UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-05227
Name of Fund: BlackRock Apex Municipal Fund, Inc. (APX)
Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809
Name and address of agent for service: Donald C. Burke, 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, Option 4
Date of fiscal year end: 06/30/2008
Date of reporting period: 07/01/2007 - 12/31/2007
Item 1 - Report to Stockholders
EQUITIES FIXED INCOME REAL ESTATE
LIQUIDITY ALTERNATIVES BLACKROCK SOLUTIONS
BlackRock Apex Municipal BLACKROCK
Fund, Inc. (APX)
SEMI-ANNUAL REPORT
DECEMBER 31, 2007 | (UNAUDITED)
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
Table of Contents
================================================================================
Page
--------------------------------------------------------------------------------
A Letter to Shareholders ................................................. 3
Semi-Annual Report:
Fund Summary ............................................................. 4
Fund Financial Statements:
Schedule of Investments ................................................ 5
Statement of Assets and Liabilities .................................... 10
Statement of Operations ................................................ 10
Statements of Changes in Net Assets .................................... 11
Financial Highlights ..................................................... 12
Notes to Financial Statements ............................................ 13
Officers and Directors ................................................... 16
Additional Information ................................................... 17
2 BLACKROCK APEX MUNICIPAL FUND, INC. DECEMBER 31, 2007
A Letter to Shareholders
Dear Shareholder
Financial markets endured heightened volatility during 2007, culminating in
mixed results for some of the major benchmark indexes:
Total Returns as of December 31, 2007 6-month 12-month
==========================================================================================================
U.S. equities (S&P 500 Index) -1.37% + 5.49%
----------------------------------------------------------------------------------------------------------
Small cap U.S. equities (Russell 2000 Index) -7.53 - 1.57
----------------------------------------------------------------------------------------------------------
International equities (MSCI Europe, Australasia, Far East Index) +0.39 +11.17
----------------------------------------------------------------------------------------------------------
Fixed income (Lehman Brothers U.S. Aggregate Bond Index) +5.93 + 6.97
----------------------------------------------------------------------------------------------------------
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) +3.22 + 3.36
----------------------------------------------------------------------------------------------------------
High yield bonds (Lehman Brothers U.S. Corporate High Yield 2% Issuer Cap Index) -0.67 + 2.27
----------------------------------------------------------------------------------------------------------
Past performance is no guarantee of future results. Index performance shown for
illustrative purposes only. You cannot invest directly in an index.
Subprime mortgage woes dominated headlines for much of 2007, spawning a
widespread liquidity and credit crisis with ramifications across global markets.
The Federal Reserve Board (the "Fed") stepped in to inject liquidity into the
markets and bolster investor confidence, cutting the federal funds rate by 0.50%
in September, 0.25% in October and 0.25% in December, which brought the target
short-term interest rate to 4.25%. In taking action, the central bankers, who
had long deemed themselves inflation fighters, were seeking to stem the fallout
from the credit crunch and forestall a wider economic unraveling.
Amid the volatility, equity markets displayed surprising resilience. Market
fundamentals generally held firm, dividend payouts and share buybacks continued,
and valuations remained attractive. To some extent, the credit turmoil dampened
corporate merger-and-acquisition (M&A) activity, a key source of strength for
equity markets, but 2007 remained a record year for global M&A nonetheless. As
the returns indicate, the most recent six months were more trying, reflecting
the slowing U.S. economy, a troubled housing market and a more difficult
corporate earnings backdrop. Overall, large cap stocks outperformed small caps
as investors grew increasingly risk averse. International markets fared better
than their U.S. counterparts, benefiting from generally stronger economies.
In fixed income markets, mixed economic signals and subprime fallout resulted in
a flight to quality. Investors shunned bonds associated with the housing and
credit markets in favor of higher-quality Treasury issues. The yield on 10-year
Treasury issues, which touched 5.30% in June (its highest level in five years),
fell to 4.04% by year-end, while prices correspondingly rose. The tax-exempt
bond market waffled amid the economic uncertainty and concerns around the credit
worthiness of bond insurers, but set a new-issuance record in 2007. A drop in
municipal bond prices created buying opportunities, and the heightened supply
was generally well absorbed.
As you navigate the uncertainties inherent in the financial markets, we
encourage you to start the year by reviewing your investment goals with your
financial professional and making portfolio changes, as needed. For more
reflection on 2007 and our 10 predictions for 2008, please ask your financial
professional for a copy of "What's Ahead in 2008: An Investment Perspective," or
view it online at www.blackrock.com/funds. As always, we thank you for
entrusting BlackRock with your investment assets, and we look forward to
continuing to serve you in the new year and beyond.
Sincerely,
/s/ Rob Kapito
Rob Kapito
President, BlackRock Advisors, LLC
3
THIS PAGE NOT PART OF YOUR FUND REPORT
Fund Summary as of December 31, 2007
Investment Objective
BlackRock Apex Municipal Fund, Inc. (APX) 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.
Fund Information
Symbol on New York Stock Exchange ............................... APX
Initial Offering Date ........................................... July 25, 1989
Yield on Closing Market Price as of December 31, 2007 ($9.23)* .. 6.37%
Tax Equivalent Yield** .......................................... 9.80%
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.
** Tax equivalent yield assumes the maximum federal tax rate of 35%.
*** 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 per share:
--------------------------------------------------------------------------------
12/31/07 6/30/07 Change High Low
--------------------------------------------------------------------------------
Market Price ........... $9.23 $10.23 (9.78%) $10.45 $8.92
Net Asset Value ........ $9.54 $ 9.95 (4.12%) $ 9.96 $9.52
--------------------------------------------------------------------------------
The following charts show the Fund's portfolio composition and credit quality
allocations of the Fund's long-term investments:
Portfolio Composition
Sector 12/31/07 6/30/07
--------------------------------------------------------------------------------
Hospital .................................................. 28% 31%
Industrial & Pollution Control ............................ 26 29
City, County & State ...................................... 12 11
Tax Revenue ............................................... 8 9
Housing ................................................... 7 4
Power ..................................................... 6 3
Education ................................................. 4 5
Transportation ............................................ 4 3
Tobacco ................................................... 3 3
Water & Sewer ............................................. 1 1
Lease Revenue ............................................. 1 1
--------------------------------------------------------------------------------
Credit Quality Allocations*
Credit Rating 12/31/07 6/30/07
--------------------------------------------------------------------------------
AAA/Aaa ................................................... 15% 8%
AA/Aa ..................................................... 6 --
A/A ....................................................... 3 4
BBB/Baa ................................................... 18 21
BB/Ba ..................................................... 8 9
B/B ....................................................... 4 6
CCC/Caa ................................................... 5 5
CC/Ca ..................................................... 1 --
NR (Not Rated)** .......................................... 40 47
--------------------------------------------------------------------------------
* Using the higher of Standard & Poor's or Moody's Investor Services
ratings.
