UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-05227
Name of Fund: BlackRock Apex Municipal Fund, Inc.
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Robert C. Doll, Jr., Chief Executive
Officer, BlackRock Apex Municipal Fund, Inc., 800 Scudders Mill Road,
Plainsboro, NJ 08536. Mailing address: P.O. Box 9011, Princeton, NJ
08543-9011
Registrant's telephone number, including area code: (800) 882-0052
Date of fiscal year end: 06/30/07
Date of reporting period: 07/01/06 - 06/30/07
Item 1 - Report to Stockholders
EQUITIES FIXED INCOME REAL ESTATE
LIQUIDITY ALTERNATIVES BLACKROCK SOLUTIONS
BlackRock Apex Municipal BLACKROCK
Fund, Inc.
ANNUAL REPORT | JUNE 30, 2007
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
BlackRock Apex Municipal Fund, Inc.
Dividend Policy
The Fund's dividend policy is to distribute all or a portion of its net
investment income to its shareholders on a monthly basis. In order to provide
shareholders with a more stable level of dividend distributions, the Fund 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 Fund for any particular
month may be more or less than the amount of net investment income earned by the
Fund during such month. The Fund's current accumulated but undistributed net
investment income, if any, is disclosed in the Statement of Assets, Liabilities
and Capital which comprises part of the financial information included in this
report.
Electronic Delivery
Electronic copies of most financial reports and prospectuses are available on
the Fund's Web site. Shareholders can sign up for e-mail notifications of
quarterly statements, annual and semi-annual reports and prospectuses by
enrolling in the Fund's electronic delivery program.
Shareholders Who Hold Accounts with Investment Advisers, Banks or Brokerages:
Please contact your financial advisor to enroll. Please note that not all
investment advisers, banks or brokerages may offer this service.
2 BLACKROCK APEX MUNICIPAL FUND, INC. JUNE 30, 2007
A Letter to Shareholders
Dear Shareholder
At the mid-point of 2007, investor sentiment appeared quite buoyant,
notwithstanding some undertones of caution. For equity markets, positive
momentum as the year began was interrupted by a notable but transitory set-back
at the end of February. Markets resumed their ascent through May, but entered a
trading range in June as investors began to question the sustainability of the
rally. For the most part, equities found support in robust
merger-and-acquisition activity, healthy global economies, tame inflation,
relatively low interest rates, still-positive earnings growth and attractive
valuations. These tailwinds prevailed over such headwinds as a weakening U.S.
economy, slowing housing market, credit-related lending problems, escalating
geopolitical concerns and high energy prices, leading the Standard & Poor's
(S&P) 500 Index to a new record high in May.
Meanwhile, turmoil in the subprime mortgage market and generally mixed economic
signals weighed on bonds. In June, bond prices dropped precipitously as
long-term yields rose to their highest levels in five years. The 10-year
Treasury yield, which began 2007 at 4.68%, reached nearly 5.30% in mid-June
before retracing to 5.03% by month's end. Notably, this year has brought some
re-steepening of the yield curve, which had been flat to inverted throughout
2006. Still, at the end of June, yields along the curve remained below the
federal funds rate of 5.25%, the level at which the Federal Reserve Board (the
Fed) has left it since first pausing in August 2006. While first-quarter gross
domestic product growth of 0.7% represented the slowest rate of expansion since
2002, the Fed reiterated that inflation, not a slowing economy, remains its
primary concern. Many observers interpreted the Fed's reaction to mean that the
economy has hit its low and is bound for renewed strength, thereby reducing the
likelihood of an interest rate cut in the near future.
Against this backdrop, the major equity market indexes posted strong returns for
the annual and semi-annual periods ended June 30, 2007, while fixed income
assets were more mixed:
Total Returns as of June 30, 2007 6-month 12-month
=============================================================================================================
U.S. equities (S&P 500 Index) + 6.96% +20.59%
-------------------------------------------------------------------------------------------------------------
Small cap U.S. equities (Russell 2000 Index) + 6.45 +16.43
-------------------------------------------------------------------------------------------------------------
International equities (MSCI Europe, Australasia, Far East Index) +10.74 +27.00
-------------------------------------------------------------------------------------------------------------
Fixed income (Lehman Brothers U.S. Aggregate Bond Index) + 0.98 + 6.12
-------------------------------------------------------------------------------------------------------------
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) + 0.14 + 4.69
-------------------------------------------------------------------------------------------------------------
High yield bonds (Lehman Brothers U.S. Corporate High Yield 2% Issuer Cap Index) + 2.96 +11.22
-------------------------------------------------------------------------------------------------------------
We expect market volatility to linger throughout the second half of 2007. As you
navigate the uncertainties, we encourage you to review your investment goals
with your financial professional and to make portfolio changes, as needed. For
more market insight, we invite you to view "What's Ahead in 2007: The
Second-Quarter Update" and "Are You Prepared for Volatility?" at
www.blackrock.com/funds. We thank you for entrusting BlackRock with your
investment assets, and we look forward to continuing to serve you in the months
and years ahead.
Sincerely,
/s/ Robert C. Doll, Jr.
Robert C. Doll, Jr.
Fund President and Director
BLACKROCK APEX MUNICIPAL FUND, INC. JUNE 30, 2007 3
Fund Summary as of June 30, 2007 (Unaudited)
Fund Information
Symbol on New York Stock Exchange .............................. APX
Initial Offering Date .......................................... July 25, 1989
Yield on Closing Market Price as of 6/30/07 ($10.23)* .......... 5.75%
Current Monthly Distribution per share of Common Stock** ....... $ .049
Current Annualized Distribution per share of Common Stock** .... $ .588
--------------------------------------------------------------------------------
* 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.
** The distribution is not constant and is subject to change.
The table below summarizes the changes in the Fund's market price and net asset
value:
--------------------------------------------------------------------------------
6/30/07 6/30/06 Change High Low
--------------------------------------------------------------------------------
Market Price ............... $10.23 $10.25 (0.20%) $11.35 $9.84
Net Asset Value ............ $ 9.95 $ 9.90 0.51% $10.20 $9.88
--------------------------------------------------------------------------------
The following charts show the Fund's portfolio composition and credit quality
allocations of the Fund's long-term investments:
Portfolio Composition
Sector 6/30/07 6/30/06
--------------------------------------------------------------------------------
Hospital .................................................. 31% 30%
Industrial & Pollution Control ............................ 29 29
City, County & State ...................................... 11 12
Tax Revenue ............................................... 9 12
Education ................................................. 5 4
Housing ................................................... 4 1
Power ..................................................... 3 5
Tobacco ................................................... 3 1
Transportation ............................................ 3 3
Water & Sewer ............................................. 1 2
Lease Revenue ............................................. 1 1
--------------------------------------------------------------------------------
Credit Quality Allocations*
Credit Rating 6/30/07 6/30/06
--------------------------------------------------------------------------------
AAA/Aaa ................................................... 8% --+%
AA/Aa ..................................................... --+ --
A/A ....................................................... 4 3
BBB/Baa ................................................... 21 20
BB/Ba ..................................................... 9 12
B/B ....................................................... 6 7
CCC/Caa ................................................... 5 6
NR (Not Rated) ............................................ 47++ 52
--------------------------------------------------------------------------------
* Using the highest of S&P's or Moody's ratings.
+ Amount is less than 1%.
++ The Manager has deemed certain of these non-related securities to be of
investment grade quality. As of June 30, 2007, the market value of these
securities was $92,103,373, representing 47% of the Fund's long-term
investments.
4 BLACKROCK APEX MUNICIPAL FUND, INC. JUNE 30, 2007
Schedule of Investments as of June 30, 2007 (in Thousands)
Face
Amount Municipal Bonds Value
================================================================================
Alabama -- 0.6%
$1,255 Tuscaloosa, Alabama, Special Care Facilities Financing
Authority, Residential Care Facility Revenue Bonds
(Capstone Village, Inc. Project), Series A, 5.875%
due 8/01/2036 $ 1,266
================================================================================
Alaska -- 1.1%
2,000 Alaska Industrial Development and Expert Authority
Revenue Bonds (Williams Lynxs Alaska Cargoport),
AMT, 8% due 5/01/2023 2,125
================================================================================
Arizona -- 3.4%
900 Maricopa County, Arizona, IDA, Education Revenue
Bonds (Arizona Charter Schools Project 1), Series A,
6.625% due 7/01/2020 910
Maricopa County, Arizona, IDA, M/F Housing Revenue
Bonds (Sun King Apartments Project), Series A:
45 5.875% due 11/01/2008 45
20 6% due 11/01/2010 20
1,020 6.75% due 5/01/2031 1,045
2,950 Phoenix, Arizona, IDA, Airport Facility, Revenue
Refunding Bonds (America West Airlines Inc. Project),
AMT, 6.30% due 4/01/2023 2,989
1,000 Pima County, Arizona, IDA, Education Revenue Bonds
(Arizona Charter Schools Project), Series E, 7.25%
due 7/01/2031 1,100
500 Yavapai County, Arizona, IDA, Hospital Facility Revenue
Bonds (Yavapai Regional Medical Center), Series A,
6% due 8/01/2033 532
================================================================================
California -- 2.6%
1,800 California State, GO, 5% due 2/01/2014 (a) 1,906
1,300 California State, Various Purpose, GO, 5.25%
due 11/01/2025 1,363
1,000 Fontana, California, Special Tax, Refunding (Community
Facilities District Number 22 -- Sierra), 6%
due 9/01/2034 1,050
865 Golden State Tobacco Securitization Corporation of
California, Tobacco Settlement Revenue Refunding
Bonds, Senior Series A-1, 5.125% due 6/01/2047 844
================================================================================
Colorado -- 4.3%
450 Colorado Health Facilities Authority, Revenue Refunding
Bonds (Christian Living Communities Project),
Series A, 5.75% due 1/01/2026 469
2,800 Elk Valley, Colorado, Public Improvement Revenue
Bonds (Public Improvement Fee), Series A, 7.30%
due 9/01/2022 2,951
1,235 North Range Metropolitan District Number 1, Colorado,
GO, 7.25% due 12/15/2011 (a) 1,376
Plaza Metropolitan District Number 1, Colorado, Tax
Allocation Revenue Bonds (Public Improvement Fees):
2,000 8% due 12/01/2025 2,198
500 8.125% due 12/01/2025 502
830 Southlands, Colorado, Medical District, GO
(Metropolitan District Number 1), 7.125%
due 12/01/2034 911
================================================================================
Connecticut -- 0.3%
490 Connecticut State Development Authority, Airport
Facility Revenue Bonds (Learjet Inc. Project), AMT,
7.95% due 4/01/2026 582
================================================================================
Florida -- 9.8%
800 Capital Projects Finance Authority, Florida, Continuing
Care Retirement Revenue Bonds (Glenridge on Palmer
Ranch), Series A, 8% due 6/01/2012 (a) 943
840 Halifax Hospital Medical Center, Florida, Hospital
Revenue Refunding Bonds, Series A, 5%
due 6/01/2038 823
850 Highlands County, Florida, Health Facilities Authority,
Hospital Revenue Bonds (Adventist Health System),
Series C, 5.25% due 11/15/2036 868
2,500 Hillsborough County, Florida, IDA, Exempt Facilities
Revenue Bonds (National Gypsum Company), AMT,
Series A, 7.125% due 4/01/2030 2,690
900 Jacksonville, Florida, Economic Development
Commission, IDR (Gerdau Ameristeel US, Inc.), AMT,
5.30% due 5/01/2037 892
750 Lakewood Ranch, Florida, Community Development
District Number 5, Special Assessment Revenue
Refunding Bonds, Series A, 6.70% due 5/01/2031 799
1,810 Lee County, Florida, IDA, IDR (Lee Charter Foundation),
Series A, 5.375% due 6/15/2037 1,779
Midtown Miami, Florida, Community Development
District, Special Assessment Revenue Bonds, Series A:
1,500 6% due 5/01/2024 1,596
1,350 6.25% due 5/01/2037 1,436
1,525 Orlando, Florida, Urban Community Development
District, Capital Improvement Special Assessment
Bonds, Series A, 6.95% due 5/01/2033 1,629
2,140 Santa Rosa Bay Bridge Authority, Florida, Revenue
Bonds, 6.25% due 7/01/2028 2,150
Sarasota County, Florida, Health Facilities Authority,
Retirement Facility Revenue Refunding Bonds
(Village on the Isle Project):
590 5.50% due 1/01/2027 601
550 5.50% due 1/01/2032 558
2,385 Tampa Palms, Florida, Open Space and Transportation
Community Development District Revenue Bonds,
Capital Improvement (Richmond Place Project),
7.50% due 5/01/2018 2,414
================================================================================
Georgia -- 3.8%
Atlanta, Georgia, Tax Allocation Bonds:
2,000 (Atlantic Station Project), 7.90% due 12/01/2024 2,192
495 (Princeton Lakes Project), 5.50% due 1/01/2031 500
Brunswick and Glynn County, Georgia, Development
Authority, First Mortgage Revenue Bonds (Coastal
Community Retirement Corporation Project), Series A:
830 7.125% due 1/01/2025 661
1,185 7.25% due 1/01/2035 942
Portfolio Abbreviations
To simplify the listings of BlackRock Apex Municipal Fund, Inc.'s portfolio
holdings in the Schedule of Investments, we have abbreviated the names of many
of the securities according to the list at right.
