UNITEDSTATES
SECURITIESANDEXCHANGECOMMISSION
Washington,D.C.20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES

Investment Company Act file number 811-08621

Name of Fund: BlackRock MuniHoldings New Jersey Insured Fund, Inc. (MUJ)

Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809

Name and address of agent for service: Anne F. Ackerley, Chief Executive Officer, BlackRock
MuniHoldings New Jersey Insured Fund, Inc., 55 East 52^nd Street, New York, NY 10055

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

Date of fiscal year end: 07/31/2010

Date of reporting period: 07/31/2010

Item 1 – Report to Stockholders

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Annual Report

BlackRock MuniHoldings California Insured Fund, Inc. (MUC)

BlackRock MuniHoldings New Jersey Insured Fund, Inc. (MUJ)

BlackRock MuniYield Insured Investment Fund (MFT)

BlackRock MuniYield Michigan Insured Fund, Inc. (MIY)

BlackRock MuniYield New Jersey Insured Fund, Inc. (MJI)

BlackRock MuniYield Pennsylvania Insured Fund (MPA)

July 31, 2010

Not FDIC Insured • No Bank Guarantee • May Lose Value

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2 ANNUAL REPORT

JULY 31, 2010

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Dear Shareholder

The global economy is continuing to slowly improve, with the United States and emerging markets leading the way; however global and US economic

statistics show that the pace of economic growth has trailed off in recent months. Market volatility has remained elevated over the past several months as

investors remain uncertain about the future direction of economic growth. The sovereign debt crisis in Europe, slowing growth in China and concerns over

the possibility that the United States and other developed markets are heading for a double-dip recession have all acted to depress investor sentiment. It

is our view that the recent soft patch of economic data is just that — a slowdown in the pace of recovery and not an indication that the economy is sliding

back into recession. In the United States, we expect to see slightly slower economic growth over the next several quarters; however, true double-dip

recessions are quite rare, and unless there is a major shock to the economy, we believe the recovery will continue.

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

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

concerns about the possibility of prolonged deflation (especially in Europe). As the period drew to a close, equity markets were staging a muted recovery.

On a 12-month basis global equities were still showing positive returns thanks to improving corporate revenues and profits and a reasonably strong macro

backdrop. From a geographic perspective, US equities have significantly outpaced their international counterparts over the past six and twelve months, as

the domestic economic recovery has been more pronounced and credit-related issues have held European markets down. Within the United States, smaller

cap stocks have outperformed large caps year-to-date.

In fixed income markets, yields have fluctuated significantly over the past year as economic data has been mixed. Over recent months, risk aversion and

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

higher-risk fixed income assets performed well due to strong earnings announcements and better-than-expected results on European bank stress tests.

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

investors rotated to the relative safety of Treasuries.

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

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

“extended period.”

 

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

Although conditions are certainly better than they were a couple of years ago, global financial markets continue to face high volatility while questions about
the strength and sustainability of the recovery abound. Through periods of uncertainty, as ever, BlackRock’s full resources are dedicated to the management
of our clients’ assets. For additional market perspective and investment insight, visit www.blackrock.com/shareholdermagazine, where you’ll find the most
recent issue of our award-winning Shareholder® magazine, as well as its quarterly companion newsletter, Shareholder Perspectives. We thank you for
entrusting BlackRock with your investments, and we look forward to your continued partnership in the months and years ahead.

THIS PAGE NOT PART OF YOUR FUND REPORT

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Fund Summary as of July 31, 2010

BlackRock MuniHoldings California Insured Fund, Inc.

Fund Overview

BlackRock MuniHoldings California Insured Fund, Inc.’s (MUC) (the “Fund”) investment objective is to provide shareholders with current income exempt
from federal and California income taxes. The Fund seeks to achieve its investment objective by investing primarily in municipal obligations exempt from fed-
eral income taxes (except that the interest may be subject to the federal alternative minimum tax) and California income taxes. Under normal market condi-
tions, the Fund invests at least 80% of its assets in investment grade municipal obligations with remaining maturities of one year or more at the time of
investment that are covered by insurance guaranteeing the timely payment of principal at maturity and interest when due. The Fund may invest directly in
such securities or synthetically through the use of derivatives.
No assurance can be given that the Fund’s investment objective will be achieved.

Performance

For the 12 months ended July 31, 2010, the Fund returned 22.40% based on market price, and 16.96% based on net asset value (NAV). For the same
period, the closed-end Lipper Single-State Insured Municipal Debt Funds category posted an average return of 21.26% based on market price, and 14.03%
based on NAV. All returns reflect reinvestment of dividends. The performance of the Lipper category does not necessarily correlate to that of the Fund, as
the Lipper group is comprised of funds representing various states and not California alone. The Fund's discount to NAV, which narrowed during the period,
accounts for the difference between performance based on market price and performance based on NAV. The following discussion relates to performance
based on NAV. The Fund maintains a relatively generous degree of coupon interest income from its securities holdings, which was a positive factor. The tight-
ening of credit quality spreads in the uninsured basket of the Fund’s holdings also aided results. A fully-invested and slightly longer relative duration posture
were additive too, as rates declined over the period. Throughout this period, the municipal market benefited from the Build America Bond Program, which
effectively moved supply to the taxable market and, thus, alleviated supply pressure in the tax-exempt space. Management’s focus on the quality of under-
lying credits while the market placed less value on monoline insurance also aided relative performance. However, downgrades of monoline insurers had a
negative impact on performance in all funds that invest in bonds utilizing insurance wraps. Secondary market demand for insured municipals weakened,
resulting in limited liquidity and widening spreads on insured bonds. Cash reserves held in the Fund during the period also detracted from performance,
as cash underperformed longer maturity coupon bonds in an environment of falling rates and tightening spreads.
The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These
views are not intended to be a forecast of future events and are no guarantee of future results.

 

¹ Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.
² Tax equivalent yield assumes the maximum federal tax rate of 35%.
³ The Monthly Distribution per Share, declared on September 1, 2010, was increased to $0.0735. The Yield on Closing Market Price, Current Monthly Distribution per Common Share
and Current Annualized Distribution per Common Share do not reflect the new distribution rate. The distribution rate is not constant and is subject to further change in the future.
⁴ Represents Auction Market Preferred Shares (“Preferred Shares”) and tender option bond trusts (“TOBs”) as a percentage of total managed assets, which is the total assets of the
Fund, including any assets attributable to Preferred Shares and TOBs, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Fund, please see
The Benefits and Risks of Leveraging on page 10.

 

4 ANNUAL REPORT

JULY 31, 2010

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Fund Summary as of July 31, 2010

BlackRock MuniHoldings New Jersey Insured Fund, Inc.

Fund Overview

BlackRock MuniHoldings New Jersey Insured Fund, Inc.’s (MUJ) (the “Fund”) investment objective is to provide shareholders with current income exempt
from federal income tax and New Jersey personal income taxes. The Fund seeks to achieve its investment objective by investing primarily in long-term,
investment grade municipal obligations exempt from federal income taxes (except that the interest may be subject to the federal alternative minimum tax)
and New Jersey personal income taxes. Under normal market conditions, the Fund invests at least 80% of its assets in municipal obligations with remaining
maturities of one year or more that are covered by insurance guaranteeing the timely payment of principal at maturity and interest at the time of investment.
The Fund may invest directly in such securities or synthetically through the use of derivatives.

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

Performance

For the 12 months ended July 31, 2010, the Fund returned 19.37% based on market price, and 11.95% based on NAV. For the same period, the closed-end
Lipper Single-State Insured Municipal Debt Funds category posted an average return of 21.26% based on market price, and 14.03% based on NAV. All
returns reflect reinvestment of dividends. The performance of the Lipper category does not necessarily correlate to that of the Fund, as the Lipper group is
comprised of funds representing various states and not New Jersey alone. The Fund's discount to NAV, which narrowed during the period, accounts for the dif-
ference between performance based on market price and performance based on NAV. The following discussion relates to performance based on NAV. While
the Fund benefited from increasing bond prices in the declining interest rate environment, its exposure to pre-refunded and escrowed issues detracted from
performance as their shorter maturity structure limited their upward price movement. The Fund benefited from its allocation to the health sector, which per-
formed well during the period. Positive investment income coupled with a low cost of leverage enabled the Fund to increase its dividend in 2010.

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

 

¹ Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.
² Tax equivalent yield assumes the maximum federal tax rate of 35%.
³ The monthly distribution per share, declared on September 1, 2010, was increased to $0.0740. The Yield on Closing Market Price, Current Monthly Distribution per Common
Share and Current Annualized Distribution per Common Share do not reflect the new distribution rate. The new distribution rate is not constant and is subject to further change
in the future.
⁴ Represents Preferred Shares and TOBs as a percentage of total managed assets, which is the total assets of the Fund, including any assets attributable to Preferred Shares and
TOBs, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Fund, please see The Benefits and Risks of Leveraging on page 10.

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

 

ANNUAL REPORT

JULY 31, 2010

5

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Fund Summary as of July 31, 2010

BlackRock MuniYield Insured Investment Fund

Fund Overview

BlackRock MuniYield Insured Investment Fund’s (MFT) (the “Fund”) investment objective is to provide shareholders with as high a level of current income
exempt from federal income taxes as is consistent with its investment policies and prudent investment management. The Fund seeks to achieve its invest-
ment objective by investing at least 80% of its assets in municipal obligations exempt from federal income taxes (except that the interest may be subject to
the federal alternative minimum tax). Under normal market conditions, the Fund invests primarily in long-term municipal obligations that are investment
grade quality at the time of investment and at least 80% of its assets in municipal obligations that are covered by insurance guaranteeing the timely pay-
ment of principal at maturity and interest when due. The Fund may invest directly in such securities or synthetically through the use of derivatives.