** The Advisor has deemed certain of these non-related securities to be of
investment grade quality. As of December 31, 2007 and June 30, 2007, the
market value of these securities was $2,566,050 and $2,689,825,
representing 1% and 1% of the Fund's long-term investments, respectively.
4 BLACKROCK APEX MUNICIPAL FUND, INC. DECEMBER 31, 2007
Schedule of Investments as of December 31, 2007 (Unaudited) (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 $ 1,159
=========================================================================================
Alaska -- 1.1%
2,000 Alaska Industrial Development and Expert Authority
Revenue Bonds (Williams Lynxs Alaska Cargoport),
AMT, 8% due 5/01/2023 2,052
=========================================================================================
Arizona -- 5.6%
900 Maricopa County, Arizona, IDA, Education Revenue
Bonds (Arizona Charter Schools Project 1),
Series A, 6.625% due 7/01/2020 873
Maricopa County, Arizona, IDA, M/F Housing Revenue
Bonds (Sun King Apartments Project), Series A:
30 5.875% due 11/01/2008 30
20 6% due 11/01/2010 20
1,020 6.75% due 5/01/2031 1,034
2,950 Phoenix, Arizona, IDA, Airport Facility, Revenue
Refunding Bonds (America West Airlines Inc. Project),
AMT, 6.30% due 4/01/2023 2,808
970 Pima County, Arizona, IDA, Education Revenue Bonds
(Arizona Charter Schools Project), Series E, 7.25%
due 7/01/203 11,024
Salt Verde Financial Corporation, Arizona, Senior Gas
Revenue Bonds:
1,950 5% due 12/01/2032 1,844
2,730 5% due 12/01/2037 2,553
500 Yavapai County, Arizona, IDA, Hospital Facility Revenue
Bonds (Yavapai Regional Medical Center), Series A,
6% due 8/01/2033 512
=========================================================================================
California -- 2.2%
1,300 California State, Various Purpose, GO, 5.25%
due 11/01/2025 1,359
1,000 Fontana, California, Special Tax, Refunding
(Community Facilities District Number 22 -- Sierra),
6% due 9/01/2034 987
3 San Jose, California, Airport Revenue Bonds, RIB, AMT,
Series 102TP, 5.841% due 3/01/2017 (b)(f) 3
1,785 Southern California Public Power Authority, Natural Gas
Project Number 1 Revenue Bonds, Series A, 5%
due 11/01/2029 1,750
=========================================================================================
Colorado -- 4.4%
450 Colorado Health Facilities Authority, Revenue
Refunding Bonds (Christian Living Communities
Project), Series A, 5.75% due 1/01/2026 418
2,800 Elk Valley, Colorado, Public Improvement Revenue
Bonds (Public Improvement Fee), Series A, 7.30%
due 9/01/2022 2,910
1,235 North Range Metropolitan District Number 1, Colorado,
GO, 7.25% due 12/15/2011 (a) 1,398
Plaza Metropolitan District Number 1, Colorado,
Tax Allocation Revenue Bonds
(Public Improvement Fees):
2,000 8% due 12/01/2025 2,132
500 8.125% due 12/01/2025 498
830 Southlands Metropolitan District Number 1, Colorado,
GO, 7.125% due 12/01/2014 (a) 1,008
=========================================================================================
Connecticut -- 0.6%
490 Connecticut State Development Authority, Airport
Facility Revenue Bonds (Learjet Inc. Project), AMT,
7.95% due 4/01/2026 546
640 Connecticut State, HFA, Housing Mortgage Finance
Program Revenue Bonds, AMT, Sub-Series A-2,
5.15% due 5/15/2038 625
=========================================================================================
Florida -- 11.1%
800 Capital Projects Finance Authority, Florida, Continuing
Care Retirement Revenue Bonds (Glenridge on
Palmer Ranch), Series A, 8% due 6/01/2012 (a) 961
840 Halifax Hospital Medical Center, Florida, Hospital
Revenue Refunding Bonds, Series A, 5%
due 6/01/2038 767
850 Highlands County, Florida, Health Facilities Authority,
Hospital Revenue Bonds (Adventist Health System),
Series C, 5.25% due 11/15/2036 845
2,500 Hillsborough County, Florida, IDA, Exempt Facilities
Revenue Bonds (National Gypsum Company), AMT,
Series A, 7.125% due 4/01/2030 2,566
1,000 Jacksonville, Florida, Economic Development
Commission, Health Care Facilities, Revenue
Refunding Bonds (Florida Proton Therapy Institute),
Series A, 6% due 9/01/2017 998
900 Jacksonville, Florida, Economic Development
Commission, IDR (Gerdau Ameristeel US, Inc.), AMT,
5.30% due 5/01/2037 770
750 Lakewood Ranch, Florida, Community Development
District Number 5, Special Assessment Revenue
Refunding Bonds, Series A, 6.70%
due 5/01/2011 (a) 829
1,810 Lee County, Florida, IDA, IDR (Lee Charter Foundation),
Series A, 5.375% due 6/15/2037 1,542
Midtown Miami, Florida, Community Development
District, Special Assessment Revenue Bonds,
Series A:
1,500 6% due 5/01/2024 1,432
1,350 6.25% due 5/01/2037 1,306
1,520 Orlando, Florida, Urban Community Development
District, Capital Improvement Special Assessment
Bonds, Series A, 6.95% due 5/01/2011 (a) 1,681
2,140 Santa Rosa Bay Bridge Authority, Florida, Revenue
Bonds, 6.25% due 7/01/2028 2,009
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
HDA Housing Development Authority
HFA Housing Finance Agency
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
VRDN Variable Rate Demand Notes
BLACKROCK APEX MUNICIPAL FUND, INC. DECEMBER 31, 2007 5
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
=========================================================================================
Florida (concluded)
Sarasota County, Florida, Health Facilities Authority,
Retirement Facility Revenue Refunding Bonds
(Village on the Isle Project):
$ 590 5.50% due 1/01/2027 $ 545
550 5.50% due 1/01/2032 489
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 2,399
1,850 Tolomato Community Development District, Florida,
Special Assessment Bonds, 6.65% due 5/01/2040 1,790
=========================================================================================
Georgia -- 3.8%
Atlanta, Georgia, Tax Allocation Bonds:
2,000 (Atlantic Station Project), 7.90%
due 12/01/2011 (a) 2,361
495 (Princeton Lakes Project), 5.50% due 1/01/2031 472
Brunswick and Glynn County, Georgia, Development
Authority, First Mortgage Revenue Bonds (Coastal
Community Retirement Corporation Project),
Series A (j):
830 7.125% due 1/01/2025 479
1,185 7.25% due 1/01/2035 685
1,580 Fulton County, Georgia, Development Authority, PCR,
Refunding (General Motors Corporation), VRDN,
6.50% due 4/01/2010 (e) 1,580
1,680 Rockdale County, Georgia, Development Authority
Revenue Bonds (Visy Paper Project), AMT, Series A,
6.125% due 1/01/2034 1,608
=========================================================================================
Idaho -- 0.8%
1,470 Idaho Health Facilities Authority, Revenue Refunding
Bonds (Valley Vista Care Corporation), Series A,
7.75% due 11/15/2016 1,613
=========================================================================================
Illinois -- 6.2%
1,845 Caseyville, Illinois, Senior Tax Increment Revenue
Bonds (Forest Lakes Project), 7% due 12/30/2022 1,700
2,860 Chicago, Illinois, O'Hare International Airport, Special
Facility Revenue Refunding Bonds (American Airlines
Inc. Project), 5.50% due 12/01/2030 2,449
Illinois State Finance Authority Revenue Bonds:
2,050 (Clare At Water Tower Project), Series A, 6.125%
due 5/15/2038 1,933
430 (Landing At Plymouth Place Project), Series A, 6%