AMT Alternative Minimum Tax (subject to)
EDA Economic Development Authority
GO General Obligation Bonds
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
VRDN Variable Rate Demand Notes
BLACKROCK APEX MUNICIPAL FUND, INC. JUNE 30, 2007 5
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
================================================================================
Georgia (concluded)
$1,580 Fulton County, Georgia, Development Authority, PCR
(General Motors Corporation), Refunding, VRDN,
7.50% due 4/01/2010 (d) $ 1,580
690 Gainesville, Georgia, Redevelopment Authority,
Educational Facilities Revenue Refunding Bonds
(Riverside Military Academy), 5.125% due 3/01/2027 698
830 Savannah, Georgia, EDA, First Mortgage Revenue Bonds
(Marshes of Skidaway), Series A, 7.40% due 1/01/2034 899
================================================================================
Idaho -- 0.8%
1,470 Idaho Health Facilities Authority, Revenue Refunding
Bonds (Valley Vista Care Corporation), Series A,
7.75% due 11/15/2016 1,541
================================================================================
Illinois -- 7.8%
1,845 Caseyville, Illinois, Senior Tax Increment Revenue Bonds
(Forest Lakes Project), 7% due 12/30/2022 1,925
Chicago, Illinois, O'Hare International Airport, Special
Facility Revenue Refunding Bonds (American
Airlines Inc. Project):
3,000 8.20% due 12/01/2024 3,009
2,860 5.50% due 12/01/2030 2,846
Illinois State Finance Authority Revenue Bonds:
2,050 (Clare At Water Tower Project), Series A,
6.125% due 5/15/2038 2,128
430 (Landing At Plymouth Place Project), Series A,
6% due 5/15/2037 453
490 (Primary Health Care Centers Program),
6.60% due 7/01/2024 507
755 Lincolnshire, Illinois, Special Service Area Number 1,
Special Tax Bonds (Sedgebrook Project), 6.25%
due 3/01/2034 796
2,400 Lombard, Illinois, Public Facilities Corporation,
First Tier Revenue Bonds (Conference Center and Hotel),
Series A-1, 7.125% due 1/01/2036 2,555
265 Naperville, Illinois, IDR (General Motors Corporation),
Refunding, VRDN, 7.50% due 12/01/2012 (d) 265
760 Village of Wheeling, Illinois, Revenue Bonds (North
Milwaukee/Lake-Cook Tax Increment Financing (TIF)
Redevelopment Project), 6% due 1/01/2025 767
================================================================================
Indiana -- 2.0%
1,985 Indiana Health and Educational Facilities Financing
Authority, Hospital Revenue Bonds (Community
Foundation of Northwest Indiana), 5.50%
due 3/01/2037 2,010
820 Vanderburgh County, Indiana, Redevelopment
Commission, Redevelopment District Tax Allocation
Bonds, 5.25% due 2/01/2031 851
Vigo County, Indiana, Hospital Authority Revenue
Bonds (Union Hospital, Inc.):
440 5.70% due 9/01/2037 443
545 5.75% due 9/01/2042 548
================================================================================
Iowa -- 1.6%
2,635 Iowa Finance Authority, Health Care Facilities, Revenue
Refunding Bonds (Care Initiatives Project), 9.25%
due 7/01/2011 (a) 3,156
================================================================================
Kansas -- 0.6%
1,230 Wyandotte County, Kansas, Kansas City Unified
Government Revenue Refunding Bonds (General
Motors Corporation Project), 6% due 6/01/2025 1,238
================================================================================
Louisiana -- 0.7%
1,300 Louisiana Public Facilities Authority, Hospital Revenue
Bonds (Franciscan Missionaries of Our Lady Health
System, Inc.), Series A, 5.25% due 8/15/2036 1,325
================================================================================
Maine -- 0.4%
840 Maine Finance Authority, Solid Waste Recycling Facilities
Revenue Bonds (Great Northern Paper Project --
Bowater), AMT, 7.75% due 10/01/2022 846
================================================================================
Maryland -- 2.0%
385 Baltimore, Maryland, Convention Center Hotel Revenue
Bonds, Sub-Series B, 5.875% due 9/01/2039 406
620 Howard County, Maryland, Retirement Community
Revenue Refunding Bonds (Columbia Vantage House
Corporation), Series B, 5.25% due 4/01/2037 606
1,500 Maryland State Energy Financing Administration,
Limited Obligation Revenue Bonds (Cogeneration --
AES Warrior Run), AMT, 7.40% due 9/01/2019 1,509
Maryland State Health and Higher Educational Facilities
Authority Revenue Bonds:
1,000 (King Farm Presbyterian Community), Series A,
5.25% due 1/01/2027 994
410 (Washington Christian Academy), 5.50%
due 7/01/2038 411
================================================================================
Massachusetts -- 3.4%
1,845 Massachusetts State Development Finance Agency,
First Mortgage Revenue Bonds (Overlook
Communities Inc.), Series A, 6.25% due 7/01/2034 1,910
1,245 Massachusetts State Development Finance Agency,
Revenue Refunding Bonds (Eastern Nazarene
College), 5.625% due 4/01/2019 1,269
850 Massachusetts State Health and Educational Facilities
Authority Revenue Bonds (Jordan Hospital), Series E,
6.75% due 10/01/2033 923
Massachusetts State Health and Educational Facilities
Authority, Revenue Refunding Bonds:
1,245 (Bay Cove Human Services Issue), Series A,
5.90% due 4/01/2028 1,260
500 (Milton Hospital), Series, 5.50% due 7/01/2016 505
800 Massachusetts State Industrial Finance Agency Revenue
Bonds, Sewer Facility (Resource Control Composting),
AMT, 9.25% due 6/01/2010 813
================================================================================
Michigan -- 1.3%
1,150 Macomb County, Michigan, Hospital Finance Authority,
Hospital Revenue Bonds (Mount Clemens General
Hospital), Series B, 5.875% due 11/15/2034 1,209
1,260 Monroe County, Michigan, Hospital Financing Authority,
Hospital Revenue Refunding Bonds (Mercy Memorial
Hospital Corporation), 5.50% due 6/01/2035 1,304
================================================================================
Missouri -- 1.6%
Branson, Missouri, Regional Airport Transportation
Development District, Airport Revenue Bonds:
610 AMT, Series B, 6% due 7/01/2037 603
265 Series A, 6% due 7/01/2037 267
1,155 Fenton, Missouri, Tax Increment Revenue Refunding
and Improvement Bonds (Gravois Bluffs), 7%
due 10/01/2011 (a) 1,298
1,000 Kansas City, Missouri, IDA, First Mortgage Health
Facilities Revenue Bonds (Bishop Spencer Place),
Series A, 6.50% due 1/01/2035 1,051
================================================================================
6 BLACKROCK APEX MUNICIPAL FUND, INC. JUNE 30, 2007
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
================================================================================
Nevada -- 0.2%
$ 430 Clark County, Nevada, Improvement District
Number 142, Special Assessment Bonds, 6.375%
due 8/01/2023 $ 443
================================================================================
New Hampshire -- 1.5%
835 New Hampshire Health and Education Facilities
Authority, Hospital Revenue Bonds (Catholic Medical
Center), 5% due 7/01/2036 813
2,185 New Hampshire State Business Financing Authority,
Solid Waste Disposal Revenue Bonds (Waste
Management Inc. Project), AMT, 5.20% due 5/01/2027 2,218
================================================================================
New Jersey -- 12.9%
6,000 Camden County, New Jersey, Pollution Control Financing
Authority, Solid Waste Resource Recovery, Revenue
Refunding Bonds, AMT, Series A, 7.50%
due 12/01/2010 6,079
2,170 New Jersey EDA, Cigarette Tax Revenue Bonds,
5.50% due 6/15/2024 2,253
1,500 New Jersey EDA, IDR, Refunding (Newark Airport
Marriott Hotel), 7% due 10/01/2014 1,549
New Jersey EDA, Retirement Community Revenue
Bonds (a):
1,000 (Cedar Crest Village Inc. Facility), Series A,
7.25% due 11/15/2011 1,131
3,700 (Seabrook Village Inc.), Series A, 8.125%
due 11/15/2010 4,193
New Jersey EDA, Special Facility Revenue Bonds
(Continental Airlines Inc. Project), AMT:
3,050 6.625% due 9/15/2012 3,221
1,000 6.25% due 9/15/2029 1,031
1,870 New Jersey Health Care Facilities Financing Authority
Revenue Bonds (Pascack Valley Hospital Association),
6.625% due 7/01/2036 1,657
2,760 New Jersey State Transportation Trust Fund Authority,
Transportation System Revenue Bonds, Series C,
5.05% due 12/15/2035 (b)(c) 712
Tobacco Settlement Financing Corporation of
New Jersey, Asset-Backed Revenue Bonds:
1,075 7% due 6/01/2013 (a) 1,242
1,100 5.75% due 6/01/2032 1,170
1,270 Tobacco Settlement Financing Corporation of New
Jersey, Revenue Refunding Bonds, Series 1A,
5% due 6/01/2041 1,199
================================================================================
New Mexico -- 2.6%
5,000 Farmington, New Mexico, PCR, Refunding (Tucson
Electric Power Company -- San Juan Project),
Series A, 6.95% due 10/01/2020 5,118
================================================================================
New York -- 4.1%
1,000 Dutchess County, New York, IDA, Civic Facility Revenue
Bonds (Saint Francis Hospital), Series B, 7.50%
due 3/01/2029 1,100
1,890 Erie County, New York, IDA, Revenue Bonds (Orchard
Park CCRC, Inc. Project), Series A, 6% due 11/15/2036 1,988
New York City, New York, City IDA, Civic Facility
Revenue Bonds:
350 Series C, 6.80% due 6/01/2028 380
830 (Special Needs Facility Pooled Program), Series C-1,
6.50% due 7/01/2024 859
1,730 New York City, New York, City IDA, Special Facility
Revenue Bonds (British Airways Plc Project), AMT,
7.625% due 12/01/2032 1,902
630 New York Liberty Development Corporation Revenue
Bonds (National Sports Museum Project), Series A,
6.125% due 2/15/2019 654
1,180 Westchester County, New York, IDA, Continuing Care
Retirement, Mortgage Revenue Bonds (Kendal on
Hudson Project), Series A, 6.50% due 1/01/2034 1,255
================================================================================
North Carolina -- 0.7%
250 North Carolina Medical Care Commission, Health Care
Facilities, First Mortgage Revenue Refunding Bonds
(Salemtowne Project), 5.10% due 10/01/2030 245
1,000 North Carolina Medical Care Commission, Retirement
Facilities, First Mortgage Revenue Bonds (Givens
Estates Project), Series A, 6.50% due 7/01/2013 (a) 1,132
================================================================================
Oklahoma -- 0.5%
1,025 Oklahoma State Development Finance Authority,
Revenue Refunding Bonds (Saint John Health System),
5% due 2/15/2042 1,030
================================================================================
Pennsylvania -- 8.2%
2,080 Allegheny County, Pennsylvania, Hospital Development
Authority, Health System Revenue Refunding Bonds
(West Penn Allegheny Health System), Series A,
5.375% due 11/15/2040 2,065
250 Allegheny County, Pennsylvania, IDA, Lease Revenue
Refunding Bonds (Residential Resources Inc. Project),
5.125% due 9/01/2031 251
1,160 Bucks County, Pennsylvania, IDA, Retirement Community
Revenue Bonds (Ann's Choice Inc.), Series A,
6.125% due 1/01/2025 1,222
1,750 Chester County, Pennsylvania, Health and Education
Facilities Authority, Senior Living Revenue Refunding
Bonds (Jenners Pond Inc. Project), 7.625%
due 7/01/2012 (a) 2,047
600 Harrisburg, Pennsylvania, Authority, University Revenue