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

Performance

For the 12 months ended July 31, 2010, the Fund returned 28.72% based on market price, and 14.99% based on NAV. For the same period, the closed-
end Lipper Insured Municipal Debt Funds (Leveraged) category posted an average return of 24.23% based on market price, and 15.41% based on NAV. All
returns reflect reinvestment of dividends. The Fund moved from a discount to NAV to a premium by period end, which accounts for the difference between
performance based on market price and performance based on NAV. The following discussion relates to performance based on NAV. The Fund’s holdings
of Florida issues detracted from performance during the period as Florida underperformed the national market. The Fund continues to seek to reduce its
exposure to Florida, however, this transition is prolonged due to the lack of availability in the national insured market and the limited liquidity of some of
the Fund’s Florida holdings. On the positive side, the Fund held health, utilities and housing bonds with maturities of 20 years and longer, which
benefited performance as the municipal yield curve flattened over the last 12 months.

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

 

¹ Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.
² Tax equivalent yield assumes the maximum federal tax rate of 35%.
³ The distribution rate is not constant and is subject to change.
⁴ Represents Preferred Shares and TOBs as a percentage of total managed assets, which is the total assets of the Fund, including any assets attributable to Preferred Shares and
TOBs, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Fund, please see The Benefits and Risks of Leveraging on page 10.

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

 

6 ANNUAL REPORT

JULY 31, 2010

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Fund Summary as of July 31, 2010

BlackRock MuniYield Michigan Insured Fund, Inc.

Fund Overview

BlackRock MuniYield Michigan Insured Fund, Inc.’s (MIY) (the “Fund”) investment objective is to provide shareholders with as high a level of current income
exempt from federal and Michigan income taxes as is consistent with its investment policies and prudent investment management. The Fund seeks to
achieve its investment objective by investing at least 80% of its assets in municipal obligations exempt from federal income taxes (except that the interest
may be subject to the federal alternative minimum tax) and Michigan income taxes. Under normal market conditions, the Fund invests primarily in long-term
municipal obligations that are investment grade quality at the time of investment and at least 80% of its assets in municipal obligations that are covered by
insurance guaranteeing the timely payment of principal at maturity and interest when due. The Fund may invest directly in such securities or synthetically
through the use of derivatives.

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

Performance

For the 12 months ended July 31, 2010, the Fund returned 26.76% based on market price, and 14.31% based on NAV. For the same period, the closed-
end Lipper Single-State Insured Municipal Debt Funds category posted an average return of 21.26% based on market price, and 14.03% based on NAV.
All returns reflect reinvestment of dividends. The performance of the Lipper category does not necessarily correlate to that of the Fund, as the Lipper group
is comprised of funds representing various states and not Michigan alone. The Fund's discount to NAV, which narrowed during the period, accounts for the
difference between performance based on market price and performance based on NAV. The following discussion relates to performance based on NAV.
The Fund benefited from its allocation to the health sector, which performed well during the period. Positive investment income coupled with a low cost of
leverage enabled the Fund to increase its dividend at the end of 2009. While the Fund benefited from increasing bond prices in the declining interest
rate environment, its exposure to pre-refunded and escrowed issues detracted from performance as their shorter maturity structure limited their upward
price movement.
The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These
views are not intended to be a forecast of future events and are no guarantee of future results.

 

¹ Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.
² Tax equivalent yield assumes the maximum federal tax rate of 35%.
³ The monthly distribution per share, declared on September 1, 2010, was increased to $0.0765. The Yield on Closing Market Price, Current Monthly Distribution per Common
Share and Current Annualized Distribution per Common Share do not reflect the new distribution rate. The new distribution rate is not constant and is subject to further change in
the future.
⁴ Represents Preferred Shares and TOBs as a percentage of total managed assets, which is the total assets of the Fund, including any assets attributable to Preferred Shares and
TOBs, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Fund, please see The Benefits and Risks of Leveraging on page 10.

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

 

ANNUAL REPORT

JULY 31, 2010

7

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Fund Summary as of July 31, 2010

BlackRock MuniYield New Jersey Insured Fund, Inc.

Fund Overview

BlackRock MuniYield New Jersey Insured Fund, Inc.’s (MJI) (the “Fund”) investment objective is to provide shareholders with as high a level of current income
exempt from federal income taxes and New Jersey personal income tax as is consistent with its investment policies and prudent investment management. The
Fund seeks to achieve its investment objective by investing at least 80% of its assets in municipal obligations exempt from federal income taxes (except that
the interest may be subject to the federal alternative minimum tax) and New Jersey personal income taxes. Under normal market conditions, the Fund invests
primarily in long-term municipal obligations that are investment grade quality at the time of investment and at least 80% of its assets in municipal obligations
that are covered by insurance guaranteeing the timely payment of principal at maturity and interest when due. The Fund may invest directly in such securities
or synthetically through the use of derivatives.

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

Performance

For the 12 months ended July 31, 2010, the Fund returned 24.34% based on market price, and 13.90% based on NAV. For the same period, the closed-
end Lipper Single-State Insured Municipal Debt Funds category posted an average return of 21.26% based on market price, and 14.03% based on NAV. All
returns reflect reinvestment of dividends. The performance of the Lipper category does not necessarily correlate to that of the Fund, as the Lipper group is
comprised of funds representing various states and not New Jersey alone. The Fund's discount to NAV, which narrowed during the period, accounts for
the difference between performance based on market price and performance based on NAV. The following discussion relates to performance based on NAV.
While the Fund benefited from increasing bond prices in the declining interest rate environment, its exposure to pre-refunded and escrowed issues detracted
from performance as their shorter maturity structure limited their upward price movement. The Fund benefited from its allocation to the health sector,
which performed well during the period. Positive investment income coupled with a low cost of leverage enabled the Fund to increase its dividend in 2010.

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

 

¹ Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.
² Tax equivalent yield assumes the maximum federal tax rate of 35%.
³ The distribution rate is not constant and is subject to change.
⁴ Represents Preferred Shares and TOBs as a percentage of total managed assets, which is the total assets of the Fund, including any assets attributable to Preferred Shares and
TOBs, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Fund, please see The Benefits and Risks of Leveraging on page 10.

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

 

8 ANNUAL REPORT

JULY 31, 2010

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Fund Summary as of July 31, 2010

BlackRock MuniYield Pennsylvania Insured Fund

Fund Overview

BlackRock MuniYield Pennsylvania Insured Fund’s (MPA) (the “Fund”) investment objective is to provide shareholders with as high a level of current income
exempt from federal and Pennsylvania income taxes as is consistent with its investment policies and prudent investment management. The Fund seeks to
achieve its investment objective by investing at least 80% of its assets in municipal obligations exempt from federal income taxes (except that the interest may
be subject to the federal alternative minimum tax) and Pennsylvania income taxes. Under normal market conditions, the Fund invests primarily in long-term
municipal obligations that are investment grade quality at the time of investment and at least 80% of its assets in municipal obligations that are covered by
insurance guaranteeing the timely payment of principal at maturity and interest when due. The Fund may invest directly in such securities or synthetically
through the use of derivatives.

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

Performance

For the 12 months ended July 31, 2010, the Fund returned 25.70% based on market price, and 14.18% based on NAV. For the same period, the closed-
end Lipper Single-State Insured Municipal Debt Funds category posted an average return of 21.26% based on market price, and 14.03% based on NAV. All
returns reflect reinvestment of dividends. The performance of the Lipper category does not necessarily correlate to that of the Fund, as the Lipper group is
comprised of funds representing various states and not Pennsylvania alone. The Fund's discount to NAV, which narrowed during the period, accounts for the
difference between performance based on market price and performance based on NAV. The following discussion relates to performance based on NAV. The
Fund benefited from its increased exposure to interest rate-sensitive bonds as tax-exempt, 30-year interest rates rallied 70 basis points (0.70%) lower over
the period. Broader market recognition of the value of tightly held issuers also had a positive impact on performance as valuations on such holdings were
pushed higher. Detracting from performance was the Fund’s exposure to zero-coupon bonds, which remained out of favor with investors and underperformed
current coupon bonds throughout the period.

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

 

¹ Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.
² Tax equivalent yield assumes the maximum federal tax rate of 35%.
³ The monthly distribution per share, declared on September 1, 2010, was increased to $0.0745. The Yield on Closing Market Price, Current Monthly Distribution per Common
Share and Current Annualized Distribution per Common Share do not reflect the new distribution rate. The new distribution rate is not constant and is subject to further change
in the future.
⁴ Represents Preferred Shares and TOBs as a percentage of total managed assets, which is the total assets of the Fund, including any assets attributable to Preferred Shares and
TOBs, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Fund, please see The Benefits and Risks of Leveraging on page 10.

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

 

ANNUAL REPORT

JULY 31, 2010

9

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The Benefits and Risks of Leveraging

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

To leverage, the Funds issue Preferred Shares, which pay dividends at
prevailing short-term interest rates, and invest the proceeds in long-term
municipal bonds. In general, the concept of leveraging is based on the
premise that the financing cost of assets to be obtained from leverage will
be based on short-term interest rates, which normally will be lower than
the income earned by each 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 invest-
ments, each Fund’s Common Shareholders will benefit from the incre-
mental net income.

To illustrate these concepts, assume a Fund’s Common Shares capital-
ization is $100 million and it issues Preferred Shares for an additional
$50 million, creating a total value of $150 million available for investment
in long-term municipal bonds. If prevailing short-term interest rates are
3% and long-term interest rates are 6%, the yield curve has a strongly
positive slope. In this case, the Fund pays dividends on the $50 million of
Preferred Shares based on the lower short-term interest rates. At the same
time, the securities purchased by the Fund with assets received from the
Preferred Shares issuance earn income based on long-term interest rates.
In this case, the dividends paid to Preferred Shareholders are significantly
lower than the income earned on the Fund’s long-term investments, and
therefore the Common Shareholders are the beneficiaries of the incremen-
tal net income.

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

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

The Funds may also leverage their assets through the use of tender option
bond (“TOB”) programs, as described in Note 1 of the Notes to Financial

Statements. TOB investments generally will provide the Funds with
economic benefits in periods of declining short-term interest rates, but
expose the Funds to risks during periods of rising short-term interest rates
similar to those associated with Preferred Shares issued by the Funds, as
described above. Additionally, fluctuations in the market value of municipal
bonds deposited into the TOB trust may adversely affect each Fund’s NAV
per share.

