Inc. | ||
Date: September 4, 2012
| By: | /s/ Neal J. Andrews | |
| Neal J. Andrews | ||
| Chief Financial Officer (principal financial officer) of | ||
| BlackRock Municipal Bond Fund, Inc. | ||
Date: September 4, 2012
| 6 |