Bonds (Harrisburg University of Science), Series B,
6% due 9/01/2036 618
1,825 Montgomery County, Pennsylvania, Higher Education
and Health Authority Revenue Bonds (Faulkeways at
Gwynedd Project), 6.75% due 11/15/2009 (a) 1,959
1,700 Montgomery County, Pennsylvania, IDA, Revenue Bonds
(Whitemarsh Continuing Care Project), 6.25%
due 2/01/2035 1,785
Philadelphia, Pennsylvania, Authority for IDR:
1,600 (Air Cargo), AMT, Series A, 7.50% due 1/01/2025 1,734
4,460 Commercial Development, 7.75% due 12/01/2017 4,469
================================================================================
Rhode Island -- 1.0%
1,750 Central Falls, Rhode Island, Detention Facility
Corporation, Detention Facility, Revenue Refunding
Bonds, 7.25% due 7/15/2035 1,943
================================================================================
South Carolina -- 3.7%
Connector 2000 Association, Inc., South Carolina,
Toll Road and Capital Appreciation Revenue Bonds,
Senior-Series B (c):
1,100 6.50% due 1/01/2009 996
1,075 7.969% due 1/01/2014 644
5,715 South Carolina Housing Finance and Development
Authority, Mortgage Revenue Refunding Bonds,
AMT, Series A-2, 5.15% due 7/01/2037 (b) 5,730
================================================================================
BLACKROCK APEX MUNICIPAL FUND, INC. JUNE 30, 2007 7
Schedule of Investments (concluded) (in Thousands)
Face
Amount Municipal Bonds Value
===============================================================================
Tennessee -- 3.1%
$5,000 Knox County, Tennessee, Health, Educational and
Housing Facilities Board, Hospital Facilities Revenue
Refunding Bonds (Covenant Health), Series A,
5.03% due 1/01/2037 (c) $ 1,032
Shelby County, Tennessee, Health, Educational and
Housing Facilities Board Revenue Bonds
(Germantown Village):
245 6.25% due 12/01/2034 220
1,800 Series A, 7.25% due 12/01/2034 1,841
2,980 Sullivan County, Tennessee, Health, Educational &
Housing Facilities Board, Hospital Revenue Bonds
(Wellmont Health System Project), Series C,
5.25% due 9/01/2036 3,025
===============================================================================
Texas -- 5.9%
1,000 Austin, Texas, Convention Center Revenue Bonds
(Convention Enterprises Inc.), First Tier, Series A,
6.70% due 1/01/2011 (a) 1,087
2,530 Brazos River Authority, Texas, PCR, Refunding (TXU
Energy Company LLC Project), AMT, Series A,
7.70% due 4/01/2033 2,876
1,220 Brazos River Authority, Texas, Revenue Refunding
Bonds (Reliant Energy Inc. Project), Series B,
7.75% due 12/01/2018 1,272
655 HFDC of Central Texas, Inc., Retirement Facilities
Revenue Bonds, Series A, 5.625% due 11/01/2026 672
1,000 Houston, Texas, Health Facilities Development
Corporation, Retirement Facility Revenue Bonds
(Buckingham Senior Living Community), Series A,
7.125% due 2/15/2034 1,093
875 Kerrville, Texas, Health Facilities Development
Corporation, Hospital Revenue Bonds (Sid Peterson
Memorial Hospital Project), 5.375% due 8/15/2035 896
2,310 Matagorda County, Texas, Navigation District Number 1,
Revenue Refunding Bonds (Reliant Energy Inc.),
Series C, 8% due 5/01/2029 2,409
1,330 Port Corpus Christi, Texas, Individual Development
Corporation, Environmental Facilities Revenue Bonds
(Citgo Petroleum Corporation Project), AMT,
8.25% due 11/01/2031 1,360
===============================================================================
Utah -- 1.2%
2,240 Carbon County, Utah, Solid Waste Disposal, Revenue
Refunding Bonds (Laidlaw Environmental), AMT,
Series A, 7.45% due 7/01/2017 2,289
===============================================================================
Virginia -- 3.3%
Dulles Town Center, Virginia, Community Development
Authority, Special Assessment Tax (Dulles Town
Center Project), 6.25% due 3/01/2026
900 Fairfax County, Virginia, EDA, Residential Care Facilities,
Mortgage Revenue Refunding Bonds (Goodwin
House, Inc.), 5.125% due 10/01/2042 894
310 Farms of New Kent, Virginia, Community Development
Authority, Special Assessment Bonds, Series C,
5.80% due 3/01/2036 307
595 Lexington, Virginia, IDA, Residential Care Facility,
Mortgage Revenue Refunding Bonds (Kendal at
Lexington), Series A, 5.50% due 1/01/2037 592
725 Suffolk, Virginia, IDA, Retirement Facilities, Revenue
Refunding Bonds (Lake Prince Center), 5.15%
due 9/01/2024 732
1,500 Tobacco Settlement Financing Corporation of Virginia,
Revenue Refunding Bonds, Senior Series B-1,
5% due 6/01/2047 1,433
===============================================================================
Washington -- 0.6%
1,200 Washington State Housing Financing Commission,
Nonprofit Revenue Bonds (Skyline at First Hill Project),
Series A, 5.625% due 1/01/2038 1,212
===============================================================================
West Virginia -- 0.6%
1,125 Princeton, West Virginia, Hospital Revenue Refunding
Bonds (Community Hospital Association Inc. Project),
6.20% due 5/01/2013 1,126
===============================================================================
Wisconsin -- 0.7%
1,320 Wisconsin State Health and Educational Facilities
Authority Revenue Bonds (New Castle Place Project),
Series A, 7% due 12/01/2031 1,367
===============================================================================
U.S. Virgin Islands -- 1.2%
2,100 Virgin Islands Government Refinery Facilities, Revenue
Refunding Bonds (Hovensa Coker Project), AMT,
6.50% due 7/01/2021 2,340
===============================================================================
Total Investments (Cost -- $187,391*) -- 100.1% 197,016
Liabilities in Excess of Other Assets -- (0.1)% (190)
--------
Net Assets -- 100.0% $196,826
========
* The cost and unrealized appreciation (depreciation) of investments as of
June 30, 2007, as computed for federal income tax purposes, were as
follows:
Aggregate cost .............................................. $ 186,972
=========
Gross unrealized appreciation ............................... $ 11,092
Gross unrealized depreciation ............................... (1,048)
---------
Net unrealized appreciation ................................. $ 10,044
=========
(a) Prerefunded.
(b) AMBAC Insured.
(c) Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase.
(d) Security may have a maturity of more than one year at time of issuance,
but has variable rate and demand features that qualify it as a short-term
security. The rate disclosed is that currently in effect. This rate
changes periodically based upon prevailing market rates.
o Forward interest rate swaps outstanding as of June 30, 2007 were as
follows:
--------------------------------------------------------------------------------
Notional Unrealized
Amount Depreciation
--------------------------------------------------------------------------------
Received a fixed rate of 5.39% and pay a
floating rate based on 3-month LIBOR
Broker, Deutsche Bank
Expires August 2017 $9,550 $(179)
--------------------------------------------------------------------------------
o Investments in companies considered to be an affiliate of the Fund, for
purposes of Section 2(a)(3) of the Investment Company Act of 1940, were as
follows:
--------------------------------------------------------------------------------
Net Dividend
Affiliate Activity Income
--------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund (1,101) $62
--------------------------------------------------------------------------------
See Notes to Financial Statements.
8 BLACKROCK APEX MUNICIPAL FUND, INC. JUNE 30, 2007
Statement of Assets, Liabilities and Capital
As of June 30, 2007
===================================================================================================================================
Assets
-----------------------------------------------------------------------------------------------------------------------------------
Investments in unaffiliated securities, at value (identified cost -- $187,391,080) ... $ 197,016,220
Cash ................................................................................. 76,641
Receivables:
Interest receivable ................................................................ $ 3,133,325
Securities sold .................................................................... 85,000 3,218,325
-------------
Prepaid expenses ..................................................................... 1,468
-------------
Total assets ......................................................................... 200,312,654
-------------
===================================================================================================================================
Liabilities
-----------------------------------------------------------------------------------------------------------------------------------
Unrealized depreciation on forward interest rate swaps ............................... 178,595
Payables:
Securities purchased ............................................................. $ 2,142,456
Dividends to shareholders ........................................................ 968,937
Investment adviser ............................................................... 108,151
Other affiliates ................................................................. 909 3,220,453
-------------
Accrued expenses ..................................................................... 87,252
-------------
Total liabilities .................................................................... 3,486,300
-------------
===================================================================================================================================
Net Assets
-----------------------------------------------------------------------------------------------------------------------------------
Net Assets ........................................................................... $ 196,826,354
=============
===================================================================================================================================
Capital
-----------------------------------------------------------------------------------------------------------------------------------
Common Stock, $.10 par value, 150,000,000 shares authorized; 19,774,218 shares issued
and outstanding .................................................................... $ 1,977,422
Paid-in capital in excess of par ..................................................... 200,412,828
Undistributed investment income -- net ............................................... $ 1,880,620
Accumulated realized capital losses -- net ........................................... (16,891,061)
Unrealized appreciation -- net ....................................................... 9,446,545
-------------
Total accumulated losses -- net ...................................................... (5,563,896)
-------------
Total capital -- Equivalent to $9.95 net asset value per share of Common Stock
(market price -- $10.23) ........................................................... $ 196,826,354
=============
See Notes to Financial Statements.
