The information in the above Financial Highlights represents the operating performance for a common share outstanding, total investment returns, ratios to average net assets and other supplemental data for each year indicated. This information has been determined based upon financial information provided in the financial statements and market price data for the Trust’s common shares.
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
Note 1. Organization & Accounting Policies
The BlackRock Insured Municipal 2008 Term Trust Inc. (“Municipal Insured 2008”), The BlackRock Insured Municipal Term Trust Inc. (“Insured Municipal”), The BlackRock Municipal Target Term Trust Inc. (“Municipal Target”), The BlackRock California Insured Municipal 2008 Term Trust Inc. (“California Insured 2008”) and The BlackRock New York Insured Municipal 2008 Term Trust Inc. (“New York Insured 2008”) were organized as Maryland corporations. BlackRock Municipal 2018 Term Trust (“Municipal 2018”), BlackRock Municipal 2020 Term Trust (“Municipal 2020”), The BlackRock Strategic Municipal Trust (“Municipal Strategic”), BlackRock California Municipal 2018 Term Trust (“California 2018”), BlackRock Florida Municipal 2020 Term Trust (“Florida 2020”), BlackRock New York Municipal 2018 Term Trust (“New York 2018”) and The BlackRock Pennsylvania Strategic Municipal Trust (“Pennsylvania Strategic”) were organized as Delaware statutory trusts. The BlackRock Florida Insured Municipal 2008 Term Trust (“Florida Insured 2008”) was organized as a Massachusetts business trust. Municipal Insured 2008, Insured Municipal, Municipal 2018, Municipal 2020, Municipal Target and Municipal Strategic are registered as diversified closed-end management investment companies under the Investment Company Act of 1940, as amended. California Insured 2008, California 2018, Florida Insured 2008, Florida 2020, New York Insured 2008, New York 2018 and Pennsylvania Strategic are registered as non-diversified closed-end management investment companies under the Investment Company Act of 1940, as amended. Municipal Insured 2008, California Insured 2008, Florida Insured 2008 and New York Insured 2008 are herein referred to as the 2008 Trusts. Municipal 2018, California 2018 and New York 2018 are herein referred to as the 2018 Trusts. Municipal 2020 and Florida 2020 are herein referred to as the 2020 Trusts. Municipal Strategic and Pennsylvania Strategic are herein referred to as the Strategic Trusts.
The following is a summary of significant accounting policies followed by the Trusts.
Investments Valuation: 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 each Trust’s Board of Trustees or Board of Directors, as the case may be (each, 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. A futures contract is valued at the last sale price as of the close of the commodities exchange on which it trades. Short-term securities may be valued at amortized cost. Investments in open-end investment companies are valued at net asset value. Any investments or other assets for which such current market quotations are not readily available are valued at fair value (“Fair Value Assets”) as determined in good faith under procedures established by, and under the general supervision and responsibility of, each Trust’s Board. The investment advisor and/or sub-advisor will submit its recommendations regarding the valuation and/or valuation methodologies for Fair Value Assets to a valuation committee. The valuation committee may accept, modify or reject any recommendations. The pricing of all Fair Value Assets shall be subsequently reported to and ratified by the Board.
When determining the price for a Fair Value Asset, the investment advisor and/or sub-advisor shall seek to determine the price that the Trust might reasonably expect to receive from the current sale of that asset in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that BlackRock Advisors, Inc. deems relevant.
Investment Transactions and Investment Income: Investment transactions are recorded on trade date. Realized and unrealized gains and losses are calculated on the identified cost basis. Each Trust also records interest income on an accrual basis and amortizes premium and/or accretes discount on securities purchased using the interest method.
Financial Futures Contracts: A futures contract is an agreement between two parties to buy and sell a financial instrument for a set price on a future date. Initial margin deposits are made upon entering into futures contracts and can be either cash or securities. During the period the futures contract is open, changes in the value of the contract are recognized as unrealized gains or losses by “marking-to-market” on a daily basis to reflect the market value of the contract at the end of each day’s trading. Variation margin payments are made or received, depending upon whether unrealized gains or losses are incurred. When the contract is closed, the Trust records a realized gain or loss equal to the difference between the proceeds from (or cost of) the closing transaction and the Trust’s basis in the contract.
Financial futures contracts, when used by the Trusts, help in maintaining a targeted duration. Futures contracts can be sold to effectively shorten an otherwise longer duration portfolio. In the same sense, futures contracts can be purchased to lengthen a portfolio that is shorter than its duration target. Thus, by buying or selling futures contracts, the Trusts may attempt to manage the duration of positions so that changes in interest rates do not change the duration of the portfolio unexpectedly.
Segregation: In cases in which the Investment Company Act of 1940, as amended, and the interpretive positions of the Securities and Exchange Commission (the “Commission”) require that each Trust segregate assets in connection with certain investments (e.g., when-issued securities or futures contracts), each Trust will, consistent with certain interpretive letters issued by the Commission, designate on its books and records cash or other liquid debt securities having a market value at least equal to the amount that would otherwise be required to be physically segregated.
Federal Income Taxes: It is each Trust’s intention to continue to be treated as a regulated investment company under the Internal Revenue Code and to distribute sufficient net income to shareholders. For this reason and because substantially all of the gross income of each Trust consists of tax-exempt interest, no Federal income tax provisions are required.
Dividends and Distributions: Each Trust declares and pays dividends and distributions to common shareholders monthly from net investment income, net realized short-term capital gains and other sources, if necessary. Net long-term capital gains, if any, in excess of loss carryforwards may be distributed annually. Dividends and distributions are recorded on the ex-dividend date. Income distributions and capital gain distributions are determined in accordance with income tax regulations which may differ from accounting principles generally accepted in the United States of America. Dividends and distributions to preferred shareholders are accrued and determined as described in Note 4.
Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
79
Deferred Compensation and BlackRock Closed-End Share Equivalent Investment Plan: Under the deferred compensation plan approved by the Trust’s Board, non-interested Trustees/Directors (“Trustees”) are required to defer a portion of their annual complex-wide compensation. Deferred amounts earn an approximate return as though equivalent dollar amounts had been invested in common shares of other BlackRock closed-end trusts selected by the Trustees. This has the same economic effect for the Trustees as if the Trustees had invested the deferred amounts in such Trusts.
The deferred compensation plan is not funded and obligations thereunder represent general unsecured claims against the general assets of the Trust. Each Trust may, however, elect to invest in common shares of those Trusts selected by the Trustees in order to match its deferred compensation obligations.
Reclassification of Capital Accounts: In order to present undistributed (distribution in excess of) net investment income (“UNII”) and accumulated net realized gain (“Accumulated Gain”) more closely to its tax character, the following accounts for each Trust were increased (decreased):
| | | | | | | | Accumulated | | | | | | | | | | Accumulated |
| Trust | | | UNII | | | | Gain | | | Trust | | | UNII | | | | Gain |
| |
|
|
| |
|
|
| |
| |
|
|
| |
|
|
| Municipal Insured 2008 | | $ | 137,623 | | | $ | (137,623 | ) | | California 2018 | | $ | — | | | $ | — |
| Insured Municipal | | | (2,142 | ) | | | 2,142 | | | Florida Insured 2008 | | | (138,794 | ) | | | 138,794 |
| Municipal 2018 | | | 559 | | | | (559 | ) | | Florida 2020 | | | — | | | | — |
| Municipal 2020 | | | (3,825 | ) | | | 3,825 | | | New York Insured 2008 | | | (104,955 | ) | | | 104,955 |
| Municipal Target | | | (73,579 | ) | | | 73,579 | | | New York 2018 | | | — | | | | — |
| Municipal Strategic | | | (16,952 | ) | | | 16,952 | | | Pennsylvania Strategic | | | (6,243 | ) | | | 6,243 |
| California Insured 2008 | | | — | | | | — | | | | | | | | | | |
Note 2. Agreements
Each Trust has an Investment Management Agreement with BlackRock Advisors, Inc. (the “Advisor”), a wholly owned subsidiary of BlackRock, Inc. BlackRock Financial Management, Inc., a wholly owned subsidiary of BlackRock, Inc., serves as sub-advisor to the 2018 Trusts and 2020 Trusts. BlackRock, Inc. is an indirect majority owned subsidiary of The PNC Financial Services Group, Inc. The Investment Management Agreements for the 2018 Trusts, 2020 Trusts and Strategic Trusts cover both investment advisory and administration services. Each 2008 Trust, Insured Municipal Trust and Municipal Target Trust has an Administration Agreement with the Advisor.
