BLACKROCK MUNIHOLDINGS QUALITY FUND II, INC.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number 811-09191

Name of Fund: BlackRock MuniHoldings Quality Fund II, Inc. (MUE)

Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809

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

        MuniHoldings Quality Fund II, Inc., 55 East 52nd Street, New York, NY 10055

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

Date of fiscal year end: 07/31/2014

Date of reporting period: 10/31/2013

Item 1 – Schedule of Investments

Schedule of Investments October 31, 2013 (Unaudited)   

BlackRock MuniHoldings Quality Fund II, Inc. (MUE)

(Percentages shown are based on Net Assets)

 

Municipal Bonds   

Par  

(000)

     Value  

Alabama — 2.3%

     

City of Birmingham Alabama Special Care Facilities Financing Authority, RB, Children’s Hospital (AGC), 6.00%, 6/01/39

    $ 5,225      $ 5,865,010   

City of Selma Alabama IDB, RB, Gulf Opportunity Zone, International Paper Co. Project, Series A, 5.38%, 12/01/35

      940        918,813   
    

 

 

  
               6,783,823   

California — 18.0%

  

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

      5,050        5,408,651   

California Health Facilities Financing Authority, RB, Sutter Health, Series B, 6.00%, 8/15/42

      2,865        3,304,319   

California State Public Works Board, LRB, Department of Corrections and Rehabilitation, Series F, 5.25%, 9/01/33

      1,260        1,334,340   

City & County of San Francisco Airports Commission, RB, Special Facility Lease, SFO Fuel, Series A (AGM), AMT, 6.10%, 1/01/20

      1,250        1,255,350   

City & County of San Francisco Airports Commission, Refunding ARB, Second Series A, AMT:

     

5.50%, 5/01/28

      1,800        1,968,480   

5.25%, 5/01/33

      1,410        1,467,782   

City of San Jose California, Refunding ARB, Series A-1, AMT, 5.50%, 3/01/30

      4,045        4,295,021   

City of Sunnyvale California, Refunding RB, 5.25%, 4/01/40

      2,800        2,976,708   

County of Sacramento California, ARB, Senior Series A (AGC), 5.50%, 7/01/41

      3,500        3,853,430   

County of Ventura Community College District, GO, Election of 2002, Series C, 5.50%, 8/01/33

      3,175        3,532,854   

Emery Unified School District, GO, Election of 2010, Series A (AGM), 5.50%, 8/01/35

      1,875        2,007,788   

Kern Community College District, GO, Safety, Repair & Improvement, Series C, 5.50%, 11/01/33

      2,445        2,744,855   
Municipal Bonds   

Par  

(000)

     Value  

California (concluded)

     

Los Angeles Community College District California, GO:

     

Election of 2001, Series A (NPFGC), 5.00%, 8/01/32

    $ 5,000      $ 5,274,950   

Election of 2008, Series C, 5.25%, 8/01/39

      2,000        2,156,860   

Oceanside Unified School District, GO, Series A (AGC), 5.25%, 8/01/33

      1,675        1,760,961   

Redondo Beach Unified School District, GO, Election of 2008, Series E, 5.50%, 8/01/34

      2,670        2,848,276   

Sacramento California Municipal Utility District, RB, Series A, 5.00%, 8/15/37

      2,000        2,088,000   

University of California Medical Center, Refunding RB, Series J, 5.25%, 5/15/38

      5,630        5,905,476   
    

 

 

  
               54,184,101   

Colorado — 2.2%

  

City & County of Denver Colorado Airport System, ARB, Subordinate System, Series A, AMT:

     

5.50%, 11/15/28

      1,500        1,612,530   

5.50%, 11/15/30

      565        597,589   

5.50%, 11/15/31

      675        708,987   

Colorado Health Facilities Authority, RB, Hospital, NCMC, Inc. Project, Series B (AGM), 6.00%, 5/15/26

      3,300        3,696,297   
    

 

 

  
               6,615,403   

Florida — 19.7%

     