BLACKROCK APEX MUNICIPAL FUND, INC. JUNE 30, 2007 9
Statement of Operations
For the Year Ended June 30, 2007
===================================================================================================================================
Investment Income
-----------------------------------------------------------------------------------------------------------------------------------
Interest ............................................................................. $ 12,908,698
Dividends from affiliates ............................................................ 61,771
-------------
Total income ......................................................................... 12,970,469
-------------
===================================================================================================================================
Expenses
-----------------------------------------------------------------------------------------------------------------------------------
Investment advisory fees ............................................................. $ 1,287,302
Accounting services .................................................................. 79,460
Professional fees .................................................................... 59,510
Printing and shareholder reports ..................................................... 40,095
Transfer agent fees .................................................................. 39,885
Pricing fees ......................................................................... 17,719
Directors' fees and expenses ......................................................... 16,308
Custodian fees ....................................................................... 12,226
Listing fees ......................................................................... 9,737
Other ................................................................................ 25,900
-------------
Total expenses before reimbursement .................................................. 1,588,142
Reimbursement of expenses ............................................................ (3,564)
-------------
Total expenses after reimbursement ................................................... 1,584,578
-------------
Investment income -- net ............................................................. 11,385,891
-------------
===================================================================================================================================
Realized & Unrealized Gain (Loss) -- Net
-----------------------------------------------------------------------------------------------------------------------------------
Realized loss on investments -- net .................................................. (3,091,653)
Change in unrealized appreciation/depreciation on:
Investments -- net ................................................................. 4,597,327
Forward interest rate swaps -- net ................................................. (178,595) 4,418,732
------------------------------
Total realized and unrealized gain -- net ............................................ 1,327,079
-------------
Net Increase in Net Assets Resulting from Operations ................................. $ 12,712,970
=============
See Notes to Financial Statements.
10 BLACKROCK APEX MUNICIPAL FUND, INC. JUNE 30, 2007
Statements of Changes in Net Assets
For the Year Ended
June 30,
------------------------------
Increase (Decrease) in Net Assets: 2007 2006
===================================================================================================================================
Operations
-----------------------------------------------------------------------------------------------------------------------------------
Investment income -- net ............................................................. $ 11,385,891 $ 11,291,925
Realized gain (loss) -- net .......................................................... (3,091,653) 1,746,648
Change in unrealized appreciation/depreciation -- net ................................ 4,418,732 (166,492)
------------------------------
Net increase in net assets resulting from operations ................................. 12,712,970 12,872,081
------------------------------
===================================================================================================================================
Dividends to Shareholders
-----------------------------------------------------------------------------------------------------------------------------------
Investment income -- net ............................................................. (11,596,069) (11,421,420)
------------------------------
Net decrease in net assets resulting from dividends to shareholders .................. (11,596,069) (11,421,420)
------------------------------
===================================================================================================================================
Common Stock Transactions
-----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets derived from Common Stock issued to shareholders in
reinvestment of dividends .......................................................... 1,063,048 720,540
------------------------------
===================================================================================================================================
Net Assets
-----------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets ......................................................... 2,179,949 2,171,201
Beginning of year .................................................................... 194,646,405 192,475,204
------------------------------
End of year* ......................................................................... $ 196,826,354 $ 194,646,405
==============================
* Undistributed investment income -- net ......................................... $ 1,880,620 $ 2,109,502
==============================
See Notes to Financial Statements.
BLACKROCK APEX MUNICIPAL FUND, INC. JUNE 30, 2007 11
The following per share data and ratios For the Year Ended June 30,
have been derived from information ------------------------------------------------------
provided in the financial statements. 2007 2006 2005 2004 2003
===================================================================================================================================
Per Share Operating Performance
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ........................... $ 9.90 $ 9.82 $ 9.13 $ 8.99 $ 9.24
------------------------------------------------------
Investment income -- net*** .................................. .58 .58 .58 .60 .58
Realized and unrealized gain (loss) -- net ................... .06 .08 .69 .11 (.27)
------------------------------------------------------
Total from investment operations ............................. .64 .66 1.27 .71 .31
------------------------------------------------------
Less dividends and distributions to Common Stock shareholders:
Investment income -- net ................................. (.59) (.58) (.58) (.57) (.56)
Realized gain -- net ..................................... -- -- -- --** --
------------------------------------------------------
Total dividends and distributions to Common Stock shareholders (.59) (.58) (.58) (.57) (.56)
------------------------------------------------------
Net asset value, end of year ................................. $ 9.95 $ 9.90 $ 9.82 $ 9.13 $ 8.99
======================================================
Market price per share, end of year .......................... $ 10.23 $ 10.25 $ 9.48 $ 8.26 $ 8.48
======================================================
===================================================================================================================================
Total Investment Return*
-----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ........................... 6.48% 7.00% 14.67% 8.64% 4.13%
======================================================
Based on market price per share .............................. 5.73% 14.76% 22.36% 4.20% 8.18%
======================================================
===================================================================================================================================
Ratios to Average Net Assets
-----------------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement ............................... .80% .80% .80% .79% .90%
======================================================
Expenses ..................................................... .80% .81% .80% .79% .90%
======================================================
Investment income -- net ..................................... 5.75% 5.83% 6.11% 6.52% 6.56%
======================================================
===================================================================================================================================
Supplemental Data
-----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (in thousands) ....................... $196,826 $194,646 $192,475 $178,983 $176,116
======================================================
Portfolio turnover ........................................... 22% 19% 22% 19% 24%
======================================================
* 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. Total investment returns exclude the effects of sales
charges.
** Amount is less than $(.01) per share.
*** Based on average shares outstanding.
See Notes to Financial Statements.
12 BLACKROCK APEX MUNICIPAL FUND, INC. JUNE 30, 2007
Notes to Financial Statements
1. Significant Accounting Policies:
On September 29, 2006, Apex Municipal Fund, Inc. was renamed BlackRock Apex
Municipal Fund, Inc. (the "Fund"). The Fund is registered under the Investment
Company Act of 1940, as amended, as a non-diversified, closed-end management
investment company. The Fund's financial statements are prepared in conformity
with U.S. generally accepted accounting principles, which may require the use of
management accruals and estimates. Actual results may differ from these
estimates. The Fund determines, and makes available for publication, the net
asset value of its Common Stock on a daily basis. The Fund's Common Stock shares
are listed on the New York Stock Exchange under the symbol APX. The following is
a summary of significant accounting policies followed by the Fund.
(a) Valuation of investments -- Municipal bonds are traded primarily in the
over-the-counter ("OTC") markets and are valued at the last available bid price
in the OTC market or on the basis of values as obtained by a pricing service.
Pricing services use valuation matrixes that incorporate both dealer-supplied
valuations and valuation models. The procedures of the pricing service and its
valuations are reviewed by the officers of the Fund under the general direction
of the Board of Directors. Such valuations and procedures are reviewed
periodically by the Board of Directors of the Fund. Financial futures contracts
and options thereon, which are traded on exchanges, are valued at their closing
prices as of the close of such exchanges. Options written or purchased are
valued at the last sale price in the case of exchange-traded options. Options
traded in the OTC market are valued at the last asked price (options written) or
the last bid price (options purchased). Swap agreements are valued by quoted
fair values received daily by the Fund's pricing service. Investments in
open-end investment companies are valued at their net asset value each business
day. Securities and other assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
direction of the Board of Directors of the Fund.
(b) Derivative financial instruments -- The Fund may engage in various portfolio
investment strategies both to increase the return of the Fund and to hedge, or
protect, its exposure to interest rate movements and movements in the securities
markets. Losses may arise due to changes in the value of the contract due to an
unfavorable change in the price of the underlying security or if the
counterparty does not perform under the contract. The counterparty for certain
instruments may pledge cash or securities as collateral.
o Financial futures contracts -- The Fund may purchase or sell financial
futures contracts and options on such financial futures contracts.
Financial futures contracts are contracts for delayed delivery of
securities at a specific future date and at a specific price or yield.
Upon entering into a contract, the Fund deposits, and maintains as
collateral, such initial margin as required by the exchange on which the
transaction is effected. Pursuant to the contract, the Fund agrees to
receive from or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are known
as variation margin and are recorded by the Fund as unrealized gains or
losses. When the contract is closed, the Fund records 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.
o Options -- The Fund may write covered call options and purchase put
options. When the Fund writes an option, an amount equal to the premium
received by the Fund is reflected as an asset and an equivalent liability.
The amount of the liability is subsequently marked-to-market to reflect
the current market value of the option written. When a security is
purchased or sold through an exercise of an option, the related premium
paid (or received) is added to (or deducted from) the basis of the
security acquired or deducted from (or added to) the proceeds of the
security sold. When an option expires (or the Fund enters into a closing
transaction), the Fund realizes a gain or loss on the option to the extent
of the premiums received or paid (or gain or loss to the extent the cost
of the closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
o Forward interest rate swaps -- The Fund may enter into forward interest
rate swaps. In a forward interest rate swap, the Fund and the counterparty
agree to make periodic net payments on a specified notional contract
amount, commencing on a specified future effective date, unless terminated
earlier. When the agreement is closed, the Fund records a realized gain or
loss in an amount equal to the value of the agreement.
o Swaps -- The Fund may enter into swap agreements, which are OTC contracts
in which the Fund and a counterparty agree to make periodic net payments
on a specified notional amount. The net payments can be made for a set
period of time or may be triggered by a pre-determined credit event. The
net periodic payments may
BLACKROCK APEX MUNICIPAL FUND, INC. JUNE 30, 2007 13
Notes to Financial Statements (continued)
be based on a fixed or variable interest rate; the change in market value
of a specified security, basket of securities, or index; or the return
generated by a security. These periodic payments received or made by the
Fund are recorded in the accompanying Statement of Operations as realized
gains or losses, respectively. Gains or losses are also realized upon
termination of the swap agreements. Swaps are marked-to-market daily and
changes in value are recorded as unrealized appreciation (depreciation).
Risks include changes in the returns of the underlying instruments,
failure of the counterparties to perform under the contracts' terms and
the possible lack of liquidity with respect to the swap agreements.
(c) Income taxes -- It is the Fund's policy to comply with the requirements of
the Internal Revenue Code 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.
(d) Security transactions and investment income -- Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Realized gains and losses on security transactions are determined on the
identified cost basis. Interest income is recognized on the accrual basis. The
Fund amortizes all premiums and discounts on debt securities.
(e) Dividends and distributions -- Dividends from net investment income are
declared daily and paid monthly. Distributions of capital gains are recorded on
the ex-dividend dates.
(f) Recent accounting pronouncements -- In July 2006, the Financial Accounting
Standards Board ("FASB ") issued Interpretation No. 48 ("FIN 48"), "Accounting
for Uncertainty in Income Taxes -- an interpretation of FASB Statement No. 109."