due 5/15/2037 407
575 (Monarch Landing, Inc. Project), Series A, 7%
due 12/01/2037 574
490 (Primary Health Care Centers Program), 6.60%
due 7/01/2024 479
755 Lincolnshire, Illinois, Special Service Area Number 1,
Special Tax Bonds (Sedgebrook Project), 6.25%
due 3/01/2034 766
2,400 Lombard, Illinois, Public Facilities Corporation, First Tier
Revenue Bonds (Conference Center and Hotel),
Series A-1, 7.125% due 1/01/2036 2,500
265 Naperville, Illinois, IDR (General Motors Corporation),
Refunding, VRDN, 6.50% due 12/01/2012 (e) 265
760 Village of Wheeling, Illinois, Revenue Bonds (North
Milwaukee/Lake-Cook Tax Increment Financing
Redevelopment Project), 6% due 1/01/2025 732
=========================================================================================
Indiana -- 1.9%
1,985 Indiana Health and Educational Facilities Financing
Authority, Hospital Revenue Bonds (Community
Foundation of Northwest Indiana), 5.50%
due 3/01/2037 1,823
820 Vanderburgh County, Indiana, Redevelopment
Commission, Redevelopment District Tax Allocation
Bonds, 5.25% due 2/01/2031 775
Vigo County, Indiana, Hospital Authority Revenue
Bonds (Union Hospital, Inc.):
440 5.70% due 9/01/2037 408
545 5.75% due 9/01/2042 499
=========================================================================================
Iowa -- 1.7%
2,635 Iowa Finance Authority, Health Care Facilities, Revenue
Refunding Bonds (Care Initiatives Project), 9.25%
due 7/01/2011 (a) 3,184
=========================================================================================
Kansas -- 0.6%
1,230 Wyandotte County, Kansas, Kansas City Unified
Government Revenue Refunding Bonds (General
Motors Corporation Project), 6% due 6/01/2025 1,160
=========================================================================================
Louisiana -- 1.7%
2,000 Louisiana Local Government Environmental Facilities
and Community Development Authority Revenue
Bonds (Westlake Chemical Corporation), 6.75%
due 11/01/2032 1,983
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 1,289
=========================================================================================
Maryland -- 1.2%
385 Baltimore, Maryland, Convention Center Hotel Revenue
Bonds, Sub-Series B, 5.875% due 9/01/2039 384
1,500 Maryland State Energy Financing Administration,
Limited Obligation Revenue Bonds (Cogeneration --
AES Warrior Run), AMT, 7.40% due 9/01/2019 1,503
410 Maryland State Health and Higher Educational
Facilities Authority Revenue Bonds (Washington
Christian Academy), 5.50% due 7/01/2038 365
=========================================================================================
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 1,803
1,245 Massachusetts State Development Finance Agency,
Revenue Refunding Bonds (Eastern Nazarene
College), 5.625% due 4/01/2019 1,248
850 Massachusetts State Health and Educational Facilities
Authority Revenue Bonds (Jordan Hospital), Series E,
6.75% due 10/01/2033 883
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 1,230
500 (Milton Hospital), Series, 5.50% due 7/01/2016 507
800 Massachusetts State Industrial Finance Agency
Revenue Bonds, Sewer Facility (Resource Control
Composting), AMT, 9.25% due 6/01/2010 813
=========================================================================================
Michigan -- 1.2%
1,150 Macomb County, Michigan, Hospital Finance Authority,
Hospital Revenue Bonds (Mount Clemens General
Hospital), Series B, 5.875% due 11/15/2034 1,128
6 BLACKROCK APEX MUNICIPAL FUND, INC. DECEMBER 31, 2007
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
=========================================================================================
Michigan (concluded)
$1,260 Monroe County, Michigan, Hospital Financing Authority,
Hospital Revenue Refunding Bonds (Mercy Memorial
Hospital Corporation), 5.50% due 6/01/2035 $ 1,128
=========================================================================================
Missouri -- 1.2%
1,155 Fenton, Missouri, Tax Increment Revenue Refunding
and Improvement Bonds (Gravois Bluffs), 7%
due 10/01/2011 (a) 1,314
1,000 Kansas City, Missouri, IDA, First Mortgage Health
Facilities Revenue Bonds (Bishop Spencer Place),
Series A, 6.50% due 1/01/2035 1,005
=========================================================================================
Nevada -- 0.2%
425 Clark County, Nevada, Improvement District Number
142, Special Assessment Bonds, 6.375%
due 8/01/2023 437
=========================================================================================
New Hampshire -- 0.4%
835 New Hampshire Health and Education Facilities
Authority, Hospital Revenue Bonds (Catholic
Medical Center), 5% due 7/01/2036 756
=========================================================================================
New Jersey -- 12.2%
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 6,015
2,170 New Jersey EDA, Cigarette Tax Revenue Bonds, 5.50%
due 6/15/2024 2,099
1,500 New Jersey EDA, IDR, Refunding (Newark Airport
Marriott Hotel), 7% due 10/01/2014 1,530
New Jersey EDA, Retirement Community Revenue
Bonds (a):
1,000 (Cedar Crest Village Inc. Facility), Series A, 7.25%
due 11/15/2011 1,150
3,700 (Seabrook Village Inc.), Series A, 8.125%
due 11/15/2010 4,226
New Jersey EDA, Special Facility Revenue Bonds
(Continental Airlines Inc. Project), AMT:
3,050 6.625% due 9/15/2012 3,034
1,000 6.25% due 9/15/2029 935
1,870 New Jersey Health Care Facilities Financing Authority
Revenue Bonds (Pascack Valley Hospital Association),
6.625% due 7/01/2036 1,009
2,760 New Jersey State Transportation Trust Fund Authority,
Transportation System Revenue Bonds, Series C,
5.05% due 12/15/2035 (b)(d) 694
1,075 Tobacco Settlement Financing Corporation of New
Jersey, Asset-Backed Revenue Bonds, 7%
due 6/01/2013 (a) 1,262
1,270 Tobacco Settlement Financing Corporation of New
Jersey, Asset-Backed Revenue Refunding Bonds,
Series 1A, 5% due 6/01/2041 1,059
=========================================================================================
New Mexico -- 2.7%
5,000 Farmington, New Mexico, PCR, Refunding (Tucson
Electric Power Company -- San Juan Project),
Series A, 6.95% due 10/01/2020 5,087
=========================================================================================
New York -- 3.2%
1,000 Dutchess County, New York, IDA, Civic Facility Revenue
Bonds (Saint Francis Hospital), Series B, 7.50%
due 3/01/2029 1,061
New York City, New York, City IDA, Civic Facility
Revenue Bonds:
350 Series C, 6.80% due 6/01/2028 368
830 (Special Needs Facility Pooled Program),
Series C-1, 6.50% due 7/01/2024 827
1,730 New York City, New York, City IDA, Special Facility
Revenue Bonds (British Airways Plc Project), AMT,
7.625% due 12/01/2032 1,817
630 New York Liberty Development Corporation Revenue
Bonds (National Sports Museum Project), Series A,
6.125% due 2/15/2019 625
1,180 Westchester County, New York, IDA, Continuing Care
Retirement, Mortgage Revenue Bonds (Kendal on
Hudson Project), Series A, 6.50% due 1/01/2013 (a) 1,335
=========================================================================================
North Carolina -- 0.6%
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) 1,163