City of Jacksonville Florida, RB, Series A, 5.25%, 10/01/26

      2,000        2,218,960   

City of Jacksonville Florida, Refunding RB, Series A, 5.25%, 10/01/33

      405        432,747   

County of Hillsborough Aviation Authority, Refunding RB, Series A, 5.50%, 10/01/29

      2,995        3,166,014   

County of Lee Florida, Refunding ARB, Series A, AMT, 5.38%, 10/01/32

      2,500        2,563,725   

County of Miami-Dade Florida, RB, Seaport:

     

Series A, 5.38%, 10/01/33

      1,765        1,844,972   

Series A, 5.50%, 10/01/42

      3,000        3,130,320   

Series B, AMT, 6.25%, 10/01/38

      800        854,808   

 

                
   BLACKROCK MUNIHOLDINGS QUALITY FUND II, INC.    OCTOBER 31, 2013    1

Schedule of Investments (continued)   

BlackRock MuniHoldings Quality Fund II, Inc. (MUE)

(Percentages shown are based on Net Assets)

 

Municipal Bonds    Par  
(000)		     Value  

Florida (concluded)

     

County of Miami-Dade Florida, RB, Seaport (concluded):

     

Series B, AMT, 6.00%, 10/01/42

    $ 1,060      $ 1,106,629   

County of Miami-Dade Florida Aviation, Refunding ARB, AMT Series A:

     

Miami International Airport (AGM), 5.25%, 10/01/41

      4,610        4,649,508   

Miami International Airport (AGM), 5.50%, 10/01/41

      4,180        4,427,289   

5.00%, 10/01/31

      5,155        5,221,396   

County of Miami-Dade Florida Aviation, Refunding RB, Series A, AMT, 5.00%, 10/01/32

      5,000        5,028,400   

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

      1,880        1,908,952   

County of Miami-Dade Florida Water & Sewer System, Refunding RB, Series B, 5.25%, 10/01/29

      4,730        5,149,314   

County of Orange School Board, COP, Series A (AGC), 5.50%, 8/01/34

      7,600        8,143,628   

Reedy Creek Improvement District, GO, Series A, 5.25%, 6/01/32

      1,805        1,936,982   

Tohopekaliga Water Authority, Refunding RB, Series A, 5.25%, 10/01/36

      6,965        7,419,188   
    

 

 

  
               59,202,832   

Georgia — 2.1%

     

Augusta Georgia Water & Sewerage, RB, (AGM), 5.25%, 10/01/34

      6,290        6,472,913   

Idaho — 0.1%

     

Idaho Housing & Finance Association, RB, S/F Mortgage, Series E, AMT, 6.00%, 1/01/32

      225        225,216   

Illinois — 14.8%

     

City of Chicago Illinois, GARB, O’Hare International Airport Third Lien:

     

Series A, 5.75%, 1/01/39

      2,000        2,083,160   

Series C, 6.50%, 1/01/41

      9,085        10,216,446   

City of Chicago Illinois, RB, O’Hare International Airport Revenue, Series A (AGM), 5.00%, 1/01/38

      5,000        4,958,100   
Municipal Bonds   

Par  

(000)

     Value  

Illinois (concluded)

     

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

    $ 1,310      $ 1,367,339   

City of Chicago Illinois Board of Education, GO, Refunding, Chicago School Reform Board, Series A (NPFGC), 5.50%, 12/01/26

      895        926,450   

City of Chicago Illinois Transit Authority, RB:

     

Federal Transit Administration Section 5309, Series A (AGC), 6.00%, 6/01/26

      3,400        3,703,756   

Sales Tax Receipts, 5.25%, 12/01/40

      5,235        5,320,906   

Sales Tax Receipts, 5.25%, 12/01/36

      1,060        1,087,316   

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

      2,985        2,892,734   

County of Cook Illinois Community College District No. 508, GO, City College of Chicago:

     

5.50%, 12/01/38

      1,205        1,264,864   

5.25%, 12/01/43

      2,000        2,015,480   

Illinois Finance Authority, RB, University of Chicago, Series B, 5.50%, 7/01/37

      1,000        1,087,870   

Railsplitter Tobacco Settlement Authority, RB:

     

5.50%, 6/01/23

      2,350        2,584,084   

6.00%, 6/01/28

      670        718,374   

State of Illinois, GO, Various Purposes:

     

5.50%, 7/01/33

      1,000        1,020,970   

5.50%, 7/01/38

      700        702,548   

State of Illinois, RB, Build Illinois, Series B, 5.25%, 6/15/28

      2,500        2,663,200   
    

 

 

  
               44,613,597   

Indiana — 1.1%

     

Indiana Finance Authority, RB, Private Activity Bond, Ohio River Bridges East End Crossing Project, AMT:

     

5.00%, 7/01/40

      460        419,023   

5.00%, 7/01/44

      475        423,900   

 

                
2    BLACKROCK MUNIHOLDINGS QUALITY FUND II, INC.    OCTOBER 31, 2013   

Schedule of Investments (continued)   

BlackRock MuniHoldings Quality Fund II, Inc. (MUE)

(Percentages shown are based on Net Assets)

 

 

Municipal Bonds   

Par  

(000)

     Value  

Indiana (concluded)

     

Indianapolis Local Public Improvement Bond Bank, Refunding RB, Waterworks Project, Series A (AGC), 5.50%, 1/01/38

    $ 2,370      $ 2,499,236   
    

 

 

  
               3,342,159   

Louisiana — 1.3%

     

Tobacco Settlement Financing Corp., Refunding RB, Asset-Backed, Series A:

     

5.50%, 5/15/28

      1,890        1,968,737   

5.50%, 5/15/29

      2,020        2,085,529   
    

 

 

  
               4,054,266   

Massachusetts — 2.3%

     

Massachusetts HFA, Refunding, HRB, Series C, AMT, 5.35%, 12/01/42

      1,500        1,499,190   

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

      5,085        5,312,147   
    

 

 

  
               6,811,337   

Michigan — 4.4%

     

City of Detroit Michigan Sewage Disposal System, Refunding RB, Senior Lien:

     

Series B (AGM), 7.50%, 7/01/33

      1,330        1,427,782   

Series C-1 (AGM), 7.00%, 7/01/27

      4,180        4,414,122   

Hudsonville Public Schools, GO, School Building & Site (Q-SBLF), 5.25%, 5/01/41

      3,420        3,537,032   

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

      3,115        3,746,971   
    

 

 

  
               13,125,907   

Minnesota — 0.7%

     

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

      1,975        2,263,804   

Mississippi — 1.2%

     

Mississippi Development Bank, RB, Jackson Water & Sewer System Project (AGM), 6.88%, 12/01/40

      2,225        2,661,315   

Mississippi State University Educational Building Corp., Refunding RB, 5.25%, 8/01/38

      1,000        1,074,120   
    

 

 

  
               3,735,435   
Municipal Bonds   

Par  

(000)

     Value  

Nevada — 1.5%

     

County of Clark Nevada, ARB:

     

Las Vegas-McCarran International Airport, Series A (AGM), 5.25%, 7/01/39

    $ 3,210      $ 3,318,980   

Subordinate Lien, Series A-2 (NPFGC), 5.00%, 7/01/36

      1,300        1,302,028   
    

 

 

  
               4,621,008   

New Jersey — 7.9%

     

New Jersey EDA, RB, Motor Vehicle Surcharge, Series A (NPFGC), 5.25%, 7/01/33

      6,625        6,756,904   

New Jersey Health Care Facilities Financing Authority, RB, Virtua Health, Series A (AGC), 5.50%, 7/01/38

      3,400        3,509,820   

New Jersey Transportation Trust Fund Authority, RB:

     

Transportation Program, Series AA, 5.50%, 6/15/39

      3,040        3,253,073   

Transportation System, Series A, 5.50%, 6/15/41

      3,030        3,189,560   

Transportation System, Series A (AGC), 5.63%, 12/15/28

      2,930        3,334,311   

Rutgers-The State University of New Jersey, Refunding RB:

     

Series J, 5.00%, 5/01/32

      2,100        2,278,458   

Series L, 5.00%, 5/01/32

      1,300        1,410,474   
    

 

 

  
               23,732,600   

New York — 7.9%

     