FIN 48 prescribes the minimum recognition threshold a tax position must meet in
connection with accounting for uncertainties in income tax positions taken or
expected to be taken by an entity, including mutual funds, before being measured
and recognized in the financial statements. Adoption of FIN 48 is required for
the last net asset value calculation in the first required financial statement
reporting period for fiscal years beginning after December 15, 2006. The impact
on the Fund's financial statements, if any, is currently being assessed.
In September 2006, Statement of Financial Accounting Standards No. 157, "Fair
Value Measurements" ("FAS 157"), was issued and is effective for fiscal years
beginning after November 15, 2007. FAS 157 defines fair value, establishes a
framework for measuring fair value and expands disclosures about fair value
measurements. At this time, management is evaluating the implications of FAS 157
and its impact on the Fund's financial statements, if any, has not been
determined.
In addition, in February 2007, FASB issued Statement of Financial Accounting
Standards No. 159, "The Fair Value Option for Financial Assets and Financial
Liabilities" ("FAS 159"), which is effective for fiscal years beginning after
November 15, 2007. Early adoption is permitted as of the beginning of a fiscal
year that begins on or before November 15, 2007, provided the entity also elects
to apply the provisions of FAS 157. FAS 159 permits entities to choose to
measure many financial instruments and certain other items at fair value that
are not currently required to be measured at fair value. FAS 159 also
establishes presentation and disclosure requirements designed to facilitate
comparisons between entities that choose different measurement attributes for
similar types of assets and liabilities. At this time, management is evaluating
the implications of FAS 159 and its impact on the Fund's financial statements,
if any, has not been determined.
(g) Reclassification -- U.S. generally accepted accounting principles require
that certain components of net assets be adjusted to reflect permanent
differences between financial and tax reporting. Accordingly, during the current
year, $18,704 has been reclassified between undistributed net investment income
and accumulated net realized capital losses. This reclassification is the result
of permanent differences attributable to securities in default. This
reclassification has no effect on the net assets or net asset values per share.
2. Investment Advisory Agreement and Transactions with Affiliates:
On September 29, 2006, BlackRock, Inc. and Merrill Lynch & Co., Inc. ("Merrill
Lynch") combined Merrill Lynch's investment management business, Merrill Lynch
Investment Managers, L.P. and its affiliates, including Fund Asset Management,
L.P. ("FAM"), with BlackRock, Inc. to create a new independent company. Merrill
Lynch has a 49.8% economic interest and a 45% voting interest in the combined
company and The PNC Financial Services Group, Inc. has approximately a 34%
economic and voting interest. The new company operates under the BlackRock name
and is governed by a board of directors with a majority of independent members.
On August 15, 2006, shareholders of the Fund approved a new Investment Advisory
Agreement with BlackRock Advisors, Inc. BlackRock Advisors, Inc. was reorganized
into a
14 BLACKROCK APEX MUNICIPAL FUND, INC. JUNE 30, 2007
Notes to Financial Statements (concluded)
limited liability company and renamed BlackRock Advisors, LLC (the "Manager"),
an indirect, wholly owned subsidiary of BlackRock, Inc. The new Investment
Advisory Agreement between the Fund and the Manager became effective on
September 29, 2006. Prior to September 29, 2006, FAM was the Fund's manager. The
general partner of FAM is an indirect, wholly owned subsidiary of Merrill Lynch,
which is the limited partner.
The Manager is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain other
services necessary to the operations of the Fund. For such services, the Fund
pays a monthly fee at an annual rate of .65% of the Fund's average daily net
assets. In addition, the Manager has 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 fee that is a percentage
of the management fee paid by the Fund to the Manager. The Manager (and
previously FAM) has agreed to reimburse its management fee by the amount of
management fees the Fund pays to the Manager (and previously FAM) indirectly
through its investment in Merrill Lynch Institutional Tax-Exempt Fund. For the
period July 1, 2006 to September 29, 2006, FAM reimbursed the Fund $1,381 and
for the period September 30, 2006 to June 30, 2007 the Manager reimbursed the
Fund $2,183.
For the year ended June 30, 2007, the Fund reimbursed FAM and the Manager $1,166
and $2,856, respectively, for certain accounting services.
Prior to September 29, 2006, certain officers and/or directors of the Fund were
officers and/or directors of FAM and/or Merrill Lynch.
Commencing September 29, 2006, certain officers and/or directors of the Fund are
officers and/or directors of BlackRock, Inc. or its affiliates.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
year ended June 30, 2007 were $58,699,769 and $43,364,117, respectively.
4. Common Stock Transactions:
At June 30, 2007, the Fund had one class of shares of Common Stock, par value
$.10 per share, of which 150,000,000 shares were authorized.
Shares issued and outstanding for the year ended June 30, 2007 increased by
104,307 as a result of dividend reinvestment. Shares issued and outstanding for
the year ended June 30, 2006 increased by 73,179 as a result of dividend
reinvestment.
5. Distributions to Shareholders:
The Fund paid a tax-exempt income dividend to holders of Common Stock in the
amount of $.049000 per share on August 1, 2007 to shareholders of record on July
16, 2007.
The tax character of distributions paid during the fiscal years ended June 30,
2007 and June 30, 2006 was as follows:
--------------------------------------------------------------------------------
6/30/2007 6/30/2006
--------------------------------------------------------------------------------
Distributions paid from:
Tax-exempt income ....................... $11,596,069 $11,421,420
---------------------------
Total distributions ....................... $11,596,069 $11,421,420
===========================
As of June 30, 2007, the components of accumulated losses on a tax basis were as
follows:
------------------------------------------------------------------------------
Undistributed tax-exempt income -- net ................... $ 1,461,403
Undistributed long-term capital gains -- net ............. --
------------
Total undistributed earnings -- net ...................... 1,461,403
Capital loss carryforward ................................ (16,891,061)*
Unrealized gains -- net .................................. 9,865,762**
------------
Total accumulated losses -- net .......................... $ (5,563,896)
============
* On June 30, 2007, the Fund had a net capital loss carryforward of
$16,891,061, of which $2,542,361 expires in 2008, $5,341,699 expires in
2009, $2,075,987 expires in 2010, $2,163,492 expires in 2011, $1,659,281
expires in 2012, $35,292 expires in 2013 and $3,072,949 expires in 2015.
This amount will be available to offset like amounts of any future taxable
gains.
** The difference between book-basis and tax-basis net unrealized gains is
attributable primarily to the difference between book and tax amortization
methods for premiums and discounts on fixed income securities.
BLACKROCK APEX MUNICIPAL FUND, INC. JUNE 30, 2007 15
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of BlackRock Apex Municipal Fund,
Inc.:
We have audited the accompanying statement of assets, liabilities and capital,
including the schedule of investments, of BlackRock Apex Municipal Fund, Inc.
(formerly Apex Municipal Fund, Inc.) as of June 30, 2007, 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 five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on the financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of June 30, 2007, by correspondence with the custodian
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 Apex Municipal Fund, Inc. as of June 30, 2007, 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 its financial highlights for each of
the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.
Deloitte & Touche LLP
Princeton, New Jersey
August 21, 2007
Fund Certification (Unaudited)
In May 2007, the Fund filed its Chief Executive Officer Certification for the
prior year with the New York Stock Exchange pursuant to Section 303A.12(a) of
the New York Stock Exchange Corporate Governance Listing Standards.
The Fund's Chief Executive Officer and Chief Financial Officer Certifications
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 were filed with the
Fund's Forms N-CSR and are available on the Securities and Exchange Commission's
Web site at http://www.sec.gov.
Important Tax Information (Unaudited)
All of the net investment income distributions paid monthly by BlackRock Apex
Municipal Fund, Inc. during the taxable year ended June 30, 2007 qualify as
tax-exempt interest dividends for federal income tax purposes.
16 BLACKROCK APEX MUNICIPAL FUND, INC. JUNE 30, 2007
Automatic Dividend Reinvestment Plan
How the Plan Works -- The Fund offers a Dividend Reinvestment Plan (the "Plan")
under which income and capital gains dividends paid by the Fund are
automatically reinvested in additional shares of Common Stock of the Fund. The
Plan is administered on behalf of the shareholders by The Bank of New York (the
"Plan Agent"). Under the Plan, whenever the Fund declares a dividend,
participants in the Plan will receive the equivalent in shares of Common Stock
of the Fund. The Plan Agent will acquire the shares for the participant's
account either (i) through receipt of additional unissued but authorized shares
of the Fund ("newly issued shares") or (ii) by purchase of outstanding shares of
Common Stock on the open market on the New York Stock Exchange or elsewhere. If,
on the dividend payment date, the Fund's net asset value per share is equal to
or less than the market price per share plus estimated brokerage commissions (a
condition often referred to as a "market premium"), the Plan Agent will invest
the dividend amount in newly issued shares. If the Fund's net asset value per
share is greater than the market price per share (a condition often referred to
as a "market discount"), the Plan Agent will invest the dividend amount by
purchasing on the open market additional shares. If the Plan Agent is unable to
invest the full dividend amount in open market purchases, or if the market
discount shifts to a market premium during the purchase period, the Plan Agent
will invest any uninvested portion in newly issued shares. The shares acquired
are credited to each shareholder's account. The amount credited is determined by
dividing the dollar amount of the dividend by either (i) when the shares are
newly issued, the net asset value per share on the date the shares are issued or
(ii) when shares are purchased in the open market, the average purchase price
per share.
Participation in the Plan -- Participation in the Plan is automatic, that is, a
shareholder is automatically enrolled in the Plan when he or she purchases
shares of Common Stock of the Fund unless the shareholder specifically elects
not to participate in the Plan. Shareholders who elect not to participate will
receive all dividend distributions in cash. Shareholders who do not wish to
participate in the Plan must advise the Plan Agent in writing (at the address
set forth below) that they elect not to participate in the Plan. Participation
in the Plan is completely voluntary and may be terminated or resumed at any time
without penalty by writing to the Plan Agent.
Benefits of the Plan -- The Plan provides an easy, convenient way for
shareholders to make additional, regular investments in the Fund. The Plan
promotes a long-term strategy of investing at a lower cost. All shares acquired
pursuant to the Plan receive voting rights. In addition, if the market price
plus commissions of the Fund's shares is above the net asset value, participants
in the Plan will receive shares of the Fund for less than they could otherwise
purchase them and with a cash value greater than the value of any cash
distribution they would have received. However, there may not be enough shares
available in the market to make distributions in shares at prices below the net
asset value. Also, since the Fund does not redeem shares, the price on resale
may be more or less than the net asset value.
Plan Fees -- There are no enrollment fees or brokerage fees for participating in
the Plan. The Plan Agent's service fees for handling the reinvestment of
distributions are paid for by the Fund. However, brokerage commissions may be
incurred when the Fund purchases shares on the open market and shareholders will
pay a pro rata share of any such commissions.