=========================================================================================
Ohio -- 0.7%
1,290 Buckeye Tobacco Settlement Financing Authority, Ohio,
Tobacco Settlement Asset-Backed Bonds, Series A-2,
6.50% due 6/01/2047 1,325
=========================================================================================
Pennsylvania -- 7.7%
1,160 Bucks County, Pennsylvania, IDA, Retirement
Community Revenue Bonds (Ann's Choice Inc.),
Series A, 6.125% due 1/01/2025 1,163
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) 2,078
600 Harrisburg, Pennsylvania, Authority, University Revenue
Bonds (Harrisburg University of Science), Series B,
6% due 9/01/2036 593
Lancaster County, Pennsylvania, Hospital Authority
Revenue Bonds (Brethren Village Project), Series A:
475 6.25% due 7/01/2026 472
410 6.50% due 7/01/2040 411
1,825 Montgomery County, Pennsylvania, Higher Education
and Health Authority Revenue Bonds (Faulkeways at
Gwynedd Project), 6.75% due 11/15/2009 (a) 1,965
1,700 Montgomery County, Pennsylvania, IDA, Revenue
Bonds (Whitemarsh Continuing Care Project),
6.25% due 2/01/2035 1,669
Philadelphia, Pennsylvania, Authority for IDR:
1,600 (Air Cargo), AMT, Series A, 7.50% due 1/01/2025 1,674
4,460 Commercial Development, 7.75%
due 12/01/2017 4,466
=========================================================================================
Rhode Island -- 1.0%
1,750 Central Falls, Rhode Island, Detention Facility
Corporation, Detention Facility, Revenue Refunding
Bonds, 7.25% due 7/15/2035 1,873
=========================================================================================
South Carolina -- 3.8%
Connector 2000 Association, Inc., South Carolina, Toll
Road and Capital Appreciation Revenue Bonds,
Senior-Series B (d):
1,100 6.50% due 1/01/2009 1,025
1,075 7.969% due 1/01/2014 605
5,690 South Carolina Housing Finance and Development
Authority, Mortgage Revenue Refunding Bonds, AMT,
Series A-2, 5.15% due 7/01/2037 (b) 5,543
=========================================================================================
BLACKROCK APEX MUNICIPAL FUND, INC. DECEMBER 31, 2007 7
Schedule of Investments (continued) (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 (d) $ 1,022
Shelby County, Tennessee, Health, Educational and
Housing Facilities Board Revenue Bonds
(Germantown Village):
245 6.25% due 12/01/2034 208
1,800 Series A, 7.25% due 12/01/2034 1,736
2,980 Sullivan County, Tennessee, Health, Educational and
Housing Facilities Board, Hospital Revenue Bonds
(Wellmont Health System Project), Series C, 5.25%
due 9/01/2036 2,812
=========================================================================================
Texas -- 4.9%
1,000 Austin, Texas, Convention Center Revenue Bonds
(Convention Enterprises Inc.), First Tier, Series A,
6.70% due 1/01/2011 (a) 1,101
2,530 Brazos River Authority, Texas, PCR, Refunding (TXU
Energy Company LLC Project), AMT, Series A, 7.70%
due 4/01/2033 2,617
1,220 Brazos River Authority, Texas, Revenue Refunding
Bonds (Reliant Energy Inc. Project), Series B, 7.75%
due 12/01/2018 1,249
1,000 Houston, Texas, Health Facilities Development
Corporation, Retirement Facility Revenue Bonds
(Buckingham Senior Living Community), Series A,
7.125% due 2/15/2014 (a) 1,207
875 Kerrville, Texas, Health Facilities Development
Corporation, Hospital Revenue Bonds (Sid Peterson
Memorial Hospital Project), 5.375%
due 8/15/2035 807
2,310 Matagorda County, Texas, Navigation District Number 1,
Revenue Refunding Bonds (Reliant Energy Inc.),
Series C, 8% due 5/01/2029 2,367
=========================================================================================
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 2,276
=========================================================================================
Virginia -- 2.1%
2,450 Dulles Town Center, Virginia, Community Development
Authority, Special Assessment Tax (Dulles Town
Center Project), 6.25% due 3/01/2026 2,464
310 Farms of New Kent Community Development Authority,
Virginia, Special Assessment Bonds, Series C,
5.80% due 3/01/2036 279
1,500 Tobacco Settlement Financing Corporation of Virginia,
Revenue Refunding Bonds, Senior Series B-1, 5%
due 6/01/2047 1,245
=========================================================================================
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 1,080
=========================================================================================
West Virginia -- 0.6%
1,125 Princeton, West Virginia, Hospital Revenue Refunding
Bonds (Community Hospital Association Inc. Project),
6.20% due 5/01/2013 1,122
=========================================================================================
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 1,342
=========================================================================================
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 2,183
=========================================================================================
Total Municipal Bonds (Cost -- $180,130) -- 96.2% 181,975
=========================================================================================
Municipal Bonds Transferred to Tender
Option Bond Trusts (i)
=========================================================================================
California -- 1.7%
2,965 San Jose, California, Airport Revenue Refunding Bonds,
Series A, 5.50% due 3/01/2032 (b) 3,095
=========================================================================================
Virginia -- 3.2%
6,010 Virginia State, HDA, Commonwealth Mortgage
Revenue Bonds, Series H Sub-Series H-1, 5.375%
due 7/01/2036 (c) 6,101
=========================================================================================
Total Municipal Bonds Transferred to Tender Option
Bond Trusts (Cost -- $9,174) -- 4.9% 9,196
=========================================================================================
Shares
Held Short-Term Securities
=========================================================================================
204 Merrill Lynch Institutional Tax-Exempt Fund,
3.35% (g)(h) 204
=========================================================================================
Total Short-Term Securities (Cost -- $204) -- 0.1% 204
=========================================================================================
Total Investments (Cost -- $189,508*) -- 101.2% 191,375
Other Assets Less Liabilities -- 1.2% 2,228
Liability for Trust Certificates, Including Interest
Expense Payable -- (2.4%) (4,507)
--------
Net Assets -- 100.0% $189,096
========
8 BLACKROCK APEX MUNICIPAL FUND, INC. DECEMBER 31, 2007
Schedule of Investments (concluded) (in Thousands)
* The cost and unrealized appreciation (depreciation) of investments as of
December 31, 2007, as computed for federal income tax purposes, were as
follows:
Aggregate cost ......................................... $184,654
========
Gross unrealized appreciation .......................... $ 8,071
Gross unrealized depreciation .......................... (5,838)
--------
Net unrealized appreciation ............................ $ 2,233
========
(a) Prerefunded.