Each Trust’s investment advisory fee paid to the Advisor is computed weekly and payable monthly based on an annual rate, 0.35% for the 2008 Trusts, Insured Municipal Trust and Municipal Target Trust, 0.40% for the 2018 Trusts, 0.50% for the 2020 Trusts and 0.60% for the Strategic Trusts, of the Trust’s average weekly managed assets. “Managed assets” means the total assets of a Trust (including any assets attributable to any preferred shares that may be outstanding) minus the sum of accrued liabilities (other than debt representing financial leverage). The Advisor has voluntarily agreed to waive a portion of the investment advisory fee or other expenses on the Strategic Trusts as a percentage of managed assets as follows: 0.25% for the first five years of each of the Trust’s operations, 0.20% in year six, 0.15% in year seven, 0.10% in year eight and 0.05% in year nine.
The administration fee paid to the Advisor by the 2008 Trusts, Insured Municipal Trust and Municipal Trust is computed weekly and payable monthly based on an annual rate of 0.10% for each 2008 Trust and Insured Municipal Trust and 0.07% for Municipal Target Trust, of the Trusts’ average weekly managed assets.
Pursuant to the agreements, the Advisor provides continuous supervision of the investment portfolio and pays the compensation of officers of each Trust who are affiliated persons of the Advisor, as well as occupancy and certain clerical and accounting costs of each Trust. Each Trust bears all other costs and expenses, which include reimbursements to the Advisor for costs of employees that provide pricing, secondary market support and compliance services to each Trust. For the year ended December 31, 2004, the Trusts reimbursed the Advisor the following amounts:
| Trust | | Amount | | Trust | | Amount |
| |
| |
| |
|
| Municipal Insured 2008 | | $30,012 | | California 2018 | | $7,016 |
| Insured Municipal | | 19,962 | | Florida Insured 2008 | | 9,194 |
| Municipal 2018 | | 15,452 | | Florida 2020 | | 5,124 |
| Municipal 2020 | | 16,536 | | New York Insured 2008 | | 13,385 |
| Municipal Target | | 35,136 | | New York 2018 | | 3,656 |
| Municipal Strategic | | 7,518 | | Pennsylvania Strategic | | 988 |
| California Insured 2008 | | 12,010 | | | | |
Pursuant to the terms of the custody agreement, each Trust received earning credits from its custodian for positive cash balances maintained, which are used to offset custody fees.
80
Note 3. Portfolio Investments
Purchases and sales of investment securities, other than short-term investments and U.S. government securities, for the year ended December 31, 2004, were as follows:
| Trust | | Purchases | | | Sales | | Trust | | Purchases | | | Sales |
| |
|
| |
|
| |
| |
|
| |
|
|
| Municipal Insured 2008 | $ | 25,036,503 | | $ | 118,393,791 | | California 2018 | $ | 12,779,555 | | $ | 16,344,200 |
| Insured Municipal | | 5,265,175 | | | 69,149,238 | | Florida Insured 2008 | | — | | | 17,692,115 |
| Municipal 2018 | | 116,724,316 | | | 114,529,905 | | Florida 2020 | | 25,885,363 | | | 10,613,730 |
| Municipal 2020 | | 293,916,689 | | | 232,905,133 | | New York Insured 2008 | | 1,233,970 | | | 27,710,315 |
| Municipal Target | | 13,160,982 | | | 56,577,054 | | New York 2018 | | — | | | — |
| Municipal Strategic | | 38,488,892 | | | 39,003,986 | | Pennsylvania Strategic | | 2,003,980 | | | 7,094,443 |
| California Insured 2008 | | — | | | 11,772,750 | | | | | | | |
There were no purchases or sales of U.S. government securities for the year ended December 31, 2004.
Details of open financial futures contracts at December 31, 2004, were as follows:
| | | Number of | | | | Expiration | | | Value at | | | Value at | | | Unrealized | |
| Trust | | Contracts | | Type | | Date | | | Trade Date | | | December 31, 2004 | | | Depreciation | |
| |
| |
| |
| |
|
| |
|
|
|
| Short Positions: | | | | | | | | | | | | | | | | |
| Municipal 2018 | | 856 | | 10 Yr. U.S. T-Note | | Mar ’05 | | $ | 95,428,379 | | $ | 95,818,516 | | | $(390,137 | ) |
| Municipal 2020 | | 1,075 | | 10 Yr. U.S. T-Note | | Mar ’05 | | | 119,841,931 | | | 120,332,826 | | | (490,895 | ) |
| Municipal Strategic | | 369 | | 10 Yr. U.S. T-Note | | Mar ’05 | | | 41,139,824 | | | 41,304,939 | | | (165,115 | ) |
| California 2018 | | 311 | | 10 Yr. U.S. T-Note | | Mar ’05 | | | 34,673,746 | | | 34,812,568 | | | (138,822 | ) |
| Florida 2020 | | 288 | | 10 Yr. U.S. T-Note | | Mar ’05 | | | 32,107,201 | | | 32,238,000 | | | (130,799 | ) |
| New York 2018 | | 177 | | 10 Yr. U.S. T-Note | | Mar ’05 | | | 19,734,237 | | | 19,812,930 | | | (78,693 | ) |
| Pennsylvania Strategic | | 83 | | 10 Yr. U.S. T-Note | | Mar ’05 | | | 9,254,954 | | | 9,290,811 | | | (35,857 | ) |
At December 31, 2004, the total cost of securities for Federal Income tax purposes and the aggregate gross unrealized appreciation and depreciation for securities held by each Trust were as follows:
| Trust | Cost | | Appreciation | | Depreciation | | Net | |
|
| |
| |
| |
| |
| Municipal Insured 2008 | $ | 681,346,934 | | $ | 37,106,504 | | $ | 53,286 | | $ | 37,053,218 | |
| Insured Municipal | 425,773,109 | | 26,057,297 | | 5,690 | | 26,051,607 | |
| Municipal 2018 | 365,784,213 | | 19,884,518 | | 379,561 | | 19,504,957 | |
| Municipal 2020 | 458,112,269 | | 17,991,916 | | 2,098,695 | | 15,893,221 | |
| Municipal Target | 745,832,185 | | 24,878,120 | | 39,869 | | 24,838,251 | |
| Municipal Strategic | 162,429,001 | | 16,306,038 | | 4,058,647 | | 12,247,391 | |
| California Insured 2008 | 259,741,260 | | 15,702,470 | | 8,287 | | 15,694,183 | |
| California 2018 | 145,876,179 | | 6,587,331 | | 849,471 | | 5,737,860 | |
| Florida Insured 2008 | 210,354,772 | | 9,062,902 | | 4,013 | | 9,058,889 | |
| Florida 2020 | 125,137,724 | | 3,915,037 | | 258,088 | | 3,656,949 | |
| New York Insured 2008 | 275,111,846 | | 17,095,082 | | 158 | | 17,094,924 | |
| New York 2018 | 82,249,214 | | 5,392,960 | | 322,226 | | 5,070,734 | |
| Pennsylvania Strategic | 39,441,932 | | 3,674,295 | | 10,858 | | 3,663,437 | |
For Federal income tax purposes, the following Trusts had capital loss carryforwards at December 31, 2004, the Trusts’ last tax year-end (other than the 2020 Trusts and Strategic Trusts, each of which has a tax year-end of June 30th). These amounts may be used to offset future realized capital gains, if any:
| | Capital Loss | | | | | | Capital Loss | | | |
| Trust | Carryforward Amount | | Expires | | Trust | | Carryforward Amount | | Expires | |
| |
|
| |
| |
| | |
|
| |
| |
| Municipal 2018 | $ | 2,036,899 | | | 2010 | | New York 2018 | | $ | 668,608 | | | 2010 | |
| | 6,665,869 | | | 2012 | | | | 431,368 | | | 2011 | |
|
| | | | | | | | | | | |
| | $ | 8,702,768 | | | | | | | 590,480 | | | 2012 | |
|
| | | | | | |
| | | | |
| Municipal 2020 | $ | 273,311 | | | 2012 | | | | $ | 1,690,456 | | | | |
|
| | | | | | |
| | | | |
| Municipal Strategic | $ | 78,019 | | | 2008 | | Pennsylvania Strategic | | $ | 87,565 | | | 2009 | |
| | 1,802,842 | | | 2009 | | | | 408,700 | | | 2010 | |
| | | | | | | |
| | | | |
| | 760,288 | | | 2010 | | | | $ | 496,265 | | | | |
| | | | | | | |
| | | | |
| | 2,477,786 | | | 2012 | | | | | | | | |
|
| | | | | | | | | | | |
| | $ | 5,118,935 | | | | | | | | | | | |
|
| | | | | | | | | | | |
| California 2018 | $ | 1,287,186 | | | 2010 | | | | | | | | |
| | 1,444,501 | | | 2012 | | | | | | | | |
|
| | | | | | | | | | | |
| | $ | 2,731,687 | | | | | | | | | | | |
|
| | | | | | | | | | | |
81
Accordingly, no capital gain distributions are expected to be paid to shareholders of a Trust until that Trust has net realized capital gains in excess of its capital loss carryforward amounts.