Tax Implications -- The automatic reinvestment of dividends and distributions
will not relieve participants of any federal, state or local income tax that may
be payable (or required to be withheld) on such dividends. Therefore, income and
capital gains may still be realized even though shareholders do not receive
cash. The value of shares acquired pursuant to the Plan will generally be
excluded from gross income to the extent that the cash amount reinvested would
be excluded from gross income. If, when the Fund's shares are trading at a
market premium, the Fund issues shares pursuant to the Plan that have a greater
fair market value than the amount of cash reinvested, it is possible that all or
a portion of the discount from the market value (which may not exceed 5% of the
fair market value of the Fund's shares) could be viewed as a taxable
distribution. If the discount is viewed as a taxable distribution, it is also
possible that the taxable character of this discount would be allocable to all
the shareholders, including shareholders who do not participate in the Plan.
Thus, shareholders who do not participate in the Plan might be required to
report as ordinary income a portion of their distributions equal to their
allocable share of the discount.
Contact Information -- All correspondence concerning the Plan, including any
questions about the Plan, should be directed to the Plan Agent at The Bank of
New York, Church Street Station, P.O. Box 11258, New York, NY 10286-1258,
Telephone: 800-432-8224.
BLACKROCK APEX MUNICIPAL FUND, INC. JUNE 30, 2007 17
Officers and Directors
Number of
Funds and
Portfolios in Other Public
Position(s) Length of Fund Complex Directorships
Held with Time Overseen by Held by
Name Address & Age Fund Served Principal Occupation(s) During Past 5 Years Director Director
====================================================================================================================================
Interested Director
------------------------------------------------------------------------------------------------------------------------------------
Robert C. P.O. Box 9011 Fund 2005 to Vice Chairman and Director of BlackRock, Inc., 121 Funds None
Doll, Jr.* Princeton, NJ President present Global Chief Investment Officer for Equities, 161 Portfolios
08543-9011 and Chairman of the BlackRock Retail Operating
Age: 52 Director Committee, and member of the BlackRock Executive
Committee since 2006; President of the funds
advised by Merrill Lynch Investment Managers, L.P.
("MLIM") and its affiliates ("MLIM/FAM-advised
funds") from 2005 to 2006 and Chief Investment
Officer thereof from 2001 to 2006; President of
MLIM and Fund Asset Management, L.P. ("FAM") from
2001 to 2006; Co-Head (Americas Region) thereof
from 2000 to 2001 and Senior Vice President from
1999 to 2001; President and Director of Princeton
Services, Inc. ("Princeton Services") and
President of Princeton Administrators, L.P.
("Princeton Administrators") from 2001 to 2006;
Chief Investment Officer of OppenheimerFunds, Inc.
in 1999 and Executive Vice President thereof from
1991 to 1999.
------------------------------------------------------------------------------------------------------------------------
* Mr. Doll is a director, trustee or member of an advisory board of certain other investment companies for which
BlackRock Advisors, LLC and its affiliates act as investment adviser. Mr. Doll is an "interested person," as
defined in the Investment Company Act, of the Fund based on his positions with BlackRock, Inc. and its affiliates.
Directors serve until their resignation, removal or death, or until December 31 of the year in which they turn 72.
As Fund President, Mr. Doll serves at the pleasure of the Board of Directors.
18 BLACKROCK APEX MUNICIPAL FUND, INC. JUNE 30, 2007
Officers and Directors (continued)
Number of
Funds and
Portfolios in Other Public
Position(s) Length of Fund Complex Directorships
Held with Time Overseen by Held by
Name Address & Age Fund Served Principal Occupation(s) During Past 5 Years Director Director
====================================================================================================================================
Independent Directors*
------------------------------------------------------------------------------------------------------------------------------------
James H. P.O. Box 9095 Director 2002 to Director, The China Business Group, Inc. since 37 Funds None
Bodurtha** Princeton, NJ present 1996 and Executive Vice President thereof from 57 Portfolios
08543-9095 1996 to 2003; Chairman of the Board, Berkshire
Age: 63 Holding Corporation since 1980; Partner, Squire,
Sanders & Dempsey from 1980 to 1993.
------------------------------------------------------------------------------------------------------------------------------------
Kenneth P.O. Box 9095 Director 2005 to Professor, Harvard University since 1992; 37 Funds None
A. Froot Princeton, NJ present Professor, Massachusetts Institute of Technology 57 Portfolios
08543-9095 from 1986 to 1992.
Age: 49
------------------------------------------------------------------------------------------------------------------------------------
Joe P.O. Box 9095 Director 1994 to Member of the Committee of Investment of 37 Funds Kimco
Grills** Princeton, NJ present Employee Benefit Assets of the Association of 57 Portfolios Realty
08543-9095 Financial Professionals ("CIEBA") since 1986; Corporation
Age: 72 Member of CIEBA's Executive Committee since
1988 and its Chairman from 1991 to 1992;
Assistant Treasurer of International Business
Machines Corporation ("IBM") and Chief
Investment Officer of IBM Retirement Funds from
1986 to 1993; Member of the Investment Advisory
Committee of the State of New York Common
Retirement Fund from 1989 to 2006; Member of
the Investment Advisory Committee of the Howard
Hughes Medical Institute from 1997 to 2000;
Director, Duke University Management Company
from 1992 to 2004, Vice Chairman thereof from
1998 to 2004, and Director Emeritus thereof since
2004; Director, LaSalle Street Fund from 1995 to
2001; Director, Kimco Realty Corporation since
1997; Member of the Investment Advisory
Committee of the Virginia Retirement System since
1998, Vice Chairman thereof from 2002 to 2005,
and Chairman thereof since 2005; Director,
Montpelier Foundation since 1998, its Vice
Chairman from 2000 to 2006, and Chairman,
thereof, since 2006; Member of the Investment
Committee of the Woodberry Forest School since
2000; Member of the Investment Committee of
the National Trust for Historic Preservation
since 2000.
------------------------------------------------------------------------------------------------------------------------------------
BLACKROCK APEX MUNICIPAL FUND, INC. JUNE 30, 2007 19
Officers and Directors (continued)
Number of
Funds and
Portfolios in Other Public
Position(s) Length of Fund Complex Directorships
Held with Time Overseen by Held by
Name Address & Age Fund Served Principal Occupation(s) During Past 5 Years Director Director
====================================================================================================================================
Independent Directors* (concluded)
------------------------------------------------------------------------------------------------------------------------------------
Herbert P.O. Box 9095 Director 2002 to Professor Emeritus, New York University since 37 Funds None
I. London Princeton, NJ present 2005; John M. Olin Professor of Humanities, New 57 Portfolios
08543-9095 York University from 1993 to 2005 and Professor
Age: 68 thereof from 1980 to 2005; President, Hudson
Institute since 1997 and Trustee thereof since 1980;
Dean, Gallatin Division of New York University
from 1976 to 1993; Distinguished Fellow, Herman
Kahn Chair, Hudson Institute from 1984 to 1985;
Chairman of the Board of Directors of Vigilant
Research, Inc. since 2006; Member of the Board
of Directors for Grantham University since 2006;
Director of AIMS since 2006; Director of Reflex
Security since 2006; Director of InnoCentive, Inc.
since 2006; Director of Cerego, LLC since 2005;
Director, Damon Corp. from 1991 to 1995;
Overseer, Center for Naval Analyses from
1983 to 1993.
------------------------------------------------------------------------------------------------------------------------------------
Roberta P.O. Box 9095 Director 2002 to Shareholder, Modrall, Sperling, Roehl, Harris & 37 Funds None
Cooper Princeton, NJ present Sisk, P.A. since 1993; President, American Bar 57 Portfolios
Ramo 08543-9095 Association from 1995 to 1996 and Member of
Age: 64 the Board of Governors thereof from 1994 to
1997; Shareholder, Poole, Kelly & Ramo, Attorneys
at Law, P.C. from 1977 to 1993; Director of ECMC
Group (service provider to students, schools and
lenders) since 2001; Director, United New Mexico
Bank (now Wells Fargo) from 1983 to 1988;
Director, First National Bank of New Mexico
(now Wells Fargo) from 1975 to 1976; Vice
President, American Law Institute since 2004.
------------------------------------------------------------------------------------------------------------------------------------
Robert S. P.O. Box 9095 Director 1996 to Principal of STI Management (investment adviser) 37 Funds None
Salomon, Princeton, NJ present from 1994 to 2005; Chairman and CEO of Salomon 57 Portfolios
Jr. 08543-9095 Brothers Asset Management Inc. from 1992 to
Age: 70 1995; Chairman of Salomon Brothers Equity Mutual
Funds from 1992 to 1995; regular columnist with
Forbes Magazine from 1992 to 2002; Director of
Stock Research and U.S. Equity Strategist at Salomon
Brothers Inc. from 1975 to 1991; Trustee, Commonfund
from 1980 to 2001.
------------------------------------------------------------------------------------------------------------------------
* Directors serve until their resignation, removal or death, or until December 31 of the year in which they turn 72.
** Co-Chairman of the Board of Directors and the Audit Committee.
20 BLACKROCK APEX MUNICIPAL FUND, INC. JUNE 30, 2007
Officers and Directors (concluded)
Position(s) Length of
Held with Time
Name Address & Age Fund Served Principal Occupation(s) During Past 5 Years
====================================================================================================================================
Fund Officers*
------------------------------------------------------------------------------------------------------------------------------------
Donald C. P.O. Box 9011 Vice 1993 to Managing Director of BlackRock, Inc. since 2006; Managing Director of Merrill Lynch
Burke Princeton, NJ President present Investment Managers, L.P. ("MLIM") and Fund Asset Management, L.P. ("FAM") in 2006;
08543-9011 and and First Vice President of MLIM and FAM from 1997 to 2005 and Treasurer thereof from
Age: 47 Treasurer 1999 to 1999 to 2006; Vice President of MLIM and FAM from 1990 to 1997.
present
------------------------------------------------------------------------------------------------------------------------------------
Karen P.O. Box 9011 Fund Chief 2007 to Managing Director of BlackRock, Inc. and Chief Compliance Officer of certain
Clark Princeton, NJ Compliance present BlackRock-advised funds since 2007; Director of BlackRock, Inc. from 2005 to 2007;
08543-9011 Officer Principal and Senior Compliance Officer, State Street Global Advisors, from 2001 to
Age: 42 2005; Principal Consultant, PricewaterhouseCoopers, LLP from 1998 to 2001; and
Branch Chief, Division of Investment Management and Office of Compliance
Inspections and Examinations, U.S. Securities and Exchange Commission, from 1993
to 1998.
------------------------------------------------------------------------------------------------------------------------------------
Alice A. P.O. Box 9011 Secretary 2004 to Director of BlackRock, Inc. since 2006; Director (Legal Advisory) of MLIM from 2002
Pellegrino Princeton, NJ present to 2006; Vice President of MLIM from 1999 to 2002; Attorney associated with MLIM
08543-9011 from 1997 to 1999; Secretary of MLIM, FAM, FAM Distributors, Inc. and Princeton
Age: 47 Services from 2004 to 2006.
------------------------------------------------------------------------------------------------------------------------
* Officers of the Fund serve at the pleasure of the Board of Directors.
------------------------------------------------------------------------------------------------------------------------------------
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agent
The Bank of New York
101 Barclay Street -- 11 East
New York, NY 10286
BLACKROCK APEX MUNICIPAL FUND, INC. JUNE 30, 2007 21
Swap Agreements
The Fund may invest in swap agreements, which are over-the-counter contracts in
which one party agrees to make periodic payments based on the change in market
value of a specified bond, basket of bonds, or index in return for periodic
payments based on a fixed or variable interest rate or the change in market
value of a different bond, basket of bonds or index. Swap agreements may be used
to obtain exposure to a bond or market without owning or taking physical custody
of securities. Swap agreements involve the risk that the party with whom the
Fund has entered into a swap will default on its obligation to pay the Fund and
the risk that the Fund will not be able to meet its obligations to pay the other
party to the agreement. The swap agreements in which the Fund may invest
includes credit default swap agreements.