(b) AMBAC Insured.
(c) MBIA Insured.
(d) Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase.
(e) 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.
(f) The rate disclosed is that currently in effect. This rate changes
periodically and inversely based upon prevailing market rates.
(g) Represents the current yield as of December 31, 2007.
(h) 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 204 $17
--------------------------------------------------------------------------
(i) Securities represent underlying bonds transferred to a separate
securitization trust established in a tender option bond transaction in
which the Fund may have acquired the residual interest certificates. These
securities serve as collateral in a financing transaction. See Note 1 of
the Notes to Financial Statements for details of municipal bonds
transferred to tender option bond trusts.
(j) Non-income producing security; issuer filed for bankruptcy or is in
default of interest payments.
See Notes to Financial Statements.
BLACKROCK APEX MUNICIPAL FUND, INC. DECEMBER 31, 2007 9
Statement of Assets and Liabilities of Operations
As of December 31, 2007 (Unaudited)
===============================================================================
Assets
-------------------------------------------------------------------------------
Investments in unaffiliated securities, at value
(identified cost -- $189,304,530) .......................... $ 191,171,161
Investments, in affiliated securities, at value
(identified cost -- $203,567) .............................. 203,567
Cash ......................................................... 72,489
Receivables:
Interest receivable ........................................ 3,229,957
Securities sold ............................................ 55,000
Prepaid expenses ............................................. 1,468
-------------
Total assets ................................................. 194,733,642
-------------
===============================================================================
Liabilities
-------------------------------------------------------------------------------
Trust certificates* .......................................... 4,487,500
Payables:
Securities purchased ....................................... 880,626
Investment advisor ......................................... 107,625
Dividends to shareholders .................................. 94,620
Interest expense ........................................... 19,154
Other affiliates ........................................... 1,708
Accrued expenses ............................................. 46,668
-------------
Total liabilities ............................................ 5,637,901
-------------
===============================================================================
Net Assets
-------------------------------------------------------------------------------
Net Assets ................................................... $ 189,095,741
=============
===============================================================================
Capital
-------------------------------------------------------------------------------
Common Stock, $.10 par value, 150,000,000 shares authorized;
19,821,674 shares issued and outstanding ................... $ 1,982,167
Paid-in capital in excess of par ............................. 200,873,492
Accumulated distributions in excess of investment
income -- net .............................................. 1,411,166
Accumulated realized capital losses -- net ................... (17,037,715)
Unrealized appreciation -- net ............................... 1,866,631
-------------
Total capital -- Equivalent to $9.54 net asset value per
share of Common Stock (market price -- $9.23) .............. $ 189,095,741
=============
* Represents short-term floating rate certificates issued by tender option
bond trusts.
See Notes to Financial Statements.
Statement of Operations
For the Six Months Ended December 31, 2007 (Unaudited)
===============================================================================
Investment Income
-------------------------------------------------------------------------------
Interest ..................................................... $ 6,138,869
Dividends from affiliates .................................... 16,508
-------------
Total income ................................................. 6,155,377
-------------
===============================================================================
Expenses
-------------------------------------------------------------------------------
Investment advisory fees ..................................... 630,489
Accounting services .......................................... 38,924
Professional fees ............................................ 25,729
Interest expense and fees .................................... 22,560
Transfer agent fees .......................................... 21,172
Printing and shareholder reports ............................. 19,419
Pricing fees ................................................. 9,606
Directors' fees and expenses ................................. 7,910
Custodian fees ............................................... 6,285
Listing fees ................................................. 4,854
Other ........................................................ 16,398
-------------
Total expenses before reimbursement .......................... 803,346
Reimbursement of expenses .................................... (932)
-------------
Total expenses ............................................... 802,414
-------------
Investment income -- net ..................................... 5,352,963
-------------
===============================================================================
Realized & Unrealized Gain (Loss) -- Net
-------------------------------------------------------------------------------
Realized gain (loss) on:
Investments -- net ......................................... (199,292)
Forward interest rate swaps -- net ......................... 52,638
-------------
Total realized loss -- net ................................... (146,654)
-------------
Change in unrealized appreciation/depreciation on:
Investments -- net ......................................... (7,758,509)
Forward interest rate swaps -- net ......................... 178,595
-------------
Total change in unrealized appreciation/depreciation -- net .. (7,579,914)
-------------
Total realized and unrealized loss -- net .................... (7,726,568)
-------------
Net Decrease in Net Assets Resulting from Operations ......... $ (2,373,605)
=============
See Notes to Financial Statements.