Note 4. Distributions to Shareholders
The tax character of distributions paid during the year ended December 31, 2004 and the period ended December 31, 2003, were as follows:
| | | | Year ended December 31, 2004 | | | |
| |
|
|
|
|
|
|
|
| |
| | | Tax-exempt | | Ordinary | | Long-term | | Total | |
| Distributions Paid From: | | Income | | Income | | Capital Gains | | Distributions | |
| | |
| |
| |
|
| |
| |
| Municipal Insured 2008 | | $26,619,425 | | $ | — | | | $1,894,315 | | | $28,513,740 | |
| Insured Municipal | | 17,037,771 | | — | | | 812,492 | | | 17,850,263 | |
| Municipal 2018 | | 13,984,481 | | — | | | — | | | 13,984,481 | |
| Municipal 2020 | | 21,054,806 | | — | | | — | | | 21,054,806 | |
| Municipal Target | | 25,726,694 | | — | | | 533,877 | | | 26,260,571 | |
| Municipal Strategic | | 7,612,041 | | — | | | — | | | 7,612,041 | |
| California Insured 2008 | | 9,051,950 | | — | | | 324,195 | | | 9,376,145 | |
| California 2018 | | 5,263,705 | | — | | | — | | | 5,263,705 | |
| Florida Insured 2008 | | 7,309,322 | | — | | | 700,253 | | | 8,009,575 | |
| Florida 2020 | | 5,552,053 | | — | | | — | | | 5,552,053 | |
| New York Insured 2008 | | 10,262,252 | | — | | | 697,742 | | | 10,959,994 | |
| New York 2018 | | 2,990,333 | | — | | | — | | | 2,990,333 | |
| Pennsylvania Strategic | | 1,976,299 | | — | | | — | | | 1,976,299 | |
| |
| | | Period ended December 31, 2003
| |
| | | Tax-exempt | | Ordinary | | Long-term | | Total | |
| Distributions Paid From: | | Income | | Income | | Capital Gains | | Distributions | |
| | |
| |
|
| |
|
| |
| |
| Municipal Insured 2008 | | 29,760,736 | | 66,619 | | | 3,886,672 | | | 33,714,027 | |
| Insured Municipal | | 17,946,098 | | — | | | 728,209 | | | 18,674,307 | |
| Municipal 2018 | | 13,745,221 | | — | | | — | | | 13,745,221 | |
| Municipal 2020 | | 3,374,772 | | — | | | — | | | 3,374,772 | |
| Municipal Target | | 28,819,211 | | — | | | 1,244,095 | | | 30,063,306 | |
| Municipal Strategic | | 7,322,693 | | — | | | — | | | 7,322,693 | |
| California Insured 2008 | | 11,090,126 | | 174 | | | 1,068,263 | | | 12,158,563 | |
| California 2018 | | 5,197,098 | | — | | | — | | | 5,197,098 | |
| Florida Insured 2008 | | 7,606,766 | | 164,752 | | | 874,481 | | | 8,645,999 | |
| Florida 2020 | | 893,572 | | — | | | — | | | 893,572 | |
| New York Insured 2008 | | 9,757,879 | | 108,700 | | | 408,189 | | | 10,274,768 | |
| New York 2018 | | 2,957,322 | | — | | | — | | | 2,957,322 | |
| Pennsylvania Strategic | | 1,893,236 | | — | | | — | | | 1,893,236 | |
| |
| As of December 31, 2004, the components of distributable earnings on a tax basis were as follows: | | | |
| | | Undistributed | | Undistributed | | Undistributed | | Unrealized | |
| | | Tax-exempt | | Ordinary | | Long-term | | Net | |
| Trust | | Income | | Income | | Gains | | Appreciation | |
| | |
| |
|
| |
|
| |
| |
| Municipal Insured 2008 | | 24,951,354 | | $ | — | | | — | | | 52,847,309 | |
| Insured Municipal | | 16,516,505 | | — | | | 275,431 | | | 29,827,351 | |
| Municipal 2018 | | 15,534,554 | | — | | | — | | | 19,070,349 | |
| Municipal 2020 | | 877,649 | | — | | | — | | | 15,881,555 | |
| Municipal Target | | 24,247,223 | | — | | | 54,095 | | | 34,106,597 | |
| Municipal Strategic | | 5,616,198 | | — | | | — | | | 12,223,225 | |
| California Insured 2008 | | 8,795,033 | | — | | | 67,337 | | | 21,267,757 | |
| California 2018 | | 4,037,661 | | — | | | — | | | 5,063,572 | |
| Florida Insured 2008 | | 6,252,118 | | — | | | — | | | 11,619,878 | |
| Florida 2020 | | — | | — | | | — | | | 3,654,909 | |
| New York Insured 2008 | | 9,824,772 | | — | | | 71,879 | | | 20,467,430 | |
| New York 2018 | | 2,443,513 | | — | | | — | | | 5,064,021 | |
| Pennsylvania Strategic | | 1,001,612 | | — | | | — | | | 3,650,531 | |
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Note 5. Capital
There are 200 million of $0.01 par value common shares authorized for each of the 2008 Trusts, Insured Municipal and Municipal Target. There are an unlimited number of $0.001 par value common shares authorized for each of the 2018 Trusts, 2020 Trusts and Strategic Trusts. Each Trust may classify or reclassify any unissued common shares into one or more series of preferred shares. At December 31, 2004, the common shares outstanding and the shares owned by affiliates of the Advisor of each Trust were as follows:
| | | Common | | Common | | | | Common | | Common | |
| | | Shares | | Shares | | | | Shares | | Shares | |
| Trust | | Outstanding | | Owned | | Trust | | Outstanding | | Owned | |
| |
| |
| |
| |
| |
|
| |
| Municipal Insured 2008 | | 27,207,093 | | — | | California 2018 | | 6,433,028 | | — | | |
| Insured Municipal | | 25,885,639 | | — | | Florida Insured 2008 | | 8,707,093 | | — | | |
| Municipal 2018 | | 15,908,028 | | — | | Florida 2020 | | 5,562,128 | | 8,028 | | |
| Municipal 2020 | | 20,236,628 | | 8,028 | | | New York Insured 2008 | | 11,257,093 | | — | | |
| Municipal Target | | 45,410,639 | | — | | New York 2018 | | 3,633,028 | | — | | |
| Municipal Strategic | | 7 ,242,261 | | — | | Pennsylvania Strategic | | 2,015,492 | | — | | |
| California Insured 2008 | | 10,407,093 | | — | | | | | | | | |
There were no transactions in common shares of beneficial interest for the year ended December 31, 2004. Transactions in common shares of beneficial interest for the period ended December 31, 2003 were as follows:
| | | | | Shares from | | | | | |
| |
|
|
|
|
| | | |
| | | | | Underwriters’ | | | | | |
| | | | | Exercising the | | | | Net Increase | |
| | | Initial Public | | Over-allotment | | Reinvestment | | in Shares | |
| Trust | | | Offering | | Option | | of Dividends | | Outstanding | |
| |
| |
| |
| |
| |
| Municipal 2020 | | 18,508,028 | | 1,728,600 | | — | | 20,236,628 | |
| Florida 2020 | | 5,008,028 | | 554,100 | | — | | 5,562,128 | |
Offering costs incurred in connection with the offering of common shares for the Municipal 2020 Term Turst and Florida Municipal 2020 Term Trust have been charged against the proceeds from the initial common share offering of the common shares in the amounts of $540,000 and $135,000, respectively.