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

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

 

Derivative Financial Instruments

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

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

10 ANNUAL REPORT

JULY 31, 2010

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Schedule of Investments July 31, 2010

BlackRock MuniHoldings California Insured Fund, Inc. (MUC)

(Percentages shown are based on Net Assets)

 

 

 

ANNUAL REPORT

JULY 31, 2010

11

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Schedule of Investments (continued)

BlackRock MuniHoldings California Insured Fund, Inc. (MUC)

(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

12 ANNUAL REPORT

JULY 31, 2010

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Schedule of Investments (continued)

BlackRock MuniHoldings California Insured Fund, Inc. (MUC)

(Percentages shown are based on Net Assets)

 

 

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

 

(a) Represents a zero-coupon bond. Rate shown reflects the current yield as of
report date.
(b) When-issued security. Unsettled when-issued transactions were as follows:

 

(c) Securities represent bonds transferred to a tender option bond trust in exchange
for which the 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 tender option bond trusts.
(d) 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, are as follows:

 

(e) 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 mar-
ket indexes or rating group indexes, and/or as defined by Fund management. This
definition may not apply for purposes of this report, which may combine such sector
sub-classifications for reporting ease.
•Financial futures contracts sold as of July 31, 2010 were as follows:

 

See Notes to Financial Statements.

ANNUAL REPORT

JULY 31, 2010

13

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Schedule of Investments (concluded)

BlackRock MuniHoldings California Insured Fund, Inc. (MUC)

• Fair Value Measurements — Various inputs are used in determining the fair value of
investments and derivatives, which are as follows:
• Level 1 — price quotations in active markets/exchanges for identical assets
and liabilities
• Level 2 — other observable inputs (including, but not limited to: quoted prices for
similar assets or liabilities in markets that are active, quoted prices for identical
or similar assets or liabilities in markets that are not active, inputs other than
quoted prices that are observable for the assets or liabilities (such as interest
rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and
default rates) or other market-corroborated inputs)
• Level 3 — unobservable inputs based on the best information available in the
circumstances, to the extent observable inputs are not available (including the
Fund’s own assumptions used in determining the fair value of investments
and derivatives)
The inputs or methodologies used for valuing securities are not necessarily an
indication of the risk 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 tables summarize the inputs used as of July 31, 2010 in determining
the fair valuation of the Fund’s investments and derivatives:

 

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

See Notes to Financial Statements.

14 ANNUAL REPORT

JULY 31, 2010

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Schedule of Investments July 31, 2010

BlackRock MuniHoldings New Jersey Insured Fund, Inc. (MUJ)

(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

ANNUAL REPORT

JULY 31, 2010

15

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Schedule of Investments (continued)

BlackRock MuniHoldings New Jersey Insured Fund, Inc. (MUJ)

(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

16 ANNUAL REPORT

JULY 31, 2010

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Schedule of Investments (continued)

BlackRock MuniHoldings New Jersey Insured Fund, Inc. (MUJ)

(Percentages shown are based on Net Assets)

 

 

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

 

See Notes to Financial Statements.

ANNUAL REPORT

JULY 31, 2010

17

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Schedule of Investments (concluded)

BlackRock MuniHoldings New Jersey Insured Fund, Inc. (MUJ)

(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 step-up bond that pays an initial coupon rate for the first period and
then a higher coupon rate for the following periods. Rate shown reflects the current
yield as of report date.
(c) Security is collateralized by Municipal or US Treasury obligations.
(d) Represents a zero-coupon bond. Rate shown reflects the current yield as of
report date.
(e) Securities represent bonds transferred to a tender option bond trust 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 tender option bond trusts.
(f) 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, are as follows:

 

(g) 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 mar-
ket indexes or rating group indexes, and/or as defined by Fund management. This
definition may not apply for purposes of this report, which may combine such sector
sub-classifications for reporting ease.

• Fair Value Measurements — Various inputs are used in determining the fair value of
investments, which are as follows:
• Level 1 — price quotations in active markets/exchanges for identical assets
and liabilities
• Level 2 — other observable inputs (including, but not limited to: quoted prices for
similar assets or liabilities in markets that are active, quoted prices for identical
or similar assets or liabilities in markets that are not active, inputs other than
quoted prices that are observable for the assets or liabilities (such as interest
rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and
default rates) or other market-corroborated inputs)
• Level 3 — unobservable inputs based on the best information available in the
circumstances, to the extent observable inputs are not available (including the
Fund’s own assumptions used in determining the fair value of investments)
The inputs or methodologies used for valuing securities are not necessarily an
indication of the risk 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 inputs used as of July 31, 2010 in determining
the fair valuation of the Fund’s investments:

 

See Notes to Financial Statements.

18 ANNUAL REPORT

JULY 31, 2010

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Schedule of Investments July 31, 2010

BlackRock MuniYield Insured Investment Fund (MFT)
(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

ANNUAL REPORT

JULY 31, 2010

19

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Schedule of Investments (continued)

BlackRock MuniYield Insured Investment Fund (MFT)
(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

20 ANNUAL REPORT

JULY 31, 2010

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Schedule of Investments (continued)

BlackRock MuniYield Insured Investment Fund (MFT)
(Percentages shown are based on Net Assets)

 

 

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

 

(a) Securities represent bonds transferred to a tender option bond trust 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 tender option bond trusts.
(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) 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:

 

See Notes to Financial Statements.

ANNUAL REPORT

JULY 31, 2010

21

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Schedule of Investments (concluded)

BlackRock MuniYield Insured Investment Fund (MFT)

• Fair Value Measurements — Various inputs are used in determining the fair value of
investments, which are as follows:
• Level 1 — price quotations in active markets/exchanges for identical assets
and liabilities
• Level 2 — other observable inputs (including, but not limited to: quoted prices for
similar assets or liabilities in markets that are active, quoted prices for identical
or similar assets or liabilities in markets that are not active, inputs other than
quoted prices that are observable for the assets or liabilities (such as interest
rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and
default rates) or other market-corroborated inputs)
• Level 3 — unobservable inputs based on the best information available in the
circumstances, to the extent observable inputs are not available (including the
Fund’s own assumptions used in determining the fair value of investments)
The inputs or methodologies used for valuing securities are not necessarily an
indication of the risk 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 inputs used as of July 31, 2010 in determining
the fair valuation of the Fund’s investments:

 

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

See Notes to Financial Statements.

22 ANNUAL REPORT

JULY 31, 2010

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Schedule of Investments July 31, 2010

BlackRock MuniYield Michigan Insured Fund, Inc. (MIY)

(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

ANNUAL REPORT

JULY 31, 2010

23

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Schedule of Investments (continued)

BlackRock MuniYield Michigan Insured Fund, Inc. (MIY)
(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

24 ANNUAL REPORT

JULY 31, 2010

---

Schedule of Investments (concluded)

BlackRock MuniYield Michigan Insured Fund, Inc. (MIY)

(Percentages shown are based on Net Assets)

 

 

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

 

(a) US government securities, held in escrow, are used to pay interest on this security as
well as to retire the bond in full at the date indicated, typically at a premium to par.
(b) Security is collateralized by Municipal or US Treasury obligations.
(c) Represents a zero-coupon bond. Rate shown reflects the current yield as of
report date.
(d) Securities represent bonds transferred to a tender option bond trust in exchange
for which the 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 tender option bond trusts.
(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, are as follows:

 

(f) 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 mar-
ket indexes or rating group indexes, and/or as defined by Fund management. This
definition may not apply for purposes of this report, which may combine such sector
sub-classifications for reporting ease.

• Fair Value Measurements — Various inputs are used in determining the fair value of
investments, which are as follows:
• Level 1 — price quotations in active markets/exchanges for identical assets
and liabilities
• Level 2 — other observable inputs (including, but not limited to: quoted prices for
similar assets or liabilities in markets that are active, quoted prices for identical
or similar assets or liabilities in markets that are not active, inputs other than
quoted prices that are observable for the assets or liabilities (such as interest
rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and
default rates) or other market-corroborated inputs)
• Level 3 — unobservable inputs based on the best information available in the
circumstances, to the extent observable inputs are not available (including the
Fund’s own assumptions used in determining the fair value of investments)
The inputs or methodologies used for valuing securities are not necessarily an
indication of the risk 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 inputs used as of July 31, 2010 in determining
the fair valuation of the Fund’s investments:

 

See Notes to Financial Statements.

ANNUAL REPORT

JULY 31, 2010

25

---

Schedule of Investments July 31, 2010

BlackRock MuniYield New Jersey Insured Fund, Inc. (MJI)

(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

26 ANNUAL REPORT

JULY 31, 2010

---

Schedule of Investments (continued)

BlackRock MuniYield New Jersey Insured Fund, Inc. (MJI)

(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

ANNUAL REPORT

JULY 31, 2010

27

---

Schedule of Investments (concluded)

BlackRock MuniYield New Jersey Insured Fund, Inc. (MJI)

(Percentages shown are based on Net Assets)

 

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

 

(a) Represents a step-up bond that pays an initial coupon rate for the first period and
then a higher coupon rate for the following periods. Rate shown reflects the current
yield as of report date.
(b) Represents a zero-coupon bond. Rate shown reflects the current yield as of
report date.
(c) 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.
(d) Securities represent bonds transferred to a tender option bond trust 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 tender option bond trusts.
(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, are as follows:

 

(f) 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 mar-
ket indexes or rating group indexes, and/or as defined by Fund management. This
definition may not apply for purposes of this report, which may combine such sector
sub-classifications for reporting ease.
• Fair Value Measurements — Various inputs are used in determining the fair value of
investments, which are as follows:
• Level 1 — price quotations in active markets/exchanges for identical assets
and liabilities
• Level 2 — other observable inputs (including, but not limited to: quoted prices for
similar assets or liabilities in markets that are active, quoted prices for identical
or similar assets or liabilities in markets that are not active, inputs other than
quoted prices that are observable for the assets or liabilities (such as interest
rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and
default rates) or other market-corroborated inputs)
• Level 3 — unobservable inputs based on the best information available in the
circumstances, to the extent observable inputs are not available (including the
Fund’s own assumptions used in determining the fair value of investments)
The inputs or methodologies used for valuing securities are not necessarily an
indication of the risk 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 inputs used as of July 31, 2010 in determining
the fair valuation of the Fund’s investments:

 

See Notes to Financial Statements.