22 BLACKROCK APEX MUNICIPAL FUND, INC. JUNE 30, 2007
BlackRock Privacy Principles
BlackRock is committed to maintaining the privacy of its current and former fund
investors and individual clients (collectively, "Clients") and to safeguarding
their non-public personal information. The following information is provided to
help you understand what personal information BlackRock collects, how we protect
that information and why in certain cases we share such information with select
parties.
If you are located in a jurisdiction where specific laws, rules or regulations
require BlackRock to provide you with additional or different privacy-related
rights beyond what is set forth below, then BlackRock will comply with those
specific laws, rules or regulations.
BlackRock obtains or verifies personal non-public information from and about you
from different sources, including the following: (i) information we receive from
you or, if applicable, your financial intermediary, on applications, forms or
other documents; (ii) information about your transactions with us, our
affiliates, or others; (iii) information we receive from a consumer reporting
agency; and (iv) from visits to our Web sites.
BlackRock does not sell or disclose to non-affiliated third parties any
non-public personal information about its Clients, except as permitted by law or
as is necessary to respond to regulatory requests or to service Client accounts.
These non-affiliated third parties are required to protect the confidentiality
and security of this information and to use it only for its intended purpose.
We may share information with our affiliates to service your account or to
provide you with information about other BlackRock products or services that may
be of interest to you. In addition, BlackRock restricts access to non-public
personal information about its Clients to those BlackRock employees with a
legitimate business need for the information. BlackRock maintains physical,
electronic and procedural safeguards that are designed to protect the non-public
personal information of its Clients, including procedures relating to the proper
storage and disposal of such information.
Availability of Quarterly Schedule of Investments
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission ("SEC") for the first and third quarters of each fiscal
year on Form N-Q. The Fund's Forms N-Q are available on the SEC's Web site at
http://www.sec.gov. The Fund's Forms N-Q 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 1-800-SEC-0330.
BLACKROCK APEX MUNICIPAL FUND, INC. JUNE 30, 2007 23
BlackRock Apex Municipal Fund, Inc. seeks to provide shareholders with high
current income exempt from federal income taxes by investing primarily in a
portfolio of medium-to-lower grade or unrated municipal obligations, the
interest on which is exempt from federal income taxes in the opinion of bond
counsel to the issuer.
This report, including the financial information herein, is transmitted to
shareholders of BlackRock Apex Municipal Fund, Inc. for their information. It is
not a prospectus. Past performance results shown in this report should not be
considered a representation of future performance. Statements and other
information herein are as dated and are subject to change.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available (1) without
charge, upon request, by calling toll-free 1-800-441-7762; (2) at
www.blackrock.com; and (3) on the Securities and Exchange Commission's Web site
at http://www.sec.gov. Information about how the Fund voted proxies relating to
securities held in the Fund's portfolio during the most recent 12-month period
ended June 30 is available (1) at www.blackrock.com and (2) on the Securities
and Exchange Commission's Web site at http://www.sec.gov.
BlackRock Apex Municipal Fund, Inc.
P.O. Box 9011
Princeton, NJ 08543-9011
BLACKROCK
#10955-6/07
Item 2 - Code of Ethics - The registrant has adopted a code of ethics, as of
the end of the period covered by this report, that applies to the
registrant's principal executive officer, principal financial
officer and principal accounting officer, or persons performing
similar functions. 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 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: (1) Joe
Grills and (2) Robert S. Salomon, Jr.
Item 4 - Principal Accountant Fees and Services
(a) Audit Fees - Fiscal Year Ended June 30, 2007 - $28,000
Fiscal Year Ended June 30, 2006 - $28,000
(b) Audit-Related Fees - Fiscal Year Ended June 30, 2007 - $0
Fiscal Year Ended June 30, 2006 - $0
(c) Tax Fees - Fiscal Year Ended June 30, 2007 - $6,100
Fiscal Year Ended June 30, 2006 - $6,000
The nature of the services include tax compliance, tax advice and
tax planning.
(d) All Other Fees - Fiscal Year Ended June 30, 2007 - $0
Fiscal Year Ended June 30, 2006 - $0
(e)(1) 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"). However, such services will only be deemed
pre-approved provided that any individual project does not exceed
$5,000 attributable to the registrant or $50,000 for all of the
registrants the Committee oversees. 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.
(e)(2) 0%
(f) Not Applicable
(g) Fiscal Year Ended June 30, 2007 - $2,967,000
Fiscal Year Ended June 30, 2006 - $2,815,800
(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 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) - $1,735,000, 0%
Item 5 - Audit Committee of Listed Registrants - 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
Exchange Act (15 U.S.C. 78c(a)(58)(A)):
James H. Bodurtha
Kenneth A. Froot
Joe Grills
Herbert I. London
Roberta Cooper Ramo
Robert S. Salomon, Jr.
Item 6 - Schedule of Investments - The registrant's Schedule of Investments
is included as part of the Report to Stockholders filed under Item 1
of this form.
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Proxy Voting Policies and
Procedures Applicable to the Fund
Each Fund's Board of Directors has delegated to the Manager
authority to vote all proxies relating to the Fund's portfolio
securities. The Manager has adopted policies and procedures (the
"Proxy Voting Procedures") with respect to the voting of proxies
related to the portfolio securities held in the account of one or
more of its clients, including a Fund. Pursuant to these Proxy
Voting Procedures, the Manager's primary objective when voting
proxies is to make proxy voting decisions solely in the best
interests of each Fund and its shareholders, and to act in a manner
that the Manager believes is most likely to enhance the economic
value of the securities held by the Fund. The Proxy Voting
Procedures are designed to ensure that the Manager considers the
interests of its clients, including each Fund, and not the interests
of the Manager, when voting proxies and that real (or perceived)
material conflicts that may arise between the Manager's interest and
those of the Manager's clients are properly addressed and resolved.
In order to implement the Proxy Voting Procedures, the Manager has
formed a Proxy Voting Committee (the "Committee"). The Committee,
which is a subcommittee of the Manager's Equity Investment Policy
Oversight Committee ("EIPOC"), is comprised of a senior member of
the Manager's equity management group who is also a member of EIPOC,
one or more other senior investment professionals appointed by
EIPOC, portfolio managers and investment analysts appointed by EIPOC
and any other personnel EIPOC deems appropriate. The Committee will
also include two non-voting representatives from the Manager's Legal
Department appointed by the Manager's General Counsel. The
Committee's membership shall be limited to full-time employees of
the Manager. No person with any investment banking, trading, retail
brokerage or research responsibilities for the Manager's affiliates
may serve as a member of the Committee or participate in its
decision making (except to the extent such person is asked by the
Committee to present information to the Committee on the same basis
as other interested knowledgeable parties not affiliated with the
Manager might be asked to do so). The Committee determines how to
vote the proxies of all clients, including a Fund, that have
delegated proxy voting authority to the Manager and seeks to ensure
that all votes are consistent with the best interests of those
clients and are free from unwarranted and inappropriate influences.
The Committee establishes general proxy voting policies for the
Manager and is responsible for determining how those policies are
applied to specific proxy votes, in light of each issuer's unique
structure, management, strategic options and, in certain
circumstances, probable economic and other anticipated consequences
of alternate actions. In so doing, the Committee may determine to
vote a particular proxy in a manner contrary to its generally stated
policies. In addition, the Committee will be responsible for
ensuring that all reporting and recordkeeping requirements related
to proxy voting are fulfilled.
The Committee may determine that the subject matter of a recurring
proxy issue is not suitable for general voting policies and requires
a case-by-case determination. In such cases, the Committee may elect
not to adopt a specific voting policy applicable to that issue. The
Manager believes that certain proxy voting issues require investment
analysis - such as approval of mergers and other significant
corporate transactions - akin to investment decisions, and are,
therefore, not suitable for general guidelines. The Committee may
elect to adopt a common position for the Manager on certain proxy
votes that are akin to investment decisions, or determine to permit
the portfolio manager to make individual decisions on how best to
maximize economic value for a Fund (similar to normal buy/sell
investment decisions made by such portfolio managers). While it is
expected that the Manager will generally seek to vote proxies over
which the Manager exercises voting authority in a uniform manner for
all the Manager's clients, the Committee, in conjunction with a
Fund's portfolio manager, may determine that the Fund's specific
circumstances require that its proxies be voted differently.
To assist the Manager in voting proxies, the Committee has retained
Institutional Shareholder Services ("ISS"). ISS is an independent
adviser that specializes in providing a variety of fiduciary-level
proxy-related services to institutional investment managers, plan
sponsors, custodians, consultants, and other institutional
investors. The services provided to the Manager by ISS include
in-depth research, voting recommendations (although the Manager is
not obligated to follow such recommendations), vote execution, and
recordkeeping. ISS will also assist the Fund in fulfilling its
reporting and recordkeeping obligations under the Investment Company
Act.
The Manager's Proxy Voting Procedures also address special
circumstances that can arise in connection with proxy voting. For
instance, under the Proxy Voting Procedures, the Manager generally
will not seek to vote proxies related to portfolio securities that
are on loan, although it may do so under certain circumstances. In
addition, the Manager will vote proxies related to securities of
foreign issuers only on a best efforts basis and may elect not to
vote at all in certain countries where the Committee determines that
the costs associated with voting generally outweigh the benefits.
The Committee may at any time override these general policies if it
determines that such action is in the best interests of a Fund.
From time to time, the Manager may be required to vote proxies in
respect of an issuer where an affiliate of the Manager (each, an
"Affiliate"), or a money management or other client of the Manager,
including investment companies for which the Manager provides
investment advisory, administrative and/or other services (each, a
"Client"), is involved. The Proxy Voting Procedures and the
Manager's adherence to those procedures are designed to address such
conflicts of interest. The Committee intends to strictly adhere to
the Proxy Voting Procedures in all proxy matters, including matters
involving Affiliates and Clients. If, however, an issue representing
a non-routine matter that is material to an Affiliate or a widely
known Client is involved such that the Committee does not reasonably
believe it is able to follow its guidelines (or if the particular
proxy matter is not addressed by the guidelines) and vote
impartially, the Committee may, in its discretion for the purposes
of ensuring that an independent determination is reached, retain an
independent fiduciary to advise the Committee on how to vote or to
cast votes on behalf of the Manager's clients.
In the event that the Committee determines not to retain an
independent fiduciary, or it does not follow the advice of such an
independent fiduciary, the Committee may pass the voting power to a
subcommittee, appointed by EIPOC (with advice from the Secretary of
the Committee), consisting solely of Committee members selected by
EIPOC. EIPOC shall appoint to the subcommittee, where appropriate,
only persons whose job responsibilities do not include contact with
the Client and whose job evaluations would not be affected by the
Manager's relationship with the Client (or failure to retain such
relationship). The subcommittee shall determine whether and how to
vote all proxies on behalf of the Manager's clients or, if the proxy
matter is, in their judgment, akin to an investment decision, to
defer to the applicable portfolio managers, provided that, if the
subcommittee determines to alter the Manager's normal voting
guidelines or, on matters where the Manager's policy is
case-by-case, does not follow the voting recommendation of any proxy
voting service or other independent fiduciary that may be retained
to provide research or advice to the Manager on that matter, no
proxies relating to the Client may be voted unless the Secretary, or
in the Secretary's absence, the Assistant Secretary of the Committee
concurs that the subcommittee's determination is consistent with the
Manager's fiduciary duties.