As of December 31, 2004, each Trust had the following series of preferred shares outstanding as listed in the table below. The preferred shares have a liquidation value of $25,000 per share plus any accumulated unpaid dividends.
| Trust | | Series | | Shares | | Trust | | Series | | Shares |
| | |
| |
| |
| | |
| |
|
| Municipal Insured 2008 | | T7 | | 4,660 | | Municipal Strategic | | W7 | | 2,480 |
| | | R7 | | 2,060 | | California Insured 2008 | | W7 | | 2,622 |
| | | T28 | | 2,060 | | | | W28 | | 1,560 |
| | | R28 | | 2,060 | | California 2018 | | M7 | | 2,221 |
| Insured Municipal | | M7 | | 4,216 | | Florida Insured 2008 | | R7 | | 3,366 |
| | | M28 | | 2,600 | | Florida 2020 | | F7 | | 1,956 |
| Municipal 2018 | | W7 | | 2,752 | | New York Insured 2008 | | F7 | | 2,672 |
| | | R7 | | 2,752 | | | | F28 | | 1,710 |
| Municipal 2020 | | M7 | | 2,368 | | New York 2018 | | T7 | | 1,256 |
| | | W7 | | 2,368 | | Pennsylvania Strategic | | W7 | | 700 |
| | | F7 | | 2,368 | | | | | | |
| Municipal Target | | W7 | | 5,964 | | | | | | |
| | | F7 | | 3,000 | | | | | | |
| | | W28 | | 3,000 | | | | | | |
Underwriting discounts and offering costs incurred in connection with the 2020 Trust’s preferred share offering have been charged to paid-in capital in excess of par of the common shares.
| | | Underwriting | | | Offering | |
| Trust | | Discount | | | Cost | |
| | |
| |
|
| |
| Municipal 2020 | $ | 1,776,000 | | $ | 320,320 | |
| Florida 2020 | | 489,000 | | | 130,560 | |
83
Dividends on 7-day preferred shares are cumulative at a rate which is reset every seven days based on the results of an auction. Dividends on 28-day preferred shares are cumulative at a rate which is reset every 28 days based on the results of an auction. The dividend ranges on the preferred shares for each of the Trusts for the year ended December 31, 2004 were as follows:
| Trust | | Low | | | High | | | Trust | | Low | | | High | | |
| | |
|
| |
|
| |
| | |
|
| |
|
| |
| Municipal Insured 2008 | | 0.49 | % | | 2.30 | % | | California 2018 | | 0.45 | % | | 1.80 | % | |
| Insured Municipal | | 0.68 | | | 2.20 | | | Florida Insured 2008 | | 0.12 | | | 2.00 | | |
| Municipal 2018 | | 0.75 | | | 1.95 | | | Florida 2020 | | 0.10 | | | 1.80 | | |
| Municipal 2020 | | 0.73 | | | 1.96 | | | New York Insured 2008 | | 0.60 | | | 2.28 | | |
| Municipal Target | | 0.60 | | | 2.20 | | | New York 2018 | | 0.45 | | | 1.65 | | |
| Municipal Strategic | | 0.69 | | | 1.86 | | | Pennsylvania Strategic | | 0.60 | | | 1.91 | | |
| California Insured 2008 | | 0.43 | | | 2.00 | | | | | | | | | | |
A Trust may not declare dividends or make other distributions on common shares or purchase any such shares if, at the time of the declaration, distribution or purchase, asset coverage with respect to the outstanding preferred shares would be less than 200%.
The preferred shares are redeemable at the option of each Trust, in whole or in part, on any dividend payment date at $25,000 per share plus any accumulated or unpaid dividends whether or not declared. The preferred shares are also subject to mandatory redemption at $25,000 per share plus any accumulated or unpaid dividends, whether or not declared, if certain requirements relating to the composition of the assets and liabilities of a Trust, as set forth in each Trust’s Declaration of Trust/Articles Supplementary, are not satisfied.
The holders of preferred shares have voting rights equal to the holders of common shares (one vote per share) and will vote together with holders of common shares as a single class. However, holders of preferred shares, voting as a separate class, are also entitled to elect two Directors/Trustees for each Trust. In addition, the Investment Company Act of 1940, as amended, requires that along with approval by shareholders that might otherwise be required, the approval of the holders of a majority of any outstanding preferred shares, voting separately as a class, would be required to (a) adopt any plan of reorganization that would adversely affect the preferred shares, (b) change a Trust’s sub-classification as a closed-end investment company or change its fundamental investment restrictions or (c) change its business so as to cease to be an investment company.
Note 6. Dividends
Subsequent to December 31, 2004, the Board of each Trust declared dividends from undistributed earnings per common share payable February 1, 2005, to shareholders of record on January 4, 2005. The per share common dividends declared were:
| | | Common Dividend | | | | Common Dividend | |
| Trust | | Per Share | | Trust | | Per Share | |
| |
|
|
| |
| |
|
| |
| Municipal Insured 2008 | | | $0.066250 | | | California 2018 | | $0.061250 | | |
| Insured Municipal | | 0.047917 | | | Florida Insured 2008 | | 0.062500 | | |
| Municipal 2018 | | 0.065000 | | | Florida 2020 | | 0.075000 | | |
| Municipal 2020 | | 0.078125 | | | New York Insured 2008 | | 0.062500 | | |
| Municipal Target | | 0.040000 | | | New York 2018 | | 0.061250 | | |
| Municipal Strategic | | 0.079585 | | | Pennsylvania Strategic | | 0.073965 | | |
| California Insured 2008 | | 0.064375 | | | | | | | |
The dividends declared on preferred shares for the period January 1, 2005 to January 31, 2005, for each of the Trusts were as follows:
| | | | | | Dividends | | | | | | | Dividends | |
| Trust | | Series | | | Declared | | Trust | | Series | | | Declared | |
| | |
| |
|
| |
| | |
| |
|
| |
| Municipal Insured 2008 | | T7 | | $ | 113,890 | | California Insured 2008 | | W7 | | $ | 62,823 | |
| | | R7 | | | 58,257 | | | | W28 | | | 41,590 | |
| | | T28 | | | 63,180 | | California 2018 | | M7 | | | 59,190 | |
| | | R28 | | | 70,679 | | Florida Insured 2008 | | R7 | | | 95,998 | |
| Insured Municipal | | M7 | | | 123,276 | | Florida 2020 | | F7 | | | 62,162 | |
| | | M28 | | | 84,162 | | New York Insured 2008 | | F7 | | | 104,823 | |
| Municipal 2018 | | W7 | | | 79,808 | | | | F28 | | | 54,344 | |
| | | R7 | | | 91,807 | | New York 2018 | | T7 | | | 32,455 | |
| Municipal 2020 | | M7 | | | 77,078 | | Pennsylvania Strategic | | W7 | | | 19,327 | |
| | | W7 | | | 75,231 | | | | | | | | |
| | | F7 | | | 98,414 | | | | | | | | |
| Municipal Target | | W7 | | | 171,226 | | | | | | | | |
| | | F7 | | | 130,890 | | | | | | | | |
| | | W28 | | | 92,040 | | | | | | | | |
| Municipal Strategic | | W7 | | | 76,682 | | | | | | | | |
Note 7. Subsequent Event
On February 7, 2005, Municipal Target Trust’s Board approved the redemption of all of the 3,000 W28 preferred shares outstanding in preparation for its termination on or about December 31, 2006. The shares will be redeemed at a price of $25,000 per share (an aggregate price of $75,000,000) plus any accrued and unpaid dividends through the redemption date on March 10, 2005. Management believes that the redemption of the W28 preferred shares will not affect the Municipal Target Trust’s ability to satisfy the terms of the remaining preferred shares outstanding.
84
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Trustees and Shareholders of:
BlackRock Insured Municipal 2008 Term Trust
BlackRock Insured Municipal Term Trust
BlackRock Municipal 2018 Term Trust
BlackRock Municipal 2020 Term Trust
BlackRock Municipal Target Term Trust
BlackRock Strategic Municipal Trust
BlackRock California Insured Municipal 2008 Term Trust
BlackRock California Municipal 2018 Term Trust
BlackRock Florida Insured Municipal 2008 Term Trust
BlackRock Florida Municipal 2020 Term Trust
BlackRock New York Insured Municipal 2008 Term Trust
BlackRock New York Municipal 2018 Term Trust
BlackRock Pennsylvania Strategic Municipal Trust
(Collectively the “Trusts”)
We have audited the accompanying statement of assets and liabilities of the Trusts, including the portfolio of investments, as of December 31, 2004, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Trust’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes 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 Trust’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 December 31, 2004, 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 each of the Trusts as of December 31, 2004, the results of their operations for the year then ended, and the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.