10 BLACKROCK APEX MUNICIPAL FUND, INC. DECEMBER 31, 2007
Statements of Changes in Net Assets
For the Six
Months Ended For the
December 31, Year Ended
2007 June 30,
Increase (Decrease) in Net Assets: (Unaudited) 2007
===================================================================================================================================
Operations
-----------------------------------------------------------------------------------------------------------------------------------
Investment income -- net ....................................................................... $ 5,352,963 $ 11,385,891
Realized loss -- net ........................................................................... (146,654) (3,091,653)
Change in unrealized appreciation/depreciation -- net .......................................... (7,579,914) 4,418,732
-------------------------------
Net increase (decrease) in net assets resulting from operations ................................ (2,373,605) 12,712,970
-------------------------------
===================================================================================================================================
Dividends to Shareholders
-----------------------------------------------------------------------------------------------------------------------------------
Investment income -- net ....................................................................... (5,822,417) (11,596,069)
===================================================================================================================================
Common Stock Transactions
-----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets derived from Common Stock issued to shareholders in
reinvestment of dividends .................................................................... 465,409 1,063,048
===================================================================================================================================
Net Assets
-----------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets ........................................................ (7,730,613) 2,179,949
Beginning of period ............................................................................ 196,826,354 194,646,405
-------------------------------
End of period* ................................................................................. $ 189,095,741 $ 196,826,354
===============================
* Undistributed investment income -- net ................................................... $ 1,411,166 $ 1,880,620
===============================
See Notes to Financial Statements.
BLACKROCK APEX MUNICIPAL FUND, INC. DECEMBER 31, 2007 11
For the Six
Months Ended
December 31, For the Year Ended June 30,
The following per share data and ratios have been derived 2007 --------------------------------------------------------
from information provided in the financial statements. (Unaudited) 2007 2006 2005 2004 2003
===================================================================================================================================
Per Share Operating Performance
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ................ $ 9.95 $ 9.90 $ 9.82 $ 9.13 $ 8.99 $ 9.24
----------------------------------------------------------------------
Investment income -- net*** ......................... .27 .58 .58 .58 .60 .58
Realized and unrealized gain (loss) -- net .......... (.39) .06 .08 .69 .11 (.27)
----------------------------------------------------------------------
Total from investment operations .................... (.12) .64 .66 1.27 .71 .31
----------------------------------------------------------------------
Less dividends and distributions to Common
Stock shareholders:
Investment income -- net ........................ (.29) (.59) (.58) (.58) (.57) (.56)
Realized gain -- net ............................ -- -- -- -- --** --
----------------------------------------------------------------------
Total dividends and distributions to Common Stock
shareholders ...................................... (.29) (.59) (.58) (.58) (.57) (.56)
----------------------------------------------------------------------
Net asset value, end of period ...................... $ 9.54 $ 9.95 $ 9.90 $ 9.82 $ 9.13 $ 8.99
======================================================================
Market price per share, end of period ............... $ 9.23 $ 10.23 $ 10.25 $ 9.48 $ 8.26 $ 8.48
======================================================================
===================================================================================================================================
Total Investment Return*
-----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share .................. (1.18%)++ 6.48% 7.00% 14.67% 8.64% 4.13%
======================================================================
Based on market price per share ..................... (7.01%)++ 5.73% 14.76% 22.36% 4.20% 8.18%
======================================================================
===================================================================================================================================
Ratios to Average Net Assets
-----------------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement and excluding interest
expense and fees@ ................................. .80%+ .80% .80% .80% .79% .90%
======================================================================
Expenses, net of reimbursement ...................... .82%+ .80% .80% .80% .79% .90%
======================================================================
Expenses ............................................ .83%+ .80% .81% .80% .79% .90%
======================================================================
Investment income -- net ............................ 5.50%+ 5.75% 5.83% 6.11% 6.52% 6.56%
======================================================================
===================================================================================================================================
Supplemental Data
-----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) ............ $189,096 $196,826 $194,646 $192,475 $178,983 $176,116
======================================================================
Portfolio turnover .................................. 13% 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.
+ Annualized.
++ Aggregate total investment return.
@ Interest expense and fees relate to tender option bond trusts. See Note 1
of the Notes to Financial Statements for details of municipal bonds
transferred to tender option bond trusts.
See Notes to Financial Statements.
12 BLACKROCK APEX MUNICIPAL FUND, INC. DECEMBER 31, 2007
Notes to Financial Statements (Unaudited)
1. Significant Accounting Policies:
BlackRock Apex Municipal Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as a
non-diversified, closed-end management investment company. The Fund's financial
statements are prepared in conformity with accounting principles generally
accepted in the United States of America, which may require the use of
management accruals and estimates. Actual results may differ from these
estimates. These unaudited financial statements reflect all adjustments which
are, in the opinion of management, necessary to present a fair statement of the
results for the interim period. All such adjustments are of a normal, recurring
nature. 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.
Valuation of Investments: Municipal investments (including commitments to
purchase such investments on a "when-issued" basis) are valued on the basis of
prices provided by dealers or pricing services selected under the supervision of
the Fund's Board of Directors ("Directors" or a "Board"). In determining the
value of a particular investment, pricing services may use certain information
with respect to transactions in such investments, quotations from bond dealers,
market transactions in comparable investments and various relationships between
investments. Swap agreements are valued by quoted fair values received daily by
the Fund's pricing service. Short-term securities may be valued at amortized
cost. Investments in open-end investment companies are valued at net asset value
each business day. In the event that application of these methods of valuation
results in a price for an investment which is deemed not to be representative of
the market value of such investment, the investment will be valued by, under the
direction of or in accordance with a method approved by the Board as reflecting
fair value ("Fair Value Assets"). When determining the price for Fair Value
Assets, the investment advisor and/or sub-advisor shall seek to determine the
price that the Fund might reasonably expect to receive from the current sale of
that asset in an arms-length transaction. Fair value determinations shall be
based upon all available factors that the advisor and/or sub-advisor deems
relevant. The pricing of all Fair Value Assets shall be subsequently reported to
the Board or a committee thereof.
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 or if the
counterparty does not perform under the contract. The counterparty, for certain
instruments, may pledge cash or securities as collateral.
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. Changes in the value of the forward interest rate swap are
recognized as unrealized gains and losses. When the agreement is closed,
the Fund records a realized gain or loss in an amount equal to the value
of the agreement. The Fund generally intends to close each forward
interest rate swap before the accrual date specified in the agreement and
therefore avoid entering into the interest rate swap underlying each
forward interest rate swap.