28 ANNUAL REPORT

JULY 31, 2010

---

Schedule of Investments July 31, 2010

BlackRock MuniYield Pennsylvania Insured Fund (MPA)

(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

ANNUAL REPORT

JULY 31, 2010

29

---

Schedule of Investments (continued)

BlackRock MuniYield Pennsylvania Insured Fund (MPA)

(Percentages shown are based on Net Assets)

 

 

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

 

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

 

See Notes to Financial Statements.

30 ANNUAL REPORT

JULY 31, 2010

---

Schedule of Investments (concluded)

BlackRock MuniYield Pennsylvania Insured Fund (MPA)

(e) Securities represent bonds transferred to a tender option bond trust 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 tender option bond trusts.
(f) 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, are as follows:

 

(g) 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 mar-
ket indexes or rating group indexes, and/or as defined by Fund management. This
definition may not apply for purposes of this report, which may combine such sector
sub-classifications for reporting ease.

• Fair Value Measurements — Various inputs are used in determining the fair value of
investments, which are as follows:
• Level 1 — price quotations in active markets/exchanges for identical assets
and liabilities
• Level 2 — other observable inputs (including, but not limited to: quoted prices for
similar assets or liabilities in markets that are active, quoted prices for identical
or similar assets or liabilities in markets that are not active, inputs other than
quoted prices that are observable for the assets or liabilities (such as interest
rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and
default rates) or other market-corroborated inputs)
• Level 3 — unobservable inputs based on the best information available in the
circumstances, to the extent observable inputs are not available (including the
Fund’s own assumptions used in determining the fair value of investments)
The inputs or methodologies used for valuing securities are not necessarily an
indication of the risk 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 inputs used as of July 31, 2010 in determining
the fair valuation of the Fund’s investments:

 

See Notes to Financial Statements.

ANNUAL REPORT

JULY 31, 2010

31

---

 

See Notes to Financial Statements.

32 ANNUAL REPORT

JULY 31, 2010

---

 

See Notes to Financial Statements.

ANNUAL REPORT

JULY 31, 2010

33

---

 

See Notes to Financial Statements.

34 ANNUAL REPORT

JULY 31, 2010

---

 

See Notes to Financial Statements.

ANNUAL REPORT

JULY 31, 2010

35

---

 

See Notes to Financial Statements.

36 ANNUAL REPORT

JULY 31, 2010

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A Statement of Cash Flows is presented when a Fund had a significant amount of borrowing during the period, based on the average borrowing outstanding in relation to average
total assets.

See Notes to Financial Statements.

ANNUAL REPORT

JULY 31, 2010

37

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¹ Based on average Common Shares outstanding.
² Amount is less than $(0.01) per share.
³ Total investment returns based on market value, which can be significantly greater or lesser than the net asset value, may result in substantially different returns. Where applicable,
total investment returns exclude effects of sales charges and include the reinvestment of dividends and distributions.
⁴ Aggregate total investment return.
⁵ Do not reflect the effect of dividends to Preferred Shareholders.
⁶ Annualized.
⁷ Certain non-recurring expenses have been included in the ratio but not annualized. If these expenses were annualized, the ratios of total expenses, total expenses after fees
waived, total expenses after fees waived and excluding interest expense and fees, net investment income and net investment income to Common Shareholders would have been
1.43%, 1.28%, 1.15%, 6.50% and 6.27%, respectively.
⁸ Interest expense and fees relate to tender option bond trusts. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to tender option
bond trusts.

See Notes to Financial Statements.

38 ANNUAL REPORT

JULY 31, 2010

---

 

¹ Based on average Common Shares outstanding.
² Amount is less than $(0.01) per share.
³ Total investment returns based on market value, which can be significantly greater or lesser than the net asset value, may result in substantially different returns. Where applicable,
total investment returns exclude effects of sales charges and include the reinvestment of dividends and distributions.
⁴ Do not reflect the effect of dividends to Preferred Shareholders.
⁵ Interest expense and fees relate to tender option bond trusts. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to tender option
bond trusts.
⁶ Amounts have been recalculated to conform with current year presentation.

See Notes to Financial Statements.

ANNUAL REPORT

JULY 31, 2010

39

---

 

¹ Based on average Common Shares outstanding.
² Total investment returns based on market value, which can be significantly greater or lesser than the net asset value, may result in substantially different returns. Where applicable,
total investment returns exclude effects of sales charges and include the reinvestment of dividends and distributions.
³ Aggregate total investment return.
⁴ Do not reflect the effect of dividends to Preferred Shareholders.
⁵ Annualized.
⁶ Interest expense and fees relate to tender option bond trusts. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to tender option
bond trusts.

See Notes to Financial Statements.

40 ANNUAL REPORT

JULY 31, 2010

---

 

¹ Based on average Common Shares outstanding.
² Total investment returns based on market value, which can be significantly greater or lesser than the net asset value, may result in substantially different returns. Where applicable,
total investment returns exclude effects of sales charges and include the reinvestment of dividends and distributions.
³ Aggregate total investment return.
⁴ Do not reflect the effect of dividends to Preferred Shareholders.
⁵ Annualized.
⁶ Interest expense and fees relate to tender option bond trusts. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to tender option
bond trusts.
⁷ Asset coverage per Preferred Share at $25,000 liquidation preference for the periods ended 2010, 2009, 2008, 2007 and 2006 were $71,945, $68,838, $69,563, $66,461 and
$67,638, respectively.

See Notes to Financial Statements.

ANNUAL REPORT

JULY 31, 2010

41

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¹ Based on average Common Shares outstanding.
² Amount is less than $(0.01) per share.
³ Amount is less than $0.01 per share.
⁴ Total investment returns based on market value, which can be significantly greater or lesser than the net asset value, may result in substantially different returns. Where applicable,
total investment returns exclude effects of sales charges and include the reinvestment of dividends and distributions.
⁵ Aggregate total investment return.
⁶ Do not reflect the effect of dividends to Preferred Shareholders.
⁷ Annualized.
⁸ Interest expense and fees relate to tender option bond trusts. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to tender option
bond trusts.

See Notes to Financial Statements.

42 ANNUAL REPORT

JULY 31, 2010

---

 

¹ Based on average Common Shares outstanding.
² Amount is less than $(0.01) per share.
³ Total investment returns based on market value, which can be significantly greater or lesser than the net asset value, may result in substantially different returns. Where applicable,
total investment returns exclude effects of sales charges and include the reinvestment of dividends and distributions.
⁴ Aggregate total investment return.
⁵ Do not reflect the effect of dividends to Preferred Shareholders.
⁶ Annualized.
⁷ Interest expense and fees relate to tender option bond trusts. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to tender option
bond trusts.

See Notes to Financial Statements.

ANNUAL REPORT

JULY 31, 2010

43

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Notes to Financial Statements

1. Organization and Significant Accounting Policies:

BlackRock MuniHoldings California Insured Fund, Inc. (“MUC”), BlackRock
MuniHoldings New Jersey Fund, Inc. (“MUJ”), BlackRock MuniYield Insured
Investment Fund (“MFT”), BlackRock MuniYield Michigan Insured Fund, Inc.
(“MIY”), BlackRock MuniYield New Jersey Insured Fund, Inc. (“MJI”) and
BlackRock MuniYield Pennsylvania Insured Fund (“MPA”) (collectively, the
“Funds” or individually, as a “Fund”), are registered under the Investment
Company Act of 1940, as amended (the “1940 Act”), as non-diversified,
closed-end management investment companies. MUC, MUJ, MIY and MJI
are organized as Maryland corporations. MFT and MPA are organized as
Massachusetts business trusts. The Funds’ financial statements are pre-
pared 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 Funds determine and make available for publication
the net asset values of their Common Shares on a daily basis.

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

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

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

Forward Commitments and When-Issued Delayed Delivery Securities: The
Funds may purchase securities on a when-issued basis and may purchase
or sell securities on a forward commitment basis. Settlement of such trans-
actions 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 purchaser is not entitled to any of the interest
earned prior to settlement. When purchasing a security on a delayed deliv-
ery basis, the Funds assume the rights and risks of ownership of the secu-
rity, including the risk of price and yield fluctuations. In the event of default
by the counterparty, the Funds' maximum amount of loss is the unrealized
appreciation of unsettled when-issued transactions, which is shown on the
Schedules of Investments, if any.

Municipal Bonds Transferred to Tender Option Bond Trusts: The Funds
leverage their assets through the use of tender option bond trusts (“TOBs”).
A TOB is established by a third party sponsor forming a special purpose
entity, into which one or more funds, or an agent on behalf of the funds,
transfers municipal bonds. Other funds managed by the investment advisor
may also contribute municipal bonds to a TOB into which a Fund has con-
tributed bonds. A TOB typically issues two classes of beneficial interests:
short-term floating rate certificates, which are sold to third party investors,
and residual certificates (“TOB Residuals”), which are generally issued to
the participating funds that made the transfer. The TOB Residuals held by a
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.

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

Interest income from the underlying municipal bonds 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 July 31, 2010, the aggregate value of the underlying municipal bonds

44 ANNUAL REPORT

JULY 31, 2010

---

Notes to Financial Statements (continued)

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

 

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

 

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

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.

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)
each Fund will, consistent with SEC rules and/or certain interpretive letters
issued by the SEC, segregate collateral or designate on its books and
records cash or other liquid securities having a market value at least
equal to the amount that would otherwise be required to be physically
segregated. Furthermore, based on requirements and agreements with
certain exchanges and third party broker-dealers, each party has require-
ments 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 trans-
actions are entered into (the trade dates). Realized gains and losses
on investment transactions are determined on the identified cost basis.
Dividend income is recorded on the ex-dividend dates. Interest income,
including amortization of premium and accretion of discount on debt
securities, is recognized on the accrual basis.