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

      940        995,742   

New York City Municipal Water Finance Authority, Refunding RB, Water & Sewer System 2nd General Resolution Series EE:

     

Fiscal 2009, 5.25%, 6/15/40

      6,930        7,304,913   

Fiscal 2011, 5.38%, 6/15/43

      2,220        2,363,567   

New York City Transitional Finance Authority Building Aid, BARB, Fiscal 2011, Sub-Series S-2A, 5.00%, 7/15/30

      4,045        4,358,002   

Port Authority of New York & New Jersey, Refunding ARB, Consolidated, 166th Series, 5.25%, 7/15/36

      2,000        2,143,400   

Sales Tax Asset Receivable Corp., Refunding RB, Series A (AMBAC), 5.25%, 10/15/27

      6,250        6,509,438   
    

 

 

  
               23,675,062   

 

                
   BLACKROCK MUNIHOLDINGS QUALITY FUND II, INC.    OCTOBER 31, 2013    3

Schedule of Investments (continued)   

BlackRock MuniHoldings Quality Fund II, Inc. (MUE)

(Percentages shown are based on Net Assets)

 

Municipal Bonds   

Par  

(000)

     Value  

Ohio — 1.6%

     

Ohio Higher Educational Facility Commission, Refunding RB, Kenyon College Project, 5.00%, 7/01/37

    $ 475      $ 484,457   

Ohio State Turnpike Commission, RB, Junior Lien, Infrastructure Projects, Series A-1:

     

5.25%, 2/15/30

      1,480        1,597,231   

5.25%, 2/15/31

      2,500        2,686,075   
    

 

 

  
               4,767,763   

Pennsylvania — 1.2%

     

Pennsylvania Turnpike Commission, RB, Motor License Fund, Enhanced Turnpike Subordinate Special, Series A, 5.00%, 12/01/31

      3,360        3,535,190   

South Carolina — 6.0%

     

City of North Charleston South Carolina, RB, Public Facilities Corp., Installment Purchase, 5.00%, 6/01/35

      3,380        3,511,313   

County of Charleston Airport District, ARB, AMT Series A:

     

5.50%, 7/01/41

      1,500        1,546,380   

6.00%, 7/01/38

      2,940        3,144,359   

South Carolina State Public Service Authority, RB, Series A (AMBAC), 5.00%, 1/01/42

      7,000        7,025,970   

South Carolina State Public Service Authority, Refunding RB, Santee Cooper, Series A, 5.50%, 1/01/38

      2,500        2,707,200   
    

 

 

  
               17,935,222   

Texas — 22.0%

     

City of Beaumont Texas, GO, Certificates of Obligation, 5.25%, 3/01/37

      2,345        2,539,025   

City of Houston Texas Utility System, Refunding RB, Combined First Lien, Series A (AGC), 6.00%, 11/15/35

      6,700        7,616,627   

County of Tarrant Cultural Education Facilities Finance Corp., Refunding RB, Christus Health, Series A (AGC), 6.50%, 7/01/37

      3,000        3,286,650   

Dallas Area Rapid Transit, Refunding RB, Senior Lien, 5.25%, 12/01/38

      4,555        4,845,017   
Municipal Bonds   

Par  

(000)

     Value  

Texas (concluded)

     

Dallas-Fort Worth International Airport, ARB, Joint Improvement AMT:

     

Series A, 5.00%, 11/01/38

    $ 1,615      $ 1,537,577   

Series D, 5.00%, 11/01/38

      2,200        2,109,140   

Series H, 5.00%, 11/01/37

      1,810        1,736,749   

Lower Colorado River Authority, Refunding RB, 5.50%, 5/15/33

      2,155        2,311,949   

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

      7,000        7,558,040   

North Texas Tollway Authority, Refunding RB, First Tier System:

     

(NPFGC), Series A, 5.63%, 1/01/33

      10,975        11,673,559   

(NPFGC), Series B, 5.75%, 1/01/40

      1,000        1,081,090   

(NPFGC), 5.75%, 1/01/40

      11,575        12,513,617   

Series K-2 (AGC), 6.00%, 1/01/38

      1,000        1,101,280   

Red River Education Financing Corp., RB, Texas Christian University Project, 5.25%, 3/15/38