Municipal Bonds Transferred to Tender Option Bond Trusts: The Fund invests in
leveraged residual certificates ("TOB Residuals") issued by tender option bond
trusts ("TOBs"). A TOB is established by a third party sponsor forming a special
purpose entity, into which the Fund, or an agent on behalf of the Fund,
transfers municipal securities. A TOB typically issues two classes of beneficial
interests: short-term floating rate certificates, which are sold to third party
investors, and residual certificates, which are generally issued to the Fund
which made the transfer or to affiliates of the Fund. The Fund's transfers of
the municipal securities to a TOB do not qualify for sale treatment under
Statement of Financial Accounting Standards No. 140, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities" ("FAS
140"), therefore the municipal securities deposited into a TOB are presented in
the Fund's schedule of investments and the proceeds from the transaction are
reported as a liability for trust certificates of the Fund. Similarly, proceeds
from residual certificates issued to affiliates, if any, from the transaction
are included in the liability for trust certificates. Interest income from the
underlying security is recorded by the Fund on an accrual basis. Interest
expense incurred on the secured borrowing and other expenses related to
remarketing, administration and trustee services to a TOB are reported as
expenses of the Fund. The floating rate certificates have interest rates that
generally reset weekly and their holders have the option to tender certificates
to the TOB for redemption at par at each reset date. The residual interests held
by the Fund include the right of the Fund (1) to cause the holders of a
proportional share of the floating rate certificates to tender their
certificates at par, and (2) to transfer a corresponding share of the municipal
securities from the TOB to the Fund. At December 31, 2007, the aggregate value
of the underlying municipal securities transferred to TOBs was $9,195,708, the
related liability for trust certificates was $4,487,500 and the range of
interest rates on the liability for trust certificates was 3.42% to 3.568%.
Financial transactions executed through TOBs generally will underperform the
market for fixed rate municipal bonds in a rising interest rate environment, but
tend to outperform the market for fixed rate bonds when interest rates decline
or remain relatively stable. Should short-term interest rates rise, the Fund's
investments in TOB Residuals likely will adversely affect the Fund's investment
income -- net and distributions to shareholders.
BLACKROCK APEX MUNICIPAL FUND, INC. DECEMBER 31, 2007 13
Notes to Financial Statements (continued)
Fluctuations in the market value of municipal securities deposited into the TOB
may adversely affect the Fund's net asset value per share.
While the Fund's investment policies and restrictions expressly permit
investments in inverse floating rate securities such as TOB Residuals, they
generally do not allow the Fund to borrow money for purposes of making
investments. The Fund's management believes that the Fund's restrictions on
borrowings do not apply to the liability for trust certificates reflected as a
result of the Fund's investments in TOB Residuals.
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.
Effective June 29, 2007, the Fund implemented Financial Accounting Standards
Board ("FASB") Interpretation No. 48, "Accounting for Uncertainty in Income
Taxes -- an interpretation of FASB Statement No. 109" ("FIN 48"). 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 investment companies, before being
measured and recognized in the financial statements. Management has evaluated
the application of FIN 48 to the Fund, and has determined that the adoption of
FIN 48 does not have a material impact on the Fund's financial statements. The
Fund files U.S. federal and various state and local tax returns. No income tax
returns are currently under examination. The statute of limitations on the
Fund's U.S. federal tax returns remains open for the years ended June 30, 2004
through June 30, 2007. The statute of limitations on the Fund's state and local
tax returns may remain open for an additional year depending upon the
jurisdiction.
Investment Transactions and Investment Income: Investment 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.
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.
Recent Accounting Pronouncements: 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.The impact on the Fund's financial
statement disclosures, if any, is currently being assessed.
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"), was issued and 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 fail 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. The impact on the Fund's financial
statement disclosures, if any, is currently being assessed.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with BlackRock
Advisors, LLC (the "Advisor"), an indirect, wholly owned subsidiary of
BlackRock, Inc. Merrill Lynch & Co., Inc. and The PNC Financial Services Group,
Inc. are the principal owners of BlackRock, Inc.
The Advisor 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. The Advisor has agreed to reimburse its management fee by the amount of
management fees the Fund pays to the Advisor indirectly through its investment
in Merrill Lynch Institutional Tax-Exempt Fund. For the six months ended
December 31, 2007, the Advisor reimbursed the Fund $932.
In addition, the Advisor has entered into a sub-advisory agreement with
BlackRock Investment Management, LLC, an affiliate of the Advisor, under which
the Advisor pays the sub-advisor for services it provides, a monthly fee that is
a percentage of the management fee paid by the Fund to the Advisor.
For the six months ended December 31, 2007, the Fund reimbursed the Advisor
$1,705 for certain accounting services.
Certain officers and/or directors of the Fund are officers and/or directors of
BlackRock, Inc. or its affiliates.
14 BLACKROCK APEX MUNICIPAL FUND, INC. DECEMBER 31, 2007
Notes to Financial Statements (concluded)
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the six
months ended December 31, 2007 were $27,615,373 and $25,607,866, respectively.
4. Common Stock Transactions:
At December 31, 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 six months ended December 31, 2007
increased by 47,456 as a result of dividend reinvestment. Shares issued and
outstanding for the year ended June 30, 2007 increased by 104,307 as a result of
dividend reinvestment.
5. Capital Loss Carryforward:
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.
6. Concentration Risk:
The Fund concentrates its investments in securities issued by state agencies,
other governmental entities and U.S. Territories. The Fund is more susceptible
to adverse financial, social, environmental, economic, regulatory and political
factors that may affect these state agencies, other governmental entities and
U.S. Territories, which could seriously affect the ability of these states and
their municipal subdivisions to meet continuing obligations for principal and
interest payments and therefore could impact the value of the Fund's investments
and net asset value per share, than if the Fund was not concentrated in
securities issued by state agencies, other governmental entities and U.S.
Territories.
Many municipalities insure repayment of their obligations. Although bond
insurance reduces the risk of loss due to default by an issuer, such bonds
remain subject to the risk that market value may fluctuate for other reasons and
there is no assurance that the insurance company will meet its obligations.
These securities have been identified in the Schedule of Investments.
7. Subsequent Event:
The Fund paid a tax-exempt dividend to holders of Common Stock in the amount of
$.049000 per share on February 1, 2008 to shareholders of record on January 15,
2008.
BLACKROCK APEX MUNICIPAL FUND, INC. DECEMBER 31, 2007 15
Officers and Directors
G. Nicholas Beckwith, III, Director
Richard E. Cavanagh, Director
Richard S. Davis, Director
Kent Dixon, Director
Frank J. Fabozzi, Director
Kathleen F. Feldstein, Director
James T. Flynn, Director
Henry Gabbay, Director
Jerrold B. Harris, Director
R. Glenn Hubbard, Director
W. Carl Kester, Director
Karen P. Robards, Director
Robert S. Salomon, Jr., Director
Roscoe S. Suddarth, Advisory Board Member*
Donald C. Burke, Fund President and Chief Executive Officer
Anne F. Ackerley, Vice President
Neal J. Andrews, Chief Financial Officer
Jay M. Fife, Treasurer
Brian P. Kindelan, Chief Compliance Officer
Howard Surloff, Secretary
* Roscoe S. Suddarth resigned from the Advisory Board of the Fund, effective
December 31, 2007.