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

Income Taxes: It is each 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.

The Funds file US federal and various state and local tax returns. No
income tax returns are currently under examination. The statute of limita-
tions on the Funds’ US federal tax returns remains open for the year ended
July 31, 2010, the period ended July 31, 2009 and for each of the two
years ended June 30, 2009 for MUC, for each of the four years ended July
31, 2010 for MUJ and for each of the two years ended July 31, 2010, and
the period ended July 31, 2008 and for the year ended October 31, 2007
for MFT, MIY, MJI and MPA. The statutes of limitations on the Funds’ state
and local tax returns may remain open for an additional year depending
upon the jurisdiction. There are no uncertain tax positions that require
recognition of a tax liability.

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

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

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

ANNUAL REPORT

JULY 31, 2010

45

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Notes to Financial Statements (continued)

2. Derivative Financial Instruments:

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

Losses may arise if the value of the contract decreases due to an unfavor-
able change in the market rates or 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 minimal because
of the protection against defaults by the exchange on which they 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 contracts for delayed delivery of securities
or currencies at a specific future date and at a specific price or yield.
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 margin variation and are
recognized by the Funds as unrealized gains or losses. 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 transactions involves
the risk of an imperfect correlation in the movements in the price of finan-
cial futures contracts, interest rates and the underlying assets.

Derivative Instruments Categorized by Risk Exposure:

Fair Values of Derivative Instruments as of July 31, 2010

 

*Includes cumulative appreciation/depreciation of financial futures contracts as
reported in the Schedule of Investments. Only current day's margin variation is
reported within the Statement of Assets and Liabilities.

 

For the year ended July 31, 2010, the average quarterly balance of outstanding derivative financial instruments was as follows:

 

3. Investment Advisory Agreement and Other Transactions
with Affiliates:

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

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. For such services,

each Fund pays the Manager a monthly fee at the following annual rates
of each Fund's average daily net assets as follows:

 

Average daily net assets is the average daily value of each Fund's total
assets minus the sum of its accrued liabilities.

The Manager voluntarily agreed to waive its investment advisory fees by the
amount of investment advisory fees each Fund pays to the Manager indi-
rectly through its investment in affiliated money market funds, however the
Manager does not waive its investment advisory fees by the amount of
investment advisory fees paid through its investment in other affiliated
investment companies, if any. This amount is shown as, or included in,

46 ANNUAL REPORT

JULY 31, 2010

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Notes to Financial Statements (continued)

fees waived by advisor in the Statements of Operations. For the year
ended July 31, 2010 the amounts waived were as follows:

 

In addition, the Manager has agreed to waive its investment advisory fee
on the proceeds of Preferred Shares and TOBs that exceed 35% of MUC
and MUJ’s average daily net assets. These amounts are included in fees
waived by advisor in the Statements of Operations. For the year ended July
31, 2010, the amounts waived were as follows:

 

The Manager entered into a sub-advisory agreement with BlackRock
Investment Management, LLC (“BIM”), an affiliate of the Manager, under
which 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 July 31, 2010, the Funds reimbursed the Manager for
certain accounting services, which are included in accounting services in
the Statements of Operations.

 

Certain officers and/or directors of the Funds are officers and/or directors
of BlackRock or its affiliates. The Funds reimburse the Manager for com-
pensation paid to the Funds' Chief Compliance Officer.

4. Investments:

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

 

5. Income Tax Information:

Reclassifications: US GAAP require that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting.
These reclassifications have no effect on net assets or net asset values per share. The following permanent differences as of July 31, 2010 attributable to
amortization methods on fixed income securities, the reclassification of distributions, the sale of bonds received from tender option bond trusts and distri-
butions received from a regulated investment company were reclassified to the following accounts:

 

The tax character of distributions paid during the year ended June 30, 2009, the fiscal period ended July 31, 2009 and the fiscal year ended July 31, 2010
were as follows:

 

ANNUAL REPORT

JULY 31, 2010

47

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* The differences between book-basis and tax-basis net unrealized gains is attributable primarily to the tax deferral of losses on wash sales, the tax deferral of losses on straddles,
amortization and accretion methods for premiums and discounts on fixed income securities, the deferral of post-October capital losses for tax purposes, the realization for tax
purposes of unrealized gains (losses) on certain futures contracts, the treatment of residual interests in tender option bond trusts and the deferral of compensation to directors.

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

 

6. Concentration, Market and Credit Risk:

MUC, MUJ, MIY, MJI, and MPA invest a substantial amount of their assets
in issuers located in a single state or limited number of states. Please see
the Schedules of Investments for concentrations in specific states.

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

In the normal course of business, the Funds invest in securities and enters
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 fluctua-
tions. Similar to issuer credit risk, the Funds may be exposed to counter-
party 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 it believes 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.

MUC invests a significant portion of its assets in securities in the
County/City/Special District/School District and Utilities sectors.
MUJ invests a significant portion of its assets in securities in the
County/City/Special District/School District, State and Transportation
sectors. MIY invests a significant portion of its assets in securities in the
County/City/Special District/School District and Health sectors. MJI invests
a significant portion of its assets in securities in the County/City/Special
District/School District, Education and State sectors. MPA invests a
significant portion of its assets in securities in the County/City/Special
District/School District and State sectors. Changes in economic conditions
affecting the County/City/Special District/School District, Education,
Health, State, Transportation, 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.

7. Capital Share Transactions:

MFT and MPA are authorized to issue an unlimited number of Common
Shares of beneficial interest, par value $0.10 per share together with 1
million Preferred Shares of beneficial interest, par value $0.05 per share.
Each Fund’s Board is authorized, however, to reclassify any unissued shares
of Common Shares without approval of Common Shareholders.

MUC, MUJ, MIY, and MJI are authorized to issue 200 million shares, includ-
ing Preferred Shares, par value $0.10 per share or $0.05 per share, all of
which were initially classified as Common Shares. Each Fund’s Board is
authorized, however, to reclassify any unissued shares of Common Shares
without approval of Common Shareholders.

Common Shares

Shares issued and outstanding remained constant for MUC, MUJ, MIY
and MPA during the years ended July 31, 2010 and 2009 respectively.

48 ANNUAL REPORT

JULY 31, 2010

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Notes to Financial Statements (concluded)

For MFT, shares issued and outstanding increased by 5,456 as a result of
reinvestment of dividends during the year ended July 31, 2010, and
remained constant during the year ended July 31, 2009.

For MJI, shares issued and outstanding increased by 15,316 as a result of
reinvestment of dividends and distributions during the year ended July 31,
2010, and remained constant during the year ended July 31, 2009.

Preferred Shares

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

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

The holders of Preferred Shares have voting rights equal to the holders of
Common Shares (one vote per share) and will vote together with holders
of Common Shares (one vote per share) as a single class. However, the
holders of Preferred Shares, voting as a separate class, are also entitled
to elect two Directors for each Fund. In addition, the 1940 Act requires that
along with approval by shareholders that might otherwise be required, the
approval of the holders of a majority of any outstanding Preferred Shares,
voting separately as a class would be required to (a) adopt any plan of
reorganization that would adversely affect the Preferred Shares, (b) change
a Funds' sub-classification as a closed-end investment company or change
its fundamental investment restrictions or (c) change its business so as to
cease to be an investment company.

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

 

 

¹ The maximum applicable rate on this series of Preferred Shares is the higher of
110% of the AA commercial paper rate or 110% of 90% of the Kenny S&P 30-day
High Grade Index rate divided by 1.00 minus the marginal tax rate.
² The maximum applicable rate on this series of Preferred Shares is the higher of
110% plus or times (i) the Telerate/BAA LIBOR or (ii) 90% of Kenny S&P 30-day
High Grade Index rate divided by 1.00 minus the marginal tax rate.

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

 

Since February 13, 2008, the Preferred Shares of the Funds failed to clear
any of their auctions. As a result, the Preferred Shares dividend rates were
reset to the maximum applicable rate, which ranged from 0.24% to 1.63%
for the year ended July 31, 2010. A failed auction is not an event of
default for the Funds but it has a negative impact on the liquidity of
Preferred Shares. A failed auction occurs when there are more sellers of

ANNUAL REPORT

JULY 31, 2010

49

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Notes to Financial Statements (concluded)

a Fund's auction rate preferred shares than buyers. It is impossible to pre-
dict how long this imbalance will last. A successful auction for the Funds'
Preferred Shares may not occur for some time, if ever, and even if liquidity
does resume, holders of the Preferred Shares may not have the ability to
sell the Preferred Shares at their liquidation preference.

The Funds may not declare dividends or make other distributions on
Common Shares or purchase any such shares if, at the time of the
declaration, distribution or purchase, asset coverage with respect to
the outstanding Preferred Shares is less than 200%.

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

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

 

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

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

8. Restatement Information:

During the year ended October 31, 2006 MIY determined that the criteria
for sale accounting under US GAAP had not been met for certain transfers
of municipal bonds related to investments in TOB Residuals, and that these
transfers should have been accounted for as secured borrowings rather
than as sales. As a result, certain financial highlights for the year ended
October 31, 2005 for MIY have been restated to give effect to recording
the transfers of the municipal bonds as secured borrowings, including
recording interest on the bonds as interest income and interest on the
secured borrowings as interest expense.