      1,070        1,157,975   

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

      5,000        5,098,650   
    

 

 

  
               66,166,945   

Virginia — 1.2%

     

City of Lexington Virginia IDA, RB, Washington & Lee University, 5.00%, 1/01/43

      945        990,757   

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

      2,195        2,780,406   
    

 

 

  
               3,771,163   

Washington — 1.5%

     

City of Seattle Washington Municipal Light & Power, Refunding RB, Series A, 5.25%, 2/01/36

      2,400        2,574,552   

State of Washington, GO, Various Purposes, Series B, 5.25%, 2/01/36

      1,865        2,006,703   
    

 

 

  
               4,581,255   
Total Municipal Bonds — 121.0%        364,217,001   

 

                
4    BLACKROCK MUNIHOLDINGS QUALITY FUND II, INC.    OCTOBER 31, 2013   

Schedule of Investments (continued)   

BlackRock MuniHoldings Quality Fund II, Inc. (MUE)

(Percentages shown are based on Net Assets)

 

Municipal Bonds Transferred to

Tender Option Bond (TOB) Trusts (b)

    Par  
(000)		     Value  

Alabama — 1.3%

     

City of Mobile Alabama Board of Water and Sewer Commissioners, RB, (NPFGC), 5.00%, 1/01/31

    $ 3,750      $ 3,926,475   

California — 2.4%

     

Sequoia Union High School District California, GO, Refunding, Election of 2004, Series B (AGM), 5.50%, 7/01/35

      5,189        5,577,694   

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

      1,500        1,573,408   
    

 

 

  
               7,151,102   

Colorado — 3.1%

     

Colorado Health Facilities Authority, RB, Catholic Health, Series C-3 (AGM), 5.10%, 10/01/41

      9,410        9,458,744   

District of Columbia — 0.6%

  

District of Columbia Water & Sewer Authority, Refunding RB, Senior Lien, Series A, 6.00%, 10/01/35 (c)

      1,700        1,901,576   

Florida — 7.2%

     

City of St. Petersburg Florida, Refunding RB, (NPFGC), 5.00%, 10/01/35

      6,493        6,712,237   

County of Lee Housing Finance Authority, RB, Multi-County Program, Series A-2, AMT (Ginnie Mae), 6.00%, 9/01/40

      1,020        1,067,512   

County of Miami-Dade Florida, GO, Building Better Communities Program, Series B-1, 6.00%, 7/01/38

      12,500        13,979,625   
    

 

 

  
               21,759,374   

Illinois — 4.7%

     

City of Chicago Illinois, ARB, O’Hare International Airport, Series A (AGM), 5.00%, 1/01/38

      10,000        9,916,200   

City of Chicago Illinois, Refunding RB, Waterworks, Second Lien (AGM), 5.25%, 11/01/33

      3,967        4,095,325   
    

 

 

  
               14,011,525   

Municipal Bonds Transferred to

Tender Option Bond (TOB) Trusts (b)

    Par  
(000)		     Value  

Kentucky — 0.9%

     

Kentucky State Property & Building Commission, Refunding RB, Project No. 93 (AGC), 5.25%, 2/01/27

    $ 2,304      $ 2,556,098   

Massachusetts — 1.7%

     

Massachusetts School Building Authority, RB, Dedicated Sales Tax, Series A, (AGM):

     

5.00%, 8/15/15 (a)

      644        675,500   

5.00%, 8/15/30

      4,350        4,566,361   
    

 

 

  
               5,241,861   

Nevada — 6.9%

     

County of Clark Nevada Water Reclamation District, GO:

     

Limited Tax, 6.00%, 7/01/38

      10,000        11,341,200   

Series B, 5.50%, 7/01/29

      8,247        9,455,691   
    

 

 

  
               20,796,891   

New Jersey — 1.9%

     

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

      3,861        4,026,987   

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

      1,500        1,577,116   
    

 

 

  
               5,604,103   

New York — 7.1%

     

City of New York New York Municipal Water Finance Authority, Refunding RB, Water & Sewer System, Series FF,
5.00%, 6/15/45