In addition to the general principles outlined above, the Manager
has adopted voting guidelines with respect to certain recurring
proxy issues that are not expected to involve unusual circumstances.
These policies are guidelines only, and the Manager may elect to
vote differently from the recommendation set forth in a voting
guideline if the Committee determines that it is in a Fund's best
interest to do so. In addition, the guidelines may be reviewed at
any time upon the request of a Committee member and may be amended
or deleted upon the vote of a majority of Committee members present
at a Committee meeting at which there is a quorum.
The Manager has adopted specific voting guidelines with respect to
the following proxy issues:
o Proposals related to the composition of the board of directors of
issuers other than investment companies. As a general matter, the
Committee believes that a company's board of directors (rather than
shareholders) is most likely to have access to important, nonpublic
information regarding a company's business and prospects, and is,
therefore, best-positioned to set corporate policy and oversee
management. The Committee, therefore, believes that the foundation
of good corporate governance is the election of qualified,
independent corporate directors who are likely to diligently
represent the interests of shareholders and oversee management of
the corporation in a manner that will seek to maximize shareholder
value over time. In individual cases, the Committee may look at a
nominee's number of other directorships, history of representing
shareholder interests as a director of other companies or other
factors, to the extent the Committee deems relevant.
o Proposals related to the selection of an issuer's independent
auditors. As a general matter, the Committee believes that corporate
auditors have a responsibility to represent the interests of
shareholders and provide an independent view on the propriety of
financial reporting decisions of corporate management. While the
Committee will generally defer to a corporation's choice of auditor,
in individual cases, the Committee may look at an auditors' history
of representing shareholder interests as auditor of other companies,
to the extent the Committee deems relevant.
o Proposals related to management compensation and employee
benefits. As a general matter, the Committee favors disclosure of an
issuer's compensation and benefit policies and opposes excessive
compensation, but believes that compensation matters are normally
best determined by an issuer's board of directors, rather than
shareholders. Proposals to "micro-manage" an issuer's compensation
practices or to set arbitrary restrictions on compensation or
benefits will, therefore, generally not be supported.
o Proposals related to requests, principally from management, for
approval of amendments that would alter an issuer's capital
structure. As a general matter, the Committee will support requests
that enhance the rights of common shareholders and oppose requests
that appear to be unreasonably dilutive.
o Proposals related to requests for approval of amendments to an
issuer's charter or by-laws. As a general matter, the Committee
opposes poison pill provisions.
o Routine proposals related to requests regarding the formalities of
corporate meetings.
o Proposals related to proxy issues associated solely with holdings
of investment company shares. As with other types of companies, the
Committee believes that a fund's board of directors (rather than its
shareholders) is best positioned to set fund policy and oversee
management. However, the Committee opposes granting boards of
directors authority over certain matters, such as changes to a
fund's investment objective, which the Investment Company Act
envisions will be approved directly by shareholders.
o Proposals related to limiting corporate conduct in some manner
that relates to the shareholder's environmental or social concerns.
The Committee generally believes that annual shareholder meetings
are inappropriate forums for discussion of larger social issues, and
opposes shareholder resolutions "micromanaging" corporate conduct or
requesting release of information that would not help a shareholder
evaluate an investment in the corporation as an economic matter.
While the Committee is generally supportive of proposals to require
corporate disclosure of matters that seem relevant and material to
the economic interests of shareholders, the Committee is generally
not supportive of proposals to require disclosure of corporate
matters for other purposes.
Information about how a Fund voted proxies relating to securities
held in the Fund's portfolio during the most recent 12 month period
ended June 30 is available without charge (1) at www.blackrock.com
and (2) on the Commission's web site at http://www.sec.gov.
Item 8 - Portfolio Managers of Closed-End Management Investment Companies -
as of June 30, 2007.
(a)(1) BlackRock Apex Municipal Fund, Inc. is managed by a team of
investment professionals comprised of Theodore R. Jaeckel, Jr., CFA,
Managing Director at BlackRock, and Walter O'Connor, Managing
Director at BlackRock. Each is a member of BlackRock's municipal
tax-exempt management group. Mr. Jaeckel and Mr. O'Connor are
responsible for setting the Fund's overall investment strategy and
overseeing the management of the Fund. Mr. Jaeckel is the Fund's
lead portfolio manager and is responsible for the day-to-day
management of the Fund's portfolio and the selection of its
investments. Mr. O'Connor has been a member of the Fund's management
team since 2006 and Mr. Jaeckel has been the Fund's portfolio
manager since 1997.
Mr. Jaeckel joined BlackRock in 2006. Prior to joining BlackRock, he
was a Managing Director (Municipal Tax-Exempt Fund Management) of
Merrill Lynch Investment Managers, L.P. ("MLIM") from 2005 to 2006
and a Director of MLIM from 1997 to 2005. He has been a portfolio
manager with BlackRock or MLIM since 1991.
Mr. O'Connor joined BlackRock in 2006. Prior to joining BlackRock,
he was a Managing Director (Municipal Tax-Exempt Fund Management) of
MLIM from 2003 to 2006 and was a Director of MLIM from 1997 to 2002.
He has been a portfolio manager with BlackRock or MLIM since 1991.
(a)(2) As of June 30, 2007:
------------------------------------------------------------------------------------------------------------
(iii) Number of Other Accounts and
(ii) Number of Other Accounts Managed Assets for Which Advisory Fee is
and Assets by Account Type Performance-Based
------------------------------------------------------------------------------------------------------------
Other Other
(i) Name of Registered Other Pooled Registered Other Pooled
Portfolio Investment Investment Other Investment Investment Other
Manager Companies Vehicles Accounts Companies Vehicles Accounts
------------------------------------------------------------------------------------------------------------
Theodore R.
Jaeckel, Jr. 80 0 1 0 0 1
------------------------------------------------------------------------------------------------------------
$28,783,239,309 $0 $34,091,152 $0 $0 $34,091,152
------------------------------------------------------------------------------------------------------------
Walter O'Connor 80 0 0 0 0 0
------------------------------------------------------------------------------------------------------------
$28,783,239,309 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------
(iv) Potential Material Conflicts of Interest
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 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 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 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') officers,
directors or employees are directors or officers, or companies as to
which BlackRock or any of its affiliates 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 the Fund. In this connection,
it should be noted that certain portfolio managers currently manage
certain accounts that are subject to performance fees. In addition,
certain portfolio managers 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 June 30, 2007:
Portfolio Manager Compensation
The elements of total compensation for portfolio managers on
BlackRock's municipal team include a fixed base salary, annual
performance-based cash and stock compensation (cash and stock bonus)
and other benefits. BlackRock has balanced these components of pay
to provide these portfolio managers with a powerful incentive to
achieve consistently superior investment performance. By design,
compensation levels for these portfolio managers fluctuate--both up
and down--with the relative investment performance of the portfolios
that they manage.
Base compensation. Like that of many asset management firms, base
salaries represent a relatively small portion of a portfolio
manager's total compensation. This approach serves to enhance the
motivational value of the performance-based (and therefore variable)
compensation elements of the compensation program.
Performance-Based Compensation. BlackRock believes that the best
interests of investors are served by recruiting and retaining
exceptional asset management talent and managing their compensation
within a consistent and disciplined framework that emphasizes pay
for performance in the context of an intensely competitive market
for talent. To that end, BlackRock and its affiliates portfolio
manager incentive compensation is based on a formulaic compensation
program. BlackRock's formulaic portfolio manager compensation
program includes: investment performance relative to a subset of
closed-end, high yield, municipal debt funds over 1-, 3- and 5-year
performance periods and a measure of operational efficiency.
Portfolio managers are compensated based on the pre-tax performance
of the products they manage. If a portfolio manager's tenure is less
than 5 years, performance periods will reflect time in position.
Portfolio managers are compensated based on products they manage. A
discretionary element of portfolio manager compensation may include
consideration of: financial results, expense control, profit
margins, strategic planning and implementation, quality of client
service, market share, corporate reputation, capital allocation,
compliance and risk control, leadership, workforce diversity,
supervision, technology and innovation. All factors are considered
collectively by BlackRock management.
Cash Bonus
Performance-based compensation is distributed to portfolio
managers in a combination of cash and stock. Typically, the cash
bonus, when combined with base salary, represents more than 60% of
total compensation for portfolio managers.
Stock Bonus
A portion of the dollar value of the total annual
performance-based bonus is paid in restricted shares of BlackRock
stock. Paying a portion of annual bonuses in stock puts compensation
earned by a portfolio manager for a given year "at risk" based on
the company's ability to sustain and improve its performance over
future periods. The ultimate value of stock bonuses is dependent on
future BlackRock stock price performance. As such, the stock bonus
aligns each portfolio manager's financial interests with those of
the BlackRock shareholders and encourages a balance between
short-term goals and long-term strategic objectives. Management
strongly believes that providing a significant portion of
competitive performance-based compensation in stock is in the best
interests of investors and shareholders. This approach ensures that
portfolio managers participate as shareholders in both the "downside
risk" and "upside opportunity" of the company's performance.
Portfolio managers therefore have a direct incentive to protect
BlackRock's reputation for integrity.
Other Compensation Programs
Portfolio managers who meet relative investment performance
and financial management objectives during a performance year are
eligible to participate in a deferred cash program. Awards under
this program are in the form of deferred cash that may be
benchmarked to a menu of BlackRock mutual funds (including their own
fund) during a five-year vesting period. The deferred cash program
aligns the interests of participating portfolio managers with the
investment results of BlackRock products and promotes continuity of
successful portfolio management teams.
Other Benefits
Portfolio managers are also eligible to participate in
broad-based plans offered generally to employees of BlackRock and
its affiliates, including broad-based retirement, 401(k), health,
and other employee benefit plans.
(a)(4) Beneficial Ownership of Securities. As of June 30, 2007,
neither Mr. Jaeckel nor Mr. O'Connor beneficially owned any
stock issued by the Fund.
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable
Item 10 - Submission of Matters to a Vote of Security Holders - The
registrant's Nominating Committee will consider nominees to the
Board recommended by shareholders when a vacancy becomes available.
Shareholders who wish to recommend a nominee should send nominations
which include biographical information and set forth the
qualifications of the proposed nominee to the registrant's
Secretary. There have been no material changes to these procedures.
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 and 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
(17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter
of the period covered by this report that have materially affected,
or are reasonably likely to materially affect, the registrant's
internal control over financial reporting.
Item 12 - Exhibits attached hereto
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
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 Apex Municipal Fund, Inc.
By: /s/ Robert C. Doll, Jr.
-----------------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
BlackRock Apex Municipal Fund, Inc.
Date: August 20, 2007
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/ Robert C. Doll, Jr.
-----------------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
BlackRock Apex Municipal Fund, Inc.
Date: August 20, 2007
By: /s/ Donald C. Burke
-----------------------------------
Donald C. Burke,
Chief Financial Officer of
BlackRock Apex Municipal Fund, Inc.
Date: August 20, 2007