 

9. Subsequent Events:

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

Each Fund paid a net investment income dividend on September 1, 2010
to Common Shareholders of record on August 16, 2010 as follows:

 

On September 1, 2010, each of the Funds declared a dividend to
Common Shareholders of record on September 15, 2010 in the
following amounts:

 

The dividends declared on Preferred Shares for the period August 1, 2010
to August 31, 2010 were as follows:

 

50 ANNUAL REPORT

JULY 31, 2010

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Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of
BlackRock MuniHoldings California Insured Fund, Inc.
BlackRock MuniHoldings New Jersey Insured Fund, Inc.
BlackRock MuniYield Michigan Insured Fund, Inc. and
BlackRock MuniYield New Jersey Insured Fund, Inc. and
the Shareholders and Board of Trustees of
BlackRock MuniYield Insured Investment Fund and
BlackRock MuniYield Pennsylvania Insured Fund
(collectively the “Funds”):

We have audited the accompanying statement of assets and liabilities
of BlackRock MuniHoldings California Insured Fund, Inc., including the
schedule of investments, as of July 31, 2010, and the related statements
of operations and cash flows for the year then ended, the statements of
changes in net assets for the year ended July 31, 2010, the period July 1,
2009 to July 31, 2009 and the year ended June 30, 2009, and the fin-
ancial highlights for each of the periods presented. We have also audited
the accompanying statements of assets and liabilities of BlackRock
MuniHoldings New Jersey Insured Fund, Inc., BlackRock MuniYield New
Jersey Insured Fund, Inc. and BlackRock MuniYield Insured Investment
Fund, including the schedules of investments, as of July 31, 2010, and the
related statements of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended,
and the financial highlights for each of the periods presented. We have also
audited the accompanying statement of assets and liabilities of BlackRock
MuniYield Michigan Insured Fund, Inc., including the schedule of invest-
ments, as of July 31, 2010, and the related statement 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 two years in the period then ended, the period November 1, 2007 to
July 31, 2008 and for each of the two years in the period ended October
31, 2007. We have also audited the accompanying statement of assets
and liabilities of BlackRock MuniYield Pennsylvania Insured Fund, including
the schedule of investments, as of July 31, 2010, and the related state-
ments of operations and cash flows for the year then ended, the state-
ments of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods presented. These
financial statements and financial highlights are the responsibility of the
Funds’ management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits. The
financial highlights of BlackRock MuniYield Michigan Insured Fund, Inc.
for the year ended October 31, 2005 (before the restatement described
in Note 8) were audited by other auditors whose report, dated December
9, 2005, expressed a qualified opinion on the financial highlights
because of the errors described in Note 8.

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 report-
ing. 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 signifi-
cant estimates made by management, as well as evaluating the overall
financial statement presentation. Our procedures included confirmation
of securities owned as of July 31, 2010, by correspondence with the cus-
todians and brokers; where replies were not received from brokers, we
performed other auditing procedures. We believe that our audits provide
a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
BlackRock MuniHoldings California Insured Fund, Inc. as of July 31, 2010,
the results of its operations and its cash flows for the year then ended, the
changes in its net assets for the year then ended, the period July 1, 2009
to July 31, 2009 and the year ended June 30, 2009, and the financial
highlights for each of the periods presented, in conformity with accounting
principles generally accepted in the United States of America. Additionally,
in our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial positions
of BlackRock MuniHoldings New Jersey Insured Fund, Inc., BlackRock
MuniYield New Jersey Insured Fund, Inc. and BlackRock MuniYield Insured
Investment Fund, the results of their operations for the year then ended, the
changes in their net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods presented, in
conformity with accounting principles generally accepted in the United
States of America. Additionally, in our opinion, the financial statements and
financial highlights referred to above present fairly, in all material respects,
the financial position of BlackRock MuniYield Michigan Insured Fund, Inc.,
the results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the two years in the period then ended, the period
November 1, 2007 to July 31, 2008 and for each of the two years in the
period ended October 31, 2007, in conformity with accounting principles
generally accepted in the United States of America. Additionally, in our
opinion, the financial statements and financial highlights referred to above
present fairly, in all material respects, the financial position of BlackRock
MuniYield Pennsylvania Insured Fund as of July 31, 2010, the results of
its operations and its cash flows for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the periods presented, in conformity with
accounting principles generally accepted in the United States of America.

We also have audited the adjustments, applied by management, to
restate certain financial highlights for the year ended October 31, 2005 for
BlackRock MuniYield Michigan Insured Fund, Inc. (the “Fund”) to correct
the errors described in Note 8. These adjustments are the responsibility
of the Fund’s management. The audit procedures that we performed with
respect to the adjustments included such tests as we considered neces-
sary in the circumstances and were designed to obtain reasonable assur-
ance about whether the adjustments are appropriate and have been

ANNUAL REPORT

JULY 31, 2010

51

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Report of Independent Registered Public Accounting Firm (concluded)

properly applied, in all material respects, to the restated financial highlights
for the year ended October 31, 2005. We did not perform any audit proce-
dures designed to assess whether any additional adjustments to such
financial highlights might be necessary in order for such financial highlights
to be presented in conformity with accounting principles generally accept-
ed in the United States of America. In our opinion, the adjustments to the
financial highlights for the year ended October 31, 2005 for BlackRock
MuniYield Michigan Insured Fund, Inc. described in Note 8 are appropriate
and have been properly applied, in all material respects. However, we were
not engaged to audit, review, or apply any procedures to such financial
highlights other than with respect to the adjustments described in Note 8
and, accordingly, we do not express an opinion or any other form of
assurance on such financial highlights.

Deloitte & Touche LLP
Princeton, New Jersey
September 27, 2010

52 ANNUAL REPORT

JULY 31, 2010

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Important Tax Information

The following table summarizes the taxable per share distributions paid by MJI during the taxable year ended July 31, 2010.

 

All of the net investment income distributions paid by MUC, MUJ, MIY, MFT and MPA during the taxable year ended July 31, 2010 qualify as tax-exempt
interest dividends for federal income tax purposes.

ANNUAL REPORT

JULY 31, 2010

53

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Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements

The Board of Directors and the Board of Trustees, as the case may be
(each, a “Board,” and, collectively, the "Boards," and the members of which
are referred to as "Board Members") of each of BlackRock MuniHoldings
California Insured Fund, Inc. (“MUC”), BlackRock MuniHoldings New Jersey
Insured Fund, Inc. (“MUJ”), BlackRock MuniYield Insured Investment Fund
(“MFT”), BlackRock MuniYield Michigan Insured Fund, Inc. (“MIY”),
BlackRock MuniYield New Jersey Insured Fund, Inc. (“MJI”) and BlackRock
MuniYield Pennsylvania Insured Fund (“MPA” and, together with MUC, MUJ,
MFT, MIY and MJI, each a “Fund,” and, collectively, the “Funds”) met on April
8, 2010 and May 13-14, 2010 to consider the approval of each Fund’s
investment advisory agreement (each, an “Advisory Agreement”) with
BlackRock Advisors, LLC (the “Manager”), each Fund’s investment advisor.
Each Board also considered the approval of the sub-advisory agreement
(each, a “Sub-Advisory Agreement”) between the Manager and BlackRock
Investment Management, LLC (the “Sub-Advisor”) with respect to its 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 of each Fund consists of ten individuals, eight of whom are not
“interested persons” of such Fund as defined in the Investment Company
Act of 1940 (the “1940 Act”) (the “Independent Board Members”). The
Board Members are responsible for the oversight of the operations of each
Fund and perform the various duties imposed on the directors of invest-
ment companies by the 1940 Act. The Independent Board Members have
retained independent legal counsel to assist them in connection with their
duties. The Chairman of the Boards is an Independent Board Member. The
Boards have established five standing committees: an Audit Committee,
a Governance and Nominating Committee, a Compliance Committee,
a Performance Oversight Committee and an Executive Committee, each
of which is composed of Independent Board Members (except for the
Executive Committee, which also has one interested Board Member) and
is chaired by an Independent Board Member. The Boards also have two
ad hoc committees, the Joint Product Pricing Committee, which consists
of Independent Board Members and the directors/trustees of the boards
of certain other BlackRock-managed funds, who are not “interested per-
sons” of their respective funds, and the Ad Hoc Committee on Auction
Market Preferred Shares.

The Agreements

Pursuant to the 1940 Act, the Boards are required to consider the contin-
uation of the Agreements on an annual basis. In connection with this
process, the Boards assessed, among other things, the nature, scope
and quality of the services provided to the Funds by the personnel of
BlackRock and its affiliates, including investment management, admin-
istrative and shareholder services, oversight of fund accounting and
custody, marketing services and assistance in meeting applicable legal
and regulatory requirements.

From time to time throughout the year, each Board, acting directly and
through its committees, considered at each of its meetings factors that
are relevant to its annual consideration of the renewal of the Agreements,
including the services and support provided by BlackRock to the respective
Fund and its shareholders. Among the matters the Board considered were:
(a) investment performance for one-, three- and five-year periods, as appli-
cable, against peer funds, and applicable benchmarks, if any, as well as
senior management's and portfolio managers’ analysis of the reasons for
any over performance or underperformance against a Fund’s peers and/or
benchmark, as applicable; (b) fees, including advisory, and other amounts
paid to BlackRock and its affiliates by each Fund for services such as call
center and fund accounting; (c) each Fund’s operating expenses; (d) the
resources devoted to and compliance reports relating to each Fund’s
investment objective, policies and restrictions; (e) each Fund’s compliance
with its Code of Ethics and compliance policies and procedures; (f) the
nature, cost and character of non-investment management services pro-
vided by BlackRock and its affiliates; (g) BlackRock’s and other service
providers’ internal controls; (h) BlackRock’s implementation of the proxy
voting policies approved by the Boards; (i) execution quality of portfolio
transactions; (j) BlackRock’s implementation of each Fund’s valuation and
liquidity procedures; (k) an analysis of contractual and actual management
fees for products with similar investment objectives across the open-end
fund, closed-end fund and institutional account product channels, as
applicable; and (l) periodic updates on BlackRock’s business.

Board Considerations in Approving the Agreements

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

(e) a summary of aggregate amounts paid by each Fund to BlackRock and
(f) if applicable, a comparison of management fees to similar BlackRock

closed-end funds, as classified by Lipper.

At an in-person meeting held on April 8, 2010, the Boards reviewed mat-
erials relating to their consideration of the Agreements. As a result of the
discussions that occurred during the April 8, 2010 meeting, the Boards
presented BlackRock with questions and requests for additional informa-
tion and BlackRock responded to these requests with additional written
information in advance of the May 13 – 14, 2010 Board meeting.