      5,958        6,177,388   

City of New York New York Transitional Finance Authority, BARB, Series S-3, 5.25%, 1/15/39

      2,300        2,521,029   

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

      7,515        7,842,579   

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

      4,400        4,697,132   
    

 

 

  
               21,238,128   

 

                
   BLACKROCK MUNIHOLDINGS QUALITY FUND II, INC.    OCTOBER 31, 2013    5

Schedule of Investments (continued)   

BlackRock MuniHoldings Quality Fund II, Inc. (MUE)

(Percentages shown are based on Net Assets)

 

Municipal Bonds Transferred to

Tender Option Bond (TOB) Trusts (b)

   

Par  

(000)

     Value  

Texas — 1.4%

     

County of Tarrant Cultural Education Facilities Finance Corp., RB, Baylor Health Care System Project, Series A,
5.00%, 11/15/38

    $ 4,296      $ 4,319,038   

Utah — 0.9%

     

City of Riverton Utah, RB, IHC Health Services, Inc., 5.00%, 8/15/41

      2,504        2,537,729   
Total Municipal Bonds Transferred to
Tender Option Bond (TOB) Trusts — 40.1%		         120,502,644   
Total Long-Term Investments
(Cost — $468,095,880) — 161.1%		         484,719,645   
    
                  
Short-Term Securities    Shares         

FFI Institutional Tax-Exempt Fund, 0.03% (d)(e)

      4,889,426        4,889,426   
Total Short-Term Securities
(Cost — $4,889,426) — 1.6%		         4,889,426   
Total Investments
(Cost — $472,985,306*) — 162.7%		         489,609,071   
Other Assets Less Liabilities — 4.0%        12,343,229   

Liability for TOB Trust Certificates, Including
Interest Expense and Fees Payable — (23.2%)

   

     (69,953,405 ) 
VMTP Shares, at Liquidation Value — (43.5%)        (131,000,000 ) 
    

 

 

  
Net Assets Applicable to Common Shares — 100.0%      $ 300,998,895   
    

 

 

  

 

*   As of October 31, 2013, gross unrealized appreciation and depreciation based on cost for federal income tax purposes were as follows:

 

Tax cost

   $ 407,728,902   
 

 

 

  

Gross unrealized appreciation

   $ 20,659,173   

Gross unrealized depreciation

     (4,713,304 ) 
 

 

 

  

Net unrealized appreciation

   $ 15,945,869   
 

 

 

  

 

Notes to Schedule of investments

 

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

 

(b)   Represent bonds transferred to a TOB. In exchange the Fund acquired residual interest certificates. These bonds serve as collateral in a financing transaction.

 

(c)   All or a portion of security is subject to a recourse agreement, which may require the Fund to pay the liquidity provider in the event there is a shortfall between the TOB trust certificates and proceeds received from the sale of the security contributed to the TOB trust. In the case of a shortfall, the aggregate maximum potential amount the Fund could ultimately be required to pay under the agreements, which expire from October 1, 2016 to November 15, 2019 is $4,822,872.

 

(d)   Investments in issuers considered to be an affiliate of the Fund during the period ended October 31, 2013, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliate     

Shares Held

at  July 31,
2013

       

Net

Activity

       

Shares Held

at  October 31,

2013

        Income  

FFI Institutional Tax-Exempt Fund

        16,070,448           (11,181,022 )         4,889,426         $ 633   

 

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

 

                
6    BLACKROCK MUNIHOLDINGS QUALITY FUND II, INC.    OCTOBER 31, 2013   

Schedule of Investments (continued)

   

BlackRock MuniHoldings Quality Fund II, Inc. (MUE)

 

Portfolio Abbreviations      

 