February 28, 2005
85
DIRECTORS/TRUSTEES INFORMATION (Unaudited)
| | | | | | | | | | | | | | Events or transactions by |
| | | | | | | | | | Number of | | | | reason of which the Trustee |
| | | | | | Term of office | | | | portfolios over- | | Other Directorships | | is an interested person as |
| | | | Current positions | | and length of time | | Principal occupations | | seen within the | | held outside the | | defined in Section 2(a)(19) |
| | Name, address, age | | held with the Trusts | | served | | during the past five years | | fund complex1 | | fund complex | | of the 1940 Act |
|
| Interested Trustees2 |
|
| | Ralph L. | | Chairman of the | | 3 years4 / since | | Director since 1999 and President of | | 62 | | Member of the | | Director and President of |
| | Schlosstein | | Board3 | | inception | | BlackRock, Inc. since its formation | | | | Visiting Board of | | the Advisor. |
| | BlackRock, Inc. | | | | | | in 1998 and of BlackRock, Inc.’s | | | | Overseers of the John | | |
| | 40 East 52nd Street | | | | | | predecessor entities since 1988. | | | | F. Kennedy School of | | |
| | New York, NY | | | | | | Member of the Management | | | | Government at | | |
| | 10022 | | | | | | Committee and Investment Strategy | | | | Harvard University, a | | |
| | Age: 53 | | | | | | Group of BlackRock, Inc. Formerly, | | | | member of the board | | |
| | | | | | | | Managing Director of Lehman | | | | of the Financial | | |
| | | | | | | | Brothers, Inc. and Co-head of its | | | | Institutions Center of | | |
| | | | | | | | Mortgage and Savings Institutions | | | | The Wharton School | | |
| | | | | | | | Group. Chairman and President of | | | | of the University of | | |
| | | | | | | | the BlackRock Liquidity Funds and | | | | Pennsylvania, a | | |
| | | | | | | | Director of several of BlackRock’s | | | | trustee of the | | |
| | | | | | | | alternative investment vehicles. | | | | American Museum of | | |
| | | | | | | | | | | | Natural History, a | | |
| | | | | | | | | | | | trustee of Trinity | | |
| | | | | | | | | | | | School in New York | | |
| | | | | | | | | | | | City, a member of the | | |
| | | | | | | | | | | | Board of Advisors of | | |
| | | | | | | | | | | | Marujupu LLC, and a | | |
| | | | | | | | | | | | trustee of New | | |
| | | | | | | | | | | | Visions for Public | | |
| | | | | | | | | | | | Education and of The | | |
| | | | | | | | | | | | Public Theater in New | | |
| | | | | | | | | | | | York City. Formerly, a | | |
| | | | | | | | | | | | director of Pulte | | |
| | | | | | | | | | | | Corporation, the | | |
| | | | | | | | | | | | nation’s largest home- | | |
| | | | | | | | | | | | builder, a Trustee of | | |
| | | | | | | | | | | | Denison University | | |
| | | | | | | | | | | | and a member of | | |
| | | | | | | | | | | | Fannie Mae’s | | |
| | | | | | | | | | | | Advisory Council. | | |
|
| | Robert S. Kapito | | President and | | 3 years4 / since | | Vice Chairman of BlackRock, Inc. | | 52 | | Chairman of the | | Director and Vice |
| | BlackRock, Inc. | | Trustee | | August 22, | | Head of the Portfolio Management | | | | Hope and Heroes | | Chairman of the Advisor. |
| | 40 East 52nd Street | | | | 2002 | | Group. Also a member of the | | | | Children’s Cancer | | |
| | New York, NY | | | | | | Management Committee, the | | | | Fund. President of | | |
| | 10022 | | | | | | Investment Strategy Group, the Fixed | | | | the Board of | | |
| | Age 48 | | | | | | Income and Global Operating | | | | Directors of the | | |
| | | | | | | | Committees and the Equity | | | | Periwinkle National | | |
| | | | | | | | Investment Strategy Group. | | | | Theatre for Young | | |
| | | | | | | | Responsible for the portfolio man- | | | | Audiences. Director | | |
| | | | | | | | agement of the Fixed Income, | | | | of icruise.com, Corp. | | |
| | | | | | | | Domestic Equity and International | | | | | | |
| | | | | | | | Equity, Liquidity, and Alternative | | | | | | |
| | | | | | | | Investment Groups of BlackRock. | | | | | | |
86
DIRECTORS/TRUSTEES INFORMATION (Unaudited) (Continued)
| | | | | | | | | | Number of portfo- | | |
| | | | | | | | | | lios overseen | | |
| | | Current positions held | | Term of office and | | Principal occupations | | within the fund | | Other Directorships held out- |
| | Name, address, age | | with the Trusts | | length of time served | | during the past five years | | complex1 | | side the fund complex |
|
| Independent Trustees |
|
| | Andrew F. Brimmer | | Lead Trustee | | 3 years4 / since | | President of Brimmer & Company, Inc., a | | 52 | | Director of CarrAmerica |
| | P.O. Box 4546 | | Audit Committee | | inception | | Washington, D.C.-based economic and | | | | Realty Corporation and |
| | New York, NY | | Chairman5 | | | | financial consulting firm, also Wilmer D. | | | | Borg-Warner Automotive. |
| | 10163-4546 | | | | | | Barrett Professor of Economics, University | | | | Formerly Director of |
| | Age: 78 | | | | | | of Massachusetts – Amherst. Formerly | | | | Airborne Express, |
| | | | | | | | member of the Board of Governors of the | | | | BankAmerica |
| | | | | | | | Federal Reserve System. Former | | | | Corporation (Bank of |
| | | | | | | | Chairman, District of Columbia Financial | | | | America), BellSouth |
| | | | | | | | Control Board. | | | | Corporation, College |
| | | | | | | | | | | | Retirement Equities Fund |
| | | | | | | | | | | | (Trustee), Commodity |
| | | | | | | | | | | | Exchange, Inc. (Public |
| | | | | | | | | | | | Governor), Connecticut |
| | | | | | | | | | | | Mutual Life Insurance |
| | | | | | | | | | | | Company, E.I. du Pont de |
| | | | | | | | | | | | Nemours & Company, |
| | | | | | | | | | | | Equitable Life Assurance |
| | | | | | | | | | | | Society of the United |
| | | | | | | | | | | | States, Gannett Company, |
| | | | | | | | | | | | Mercedes-Benz of North |
| | | | | | | | | | | | America, MNC Financial |
| | | | | | | | | | | | Corporation (American |
| | | | | | | | | | | | Security Bank), NCM |
| | | | | | | | | | | | Capital Management, |
| | | | | | | | | | | | Navistar International |
| | | | | | | | | | | | Corporation, PHH Corp. |
| | | | | | | | | | | | and UAL Corporation |
| | | | | | | | | | | | (United Airlines). |
|
| | Richard E. Cavanagh | | Trustee | | 3 years4 / since | | President and Chief Executive Officer of | | 52 | | Trustee: Aircraft Finance |
| | P.O. Box 4546 | | Audit Committee | | inception6 | | The Conference Board, Inc., a leading | | | | Trust (AFT) and |
| | New York, NY | | Member | | | | global business research organization, from | | | | Educational Testing |
| | 10163-4546 | | | | | | 1995-present. Former Executive Dean of | | | | Service (ETS). Director, |
| | Age: 58 | | | | | | the John F. Kennedy School of Government | | | | Arch Chemicals, Fremont |
| | | | | | | | at Harvard University from 1988-1995. | | | | Group and The Guardian |
| | | | | | | | Acting Director, Harvard Center for | | | | Life Insurance Company |
| | | | | | | | Business and Government (1991-1993). | | | | of America. |
| | | | | | | | Formerly Partner (principal) of McKinsey | | | | |
| | | | | | | | & Company, Inc. (1980-1988). Former | | | | |
| | | | | | | | Executive Director of Federal Cash | | | | |
| | | | | | | | Management, White House Office of | | | | |
| | | | | | | | Management and Budget (1977-1979). Co- | | | | |
| | | | | | | | author, THE WINNING PERFORMANCE | | | | |
| | | | | | | | (best selling management book published in | | | | |
| | | | | | | | 13 national editions). | | | | |
|
| | Kent Dixon | | Trustee | | 3 years4 / since | | Consultant/Investor. Former President and | | 52 | | Former Director of ISFA |
| | P.O. Box 4546 | | Audit Committee | | inception | | Chief Executive Officer of Empire Federal | | | | (the owner of INVEST, a |
| | New York, NY | | Member5 | | | | Savings Bank of America and Banc PLUS | | | | national securities broker- |
| | 10163-4546 | | | | | | Savings Association, former Chairman of | | | | age service designed for |
| | Age: 67 | | | | | | the Board, President and Chief Executive | | | | banks and thrift |
| | | | | | | | Officer of Northeast Savings. | | | | institutions). |
|
| | Frank J. Fabozzi | | Trustee | | 3 years4 / since | | Consultant. Editor of THE JOURNAL OF | | 52 | | Director, Guardian |
| | P.O. Box 4546 | | Audit Committee | | inception | | PORTFOLIO MANAGEMENT and | | | | Mutual Funds Group (18 |
| | New York, NY | | Member7 | | | | Frederick Frank Adjunct Professor of | | | | portfolios). |
| | 10163-4546 | | | | | | Finance at the School of Management at | | | | |
| | Age: 56 | | | | | | Yale University. Author and editor of sev- | | | | |
| | | | | | | | eral books on fixed income portfolio man- | | | | |
| | | | | | | | agement. Visiting Professor of Finance and | | | | |
| | | | | | | | Accounting at the Sloan School of | | | | |
| | | | | | | | Management, Massachusetts Institute of | | | | |
| | | | | | | | Technology from 1986 to August 1992. | | | | |
87
DIRECTORS/TRUSTEES INFORMATION (Unaudited) (Continued)
| | | | | | | | | | Number of | | |
| | | | | | | | | | portfolios | | |