54 ANNUAL REPORT

JULY 31, 2010

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

At an in-person meeting held on May 13 – 14, 2010, each Fund’s Board,
including the Independent Board Members, unanimously approved the
continuation of the Advisory Agreement between the Manager and each
respective Fund and the Sub-Advisory Agreement between the Manager
and the Sub-Advisor with respect to each Fund, each for a one-year term
ending June 30, 2011. In approving the continuation of the Agreements,
the Boards considered: (a) the nature, extent and quality of the services
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; and (e) other factors deemed relevant by
the Board Members.

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

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

The Boards considered, among other factors, the number, education
and experience of BlackRock’s investment personnel generally and each
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 capabili-
ties and BlackRock’s approach to training and retaining portfolio managers
and other research, advisory and management personnel. The Boards also
reviewed a general description of BlackRock’s compensation structure with
respect to each Fund’s portfolio management team and BlackRock’s ability
to attract and retain high-quality talent.

In addition to advisory services, the Boards considered the quality of the
administrative and non-investment advisory services provided to each
Fund. BlackRock and its affiliates and significant shareholders provide
each Fund with certain administrative 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 addition to investment advisory services, BlackRock and its affiliates
provide each Fund with other services, including (i) preparing disclosure
documents, such as the prospectus and the statement of additional infor-
mation in connection with the initial public offering and periodic share-
holder reports; (ii) preparing communications with analysts to support
secondary market trading of each Fund; (iii) assisting with daily accounting
and pricing; (iv) preparing periodic filings with regulators and stock ex-
changes; (v) overseeing and coordinating the activities of other service
providers; (vi) organizing Board meetings and preparing the materials for
such Board meetings; (vii) providing legal and compliance support; and
(viii) performing other administrative functions necessary for the operation
of each Fund, such as tax reporting, fulfilling regulatory filing requirements,
and call center services. The Boards 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 the Funds and BlackRock: The Boards,
including the Independent Board Members, also reviewed and considered
the performance history of each Fund. In preparation for the April 8, 2010
meeting, the Boards were provided with reports, independently prepared by
Lipper, which included a comprehensive analysis of each Fund’s perform-
ance. The Boards also reviewed a narrative and statistical analysis of the
Lipper data that was prepared by BlackRock, which analyzed various fac-
tors that affect Lipper’s rankings. In connection with their review, the Boards
received and reviewed information regarding the investment performance
of each Fund as compared to a representative group of similar funds as
determined by Lipper and to all funds in each Fund’s applicable Lipper
category and in the case of MUC, as customized peer group selected by
BlackRock. The Boards were provided with a description of the methodol-
ogy used by Lipper to select peer funds. The Boards regularly review the
performance of each Fund throughout the year.

The Board of MUC noted that MUC performed below the median of its
Customized Lipper Peer Group Composite in the one- and three-year
periods reported, but that MUC performed better than or equal to the
median of its Customized Lipper Peer Group Composite in the five-year
period reported. The Board of MUC and BlackRock reviewed the reasons for
MUC’s underperformance during the one- and three-year periods compared
with its Peers. The Board of MUC was informed that, among other things,
performance detractors for MUC have included exposure to lesser rated
underlying holdings and specific exposure to zero coupon structures.

The Board of MUJ noted that, in general, MUJ performed better than
its Peers in that MJU’s performance was at or above the median of its
Lipper Performance Composite in two of the one-, three- and five-year
periods reported.

The Board of MFT noted that MFT performed below the median of its Lipper
Performance Composite in each of the one-, three- and five-year periods
reported. The Board of MFT and BlackRock reviewed the reasons for MFT’s
underperformance during these periods compared with its Peers. The Board
of MFT was informed that, among other things, while MFT’s management

ANNUAL REPORT

JULY 31, 2010

55

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

team has reduced MFT’s Florida exposure, MFT remains over-weighted in
Florida holdings versus its Peers, which has hindered MFT’s performance,
as the state of Florida continues to have budget deficit concerns and a
very weak housing market.

The Board of MFT and BlackRock discussed BlackRock’s strategy for
improving MFT’s performance and BlackRock’s commitment to providing
the resources necessary to assist MFT’s portfolio managers and to improve
MFT's performance, in part through the repositioning of MFT’s portfolio.

The Board of MIY noted that MIY performed below the median of its
Lipper Performance Composite in the one- and five-year periods reported,
but that MIY performed better than or equal to the median of its Lipper
Performance Composite in the three-year period reported. The Board of
MIY and BlackRock reviewed the reasons for MIY’s underperformance
during the one- and five-year periods compared with its Peers. The Board
of MIY was informed that, among other things, performance is measured
against single state insured municipal debt funds and that MIY’s Lipper
Performance Composite is heavily weighted with New York and California
funds. Additionally, the Board of MIY was informed that the Michigan
economy has suffered greatly leading to a lower overall credit outlook.

The Board of MJI noted that MJI performed below the median of its Lipper
Performance Composite in the one- and five-year periods reported, but
that MJI performed better than or equal to the median of its Lipper Per-
formance Composite in the three-year period reported. The Board of MJI
and BlackRock reviewed the reasons for MJI’s underperformance during the
one- and five-year periods compared with its Peers. The Board of MJI was
informed that, among other things, MJI’s performance was impacted by
a neutral duration posture in a declining rate environment as well as its
sector weighting to water & sewer and transportation, which were under-
performing sectors over the past year. Additionally, opportunities to alter
sector allocations are few as issuance of insured bonds has been very
limited over the past several years.

The Board of MPA noted that MPA performed below the median of its
Lipper Performance Composite in each of the one-, three- and five-year
periods reported. The Board of MPA and BlackRock reviewed the reasons
for MPA’s underperformance during these periods compared with its Peers.
The Board of MPA was informed that, among other things, despite a recent
dividend increase, MPA’s relative distribution yield continues to have a
negative impact on performance.

The Boards of MUC, MIY, MJI and MPA and BlackRock discussed
BlackRock’s strategy for improving each respective Fund’s performance and
BlackRock’s commitment to providing the resources necessary to assist
each Fund’s portfolio managers and to improve each Fund’s performance.

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

C. Consideration of the Advisory Fees and the Cost of the Services and
Profits to be Realized by BlackRock and its Affiliates from their
Relationship with the Funds: The Boards, including the Independent Board
Members, reviewed each Fund’s contractual advisory fee rate compared
with the other funds in its Lipper category. The Boards also compared each
Fund’s total expenses, as well as actual management fees, to those of
other funds in its Lipper category. The Boards 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 Boards received and reviewed statements relating to BlackRock’s
financial condition and profitability with respect to the services it provided
each Fund. The Boards were also provided with a profitability analysis that
detailed the revenues earned and the expenses incurred by BlackRock
for services provided to each Fund. The Boards reviewed BlackRock’s prof-
itability with respect to each Fund and other funds the Boards currently
oversee for the year ended December 31, 2009 compared to available
aggregate profitability data provided for the year ended December 31,
2008. The Boards reviewed BlackRock’s profitability with respect to other
fund complexes managed by the Manager and/or its affiliates. The Boards
reviewed BlackRock’s assumptions and methodology of allocating
expenses in the profitability analysis, noting the inherent limitations in
allocating costs among various advisory products. The Boards recognized
that profitability may be affected by numerous factors including, among
other things, fee waivers and expense reimbursements by the Manager,
the types of funds managed, expense allocations and business mix, and
the difficulty of comparing profitability as a result of those factors.

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

In addition, the Boards considered the cost of the services provided to
each 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 their analysis, the Boards
reviewed BlackRock’s methodology in allocating its costs to the manage-
ment of each Fund. The Boards also considered whether BlackRock has the
financial resources necessary to attract and retain high quality investment
management personnel to perform its obligations under the Agreements
and to continue to provide the high quality of services that is expected by
the Boards.

56 ANNUAL REPORT

JULY 31, 2010

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

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

D. Economies of Scale: The Boards, including the Independent Board
Members, considered the extent to which economies of scale might be
realized as the assets of each Fund increase. The Boards 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 breakpoints in the advisory fee based upon the asset
level of each Fund.

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

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

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

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

Conclusion

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

ANNUAL REPORT

JULY 31, 2010

57

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Automatic Dividend Reinvestment Plan

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

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

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

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

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

58 ANNUAL REPORT

JULY 31, 2010

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ANNUAL REPORT

JULY 31, 2010

59

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³ Mr. Davis is an “interested person,” as defined in the Investment Company Act of 1940, of the Funds based on his position with BlackRock, Inc. and
its affiliates. Mr. Gabbay is an “interested person” of the Funds based on his former positions with BlackRock, Inc. and its affiliates as well as his owner-
ship of BlackRock, Inc. and The PNC Financial Services Group, Inc. securities. Directors serve until their resignation, removal or death, or until December 31
of the year in which they turn 72.
⁴ For MFT and MPA.

60 ANNUAL REPORT

JULY 31, 2010

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⁴ For MPA.
⁵ For MUC, MUJ, MFT, MIY and MJI.

Effective March 31, 2010, G. Nicholas Beckwith, III, a
Director of the Funds, resigned. The Funds’ Board extends its
best wishes to Mr. Beckwith.

ANNUAL REPORT

JULY 31, 2010

61

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Additional Information

Board Approvals

On September 1, 2010, the Board of Directors (the “Boards”) of MUC,
MUJ, MFT, MIY, MJI and MPA (the “Funds”) have approved changes to cer-
tain investment policies of the Funds.

Historically, under normal market conditions, each Fund has been required
to invest at least 80% of its assets in municipal bonds either (i) insured
under an insurance policy purchased by the Fund or (ii) insured under an
insurance policy obtained by the issuer of the municipal bond or any other
party. In September 2008, the Funds adopted an amended investment pol-
icy of purchasing only municipal bonds insured by insurance providers with
claims-paying abilities rated investment grade at the time of investment
(the “Insurance Policy”).

Following the onset of the credit and liquidity crises, the claims-paying abil-
ity rating of most of the municipal bond insurance providers has been low-
ered by the rating agencies. These downgrades have called into question
the long-term viability of the municipal bond insurance market, which has
the potential to severely limit the ability of BlackRock Advisors, LLC, the
Fund's investment advisor (the "Manager"), to manage the Funds under the
Insurance Policy.