To simplify the listings of portfolio holdings in the Schedule of Investments, the names and descriptions of many of the securities have been abbreviated according to the following list:      AGC    Assured Guarantee Corp.    GO    General Obligation Bonds
     AGM    Assured Guaranty Municipal Corp.    HFA    Housing Finance Agency
     AMBAC    American Municipal Bond Assurance Corp.    HRB    Housing Revenue Bonds
     AMT    Alternative Minimum Tax (subject to)    IDA    Industrial Development Authority
     ARB    Airport Revenue Bonds    IDB    Industrial Development Board
     BARB    Building Aid Revenue Bonds    LRB    Lease Revenue Bonds
     COP    Certificates of Participation    NPFGC    National Public Finance Guarantee Corp.
     EDA    Economic Development Authority    Q-SBLF    Qualified School Board Loan Fund
     GARB    General Airport Revenue Bonds    RB    Revenue Bonds
     Ginnie Mae    Government National Mortgage Association    S/F    Single Family

 

Ÿ  

Financial futures contracts as of October 31, 2013 were as follows:

 

Contracts
Sold		     Issue   Exchange   Expiration  

Notional

Value

     Unrealized
Depreciation		  
  (185 )    10-Year US Treasury Note   Chicago Board of Trade   December 2013   $ 23,561,484      $ (14,655 ) 

 

Ÿ  

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

 

Ÿ  

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

 

Ÿ  

Level 2 — other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

Ÿ  

Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Fund’s own assumptions used in determining the fair value of investments and derivative financial instruments)

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

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument and is not necessarily an indication of the risks associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and derivative financial instruments, please refer to the Fund’s most recent financial statements as contained in its annual report.

 

                
   BLACKROCK MUNIHOLDINGS QUALITY FUND II, INC.    OCTOBER 31, 2013    7

Schedule of Investments (concluded)

   

BlackRock MuniHoldings Quality Fund II, Inc. (MUE)

 

The following tables summarize the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy as of October 31, 2013:

 

     Level 1        Level 2        Level 3        Total  

Assets:

                 
Investments:                 

Long-Term Investments1

     —         $ 484,719,645           —         $ 484,719,645   

Short-Term Securities

   $ 4,889,426           —           —           4,889,426   
 

 

 

       

 

 

       

 

 

       

 

 

  

Total

   $ 4,889,426         $ 484,719,645           —         $ 489,609,071   
 

 

 

       

 

 

       

 

 

       

 

 

  

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

      

     Level 1        Level 2        Level 3        Total  
Derivative Financial Instruments2                 

Liabilities:

                 

Interest rate contracts

   $ (14,655 )         —           —         $ (14,655 ) 

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

 

      

Certain of the Fund’s assets and/or liabilities are held at carrying amount, which approximates fair value for financial reporting purposes. As of October 31, 2013, such assets and/or liabilities are categorized within the disclosure hierarchy as follows:

 

   

     Level 1        Level 2        Level 3        Total  

Assets:

                 

Cash

   $ 120,088           —           —         $ 120,088   

Cash pledged for financial futures contracts

     328,000           —           —           328,000   

Liabilities:

                 

TOB trust certificates

     —         $ (65,934,300 )         —           (65,934,300 ) 

VMTP Shares

     —           (131,000,000 )         —           (131,000,000 ) 
 

 

 

       

 

 

       

 

 

       

 

 

  

Total

   $ 448,088         $ (196,934,300 )         —         $ (196,486,212 ) 
 

 

 

       

 

 

       

 

 

       

 

 

  

There were no transfers between levels during the period ended October 31, 2013.

 

                
8    BLACKROCK MUNIHOLDINGS QUALITY FUND II, INC.    OCTOBER 31, 2013   

Item 2 – Controls and Procedures

 

2(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.

 

2(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 registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 3 – Exhibits

Certifications – Attached hereto

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

 

BlackRock MuniHoldings Quality Fund II, Inc.
By:        

/s/ John M. Perlowski

  John M. Perlowski
  Chief Executive Officer (principal executive officer) of BlackRock MuniHoldings Quality Fund II, Inc.

Date: December 23, 2013

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

 

By:        

/s/ John M. Perlowski

  John M. Perlowski
  Chief Executive Officer (principal executive officer) of BlackRock MuniHoldings Quality Fund II, Inc.

Date: December 23, 2013

 

By:        

/s/ Neal J. Andrews

  Neal J. Andrews
  Chief Financial Officer (principal financial officer) of BlackRock MuniHoldings Quality Fund II, Inc.

Date: December 23, 2013