| | | | | | | | | | overseen | | |
| | | | Current positions held | | Term of office and | | Principal occupations | | within the fund | | Other Directorships held outside |
| | Name, address, age | | with the Trusts | | length of time served | | during the past five years | | complex1 | | of the fund complex |
|
| Independent Trustees (continued) |
|
| | Kathleen F. Feldstein | | Trustee8 | | 3 years4 / since | | President of Economics Studies, Inc., a | | 199 | | Director of BellSouth Inc., |
| | P.O. Box 4546 | | | | January 19, 2005 | | Belmont, MA-based private economic | | | | Ionics, Inc., and Knight |
| | New York, NY | | | | | | consulting firm, since 1987; Chair, Board | | | | Ridder, Inc.; Trustee of the |
| | 10163-4546 | | | | | | of Trustees, McLean Hospital in Belmont, | | | | Museum of Fine Arts, |
| | Age: 63 | | | | | | MA. | | | | Boston, and of the |
| | | | | | | | | | | | Committee for Economic |
| | | | | | | | | | | | Development; Corporation |
| | | | | | | | | | | | Member, Partners HealthCare |
| | | | | | | | | | | | and Sherrill House; Member |
| | | | | | | | | | | | of the Visiting Committee of |
| | | | | | | | | | | | the Harvard University Art |
| | | | | | | | | | | | Museums and of the |
| | | | | | | | | | | | Advisory Board to the |
| | | | | | | | | | | | International School of |
| | | | | | | | | | | | Business at Brandeis |
| | | | | | | | | | | | University. |
|
|
| | R. Glenn Hubbard | | Trustee | | 3 years4 / since | | Dean of Columbia Business School since | | 52 | | Director of ADP, Dex Media, |
| | P.O. Box 4546 | | | | November 16, 2004 | | July 1, 2004. Columbia faculty member | | | | KKR Financial Corporation, |
| | New York, NY | | | | | | since 1988. Co-director of Columbia | | | | and Ripplewood Holdings. |
| | 10163-4546 | | | | | | Business School’s Entrepreneurship Program | | | | Member of Board of |
| | Age: 46 | | | | | | 1994-1997. Visiting professor at the John F. | | | | Directors of Duke Realty. |
| | | | | | | | Kennedy School of Government at Harvard | | | | Formerly on the advisory |
| | | | | | | | University and the Harvard Business School, | | | | boards of the Congressional |
| | | | | | | | as well as the University of Chicago. Visiting | | | | Budget Office, the Council |
| | | | | | | | scholar at the American Enterprise Institute | | | | on Competitiveness, the |
| | | | | | | | in Washington and member of International | | | | American Council on Capital |
| | | | | | | | Advisory Board of the MBA Program of | | | | Formation, the Tax |
| | | | | | | | Ben-Gurion University. Deputy assistant sec- | | | | Foundation and the Center |
| | | | | | | | retary of the U.S. Treasury Department for | | | | for Addiction and Substance |
| | | | | | | | Tax Policy 1991-1993. Chairman of the U.S. | | | | Abuse. Trustee of Fifth |
| | | | | | | | Council of Economic Advisers under the | | | | Avenue Presbyterian Church |
| | | | | | | | President of the United States 2001–2003. | | | | of New York. |
|
| |
| | James Clayburn | | Trustee | | 3 years4 / since | | Dean Emeritus of the John E. Anderson | | 52 | | Director of Payden & Rygel |
| | La Force, Jr. | | | | inception | | Graduate School of Management, | | | | Investment Trust, Metzler- |
| | P.O. Box 4546 | | | | | | University of California since July 1, 1993. | | | | Payden Investment Trust, |
| | New York, NY | | | | | | Acting Dean of the School of Business, | | | | Advisors Series Trust, Arena |
| | 10163-4546 | | | | | | Hong Kong University of Science and | | | | Pharmaceuticals, Inc. and |
| | Age: 76 | | | | | | Technology 1990-1993. From 1978 to | | | | CancerVax Corporation. |
| | | | | | | | September 1993, Dean of the John E. | | | | |
| | | | | | | | Anderson Graduate School of | | | | |
| | | | | | | | Management, University of California. | | | | |
|
| |
| | Walter F. Mondale | | Trustee | | 3 years4 / since | | Senior Counsel, Dorsey & Whitney, LLP, a | | 52 | | Chairman of Panasonic |
| | P.O. Box 4546 | | | | inception10 | | law firm (January 2004-present); Partner, | | | | Foundation’s Board of |
| | New York, NY | | | | | | Dorsey & Whitney, LLP, (December 1996- | | | | Directors and Director of |
| | 10163-4546 | | | | | | December 2003, September 1987-August | | | | United Health Foundation. |
| | Age: 77 | | | | | | 1993). Formerly U.S. Ambassador to Japan | | | | Member of the Hubert H. |
| | | | | | | | (1993-1996). Formerly Vice President of | | | | Humphrey Institute of Public |
| | | | | | | | the United States, U.S. Senator and | | | | Affairs Advisory Board, The |
| | | | | | | | Attorney General of the State of | | | | Mike and Maureen |
| | | | | | | | Minnesota. 1984 Democratic Nominee for | | | | Mansfield Foundation and |
| | | | | | | | President of the United States. | | | | the Dean’s Board of Visitors |
| | | | | | | | | | | | of the Medical School at the |
| | | | | | | | | | | | University of Minnesota. |
| 1 | The Fund Complex means two or more registered investments companies that: (1) hold themselves out to investors as related companies for pur- poses of investment and investor services; or (2) have a common investment advisor or have an investment advisor that is an affiliated person of the investment advisor of any of the other registered investment companies. |
| |
| 2 | Interested Director/Trustee as defined by Section 2(a)(19) of the Investment Company Act of 1940. |
| |
| 3 | Director/Trustee since inception; appointed Chairman of the Board on August 22, 2002. |
| |
| 4 | The Board is classified into three classes of which one class is elected annually. Each Director/Trustee serves a three-year term concurrent with the class from which they are elected. |
| |
| 5 | The Board of each Trust has determined that each Trust has two Audit Committee financial experts serving on its Audit Committee, Dr. Brimmer and Mr. Dixon, both of whom are independent for the purpose of the definition of Audit Committee financial expert as applicable to the Trusts. |
| |
| 6 | For the 2008 Trusts, Insured Municipal Trust and Municipal Target Trust appointed Director/Trustee on August 11, 1994. |
| |
| 7 | Appointed Audit Committee Member on May 25, 2004. |
| |
| 8 | Trustee on the 2008 Trusts, Strategic Trusts, Insured Municipal Trust and Municipal Target Trust and an Advisory Trustee on the 2018 Trusts and 2020 Trusts. |
| |
| 9 | Director/Trustee on 19 of the closed-end Trusts and an Advisory Director/Trustee on the remaining 33 closed-end Trusts. |
| |
| 10 | Except during the periods August 12, 1993 through April 15, 1997 and October 31, 2002 through November 11, 2002 for all of the Trusts. |
| |
88
DIVIDEND REINVESTMENT PLANS
Pursuant to each Trust’s Dividend Reinvestment Plan (the “Plan”), common shareholders of the 2008 Trusts, Insured Municipal and Municipal Target may elect, while the common shareholders of the 2018 Trusts, 2020 Trusts and Strategic Trusts are automatically enrolled, to have all distributions of dividends and capital gains reinvested by EquiServe Trust Company, N.A. (the “Plan Agent”) in the respective Trust’s shares pursuant to the Plan. Shareholders who do not participate in the Plan will receive all distributions in cash paid by check and mailed directly to the shareholders of record (or if the shares are held in street or other nominee name, then to the nominee) by the Plan Agent, which serves as agent for the shareholders in administering the Plan.
After a 2008 Trust, Insured Municipal, 2018 Trust, 2020 Trust and/or Municipal Target declares a dividend or determines to make a capital gain distribution, the Plan Agent will acquire shares for the participants’ account, by the purchase of outstanding shares on the open market, on the Trust’s primary exchange or elsewhere (“open market purchases”). These Trusts will not issue any new shares under the Plan.
After a Strategic Trust declares a dividend or determines to make a capital gain distribution, the Plan Agent will acquire shares for the participants’ account, depending upon the circumstances described below, either (i) through receipt of unissued but authorized shares from the Trust (“newly issued shares”) or (ii) by open market purchases. If, on the dividend payment date, the NAV is equal to or less than the market price per share plus estimated brokerage commissions (such condition being referred to herein as “market premium”), the Plan Agent will invest the dividend amount in newly issued shares on behalf of the participants. The number of newly issued shares to be credited to each participant’s account will be determined by dividing the dollar amount of the dividend by the NAV on the date the shares are issued. However, if the NAV is less than 95% of the market price on the payment date, the dollar amount of the dividend will be divided by 95% of the market price on the payment date. If, on the dividend payment date, the NAV is greater than the market value per share plus estimated brokerage commissions (such condition being referred to herein as “market discount”), the Plan Agent will invest the dividend amount in shares acquired on behalf of the participants in open market purchases.