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

As each Fund increases the amount of its assets that are invested in
municipal obligations that are not insured, the Fund’s shareholders will be
exposed to the risk of the failure of such securities’ issuers to pay interest
and repay principal and will not have the benefit of protection provided

under municipal bond insurance policies. As a result, shareholders will be
more dependent on the analytical ability of the Manager to evaluate the
credit quality of issuers of municipal obligations in which the Fund invests.
The Boards believe that the amended investment policy is in the best inter-
ests of each Fund and its shareholders because it believes that the poten-
tial benefits from increased flexibility outweigh the potential increase in risk
from the lack of insurance policies provided by weakened insurance
providers. Of course, the new investment policy cannot assure that each
Fund will achieve its investment objective.

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

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

The approved changes will not alter any Fund's investment objective.

Dividend Policy

The Funds’ dividend policy is to distribute all or a portion of their net
investment income to its shareholders on a monthly basis. In order to pro-
vide shareholders with a more stable level of dividend distributions, the
Trusts may at times pay out less than the entire amount of net investment
income earned in any particular month and may at times in any particular
month pay out such accumulated but undistributed income in addition to

net investment income earned in that month. As a result, the dividends
paid by the Trusts for any particular month may be more or less than the
amount of net investment income earned by the Funds during such month.
The Funds’ current accumulated but undistributed net investment income,
if any, is disclosed in the Statements of Assets and Liabilities, which com-
prises part of the financial information included in this report.

General Information

On June 10, 2010, BlackRock Advisors, LLC, the Trusts’ investment advisor
(the “Manager”), announced that MUJ and MIY each received a demand
letter from a law firm on behalf of common shareholders of MUJ and MIY.
The demand letters allege that the Manager and officers and Boards of
Directors (the “Boards”) of MUJ and MIY breached their fiduciary duties
by redeeming at par certain of MUJ and MIY’s Preferred Shares, and
demanded that the Boards take action to remedy those alleged breaches.
In response to the demand letter, the Boards established a Demand
Review Committee (the “Committee”) of the independent Directors to
investigate the claims made in the demand letters with the assistance of
independent counsel. Based upon its investigation, the Committee recom-
mended that the Boards reject the demand specified in the demand let-
ters. After reviewing the findings of the Committee, the Board for each Fund
unanimously adopted the Committee’s recommendation and unanimously
voted to reject the demand.

Electronic Delivery

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

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

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

Householding

The Funds will mail only one copy of shareholder documents, including
annual and semi-annual reports and proxy statements, to shareholders

62 ANNUAL REPORT

JULY 31, 2010

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Additional Information (concluded)

General Information (concluded)

with multiple accounts at the same address. This practice is commonly
called “householding” and is intended to reduce expenses and eliminate
duplicate mailings of shareholder documents. Mailings of your shareholder
documents may be householded indefinitely unless you instruct us
otherwise. If you do not want the mailing of these documents to be
combined with those for other members of your household, please
call (800) 441-7762.

Availability of Quarterly Schedule of Investments

Each Fund files its 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 the operation of the Public Reference
Room may be obtained by calling (800) SEC-0330. Each Fund’s Forms

N-Q may also be obtained upon request and without charge by calling
(800) 441-7762.

Availability of Proxy Voting Policies and Procedures

A description of the policies and procedures that the Funds use to
determine how to vote proxies relating to portfolio securities is avail-
able (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.

Fund Certification

The Funds are listed for trading on the New York Stock Exchange (“NYSE”)
and have filed with the NYSE their annual chief executive officer certifica-
tion regarding compliance with the NYSE’s listing standards. The Funds filed

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

Section 19(a) Notices

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

 

BlackRock Privacy Principles

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

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

BlackRock obtains or verifies personal non-public information from and
about you from different sources, including the following: (i) information we
receive from you or, if applicable, your financial intermediary, on applica-
tions, forms or other documents; (ii) information about your transactions
with us, our affiliates, or others; (iii) information we receive from a consumer
reporting agency; and (iv) from visits to our websites.

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

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

ANNUAL REPORT

JULY 31, 2010

63

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

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

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

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

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

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

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

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

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

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

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

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1 The nature of the services include assurance and related services reasonably related to the performance of the audit of
financial statements not included in Audit Fees.
2 The nature of the services include tax compliance, tax advice and tax planning.
3 The nature of the services include a review of compliance procedures and attestation thereto.

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

Any proposed services exceeding the pre-approved cost levels will require specific
pre-approval by the Committee, as will any other services not subject to general pre-
approval (e.g., unanticipated but permissible services). The Committee is informed of each
service approved subject to general pre-approval at the next regularly scheduled in-person
board meeting. At this meeting, an analysis of such services is presented to the Committee
for ratification. The Committee may delegate to the Committee Chairman the authority to
approve the provision of and fees for any specific engagement of permitted non-audit
services, including services exceeding pre-approved cost levels.

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

(f) Not Applicable

(g) Affiliates’ Aggregate Non-Audit Fees:

 

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

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

Item 5 – Audit Committee of Listed Registrants

(a) The following individuals are members of the registrant’s separately-designated
standing audit committee established in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(58)(A)):

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

(b) Not Applicable

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

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

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

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

(a)(1) The registrant is managed by a team of investment professionals comprised of F.
Howard Downs, Director at BlackRock, Inc., Theodore R. Jaeckel, Jr., CFA,
Managing Director at BlackRock, Inc., and Walter O’Connor, Managing Director at
BlackRock, Inc. Each is a member of BlackRock, Inc.’s municipal tax-exempt
management group. Each is jointly responsible for the day-to-day management of the
registrant’s portfolio, which includes setting the registrant’s overall investment
strategy, overseeing the management of the registrant and/or selection of its
investments. Messrs. Downs, Jaeckel and O’Connor have been members of the
registrant’s portfolio management team since 2008, 2006 and 2006, respectively.

 

(iv) Potential Material Conflicts of Interest

BlackRock and its affiliates (collectively, herein “BlackRock”) has built a professional
working environment, firm-wide compliance culture and compliance procedures and
systems designed to protect against potential incentives that may favor one account over
another. BlackRock has adopted policies and procedures that address the allocation of
investment opportunities, execution of portfolio transactions, personal trading by employees

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and other potential conflicts of interest that are designed to ensure that all client accounts are
treated equitably over time. Nevertheless, BlackRock furnishes investment management and
advisory services to numerous clients in addition to the Fund, and BlackRock may,
consistent with applicable law, make investment recommendations to other clients or
accounts (including accounts which are hedge funds or have performance or higher fees
paid to BlackRock, or in which portfolio managers have a personal interest in the receipt of
such fees), which may be the same as or different from those made to the Fund. In addition,
BlackRock, its affiliates and significant shareholders and any officer, director, stockholder
or employee may or may not have an interest in the securities whose purchase and sale
BlackRock recommends to the Fund. BlackRock, or any of its affiliates or significant
shareholders, or any officer, director, stockholder, employee or any member of their
families may take different actions than those recommended to the Fund by BlackRock with
respect to the same securities. Moreover, BlackRock may refrain from rendering any advice
or services concerning securities of companies of which any of BlackRock’s (or its
affiliates’ or significant shareholders’) officers, directors or employees are directors or
officers, or companies as to which BlackRock or any of its affiliates or significant
shareholders or the officers, directors and employees of any of them has any substantial
economic interest or possesses material non-public information. Each portfolio manager
also may manage accounts whose investment strategies may at times be opposed to the
strategy utilized for a fund. In this connection, it should be noted that a portfolio manager
may currently manage certain accounts that are subject to performance fees. In addition, a
portfolio manager may assist in managing certain hedge funds and may be entitled to
receive a portion of any incentive fees earned on such funds and a portion of such incentive
fees may be voluntarily or involuntarily deferred. Additional portfolio managers may in the
future manage other such accounts or funds and may be entitled to receive incentive fees.

As a fiduciary, BlackRock owes a duty of loyalty to its clients and must treat each client
fairly. When BlackRock purchases or sells securities for more than one account, the trades
must be allocated in a manner consistent with its fiduciary duties. BlackRock attempts to
allocate investments in a fair and equitable manner among client accounts, with no account
receiving preferential treatment. To this end, BlackRock has adopted a policy that is
intended to ensure that investment opportunities are allocated fairly and equitably among
client accounts over time. This policy also seeks to achieve reasonable efficiency in client
transactions and provide BlackRock with sufficient flexibility to allocate investments in a
manner that is consistent with the particular investment discipline and client base.

(a)(3) As of July 31, 2010:

Portfolio Manager Compensation Overview

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

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

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

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

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

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

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

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

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

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

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

 

(b) Not Applicable

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

Item 10 – On September 17, 2010, the Board of Directors of the Fund amended and restated in its
entirety the bylaws of the Fund (the "Amended and Restated Bylaws"). The Amended and
Restated Bylaws were deemed effective as of September 17, 2010 and set forth, among
other things, the processes and procedures that shareholders of the Fund must follow, and
specifies additional information that shareholders of the Fund must provide, when proposing
director nominations at any annual meeting or special meeting in lieu of an annual meeting
or other business to be considered at an annual meeting or special meeting.

Item 11 – Controls and Procedures

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

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

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

Item 12 – Exhibits attached hereto

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

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

12(a)(3) – Not Applicable

12(b) – Certifications – Attached hereto

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Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment
Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

BlackRock MuniHoldings New Jersey Insured Fund, Inc.

By: /s/ Anne F. Ackerley
Anne F. Ackerley
Chief Executive Officer of
BlackRock MuniHoldings New Jersey Insured Fund, Inc.

Date: October 6, 2010

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment
Company Act of 1940, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.

By: /s/ Anne F. Ackerley
Anne F. Ackerley
Chief Executive Officer (principal executive officer) of
BlackRock MuniHoldings New Jersey Insured Fund, Inc.

Date: October 6, 2010

By: /s/ Neal J. Andrews
Neal J. Andrews
Chief Financial Officer (principal financial officer) of
BlackRock MuniHoldings New Jersey Insured Fund, Inc.

Date: October 6, 2010

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