Custodian
The Bank of New York Mellon
New York, NY 10286
Transfer Agent
The Bank of New York Mellon
New York, NY 10286
Accounting Agent
State Street Bank and Trust Company
Princeton, NJ 08540
Independent Registered Public Accounting Firm
Deloitte & Touche LLP
Princeton, NJ 08540
Legal Counsel
Skadden, Arps, Slate Meagher & Flom LLP
New York, NY 10036
16 BLACKROCK APEX MUNICIPAL FUND, INC. DECEMBER 31, 2007
Additional Information
Proxy Results
During the six-month period ended December 31, 2007, shareholders of BlackRock
Apex Municipal Fund, Inc. voted on the following proposal, which was approved at
an annual shareholders' meeting on August 16, 2007. This proposal was part of
the reorganization of the Fund's Board of Directors which took effect on
November 1, 2007. A description of the proposal and number of shares voted are
as follows:
---------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
---------------------------------------------------------------------------------------------------
To elect the Fund's Directors: G. Nicholas Beckwith, III 16,960,625 331,064
Richard E. Cavanagh 16,967,858 323,831
Richard S. Davis 16,961,880 329,809
Kent Dixon 16,966,218 325,471
Frank J. Fabozzi 16,967,180 324,509
Kathleen F. Feldstein 16,955,080 336,609
James T. Flynn 16,965,190 326,499
Henry Gabbay 16,968,658 323,031
Jerrold B. Harris 16,960,143 331,546
R. Glenn Hubbard 16,967,971 323,718
W. Carl Kester 16,967,180 324,509
Karen P. Robards 16,964,089 327,600
Robert S. Salomon, Jr. 16,965,348 326,341
---------------------------------------------------------------------------------------------------
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 and
Liabilities, which comprises part of the financial information included in this
report.
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.
BLACKROCK APEX MUNICIPAL FUND, INC. DECEMBER 31, 2007 17
Additional Information (continued)
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 website 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 (800) SEC-0330. The Fund's
Forms N-Q may also be obtained upon request and without charge by calling (800)
441-7762.
Electronic Delivery
Electronic copies of most financial reports are available on the Fund's website.
Shareholders can sign up for e-mail notifications of quarterly statements and
annual and semi-annual reports by enrolling in the Fund's electronic delivery
program.
Shareholders Who Hold Accounts with Investment Advisors, Banks or Brokerages:
Please contact your financial advisor to enroll. Please note that not all
investment advisors, banks or brokerages may offer this service.
General Information
The Fund does not make available copies of its Statements of Additional
Information because the Fund's shares are not continuously offered, which means
that the Statement of Additional Information of the Fund has not been updated
after completion of the Fund's offering and the information contained in the
Fund's Statement of Additional Information may have become outdated.
During the period, there were no material changes in the Fund's investment
objective or policies or to the Fund's character or by-laws that were not
approved by the shareholders or in the principal risk factors associated with
investment in the Fund. There have been no changes in the persons who are
primarily responsible for the day-to-day management of the Fund's portfolio.
18 BLACKROCK APEX MUNICIPAL FUND, INC. DECEMBER 31, 2007
Additional Information (concluded)
BlackRock Privacy Principles
BlackRock is committed to maintaining the privacy of its current and former fund
investors and individual clients (collectively, "Clients") and to safeguarding
their non-public personal information. The following information is provided to
help you understand what personal information BlackRock collects, how we protect
that information and why in certain cases we share such information with select
parties.
If you are located in a jurisdiction where specific laws, rules or regulations
require BlackRock to provide you with additional or different privacy-related
rights beyond what is set forth below, then BlackRock will comply with those
specific laws, rules or regulations.
BlackRock obtains or verifies personal non-public information from and about you
from different sources, including the following: (i) information we receive from
you or, if applicable, your financial intermediary, on applications, forms or
other documents; (ii) information about your transactions with us, our
affiliates, or others; (iii) information we receive from a consumer reporting
agency; and (iv) from visits to our websites.
BlackRock does not sell or disclose to non-affiliated third parties any
non-public personal information about its Clients, except as permitted by law or
as is necessary to respond to regulatory requests or to service Client accounts.
These non-affiliated third parties are required to protect the confidentiality
and security of this information and to use it only for its intended purpose.
We may share information with our affiliates to service your account or to
provide you with information about other BlackRock products or services that may
be of interest to you. In addition, BlackRock restricts access to non-public
personal information about its Clients to those BlackRock employees with a
legitimate business need for the information. BlackRock maintains physical,
electronic and procedural safeguards that are designed to protect the non-public
personal information of its Clients, including procedures relating to the proper
storage and disposal of such information.
BLACKROCK APEX MUNICIPAL FUND, INC. DECEMBER 31, 2007 19
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 (800) 441-7762; (2) at
www.blackrock.com; and (3) on the Securities and Exchange Commission's website
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 upon request and without charge (1) at
www.blackrock.com or by calling (800) 441-7762 and (2) on the Securities and
Exchange Commission's website at http://www.sec.gov.
BlackRock Apex Municipal Fund, Inc.
100 Bellevue Parkway
Wilmington, DE 19809
BLACKROCK
#10955-12/07
Item 2 - Code of Ethics - Not Applicable to this semi-annual report
Item 3 - Audit Committee Financial Expert - Not Applicable to this
semi-annual report
Item 4 - Principal Accountant Fees and Services - Not Applicable to this
semi-annual report
Item 5 - Audit Committee of Listed Registrants - Not Applicable to this
semi-annual report
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 - Not Applicable to this semi-annual
report
Item 8 - Portfolio Managers of Closed-End Management Investment Companies -
Not Applicable to this semi-annual report
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 and Governance 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 Exchange Act of 1934, as amended.
11(b) - There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act)
that occurred during the second fiscal quarter 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 - Not Applicable to this semi-annual report
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/ Donald C. Burke
-------------------
Donald C. Burke
Chief Executive Officer of
BlackRock Apex Municipal Fund, Inc.
Date: February 21, 2008
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/ Donald C. Burke
-------------------
Donald C. Burke
Chief Executive Officer (principal executive officer) of
BlackRock Apex Municipal Fund, Inc.
Date: February 21, 2008
By: /s/ Neal J. Andrews
-------------------
Neal J. Andrews
Chief Financial Officer (principal financial officer) of
BlackRock Apex Municipal Fund, Inc.
Date: February 21, 2008