Participation in the Plan is completely voluntary and may be terminated or resumed at any time without penalty by notice if received and processed by the Plan Administrator prior to the dividend record date; otherwise such termination or resumption will be effective with respect to any subsequently declared dividend or other distribution.
The Plan Agent’s fees for the handling of the reinvestment of dividends and distributions will be paid by each Trust. However, each participant will pay a pro rata share of brokerage commissions incurred with respect to the Plan Agent’s open market purchases in connection with the reinvestment of dividends and distributions. The automatic reinvestment of dividends and distributions will not relieve participants of any Federal income tax that may be payable on such dividends or distributions.
Each Trust reserves the right to amend or terminate the Plan. There is no direct service charge to participants in the Plan; however, each Trust reserves the right to amend the Plan to include a service charge payable by the participants. Participants that request a sale of shares through the Plan Agent are subject to a $2.50 sales fee and a $0.15 per share sold brokerage commission. All correspondence concerning the Plan should be directed to the Plan Agent at 250 Royall Street, Canton, MA 02021, or by calling (800) 699-1BFM.
ADDITIONAL INFORMATION
On August 25, 2004, BlackRock, Inc., the parent of BlackRock Advisors, Inc., the Trusts’investment advisor, entered into an agreement with MetLife, Inc.® to acquire SSRM Holdings, Inc., the parent of State Street Research & Management Company, the investment advisor to the State Street Research mutual funds. This acquisition was completed on January 31, 2005. Management believes there will be no impact to the Trusts as a result of this transaction.
Each Trust listed for trading on the NewYork Stock Exchange (NYSE) has filed with the NYSE its chief executive officer certification regarding compliance with the NYSE’s listing standards and each Trust listed for trading on the American Stock Exchange (AMEX) has filed with the AMEX its corporate governance certification regarding compliance with theAMEX’s listing standards.All of the Trusts have filed with the Securities and Exchange Commission the certification of its chief executive officer and chief financial officer required by section 302 of the Sarbanes-Oxley Act.
There has been no material changes in the Trusts’ investment objective or policies that have not been approved by the shareholders or to their charters or by-laws or in the principle risk factors associated with investment in the Trusts. There have been no changes in the persons who are primarily responsible for the day-to-day management of the Trusts’ portfolio.
Quarterly performance and other information regarding the Trusts may be found on BlackRock’s website, which can be accessed at http://www.blackrock.com/indiv/products/closedendfunds/funds.html. This reference to BlackRock’s website is intended to allow investors public access to information regarding the Trusts and does not, and is not intended, to incorporate BlackRock’s website into this report.
Certain of the officers of the Trusts listed on the inside back cover of this Report to Shareholders are also officers of the Advisor or Sub-Advisor. They serve in the following capacities for the Advisor or Sub-Advisor: Robert S. Kapito—Director and Vice Chairman of the Advisor and the Sub-Advisor, Kevin M. Klingert—Director of BlackRock Advisors, Inc. and Managing Director of the Advisor and the Sub-Advisor, Henry Gabbay, Anne Ackerley and Bartholomew Battista—Managing Directors of the Advisor and the Sub-Advisor, Richard M. Shea, James Kong and Vincent Tritto—Managing Directors of the Sub-Advisor, and Brian P. Kindelan—Managing Director of the Advisor.
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BlackRock Closed-End Funds
| Directors/Trustees | | Transfer Agent |
| Ralph L. Schlosstein, Chairman | | EquiServe Trust Company, N.A. |
| Andrew F. Brimmer | | 250 Royall Street |
| Richard E. Cavanagh | | Canton, MA 02021 |
| Kent Dixon | | (800) 699-1BFM |
| Frank J. Fabozzi | | Auction Agent3 |
| Kathleen F. Feldstein1 | | Bank of New York |
| R. Glenn Hubbard2 | | 101 Barclay Street, 7 West |
| Robert S. Kapito | | New York, NY 10286 |
| James Clayburn La Force, Jr. | | Auction Agent4 |
| Walter F. Mondale | | Deutsche Bank Trust Company Americas |
| Officers | | 60 Wall Street, 27th Floor |
| Robert S. Kapito, President | | New York, NY 10005 |
| Henry Gabbay, Treasurer | | Independent Registered Public Accounting Firm |
| Bartholomew Battista, Chief Compliance Officer | | Deloitte & Touche LLP |
| Anne Ackerley, Vice President | | 200 Berkeley Street |
| Kevin M. Klingert, Vice President | | Boston, MA 02116 |
| Richard M. Shea, Vice President/Tax | | Legal Counsel |
| James Kong, Assistant Treasurer | | Skadden, Arps, Slate, Meagher & Flom LLP |
| Vincent B. Tritto, Secretary | | Four Times Square |
| Brian P. Kindelan, Assistant Secretary | | New York, NY 10036 |
| Investment Advisor | | Legal Counsel – Independent Trustees |
| BlackRock Advisors, Inc. | | Debevoise & Plimpton LLP |
| 100 Bellevue Parkway | | 919 Third Avenue |
| Wilmington, DE 19809 | | New York, NY 10022 |
| 227-7BFM | | |
| Sub-Advisor3 | | This report is for shareholder information. This is not a prospec- |
| BlackRock Financial Management, Inc. | | tus intended for use in the purchase or sale of Trust shares. |
| 40 East 52nd Street | | Statements and other information contained in this report are as |
| New York, NY 10022 | | dated and are subject to change. |
| Accounting Agent and Custodian | | |
| State Street Bank and Trust Company | | BlackRock Closed-End Funds |
| 225 Franklin Street | | c/o BlackRock Advisors, Inc. |
| Boston, MA 02110 | | 100 Bellevue Parkway |
| | | Wilmington, DE 19809 |
| | | (800) 227-7BFM |
| 1 | Trustee on the 2008 Trusts, Strategic Trusts, Insured Municipal Trust and Municipal Target Trust and an Advisory Trustee on the 2018 Trusts and 2020 Trusts. Appointed on January 19, 2005 for each Trust. |
| |
| 2 | Appointed on November 16, 2004. |
| |
| 3 | For the 2018 Trusts and 2020 Trusts. |
| |
| 4 | For the Trusts, except the 2018 Trusts and 2020 Trusts. |
| |
The Trusts will mail only one copy of shareholder documents, including annual and semi-annual reports and proxy statements, to shareholders with multiple accounts at the same address. This practice is commonly called “householding” and is intended to reduce expenses and eliminate duplicate mailings of shareholder documents. Mailings of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact the Trusts at (800) 699-1BFM.
The Trusts have delegated to the Advisor the voting of proxies relating to their voting securities pursuant to the Advisor’s proxy voting policies and procedures. You may obtain a copy of these proxy voting policies and procedures, without charge, by calling (800) 699-1BFM. These policies and procedures are also available on the website of the Securities and Exchange Commission (the “Commission”) at http://www.sec.gov.
Information on how proxies relating to the Trusts’ voting securities were voted (if any) by the Advisor during the most recent 12-month period ended December 31st is available, upon request, by calling (800) 699-1BFM or on the website of the Commission at http://www.sec.gov.
The Trusts file their complete schedule of portfolio holdings for the first and third quarters of their respective fiscal years with the Commission on Form N-Q. Each Trust’s Form N-Q will be available on the Commission’s website at http://www.sec.gov. Each Trust’s Form N-Q, when available, may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information regarding the operation of the Public Reference Room may be obtained by calling (800) SEC-0330. Each Trust’s Form N-Q, when available, may also be obtained, upon request, by calling (800) 699-1BFM.
| This report is for shareholder information. This is not a prospectus intended for | | |
| use in the purchase or sale of Trust shares. Statements and other information | | |
| contained in this report are as dated and are subject to change. | | |
| | | |
| CEF-ANN-4 | |
Item 2. Code of Ethics.
(a) The Registrant has adopted a code of ethics (the "Code of Ethics") that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.
(b) Not applicable.
(c) The Registrant has not amended its Code of Ethics during the period covered by the shareholder report presented in Item 1 hereto.
(d) The Registrant has not granted a waiver or an implicit waiver from a provision of its Code of Ethics during the period covered by the shareholder report presented in Item 1 hereto.
(e) Not applicable.
(f) The Registrant's Code of Ethics is attached as an Exhibit hereto.
Item 3. Audit Committee Financial Expert.
The Registrant's Board of Trustees has determined that it has two audit committee financial experts serving on its audit committee, each of whom is an "independent" Trustee: Dr. Andrew F. Brimmer and Mr. Kent Dixon. Under applicable securities laws, a person who is determined to be an audit committee financial expert will not be deemed an "expert" for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification of a person as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities that are greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and Board of Trustees in the absence of such designation or identification.
Item 4. Principal Accountant Fees and Services.
(a) Audit Fees. The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the Registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years were $27,600 for the fiscal year ended December 31, 2004 and $30,200 for the fiscal year ended December 31, 2003.
(b) Audit-Related Fees. The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the Registrant’s financial statements and are not
reported above in Item 4(a) were $1,900 for the fiscal year ended December 31, 2004 and $4,000 for the fiscal year ended December 31, 2003. The nature of these services was attest services not required by statute or regulation, overhead and out-of-pocket expenses.
(c) Tax Fees. The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice and tax planning were $6,600 for the fiscal year ended December 31, 2004 and $10,200 for the fiscal year ended December 31, 2003. The nature of these services was federal, state and local income and excise tax return preparation and related advice and planning and miscellaneous tax advice.
(d) All Other Fees. There were no fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported above in Items 4(a) through (c).
(e) Audit Committee Pre-Approval Policies and Procedures.
(1) The Registrant has polices and procedures (the "Policy") for the pre-approval by the Registrant's Audit Committee of Audit, Audit-Related, Tax and Other Services (as each is defined in the Policy) provided by the Trust's independent auditor (the "Independent Auditor") to the Registrant and other "Covered Entities" (as defined below). The term of any such pre-approval is 12 months from the date of pre-approval, unless the Audit Committee specifically provides for a different period. The amount of any such pre-approval is set forth in the appendices to the Policy (the "Service Pre-Approval Documents"). At its first meeting of each calendar year, the Audit Committee will review and re-approve the Policy and approve or re-approve the Service Pre-Approval Documents for that year, together with any changes deemed necessary or desirable by the Audit Committee. The Audit Committee may, from time to time, modify the nature of the services pre-approved, the aggregate level of fees pre-approved or both.
For the purposes of the Policy, "Covered Services" means (A) all engagements for audit and non-audit services to be provided by the Independent Auditor to the Trust and (B) all engagements for non-audit services related directly to the operations and financial reporting or the Trust to be provided by the Independent Auditor to any Covered Entity, "Covered Entities" means (1) the Advisor or (2) any entity controlling, controlled by or under common control with the Advisor that provides ongoing services to the Trust.
In the intervals between the scheduled meetings of the Audit Committee, the Audit Committee delegates pre-approval authority under this Policy to the Chairman of the Audit Committee (the "Chairman"). The Chairman shall report any pre-approval decisions under this Policy to the Audit Committee at its next scheduled meeting. At each scheduled meeting, the Audit Committee will review with the Independent Auditor the Covered Services pre-approved by the Chairman pursuant to delegated authority, if any, and the fees related thereto. Based on these reviews, the Audit Committee can modify, at its discretion, the pre-approval originally granted by the Chairman pursuant to delegated authority. This modification can be to the nature of services pre-approved, the aggregate level of fees approved, or both. Pre-approval of Covered Services by the Chairman pursuant to delegated authority is expected to be the exception rather than the rule and the
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Audit Committee may modify or withdraw this delegated authority at any time the Audit Committee determines that it is appropriate to do so.
Fee levels for all Covered Services to be provided by the Independent Auditor and pre-approved under this Policy will be established annually by the Audit Committee and set forth in the Service Pre-Approval Documents. Any increase in pre-approved fee levels will require specific pre-approval by the Audit Committee (or the Chairman pursuant to delegated authority).
The terms and fees of the annual Audit services engagement for the Trust are subject to the specific pre-approval of the Audit Committee. The Audit Committee (or the Chairman pursuant to delegated authority) will approve, if necessary, any changes in terms, conditions or fees resulting from changes in audit scope, Trust structure or other matters.
In addition to the annual Audit services engagement specifically approved by the Audit Committee, any other Audit services for the Trust not listed in the Service Pre-Approval Document for the respective period must be specifically pre-approved by the Audit Committee (or the Chairman pursuant to delegated authority).
Audit-Related services are assurance and related services that are not required for the audit, but are reasonably related to the performance of the audit or review of the financial statements of the Registrant and, to the extent they are Covered Services, the other Covered Entities (as defined in the Joint Audit Committee Charter) or that are traditionally performed by the Independent Auditor. Audit-Related services that are Covered Services and are not listed in the Service Pre-Approval Document for the respective period must be specifically pre-approved by the Audit Committee (or the Chairman pursuant to delegated authority).
The Audit Committee believes that the Independent Auditor can provide Tax services to the Covered Entities such as tax compliance, tax planning and tax advice without impairing the auditor’s independence. However, the Audit Committee will not permit the retention of the Independent Auditor in connection with a transaction initially recommended by the Independent Auditor, the sole business purpose of which may be tax avoidance and the tax treatment of which may not be supported in the Internal Revenue Code and related regulations. Tax services that are Covered Services and are not listed in the Service Pre-Approval Document for the respective period must be specifically pre-approved by the Audit Committee (or the Chairman pursuant to delegated authority).
All Other services that are covered and are not listed in the Service Pre-Approval Document for the respective period must be specifically pre-approved by the Audit Committee (or the Chairman pursuant to delegated authority).
Requests or applications to provide Covered Services that require approval by the Audit Committee (or the Chairman pursuant to delegated authority) must be submitted to the Audit Committee or the Chairman, as the case may be, by both the Independent Auditor and the Chief Financial Officer of the respective Covered Entity, and must include a joint statement as to whether, in their view, (a) the request or application is consistent with the rules of the Securities and Exchange Commission ("SEC") on auditor independence and (b) the requested service is or is not a non-audit service prohibited by the SEC. A request or application submitted to the Chairman between scheduled meetings of the Audit Committee should include a discussion as to why approval is being sought prior to the next regularly scheduled meeting of the Audit Committee.
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(2) None of the services described in each of Items 4(b) through (d) were approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) The aggregate non-audit fees billed by the Trust's accountant for services rendered to the Trust, the Advisor (except for any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) or any entity controlling, controlled by, or under common control with the Advisor that provides ongoing services to the registrant that directly impacted the Trust for each of the last two fiscal years were $8,500 for the fiscal year ended December 31, 2004 and $14,200 for the fiscal year ended December 31, 2003.
(h) Not applicable.
Item 5. Audit Committee of Listed Registrants.
The Registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The Audit Committee of the Registrant is comprised of: Dr. Andrew F. Brimmer; Richard E. Cavanagh; Kent Dixon and Frank Fabozzi.
Item 6. Schedule of Investments.
The Registrant’s Schedule of Investments is included as part of the Report to Shareholders filed under Item 1 of this form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
The Registrant has delegated the voting of proxies relating to its voting securities to its investment advisor, BlackRock Advisors, Inc. (the "Advisor") and its sub-advisor, BlackRock Financial Management, Inc. (the "Sub-Advisor"). The Proxy Voting Policies and Procedures of the Advisor and Sub-Advisor (the "Proxy Voting Policies") are attached as an Exhibit 99.PROXYPOL hereto.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Companies and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. Controls and Procedures.
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(a) The Registrant's principal executive officer and principal financial officer have evaluated the Registrant's disclosure controls and procedures as of a date within 90 days of this filing and have concluded that the Registrant’s disclosure controls and procedures are effective, as of such date, in ensuring that information required to be disclosed by the registrant in this Form N-CSR was recorded, processed, summarized, and reported timely.
(b) The Registrant's principal executive officer and principal financial officer are aware of no changes in the Registrant's internal control over financial reporting that occurred during the Registrant's last fiscal half-year that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting.
Item 12. Exhibits.
(a) (1) Code of Ethics attached as EX-99.CODE ETH.
(a) (2) Separate certifications of Principal Executive and Financial Officers pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 attached as EX-99.CERT.
(a) (3) Not applicable.
(b) Certification of Principal Executive and Financial Officers pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 furnished as EX-99.906CERT.
Proxy Voting Policies attached as EX-99.PROXYPOL.
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SIGNATURES
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.
| (Registrant) | BlackRock New York Municipal 2018 Term Trust |
| |
|
| By: | /s/ Henry Gabbay |
| |
|
| Name: | Henry Gabbay |
| Title: | Treasurer |
| Date: | March 2, 2005 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By: | /s/ Robert S. Kapito |
| |
|
| Name: | Robert S. Kapito |
| Title: | Treasurer |
| Date: | March 2, 2005 |
| By: | /s/ Henry Gabbay |
| |
|
| Name: | Henry Gabbay |
| Title: | Principal Financial Officer |
| Date: | March 2, 2005 |
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